One of the mistakes companies make when they try to create a business system or develop a continuous improvement culture is that they focus on the wrong things. They scrutinize behaviors. They spend their energy reacting to unexpected results. They bounce from tool to tool trying to find a fix for their problems.
What they often overlook, though, is that fact that their employees are often not guided by unifying principles. There is no clear corporate identity. Guiding principles are like beacons for the team, and create continuity as people come and go.
While the exact principles you settle on for your organization will vary based on your industry, national culture, corporate mission, and a host of other factors, there is one common thread among all great companies. They have a belief system that is shared by their employees.
The following list of principles comes from our continuous improvement transformation model. It breaks the progress from an ordinary company to a world-class one into six phases. Each of these phases requires the adoption of certain principles to successfully navigate through it. While this is a fairly long list of principles, they are rolled out over an extended period. By the time you move to the next phase, living by the previous principles should have become a habit.
PHASE 0: COMMITTING
In the committing phase, the key leaders of an organization turn the corner from accepting business as usual to choosing a new path. It is one of the most difficult of the phases because it entails accepting that there is a flaw in the way the business is currently being run.
- Build Relationships: In the later phases, it is imperative that team members and the leaders in the organization work together. It takes a long time to cultivate a strong relationship, so it has to start early in the process of change.
- Develop Trust: An integral part of relationships is trust. It is important enough to warrant a separate principle. Team members have to feel safe and confident in their bosses. Leaders have to believe that team members will act in the best interest of the organization.
- Leadership: Great organizations push themselves. Weak leadership results in a lack of stretch goals, and an inability to successfully reach them, regardless of how demanding they are. Strong leadership gives an organization purpose and direction
- Respect for People: First of all, treating employees respectfully is the right moral thing to do. After all, employees are people. They are not bodies, heads, etc. But beyond that it is good for business. Respect breeds satisfaction, and satisfaction breeds success.
- Long Term Thinking: Far too often, people think in a short timeline and don’t invest in the future. Creating a strong business system takes time and requires patience.
PHASE 1: STARTING THE JOURNEY
There is an old expression that says even the longest journeys begin with a single step. The same is true when developing a continuous improvement culture. You won’t immediately reach your destination. This phase transitions the leadership team from deciding to acting and sets the tone for your Lean journey.
- Look Within: There is a tendency to focus on external factors and other people when facing barriers and obstacles. It is important to look at yourself first. This remains important throughout the development of a business system. The performance bar is continually raised. If you continue to operate at a static level, you will eventually become a barrier to progress.
- Align the Team: It should come as no surprise that great organizations have a unity of effort. Leadership tools like policy deployment and operations reviews are the tools for getting the team working together. The guiding principles on this list, though, are the bedrock of that alignment.
- Avoid Bureaucracy: Organizations without strong principles need lots of rules and policies to get things done. When you have a strong belief system, you need less bureaucracy to be effective.
- Invest Wisely: Continuous improvement is not free in the same way that buying a rental property has an upfront cost. Eventually, if you do the right things, you’ll eventually get a payoff. But it is important to make sure that everything you spend has a purpose and will contribute to your overall goals. One of the best investments you will make when developing your business system is in people.
PHASE 3: RAMPING UP
Once the foundation is built, it is time to start building upon it. In the early part of the ramp up, you’ll probably focus on cultivating talent. While that sort of growth never goes away, by the end of the ramp up phase, most people on your team should have at least some continuous improvement experience. At that point, there will be a subtle shift from learning and teaching as the priority to a greater focus on results. Learning should not go away, but there will be a change in the ratio of how time is spent. Note that this phase can take a number of years. It is important to be patient.
- Structured Thinking: People need to think scientifically. That means that they gather and interpret facts about a problem before acting. This way of thinking is unnatural for many people. In the early days of humanity, fight or flight were the two basic responses when cavemen were presented with a problem. The decision had to be made quickly and was based upon what one had seen before. Modern problem-solving, though, tends to be ineffective when done with snap decisions.
- Focus on Flow: Every time works sits it creates a problem. It takes more energy and effort to manage it, and customers are waiting longer to get what they want.
- Create Standards: Continuous improvement requires a baseline the start and the ability to recognize abnormal conditions. This means that you have to have standards in place. Without them, there is no foundation upon which to improve.
- Value Stream Management: Companies often erect artificial barriers within the organization. They arrange their functions as silos. That makes it hard to create value for customers. Instead, the company should be arranged by value stream.
- Improving One’s Job is Part of the Job: Companies turn the corner on their Lean journey when employees start taking responsibility to make their own job better. In typical organizations, changes in work are driven by managers. When continuous improvement is part of the company’s DNA, people become dissatisfied with waste in their work and take action to do something about it.
Phase 4: Keeping Momentum
The risk during phase 4 is complacency. Once the company gathers steam, it has to keep it. Don’t confuse this phase for steady state, though. The improvement trajectory should still be steep. It is just that it is using well-established systems with highly trained people. The stability of this phase also allows for greater experimentation with more sophisticated tools.
- Build in Quality: Every company understands the quality is important to their customers. Most, though, inspect it into their products. Great Lean companies build quality into them.
- Zero Defects Mentality: This is a tricky principle. No company has ever achieved perfect quality. But that does not mean you shouldn’t strive for zero defects. It is a mentality more than a goal, and it results in localized pockets of excellence. Get enough of those pockets, though, and quality ends up being pretty great.
- Strengthen Systems: Systems put tools into context. They also make sure that you understand how a change in one place will impact operations in another. Good systems also reduce the day-to-day effort required to run an operation.
- Full Engagement: Employee engagement is actually the result of many other factors. Engaged employees, make customers happier, take the initiative more, and contribute to higher morale. The bottom line is that employee engagement helps the bottom line.
- Monitor Processes: It is important to manage operations and solve problems with actual facts and data. You don’t get that information unless you monitor processes. Pay attention to that word choice. Make the distinction between scrutinizing people and tracking processes.
Phase 5: World Class Performance
Few companies will make the leap from phase 4 to phase 5. First of all, it is hard to uncover the subtle distinctions between a very good company and a great on. Secondly, even if you know what to do, it can be extremely difficult to do. Winning isn’t easy.
- Expect to Win: There is a fine line between confidence and overconfidence. Top-performing companies know that they have the right team and systems to take on the competition and beat them.
- Grand Thinking: The companies that have changed the world, or at least their industry, have always done it with great leaps forward. With a strong business system in place, an organization opens up more possibilities.
About this article: This article is part of our new project with the working title of “The Practical Guide to Creating a Killer Business Management System.” We will be working on this project in a very open manner. As we publish articles like this and develop the supporting training materials, please let us know what you think. The final product will be much better if we get feedback from you.
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