In today’s business zeitgeist, Continuous Improvement (CI) efforts appear to be wavering, methodologies come and go, and business and operational leaders are often chasing the next big thing. Innovation has seemingly erased quality and efficiency endeavors. With the onset of AI, sophisticated BPM products and digitization, is CI even relevant?
1950s – Present
When the topic of CI comes up, many think of Toyota – and for good reason. Toyota epitomizes kaizen and has been the worldwide standard that many companies, both manufacturing and service oriented, try to replicate. Adapting from multiple sources and evolving over multiple years, Toyota developed and honed what has become known as the Toyota Production System. The main principles of quality, just-in-time, jidoka (automation with a human touch), heijunka (production leveling), standardized work and kaizen (improvement) formed over decades of work. In practice, Toyota found that in order to operationalize these principles, they had to change how they managed the people, leading to the Toyota Way. This management philosophy works hand-in-hand with operations, creating a culture of continuous improvement, respect for the people and embedding a continuous cycle of learning and doing.
Toyota initially borrowed methods and philosophies from other companies. Over years of practice, they transformed those methods and philosophies to fit their needs and their culture. That is the primary reason why it has worked out so well for Toyota.
What we call Lean today has its foundations in TPS and the Toyota Way. Lean has been attributed to the success of many companies, including Intel, Baxter Healthcare and Nike.
1980s – 1990s
Across the Pacific, Total Quality Management was finding a stronghold within the US military. Adopting the teachings of W. Edward Deming among others, TQM focused on achieving quality through understanding customer requirements, systemic analysis and continuous improvement of work processes. In order to remain competitive, many private companies also adopted TQM as a CI strategy.
In the Chicago suburbs, Six Sigma was founded by Motorola engineer, Bill Smith. Similar to TPS and TQM, Six Sigma seeks to further quality through defined methodologies and tools. Through heavy empirical analysis, Six Sigma practices eliminates defects and reduces variation in process. Notoriously, General Electric adopted Six Sigma in 1995, incorporating the CI methodologies throughout the entire company. In under 6 years, General Electric’s profit increased by 66%. After the financial crash of 2008, Six Sigma lost its largest headliner and proponent, GE, and slowly began to fade from public thought.
Today, aspects Six Sigma are widely practiced and embedded into cultures of companies such as Wipro, Abbot and Amazon.
Borrowing from both TPS and Six Sigma, Lean Six Sigma emerged to reduce process defects and waste as well as provide a management framework for the cultural shift. Lean Six Sigma uses proven tools and methodologies from both TPS and Six Sigma and have led many companies to realize increased quality, simplified and standardized processes, decreased cost, increased employee performance, customer satisfaction, and of course, increased profit. Many manufacturing, healthcare, financial and service companies have been successfully incorporating lean aspects into their operations and management philosophies over the last 20 years.
Those who appear to succeed have been able to adapt lean philosophies to their company cultures better than others as well as carry more realistic expectations on outcomes over time.
Agile and Evergreen also borrowed from TPS but have been tailored for software development and operations. Agile uses many lean tools and promotes a lean-like philosophy, such as visual management, daily communication and building quality in, while Evergreen adapts the Deming cycle to reduce waste in product CI efforts. Both advocate adaptiveness, continuous improvement and focus on the customer.
Innovative business process improvement technologies such as Artificial Intelligence, digitization, automated workflow systems, business process management systems and robotics have made great strides over the last decade. They have made process rendering and realization simpler, reorganization and testing faster and in most respects, increased overall efficiency and quality. For many organizations, funding for the otherwise traditional CI efforts have quietly dissipated for the last few years. Replacing those budgetary line items have been increasingly on the innovation and strategic side.
The advancement of AI, including augmented analytics and automated data science, is allowing business users to gain insights faster than ever before. Embedding AI into BPM products is refining both processes and user experience faster and more efficiently.
In the digital space, digital twins are increasingly being developed to augment research, development and process optimization. With the integration of AI, digital twins can continuously optimize in terms of efficiency, quality and both user and customer experience.
Traditional CI tools such as Kaizens, manual analyses and value stream mapping sessions are, in the traditional sense, unnecessary. Technology has seemingly surpassed people in this respect.
An issue experienced by many organizations is that while the enablement of technological advancements has proven to drive efficiency and quality, a remaining component is often found to be a barrier to fully realize ROI. Any type of digital transformation is a long journey, not an innovate and move on initiative. Internal acceptance and adoption can be slow, even when there is a continuum of iterative improvements leading to a larger transformation.
CI philosophies have proved to work in the past and will continue to work in the future. The enablement of people and the allowance by leadership to take initiative and propel forward have always been the true drivers.
Organizations that are currently experiencing or planning to undertake a digital transformation, CI is more important now than ever before. For many, the standard set of tools are no longer relevant. What is important are the foundational aspects of CI that have made it successful in the past.
The organization of the future, either manufacturing or service oriented, will need a constantly evolving rotation of systems, technologies and skills, employed by an adaptable and flexible workforce. Using a combination of CI methodologies and philosophies – what makes sense for the production team, division or unit will be essential. Not broadly implementing a single CI philosophy or system, but rather taking the relevant parts of TPS, Six Sigma, Lean and Agile, and tailoring them to meet the needs of the organization and the organization’s culture.
Organizationally, the foundational aspects of CI culture will be essential, including customer-centricity, optimizing the whole, building quality in and creating value, as well as respect for the people.
In order to move to an intelligent, integrated environment and ecosystem, the people need to equally be intelligent and integrated with the necessary skillsets. Ultimately, what to differentiate and how to differentiate will come from and organization’s employees and technology will only be an enabler.
Joseph Tonelli is a Consultant with Exavalu’s Insurance Practice. He is an avid CI practitioner who has deep experience with Lean transformation initiatives and insurance operations. You can reach him at Joseph.Tonelli@exavalu.com.
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