Why It’s Time for Technology-Enabled Continuous Improvement
Workplaces today are complex, global networks, writes contributor Terry Burton, and that demands a different kind of approach to continuous improvement. Here’s why the future is about technology-enabled continuous improvement and what that would look like.
The recent meltdown and slow recovery has taken over 80% of Lean Six Sigma initiatives off the tracks, and left many organizations in a coma state in terms of the future of business process improvement. There are a few fundamental reasons for this dilemma:
- The age of "top down, enterprise-wide, train-the-masses, mandate compliance everywhere" improvement programs has served its useful life. No executive in today's challenging economy wants to commit to another large, multimillion dollar improvement program that takes 2-5 years to see results, so continuous improvement remains somewhat at an impasse.
- The rapid evolution of technology is morphing the workplace into a complex global network of transactional enterprises. A few years ago everyone preached about "going to the gemba." Now the gemba is following us everywhere 24/7 in our hands or certainly within reach of an iPad or some other mobile device. Lengthy improvement projects must be replaced by a more rapid process of improvement that incorporates real time, event-driven performance dashboards and business analytics.
- The need and urgency for improvement is high, the hidden costs of these transactional enterprises is astronomical, and a different approach is needed to harvest these new opportunities. These wastes do not have physical characteristics; we can only get at them through enabling technology and creative transaction stream analytics.
The Next Generation of Improvement
The next generation of improvement is a challenge of how to design and implement continuous and sustainable improvement successfully in the new economy with the right approach, velocity, focus, simplification, and ease – while eliminating or working within the dynamic operating models, realistic constraints, and absorption bandwidths of organizations. What this means is the combined strategy of Deming back-to-basics, innovation, the integration of enabling technology, and adaptive improvement across diverse operating environments. The future of improvement is a nimble, systematic execution of this combined strategy that creates the continuous cultural standard of excellence. This is a well integrated system of improvement similar to the Toyota Production System (TPS) but a more dynamic system that leverages technology and harvests the larger enterprise and extended enterprise opportunities.
The next generation of improvement is definitely not a new buzzword program. It is a renewed direction of improvement that enables organizations to identify and harvest new opportunities rapidly, and prepares them to cash in on the even larger opportunities that they do not know about yet . We refer to this new generation of improvement as Improvement ExcellenceTM: the mastery of developing and implementing successful strategic and continuous business improvement initiatives, transforming culture, and enabling organizations to "improve how they improve." Three key elements of this new framework is a more innovative process of improvement, a different focus via the fusion of improvement and enabling technology, and the development of a new organizational core competency of "improving how we improve."
The Emergence of Transactional Enterprises
The new economy is accelerating the transformation of organizations into a complex global network of interdependent transactional enterprises. The physical content of work is being replaced with professional and knowledge-based processes.
For example, what was once a well established standalone automotive electronics manufacturing plant in Detroit is now a complex global supply chain network with several hardware and software development contractors scattered around the globe. In healthcare, the combination of consolidations, a focus on preventive medicine, information technology, ambulatory surgical centers (ASUs), and internet clinics are also moving hospitals in the direction of interconnected transactional processes.
Complexity in transactional business processes is growing, but so too is the need for improvement. This renaissance in improvement through technology is creating the greatest opportunities for forward-thinking organizations to improve, leapfrog competitors, and dominate global markets in the new economy. The future of improvement is definitely in the transactional enterprise and extended enterprise space of organizations, and the leapfrogging will occur at warp speed.
Organizations are becoming more complex & more global
Technology-Enabled Improvement: A Key Differentiator
Two trends will continue to radically change the face of improvement: the rapid emergence of enabling technology and a higher value-add content in transactional processes. With physical processes, one can use the senses to observe a machine' performance, talk to the operator, count and categorize scrap, listen for tool vibration, or feel a leaky air hose . . . so the problems are very visible. As the shift in improvement occurs from the manufacturing floor to the transactional process areas, our ability to use our natural senses to solve problems diminishes greatly.
This calls for the need to blend continuous improvement methods with technology as depicted in the figure below:
Additionally, the problems are much more complex. One cannot readily see the root causes of an invoicing error, a supply chain availability problem, a warranty issue, or product development leadership and process issues that make new products late to market or way over margin targets. These problems typically surface after the damage occurs, when it is too late for preventive improvement.
Reactionary damage control in the transactional process space is not improvement, but unfortunately it is the typical first response and usually makes matters worse. People tend to focus on issues within their own silos and are insensitive to the impact of their actions on the end-to-end process and the total value stream. The challenge of transactional problems is that the "roots" of the root causes are buried deeper in these complex, integrated processes. In fact, transactional waste has far reaching multi-directional consequences across the enterprise, and the quantified costs of non-conformance are usually astronomical and beyond belief.
For those who find this hard to believe, think about the millions of lost market opportunities from late or unreliable new products, excess/obsolete inventories, warranty and returns, premium freight, product availability, lost surgery and lab revenue due to poor scheduling and resource utilization, or the cost of ECO activities after a new product release to name a few. Each of these areas represents millions of dollars in lost growth, cash flow, and/or P&L opportunities for many organizations. Cutting headcount and IT budgets is not the answer to these complex but huge opportunities.
Transactional processes continue to become enhanced by new technology. Transactional processes are integrated and interdependent . . . where major improvements in one area provide residual improvements in other interconnected areas. The real challenge with improvement is in working one’s way through the transactional maze, and in defining and scoping out legitimate, data-driven transactional improvement opportunities. This process relies more heavily on information technology than it ever has before. With transactional processes, one cannot pick up a part and measure dimensional characteristics to determine defects and quality levels. One needs facts provided via real time event driven metrics, transaction stream mapping, digital performance dashboards, and business analytics.
The improvement expert uses the organization’s integrated enterprise architecture and other applications to trace the transaction trail like a forensic detective reconstructing and processing a crime scene to identify wastes and root causes. The differences between root causes and outcomes is often fuzzy, and the challenge becomes one of identifying and isolating the right pain point segments of these transactional processes with real facts. Success requires a deep understanding of both improvement and key business processes. This is not your traditional Lean or Six Sigma practitioner at work here.
Technology-enabled improvement plays a key role in this next generation of improvement. Technology is enabling this warp speed transformation of organizations into global, multilevel networks of transactional enterprises. Unlike most Lean Six Sigma improvement of the past, transactional improvement is transparent and comprised of key business processes, information flows, knowledge-based employees, and complex, contradictory decisions. There are literally hundreds of professional and knowledge resources managing thousands of dynamic process touch points, a continuous churn in changing requirements, specific country needs, time constraints, communications issues and exponentially greater opportunities for waste, variation, human risk, and bad decisions.
A major consideration of technology-enabled improvement that must not be overlooked is that the real intelligence lies in the improvement practitioner and the user community in the form of human intelligence. There is no improvement intelligence software available that instructs and/or executes improvement automatically, and we cannot replace the tough work of improvement with some new mobile application.
The process of improvement still relies on human intelligence to define and segment the right root cause information, analyze data with the right methodologies and tools, draw the right, data-driven conclusions, take the right fact-based actions, and close the loop with the right performance metrics.
This is the current disconnect with business analytics activities in organizations today. If one is missing this core competency of structured and disciplined improvement, then technology is reduced to providing more information quicker - the old data rich, analysis poor syndrome. It is the equivalent of replacing the war rooms of manually prepared performance charts of the past, with digital dashboards that contain even more conflicting and non-actionable information.
People, knowledge, and talent create the improvement side of technology-enabled improvement. The integrated enterprise architecture provides the technology side of technology-enabled improvement, and this combination also optimizes the value and ROI of enabling IT investments. In terms of Lean Six Sigma thinking, the interaction effects of technology plus improvement combined produce much greater benefits than treating the two as mutually exclusive. History clearly validates that organizations have tried one without the other for decades and it does not create sustainable best-in-class business processes.
There is no doubt that technology is evolving faster than organizations can assimilate it successfully. The future is all about the correct fusion of formal structured and deliberate improvement with enabling IT. This future includes how to get the most out of existing technology and integrated enterprise architectures, and assimilating emerging technologies such as mobility, real time enterprises, cloud computing, and other capabilities as a strategic weapon of global competitiveness. For example, some of our clients running on SAP's integrated enterprise architecture have built the capabilities of real time, event-driven and self-managed performance dashboards, data visualization technology, business analytics capabilities, simulation, and instantaneous access and monitoring of critical root cause metrics across the globe.
This is a huge game changer for improvement because it is transforming the traditional wave (batch), project-based Lean Six Sigma improvement activities of the past into living, real-time improvement. Improvement occurs in more of a Sense-Interpret-Decide-Act-Monitor (SIDAM) mode. Emerging technology is a major enabler of the next generations of strategic and continuous improvement. The challenges of harvesting these large-scale opportunities lie in an organization’s ability to evolve toward a state of Improvement Excellence™: improving how they improve through innovation and the correct fusion of improvement and enabling technology.
This article was created from Terry Burton's latest book, Out of the Present Crisis: Rediscovering Improvement in the New Economy on release now.