Why small, continuous improvements are better than constantly shooting for the moon




Part 2 in a 4 part series on Drucker strategies for weathering the economic storm – Continuous Productivity Improvement

The U.S and the EU are facing the prospect of low and slow economic growth for the balance of this decade. Most economists believe the decade will be characterized by mounting deficits, rising unemployment, sovereign credit downgrades, increased interest payments, galloping inflation, misguided economic policies and a host of other economic ills. In this environment, how can managers guide their companies to not just survive but thrive in these turbulent times?

This article is the second in a four part series looking at 4 key Drucker strategies – Organized Abandonment, Continuous Productivity Improvement, Exploiting Success and Innovation – you can immediately put into practice in your own business. This article looks at why continuous improvement needs to be an essential part of any companies strategy for survival.

A mini-ebook with a complete list of the four strategies discussed in this article series is available for free in an easily downloadable form here.

Most things get done in small doses. "Every day in every way I'm getting better and better," goes the inspirational mantra.

Japanese business language speaks descriptively of Kaizen, systematic continuous improvement of products and services, production processes, marketing, service, technology, training, and development of people and the like.

Drucker believed to get better one step at a time is a far better way to get better than shooting constantly for the moon. Major or so-called "quantum leaps" into sudden business success are rare. That is why they make the headlines, as so do similarly sudden and spectacular flops.

"Sustained success", noted Harvard's Ted Levitt, "is largely a matter of focusing regularly on the right things and making a lot of uncelebrated little improvements every day… Getting better and better one step at a time adds up…"

To repeat the lessons from the last strategy (Organized Abandonment): Improving things little by little does not mean sticking wrongly to what should no longer be done. Abandonment decisions come first.

Continuous improvements in any area eventually transform the operation. They lead to product innovation. They lead to service innovation. They lead to reengineered or new processes. They lead to new businesses. Eventually continuous improvements lead to creating a new and different organization.

Internal Benchmarking and Its Role in Setting Continuous Improvement Goals

Whether it is recognized or not, the organization and practice of continuous improvement management is derived largely from the early pioneering work of the Bell Telephone System.

Said Drucker: "Continuous improvement is considered a Japanese invention--the Japanese call it Kaizen. But in fact it was used almost(100) years ago, and in the United States.

From the First World War until the early '80s, when it was dissolved, the Bell Telephone System applied "continuous improvement " to every one of its activities and processes, whether it was installing a telephone in a home or manufacturing switch gear...

For every one of these activities, Bell defined results {relating to} performance, quality, and cost. And for every one, it set an annual improvement goal. Bell managers weren't rewarded for reaching these goals, but those who did not reach them were out of the running and rarely given a second chance. "

Simply put, internal benchmarking means comparing the performance of an operation with the performance of all others, with the best becoming the standard to be met by all the following year. This is a very practical way to set annual continuous improvement goals.

Every organization has to ask what can we do to improve. It needs to figure out required practices that make this happen in a routine way.

The Role of Creative Imitation in Continuous Improvement

Drucker, Tom Peters and Ted Levitt constantly reminded us, before all our R&D energies and imaginations are too one sidedly directed at the creation of innovations, it is equally important to closely monitor competitor activity.

In short, they observed the greatest flow of newness that occurs in most organizations is not really innovation. It is either copycat imitation or innovative imitation. It's important to render this explicit.

Today some call this benchmarking the competition. Tom Peters probably said it best 15 years ago in his book Thriving On Chaos:

"Fighting NIH ("Not Invented Here") is a tough job. NIH is marked by an endless number of denials: (1) We can't copy old rivals because' if we did, (a) it would be dumb or (b) we wouldn't want to look like them' […]

As a manager trades in 'Not Invented Here' for 'Not Invented Here, But Swiped from the Best with Pride […] ,the organization leaves inertia behind and replaces it with new energy, new direction, and new purpose.

The best leaders are the best note-takers, the best 'askers' the best learners. They are shameless thieves.

Grocer Stew Leonard heard a great little idea from an executive in the Department of Defense at a meeting I attended in late 1986; he implemented within the week. There was no NIH (Not Invented Here). No 'Gee, if it's DOD, it must be bad.'The only operative question was: 'Will it work [with a twist or two] for us?'

Peters goes on to explain why the best have the following attitude: "Somebody, somewhere, big or small, near or far, has introduced a service (or product) we could copy with enhancements––today."

What's Peters saying? Put NIH (Not Invented Here) behind you – and learn to copy with unique adaptation/enhancement from the best. Do so by aggressively seeking out the knowledge of competitors (small and overseas, not just tired old foes) and interesting non-competitors.

If an organization practices "creative swiping" it will improve quality, service responsiveness and all the rest. In short, innovative imitation is a worthy continuous improvement strategy. Make it a practice. (In a future article we will discuss how to formalize the imitation process).

Summary of Drucker Strategy #2

Success gets sustained by cultivating the right efforts and by getting everyone in the organization to do things a little better and get better results.

Benchmarking is a great way to practice continuous improvement. Internal benchmarking is one way to set continuous improvement goals and all the information needed would/should be readily accessible. External benchmarking (i.e. creative imitation) is another way to continuously improve products, services, distributive channels, and the like.

If this is done, effort and vision builds, little by little, into a cumulating momentum. Setting quantitative improvement goals or targets works wonders in making continuous improvement happen.

If you’d like to read more, a short e-book detailing all four Drucker strategies is available for download for free here.

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For further reading in this series see:

Strategy 1: Organized Abandonment - Executive hatchet jobs and other misguided cost cutting exercises

Strategy 2: Continuous Productivity Improvement - Why small, continuous improvements are better than constantly shooting for the moon
Strategy 3: Exploiting Success - Stop calling them problems, dammit, they’re opportunities!
Strategy 4: Innovation - Innovation suffers when everyone's too busy getting through today