Continuous improvement by passion or fashion?
When some companies embark on process improvement they launch a process improvement tool like Kaizen, Six Sigma, or Lean. More often than not, these methodologies are introduced with as much fanfare as a political campaign: new departments are created, specialists are hired, and a communications campaign undertaken.
This what I call continuous improvement by fashion. The trouble is, that just like a fashion trend, the hoopla around a methodology can quickly crash and burn without making much enduring change in the organization.
This often happens because business executives have delegated responsibility for continuous improvement to someone else. Afterall, they’ve approved the budget to make the hires and set up the new org structures so what more do they need to do? The trouble is you can’t delegate continuous improvement.
In contrast, managers that drive continuous improvements by passion don’t necessarily invest in special people and departments. They start from themselves and believe that they must be the drivers. They would like to be the change that they would like to see and drive it as an organization wide culture.
Why are passionate managers so paranoid about driving organization wide improvements? One of the reasons is that they are aware that we all unknowingly create waste in the activities that we undertake. That waste translates to unnecessary cost and missed opportunity. A passionate manager, thus, feels that their job involves continuous improvement (this is in contrast to "traditional" managers who often feel that that continuous improvement is something done one top of normal daily management role).
This brings us to ways that I classify the different categories of money that a company possesses: yesterday’s money, today’s money and tomorrow’s money as shown in Figure-1.
Yesterday’s money consists of the assets that we have invested in - e.g., land, buildings, machines, people, raw materials, etc. - to obtain and continue our business. Yesterday’s money is an investment that earns us ongoing revenue from our customers enabling us to survive and grow our business.
From this money we set aside "today’s money" for making payments for goods and services; for e.g., Salaries, material, transportation etc.
So far, so good. But what about "tomorrow’s money"?
The BIG PROBLEM is that it’s very easy not to see how we waste this money. We often use this money to solve our immediate problems like customer complaints, warranties, increased inspection, expensive poka-yokes and so on which all happened yesterday. This is a waste of tomorrow’s money.
Judicious managers realize this. Continuous improvement must be built in to systems and processes as a culture to mitigate the waste of our future income.
This, therefore, becomes the objective behind the use of tools like Kaizen, Lean etc. as an organization wide culture. And tomorrow’s money becomes available for the future growth and survival of our business as in Figure-2.
Today, all businesses are challenged to keep pace with changes in the business environment. Rapid changes in technology has put immense pressure on the life cycle of products and has also led to once very stable businesses becoming dinosaurs. This puts a pressure on managements to reflect and see if their organization is using tomorrow’s money for solving yesterday’s problems and immediately make course corrections so that the money is made available for future growth and survival.