iSixSigma

Guest Blog: Strategic Business Improvement in the New Economy – Part 1

Most organizations are emerging from largest recession and slow recovery since the Great Depression. Unfortunately, the reactionary and inconsistent leadership responses to the meltdown have become the new cultural norm in organizations, taking culture backwards and destroying their ability to improve anything. Organizations have placed a “freeze” on improvement when they need it the most. Many have downsized their improvement resources. Performance and reward systems often drive executives into a game of Liar’s Poker with their financial statements. There is a lot of selective reporting on how things are getting better. Many executives are rewarded for doing the wrong things. However, true strategic improvement is definitely off-the-tracks as the hidden waste continues to pile up. The majority of organizations currently find themselves in a derailed state with their Lean Six Sigma initiatives, and a solid foundation of strategic and sustainable improvement in general. What is needed is a more accelerated and adaptive approach to improvement to get back on track in the new economy. This post has been created from my new book, Accelerating Lean Six Sigma Results: How to Achieve Improvement Excellence in the New Economy.

The Evolution of Meltdown Mania

One thing that disturbs me and many other devoted improvement professionals is the impulsive and scattered leadership responses to the 2008 economic collapse. The recent meltdown and stalled recovery has certainly spawned many interesting attitudes about improvement reflected in a few actual comments below:

  • “There’s no money in the budget for improvement until 2011-2012”
  • “The time is not quite right for improvement”
  • “Improvement is not in my goals and objectives”
  • “We finished our continuous improvement program years ago”
  • “We eliminated our Six Sigma program . . . It did not work for us, we’re different”
  • “We don’t have the time and resources to improve and do our regular jobs”
  • “If I had more time, I would have found a better way.”
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Today, most organizations have traded in their true commitment to Lean Six Sigma for many improvement dysfunctional behaviors that are driving culture backwards, but producing short term results. Some organizations have eliminated their internal Lean Six Sigma departments and/or general improvement resources, and postponed formal improvement initiatives in the interest of improving the financial statements. In terms of strategic improvement, performance and reward systems drive organizations into a game of Liar’s Poker with their corporate executive groups and external stakeholders. There is a lot of selective reporting on how things are getting better. Many executives are even rewarded for doing the wrong things. However, true strategic improvement is definitely off-the-tracks as the hidden waste continues to pile up. Worse yet, organizations are creating another birth-death cycle of improvement, typical of previous improvement initiatives over the past three decades. This is not intended to be another criticism on leadership, just the ugly facts about a long term pattern of organizations failing to acknowledge strategic improvement as a critical enabler of competitive success.

There are two facts about waste in organizations: First – waste is dynamic and everywhere, and the growth rate of waste is proportional to executive behaviors and strategic choices about improvement. As the world accelerates, so too must the “process of improvement.” Second – When waste is left unattended, it spreads like a cancer through organizations. When people have the perception that improvement is not a priority and follow suit with reactionary behaviors, the organization fails to recognize the obvious: the only way to get better is to improve the current state. Strategic improvement is just as important as an enabler to competitive success as any other typical business function. When one thinks about it, does it make sense to stop selling, turn away bank customers, stop processing orders and other IT transactions, hold off on new product development, stop invoicing and collections, delay sourcing materials to build product, close down the emergency room or operating rooms, or stop answering the telephones in customer service? Then why would an organization stop improving? Improvement is the solid fundamental platform that makes everything else better.

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Unfortunately, the expediency of impulsive actions has trumped the propriety of logical improvement thinking, resulting in a dazzling display of illusive success. Many of the reactionary and inconsistent executive behaviors are symptomatic of the new global challenges they are facing coming out of the 2008–2011 meltdown and recovery. Like it or not, these challenges are not temporary – these are the new norms of business and life in general for the next decade and beyond. Nevertheless, these short term scattered leadership and survival tactics have accomplished nothing more than generate more waste and hidden costs, and increased the need, magnitude, and urgency of strategic improvement. You can be sure that the Piper will demand payment plus consequences from organizations that continue in this modus operandi.

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