Icebergs Lead To Titanics

So, we have a process improvement program installed. Our people are trained or are getting trained. We have a list of prioritized improvement efforts and we are attacking that list concertedly. We are tracking our improvement benefits and the numbers are good. What could possibly be wrong?

A successful process or business improvement movement can be its own tiger trap. How do we reconcile doing what we could fix with what we should fix?

So, we have a process improvement program installed. Our people are trained or are getting trained. We have a list of prioritized improvement efforts and we are attacking that list concertedly. We are tracking our improvement benefits and the numbers are good. What could possibly be wrong?

Hopefully, nothing is wrong. Sometimes though, process improvement success leads to grumblings, and not just the grumblings that come with change; honest people-discouraged grumblings. Where does this come from?

There are, in my experience, two common sources of genuine pain and morale depletion that occur when we start to have improvement success. The first generally comes from those who are responsible for driving the changes and making the improvements. They begin to perceive an enormous quagmire of never-ending problems.

The second source of pain comes from those witnessing the changes and improvements that are taking place around them, but their own problems are left behind, or are made worse. Coincidentally, one phenomenon leads to both pains. It is the proverbial “iceberg” effect.

We start digging into opportunities to improve our business and the more we dig, the more we find. As we begin investigating root cause, we find that many processes and business elements are connected. If we allow, we could chase chains of interconnected improvement opportunities forever. What started out as a simple process improvement problem maps out to a titanic endeavor if we try to address everything that is related.

The most common filter that is put on the iceberg problem is the “hard dollars” filter. If fixing the problem won’t show a savings to the business bottom-line taxable profits, we don’t solve it; for example, if a process improvement leads to increased production for fewer resources we do it. If it leads to reductions of paid personnel, leased space or equipment, reduced materials, or processing costs we do it. If, however, we make life easier for personnel, but we won’t reduce the workforce, and therefore our bottom-line costs at the end of the quarter remain unchanged, we don’t bother.

The “hard dollars” filter is a nice way of keeping our improvement personnel focused on real opportunities and preventing them from chasing minor issues when there are “bigger fish to fry” — but it is limiting and somewhat crude. There are a great many beneficial and meaningful improvements that can be difficult for the CPA to quantify.

Suppose that we reduce the number of man-hours personnel spend filling out work orders or other “red tape” activities. Suppose that over the course of a year, we save our personnel several thousand man-hours of “red tape.” That’s several thousand man-hours that were probably used for genuine value-added work, or could have been at least, but because we can’t prove it, and because we didn’t reduce the work force, we can’t calculate it. But, we all know that several thousand man-hours gained back is a good thing.

I could go on about this particular challenge for many pages, but my point is that the “hard dollars” filter is not the only one we should use. In fact, if problems that are important to enough people don’t get solved, the business culture can, and often does, turn on the process improvement program.

Worse still is when one process solution causes something to get worse for another process. If the affected process is next on the list to be fixed, we can endure the pain for a short while. However, if the owners or followers of the affected process get a message that their problems, newly created by the “process improvement” program, are not going to be addressed, they can revolt.

Dissent against further improvements or revolt doesn’t happen as often, and struggles to put a pragmatic boundary on any given process improvement. When the ideal way to fix a process involves making changes to process inputs or outputs, we can easily get swept away addressing an entire chain of processes and potential improvements. We don’t want to get carried away, but we don’t like to accept sub-optimal solutions either. How do we draw the line?

I believe the best way to prevent or address the challenge of improving everything that can be improved is to indoctrinate absolutely everyone in the improvement initiative. When everyone is fixing everything, all the time, a little bit at a time, the icebergs shrink quickly and fairly pragmatically. Unfortunately, not every business can engage everyone.

We need some filters to help us prioritize, make decisions, and to set some ground rules. Let me offer some of the latter, first:

  • If a solution makes some other process, system, or effort worse, it is not a solution.
  • If the new process’s inputs and outputs don’t match those from upstream or downstream processes, it is not fixed, but is still problematic.
  • Value-added means that either the product is improved by the activity or the information enabling the production of the product is improved by the activity (this gets us working in the office too and not just the production floor).
  • The vision should be to improve everything that can be improved, eventually.

With the exception to the last bullet, the first ones are typical rules of most programs. We need to be sure to enforce them.

Strangely, some improvement initiatives don’t behave as if the vision is to improve every opportunity. Many behave as if only “big deals” deserve improvement. It’s certainly wise to prioritize, but the “little things” add up. I observe that the “little things” added up make a much bigger bucket of potential improvement than the “big things” added up do.

With that said, here are some suggestions for additional filters or decision-makers to help decide if we keep adding to our improvement project scope, or if we cut it off and save it for later.

No filter is a one-size-fits-all suggestion. Different businesses or business cultures will have different sensitivities to these triggers. Use my list to generate some ideas and build one that is right for you:

  • Will the added scope significantly impact the potential improvement (pick a sensitivity; such as, 33 or 50 percent added performance)?
  • Will the additional scope eliminate a system, process, or significant step or element?Will the added scope noticeably improve morale or job satisfaction?
  • Will neglecting the added scope negatively impact morale or job satisfaction?
  • Will the added scope enable other significant improvements to take place immediately?
  • Is it the right thing to do?

If the answer to one or more of the above questions is, “yes,” the scope of the project should be allowed to increase. Neglecting these triggers, in my experience, leads to more problems than accepting scope creep.

I have a couple of comments about the first and last bullets in particular. The significant change to project impact is a self-limiting screen so it works very well. As we add scope and the impact of our improvement project grows, it rapidly becomes harder for the next scope increase to produce a 50 percent (for example) increase in performance improvement.

The last one can turn into a great deal of time wasted debating the meaning of “right.” The last bullet is not about what is “right” for the business or the process improvement program, per say. It should be focused on morality and ethics. If a problem leads to safety, quality, certification, legal, or customer perceptions of the image of the business issues, the improvement should be made.

The others, concerning job satisfaction, morale, or eliminating major time or process elements, are screens for the stuff that we can’t measure. If the pain of the problem is serious enough to produce a “yes” answer to those questions, then the waste or trouble of the improvement opportunity is big, even if we can’t put a measure to it. Fix it.

We can’t allow every little process improvement project turn into a titanic effort to consume the entire iceberg all at once. Neither can we stop improving things with just the portion of the iceberg that shows above the water line. We need to build some decision criteria that help us to intelligently and pragmatically determine when it is right to accept a little extra scope creep and when it is smarter to save other improvements for later.

Make sure that your succeeding program has a vision for consuming the entire iceberg of opportunity. Then, make some simple screening questions that fit your business and your culture. Use my list above as inspiration, or use it as is. Be flexible, and look beyond just the “hard dollars.”

Stay wise, friends.

If you like what you just read, find more of Alan’s thoughts at www.bizwizwithin.com.

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