Missing Links in Improvement Initiatives
How can you have US$1 million in savings but no change in your P&L?
Too often business performance improvement initiatives result in disappointing outcomes. While most initiatives, such as today's popular Six Sigma and Lean, actually do provide enhancements, the results are far below expectations. Typically, people believe that initiatives fail because business leaders do not stay engaged in the improvement process.
There are three key missing links that when addressed can help encourage leaders to take a more active role in ensuring the success of performance improvement initiatives.
First, performance improvement initiatives need a clear definition of savings. Second, there needs to be more focus on strategic rather than improvement opportunities so that leadership stays engaged. Third, the correct metrics need to be used that relate to critical improvement opportunities and important fundamentals. Finally, the last missing piece in any improvement initiative is smart leadership.
Take a look at business performance improvement initiatives implemented around the world over the last 20 years. Whether it's Total Quality Management, Cost of Quality, Time-Based Management, or some other initiative, you'll find that the outcome is often disappointing. When asked, "Why did this improvement initiative fail?" people often respond, "Because our leaders are not engaged."
In reality, organizations almost always benefit from implementing these improvement programs. But the actual results fall so far short of expectations that companies rate the initiatives as failures more than 70 percent of the time, according to studies by McKinsey, Bain, and other management consultants. As a result, these initiatives quietly improve operations even as they disappoint expectations.
To close the gap between expectations and improvement realized, a better question is this: "How do we keep leadership engaged in businesses performance improvement initiatives that usually start out with active support?" Based on my organization's experience as practitioners and coaches for Lean/Six Sigma performance improvement, we believe there are three key missing links that cause this gap. When addressed, they will move leaders from a passive to a more activist role.