What is Continuous improvement and the Kaizen method?
What is Continuous improvement?
Posted by Brynn Neilson on October 18th, 2018
Continuous Improvement is a business system made famous by Toyota which has helped it become the second largest car manufacturer in the World. Put simply, it's the process of identifying how to do things better while lowering the cost to your customer.
In our business we wish to use the Kaizen method of continuous improvement where all staff are asked to identify bottlenecks or opportunities for our business and then Management identify the most important of those recommendations and implement them as part of our business development.
Understanding your customer and your business
Before you can start submitting ideas for improvement everyone needs to understand what the goals of the business are and who the business is trying to target. To achieve this, the first thing we do is discuss these statements:
- Who is our customer?
- House renovations
- Cool Stores
- What do our customers value? Examples:
- Quality (completeness, conformance)
- Speed (delivery, responsiveness, accessibility, personal service)
- Competency (knowledge, consistency, integrity)
- Communication (clarity, promptness, flexibility)
- Empathy (friendly, courtesy, greeting)
- How do we measure the value propositions above?
- Customers don't buy products; they buy solutions. What are our solutions?
- Customers don't by features; they buy benefits. What are our benefits?
The customer is where the value is made. Most companies work on improving their products but forget that their customers want the following four things from our product or service:
(ie; Get the job done faster, our response times, responding to quiries, etc)
(ie; Easy customer service, we do most of the work for them, we schedule follow-ups, we monitor their jobs, etc.)
(ie, Better quality of workmanship, better services, better prices, better support, etc.)
(ie; Better value, more services sold cheaper as a package, corporate quality services, trust, etc.)
53% of great ideas come from staff
Statistics on Lean business practices show that 53% of great ideas come from staff. What we need to be asking ourselves is how can we improve in the above areas of customer wants? Here's some guidelines to trigger identifying where to improve:
- When submitting a continuous improvement idea 80% of your ideas must be for your own area of work. As Kiwis we're great at identifying how others could do better but we should be looking more at how we can improve our own processes.
- Your suggested improvement shouldn't include hiring more people.
- It shouldn't cost more.
- The person that raises the idea should implement it or be part of an implementation team.
- How can we change the culture of our business to be an an ideas factory of continuous improvement?
- Authority for the improvement needs to be transferred to the lowest level that is capable of doing it. This improves efficiency and also retrains staff to be problem solvers and take on more of management's role.
- The three main dimensions of success in a business are: Finance, Process and Customers. How can these things be improved? As a comparison, on the TV show The Profit, Marcus Lemonis identifies the 3 most important things as People, Process and Product but that is more an overall view of a company whereas what we're talking about is improving processes to create better services for the customer and our business.
- How many ideas should we get from staff? Toyota average 22 per person, per annum and an average of 5 are implemented per person.
- If you're not making mistakes; you're not learning anything new. Is your team making mistakes?
- It's not customers that buy our products but advocates that promote our services. How do we make more advocates?
- Road blocks = People who have all the knowledge in their heads and not in Standard Operating Procedures (SOPs). What do you or your staff do that is has not been added as a SOP?
- Standards need to be active and dynamic. Go over your SOPs frequently and update them when necessary.
- People like to be ingenious and make work-arounds that corrupt the system. Identify the work-arounds and create a better way to do it that becomes a SOP.
- Choose where you're going to compete. Will you be faster, better, more valuable, easier or all of the above?
- An asset is something that generates income. What aren't assets in our business?
- How do you know what you did today fits with the vision of the company?
- The fewer parts there are; the fewer problems there are. How can you simplify your processes?
- Common modular elements combine to make an explosive element. What isn't modular in our business?
- Overproduction = waste. What uses lots of resources but could be streamlined?
- If you can't measure it; you can't manage it. What should we measure in our business?
- Do our measurements show where we are inefficient?
- How do we change our business culture to stop problems; not fix problems.
- What drives our customers?
- What are our effectiveness milestones.
- What sales ammunition can we give staff and referrers?
- How do we choose to tackle our competitors (faster, better, more valuable, easier)?
- Staff submit the suggestions for improvement but management choose what will be worked on based on business goals.
- Different teams are formed each time to work on improvements so staff learn to work with different people within the organisation.
- Get rid of services that don't make money or bring in new clients.
- A sense of urgency (John Kotter)
- The Toyata Way Field Book (Liker and Meier)
- Like a Virgin: Secrets They Won't Teach You at Business School (Branson)
- The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (Ries)
- HBR's 10 Must Reads on Strategy (including featured article "What Is Strategy?" (Harvard Business Review)
- The Goal: A Process of Ongoing Improvement (Goldratt, Cox, Whitford)