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Continuous improvement is becoming increasingly important, partly because driving efficiencies is critical in today’s flat market, but mainly because of a dramatic shift in business strategy. For years, companies followed a playbook of creating and protecting one sustainable competitive advantage, and the continuous improvement efforts to support that model focused on improving existing processes.
By contrast, today's leading companies employ a much different growth strategy – one that seeks to understand where customers are going, involves constant reiteration of new products and creates learning cycles. In this type of operating environment, the organizations that remain ahead of the game are those that succeed in the next generation of continuous improvement.
To build a culture of continuous improvement, you must develop a clearly defined statement of strategic intent for change and tie transformation outcomes to your long-term financial outlook. You can create a burning platform for change by aligning with strategic objectives (e.g., when the only way to reach your three-year aspirational goals is through your transformation, people understand the importance of your effort). Also, connect change efforts to financial outcomes and what's happening at the board-level. Otherwise, you risk loud resistance and your program getting cut.
Understand the emotional journey that your colleagues have to go through to change what they do and how they do it. Employees must be able to let go of fundamental beliefs and conventions about how work should be done. In some companies, the average tenure of employees is 15 to 20 years, making the cultural aspect of change more difficult.
Engage various stakeholders in mapping out the design of the transformational journey, not just in understanding the driver for change. Modify methodologies to fit the cultural environment of your organization. Strive for commitment to change rather than compliance. When employees become committed to change, they bring their best and naturally look for ways to evolve and innovate.
Be transparent with your employees. Do not call a cost-cutting initiative a "change initiative." Change becomes extremely hard when you are asking people to be involved in cutting their jobs or their peers' jobs. Keep the message simple. Focus on clarity and key selling points in your communications to the business rather than discussing tools or methodologies for change. It's critical that messaging resonates with the people who do the work every day; whether they sit in the C-suite, call centers or operations areas.
Build it first; then sell it. By design, one communication program lagged the progress by 90 days. This allowed the leader to build confidence in colleagues when communicating the plan forward, as they saw evidence of what had already been accomplished.
Map the delta from the current management performance dashboards to the new metrics that align with your transformation. This is helpful in the education journey and allows for a smoother transition toward new metrics.
Today's continuous improvement programs have changed. Look at new hiring profiles and training programs to meet those needs. Find flexible talent. For companies looking to constantly reinvent themselves, talent that can meet the changing demands of customers and markets is key.
Today's continuous improvement leaders represent a new type of engineer. They must have deep business acumen, strong C-level presence, innovation, high-energy and the ability to work well in a local environment.
Ensure your leaders can speak the business and understand colleague pain points. Some organizations place all new transformation team professionals through an immersion program where they are sent to four or five different office locations to actually do (and learn) the process. Other organizations have had success in coupling a high-performing internal leader who knows the business with an external transformation leader who knows the tools. This can help drive adoption throughout the organization (people listen when a respected peer makes the case for change).
Roll out beta versions of change and then refine from there in order to quickly get to solutions based on the voice of the customer (this will also work well internally). Find ways to test your hypothesis quickly and then reiterate. Some companies use a "model office" – a functioning branch office – to test all of the latest improvements and the client interaction/response before rolling out changes globally.
Move away from a "fear of failure" culture. The only way to speedily generate new products, processes and models is by applauding experimentation, even when it fails. If you can begin to look at misses as learning experiences, you can shift to a very different environment.
Determine where technology is a differentiator for your business and where it is not. The 1,000-person information technology department is an outdated model. Invest in the areas of technology that will help innovate core business capabilities and enhance the connection to the customer. The other functions (keeping the lights on) might be done cheaper and better externally.
Use technology to better understand your customers. Social media can provide a better view of customers' behaviors, beliefs and preferences. Insurance companies tend to limit their thinking of technology in terms of transactions, but when they link transaction and social-media data to product-development systems, they have more insights into their customer.
Technology allows for personalization of the customer experience, which is a great area for continuous improvement. The ability to capture and process information with technology means that firms can shift from hypothesis-driven tests around two to three customer segments to a segment of thousands of unique customers with individualized needs.
Technology also plays a role in engaging and drawing in talent. Attracting and retaining talent is a challenge for many companies. Outdated processes, systems and technology make working in the organization less appealing. Having young employees spend time with seasoned staff and management to teach them about social media and other relevant technology can provide a great way to build a more contemporary culture of continous improvement.