Halden Zimmermann: How you know if you're a continuous improvement company
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Transcript of Halden Zimmermann: How you know if you're a continuous improvement company
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You know you are a continuous improvement company IF!
I was thinking about the concept of continuous improvement and lean six sigma principles and how many companies that are well know even well regarded state they are "continuous improvement" or "lean six sigma" companies. I got to thinking, is that really true or a marketing ploy to bring in top athlete talent and market the company to wall street as a choice investment. As Jeff Foxworthy would say, you know you are a redneck if.... I put together a few IFs for continuous improvement companies.
You know you are a "Continuous Improvement" Company if:
1. Not continuously restructuring
For people who are lean six sigma experts.. this one probably threw you, but give me a second to explain why this is number 1 on the list. Many companies file for restructuring costs every year as part of a way to save money, take out head costs and drive operating profit. This is typically done in the 4th quarter of every year. If you are a company that continually and every year restructures under this model especially at the end of the year YOU ARE NOT a continuous improvement company.
Why? Companies that need to do last second restructuring every year clearly do not have the processes, metrics and long term strategy to stabilize through a focused execution of their original plan. True continuous improvement companies are dynamic, and use proactive metrics and processes to drive growth, cut costs, acquire and out maneuver the competition. If a company has to rely on cutting head counts or costs using restructuring, this is not sustainable and is cause for concern. Even worse, stability is a major factor in productivity and continuous restructuring is a sign of instability and not being proactive in managing the business.
2. Business System:
Now you lean six sigma people are on board.... Companies that have a standard business system, that is documented, followed and improved upon are continuous improvement companies. A business system is the core processes that takes long term strategy to short term execution and deploy priorities in a systematic approach. Key performance indicators (proactive and reactive) are also part of the business systems that trickle down to the teams that are closest to where work happens. Also measurement allows teams to understand problems before they hit the fan. Last in the business system is a way to hold teams accountable, this can be done many ways but typically this is done through a goals and action plan system that is plugged back into and aligned with the long to medium term strategy of the business.
So...
a. Strategy and Operating agenda process
b. Policy deployment (focus) , KPIs (measurement) and model to hold people accountable (action plans)
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c. Results oriented
3. Process Orientation
Of course now we are getting into the crux of what continuous improvement is all about. Now most of you are going to think I am going to talk about manufacturing here, and this may surprise you. THE BEST continuous improvement companies have strong process orientation in their commercial environments and back office areas. I believe that you can drive more growth and results with the right process orientation in core levers of the business way beyond manufacturing.
Some Examples where I have personally executed and been involved with seeing significant growth and performance improvement by applying processes and metrics to these front end levers.
A. Sales -‐ Prospecting -‐ Deal Management -‐ Funnel management -‐ Time and territory management B. Marketing -‐ Demand Generation and ROI -‐ Pricing -‐ Market Strategy (Segmentation, Competitive analysis, offer development) -‐ Online Marketing
C. New product development -‐ Product roadmapping -‐ Blue Ocean Strategy -‐ Design (Design for six sigma and ROI) -‐ Beta Testing -‐ Commercialization These are just a few examples of front end core processes that dramatically changed the face of how a company did business and literally had an effect that so positive most are still in use today. 4. Financial model This might be an overlap of #2, but I wanted to clear something up that very few people may think of. The financial model for a company is an equation, and that equation MUST always balance to the profit side, ie: budget or "market expectations". Don't let any of the above fool you into thinking because I do number 2 I don't have to worry about EBITA or OP. Any great company must have a financial model that is plugged into daily, weekly and
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monthly management of the business and the managers of the business must be held to balance that model each and every day. The financial model must have non dilutive growth as a key priority in the model and should always position itself to outgrow inflation and the market COMBINED. 5. Right sense of urgency
This is the last one I am going to mention, I wanted to see what others thought of it. The right sense of urgency is something that I learned from a professor at Harvard (Prof. Kotter) that is fantastic. This is a cultural mindset that is not measured, it is set by the leaders of the organization. Be careful here, because there is such a thing as false sense of urgency, where everything is important all the time.. that leads to fatigue and then nothing is important. The right sense of urgency is an alignment, gut feel of what needs to get done today, now, that will move the ball forward to WIN for the team (not you, not the department, but the company). The right sense of urgency should be an alarm bell that goes off in your mind when you see it, hear it or witness it... and it should spring you into action either because you are seeing the train come off the tracks or because you see an opportunity that would be a game changer. I will also lead you with this last thought.. the right sense of urgency also should prioritize your day, week and month.. think about it.. when in the ER and a crash victim in wheeled in, the bloody toes of the victim may need attention but they always start with airway, heart and severe bleeding with a high sense of urgency.