Lean Business Improvement refers to the method of an ongoing effort to improve aspects of business performance. This could be products, processes or services. Something as simple as correcting a spelling mistake in a manual can be considered continuous improvement. As long as the goal is to continually improve aspects of your business.
Continuous and continual improvement are used almost interchangeably. But there’s arguably a difference between them in approach.
Continual improvement is the broader term, popularized by Deming. It refers to a more general process of improvement covering many approaches, techniques and areas.
The Toyota Production System (TPS)
The Toyota Production System (TPS) is perhaps the best known continuous improvement programme.
There are two underlying principle of the Toyota Production System (TPS),
Continuous Improvement which includes:
Kaizen meaning "change for the better" or "continuous improvement", a philosophy regarding the processes that continuously improve operations with the involvement of all employees,
Challenge and meaning obstacles to overcome, a vision and the actions needed to engage in and experiment to improve.
Genchi Genbutsu which translates as "real location, real thing”.
And also Respect for people and teamwork.
What is Lean Six Sigma?
Applying Lean Six Sigma creates operational excellence by combining both Lean and Six Sigma process improvement methodologies
Lean process improvement seeks to minimise waste, increase productivity, reduce costs to increase profitability. Lean process improvement seeks to improve process speeds so improving workflow and reducing costs.
Six sigma process improvement seeks to deliver measurable cost, quality and time management improvements by focusing on defect detection and resolution.
A business improvement programme using Lean Six Sigma will aim to ensure your business is running as efficiently and effectively as possible. This is achieved through systematically and periodically examining and improving your processes. This could be to change software, address bottlenecks and countless other examples.
There are many different methods to achieve continuous improvement, the Deming Cycle being just one example. But they can all be categorised into two groups, incremental or breakthrough improvements.
In lean thinking, Muda is any waste be that a material waste or more likely a waste of time, in work that needs to be redone, in people waiting for something to arrive, in products or services that don’t meet the required specification or a customer’s expectation.
Identify the Value
It’s first necessary to know what value is to be created and this can only be defined by the customer, be that an internal customer like another department of an external customer buying your product from a shop.
Identify the Value Stream
The value stream is all the tasks and activities that need to be completed to create the value, to deliver the product or service to the customer.
Define the Flow
Having defined the value and value stream, we need to define the flow. That is we need to eliminate the Muda. Tasks can be completed in series or parallel, in batches or one at a time. Defining the right flow ensures that Muda is minimised. You can wait for an optimum time to start or start now. They can be completed on-demand, in a Pull orientation, or delivered immediately, ready for when required.
Lean Business Improvement Concepts
Kanban is a visual workflow management method for defining, managing and improving processes.
Kaizen is the principle of continuous improvement by reflecting on how work is completed and then how it can be made more productive. It’s a systematic approach to business improvement covering work, personal and home life.
Incremental Continuous Improvement
As the name suggests, incremental continuous improvement is about making small changes to aspects of your business. Most often, it’s done ad-hoc, resolving problems as they are discovered.
It’s a cost-effective approach to continuous improvement with minimal risk involved. This is because the changes are usually addressing minor flaws in current processes or services. It’s not the large scale change that may open Pandora's box so to speak.
A good example would be if you notice some small problem in a task you do regularly. Lets use reporting on analytics as an example. You notice the reports are missing some additional information which would be beneficial to include. You would simply include this information and drop an email to your team to ask them to include this information in on-going reports. It’s a small improvement, but if these small improvements happen continuously, it can lead to long-term better practices across the business.
You don’t need to review the entire process to undertake incremental improvement. They’re the small changes you make every day to create more efficient processes for everyone.
It’s important to communicate changes with this approach though. If everyone on a team is using this approach and making small changes, you’ll end up with incoherency and confusion.
Breakthrough Continuous Improvement
Breakthrough continuous improvement refers to making large changes to processes, services, software or more.
This type of continuous improvement starts with reviewing the chosen aspect with your entire team. Collect thoughts, frustrations, challenges and ideas and decide together on what the changes to improve this aspect should be.
The breakthrough approach tends to cost more in terms of time and money, but can often result in much more effective overall improvements.
A good example of breakthrough continuous improvement would be updating your CRM software. Your whole team would meet to discuss what issues they have with the current software, where it’s causing problems for customers and what functions they’d like to see in the new CRM software. From here, you can decide which new CRM software provider to go with and eventually, change over CRM platforms. It’s a large scale update, with its own challenges to manage, but it brings about a much better customer experience and your staff are happier using the new system as it’s quicker and easier to use.
Similarly to the above, communication is key. Large changes brought about without discussion with the relevant team members involved is a recipe for chaos and disaster. Decisions made by management with no justification, explanation and seemingly little regard for those actually using the system will lead to frustrations across the business.
There’s no right or wrong approach when it comes to continuous improvement. In fact, you should generally be using both approaches to ensure your business is running as efficiently as possible.
Benefits of Lean Business Improvement
The benefits of a continuous business improvement programme are varied and many as it seeks to improve all major aspects of running a business. It will improve operational efficiencies, create a more effective leadership team and reduce operational costs, improve customer satisfaction and the business culture as well as relationships with all stakeholders from investors to staff, partners and suppliers.
- Improving the quality of work processes and activities
- Reducing errors and defects in completed work items
- Reducing costs
- Improving the workflow of processes
- Simplifying work
- Reducing lead times
- Improving time management with better utilisation of “Pull” and “Push” techniques
- Creating more efficient and effective business processes
- Increasing the predictability of work outcomes
- Improving employee engagement and morale
- Creating more effective leaders
- Improved business change and risk management
- Improved internal and external communications
- Improved customer satisfaction levels
- Improved gross margins and operating net profit
- Improved business culture
- Improved marketing Return on Investment (ROI)
- Increased sales conversion rates
- Enhanced employee hiring, motivation and retention
- Improved competitive advantage
- Improved management of priorities
- Increased transparency
- Improved personal and business productivity
There is always some room for incremental continuous improvement, even if your processes are documented and consistent, you’ll still find ways to do them better with time. Doing this allows your team to always be working more effectively, accurately and efficiently.
Thanks to constant changes in technology, breakthrough continuous improvement is always necessary. There will always be new software with features that can revolutionize the way you do business. There will always be a better CMS to redesign your website on. The examples are endless, but this kind of large-scale change helps businesses remain competitive long-term.
Implementing a business improvement programme for improving every aspect of your business means your company is constantly striving to be better, as opposed to just surviving.