I’ve spoken of the growing need for productivity innovation before. And with the drought’s impact on food commodity prices, the languishing economic indicators and the high likelihood of a recession beginning in early 2014, most businesses are going to be competing for share of wallet in a low growth environment. Let me reiterate another point: the traditional approach to continuous improvement (CI) is already insufficient and will be even more anemic going forward.
Unfortunately, many companies don’t get this point. Instead, they will go about business as usual and just shout a little louder for more productivity, squeeze a little harder on existing operations and probably attempt to force fit their lean six sigma approach into other parts of the organization like marketing, research or new product development; places that have a very limited number of rapidly repeating standardized processes where continuous improvement techniques really shine.
Don’t get me wrong. I’m not saying a business should abandon their CI programs. Far from it. What I am saying is that their CI programs are not enough. In a margin-squeezed, mature business environment businesses need to add something new to their productivity repertoire. (If you’re in one of those rare businesses that have high rates of growth and high margins, you need not read any further. Come back and see me after things slow down a bit.) They need to add “productivity innovation”. Here’s why.
Traditional CI approaches are deployed top-down, within “silos”, usually starting in manufacturing, and then spreading to other parts of the organization (usually first to those closely akin to manufacturing like finished product warehouse operations or the manufacturing processes of suppliers) when the leaders of those silos are either proselytized or coerced into signing up for the program. Each silo then uses the tools and techniques to achieve the goals of their respective domains. Implementation struggles notwithstanding, this approach can yield significant cost savings within the silos.
But there are also serious limitations with this approach. Here are just three. (I could give you dozens of examples for each but this is just a blog and not suppose to be too long.)
Paving the Cow Path – Existing processes are optimized to reduce costs, increase throughput, maximize utilization, whatever, in their current state. In other words, businesses can end up with very efficient processes that are very poorly configured in the first place. They “pave the cow path”.
Process Immortality – Processes don’t naturally go away or die. They live on and grow. They grow as a result of ad hoc requests, mergers, restructurings, reorganizations, etc. They also grow as a way to hedge against the risks of process failure (e.g., a mistake is made and in order to avoid a recurrence, another step in the process is added). And finally, processes are fiercely protected by their operators because it’s what people do and how they define themselves to the world around them. Now come in with some fancy-smancy continuous improvement approach and what happens? You improve a lot of process that shouldn’t exist in the first place.
Sparking Cage Matches – Everyone has seen this too. Another unfortunate limitation of the silo deployment of continuous improvement programs like lean six sigma is the lack of resolution of strategic and/or metric-driven disconnects between silos. As a result, silo leaders end up in a cage fight over various productivity efforts. Procurement optimizes their buying cost (because that’s what they’re incented to do) at the expense of manufacturing yields, manufacturing optimizes asset utilization at the expense of increased warehouse inventories, etc.
Lean six sigma and other continuous improvement approaches rarely resolve disconnects like these. They’re not really deployed or designed to do so. They take what exists today and make it better. (You can see a picture of what I mean here.) What’s needed is productivity innovation. Something that’s deployed horizontally, challenges what exists today, innovates new ways of doing things and takes the business to new performance levels where continuous improvement efforts can re-engage again.
And what might it be that does that? I’m glad you asked. E2E™ is a productivity innovation methodology for filling the pipeline with an array of qualified opportunities above and beyond what the business is already getting. It challenges what exists today and comes up with feasible alternatives that will take the business to a new level of performance.
It works. I’ve done it. And I have a lot more to say and show you on the subject but this blog is getting too long so more next time.