We want to tell you about the DNA of a continuous improvement culture as well as what leaders and managers need to learn and do to influence cultural change.
Continuous improvement can be an accelerator of your competitive strategy, and it is often the key element of a successful strategy implementation. In essence, it entails a people-oriented philosophy centered on a relentless focus on the voice of the customer (i.e., customer obsession).This explains why many organizations are making it part of their culture so that it becomes a normal part of “how we do things around here.”
Organizations that made this cultural move have seen the benefit. According to McKinsey & Company, a strategy consulting firm, they:
- have an easier time attracting and retaining workers
- innovate more
- are more agile
- see significant improvement in customer satisfaction
When a good employee meets a poor process, the poor process always wins.
What is the DNA of a culture of continuous improvement?
Companies that have implemented a culture of continuous improvement generally have the following beliefs:
- Customer first—every activity using a resource must serve our customers (every activity must be a value-added activity).
- People do not fail, processes do.
- Better results will be the outcome of better processes.
Leaders and managers in these companies embrace the following practices:
- Working with facts, measure results and processes—everyone must have at least one key performance indicator (KPI)!
- Encouraging experiments to learn how to improve processes.
- Sharing lessons learned.
- Breaking down silos—they are rarely a source of value for customers!
- Going and seeing; asking “why” to understand and show respect.
- Avoiding judgment on failures; using them as lessons learned on how to improve.
- Celebrating weekly, monthly and yearly measurable progress and improvement.
- Acting with integrity; sharing the wealth and profits monthly with everyone! (For example, some businesses distribute a percentage of net profits to employees while owners keep the rest and still own 100% of the business.)
- Cross-training or incentivizing non-client facing personnel (chief financial officer, production manager, etc.) to occasionally serve clients and understand their pain points—consequently creating customer ambassadors internally.
- Giving everyone the ability to generate non-compliance tickets (suggestions of improvement for the process owner), and assigning responsibility and accountability to department heads to solve issues.
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All these elements together foster an environment where coworkers are given challenges and the resources to meet them.
Culture eats strategy for breakfast.
How to create a culture of continuous improvement?
Step 1—Assess your current state
Your culture is the sum of your work patterns and the various dynamics in your organizations. These are based on deep-rooted beliefs and mechanisms built over time to fix problems and remedy errors.
Culture is so entrenched in how we do things that it often only becomes visible to outsiders who invest time to observe the situation. (A new CEO could be a good example of such an outsider.)
This analysis can be seen as intrusive, but it is pivotal to ensure the true transformation of a culture and will be key in realizing your business strategy. As Peter Drucker simply put it: “Culture eats strategy for breakfast.”
In some instances, culture may become the driver of strategy, even leading to a capability-driven strategy.
In all cases, never underestimate the inertia of your culture. At the outset, you will have a gap between the current and desired “way of doing things here.” This is just something to add to the “to do list” in your strategy!
How to gain a competitive advantage?
Strategy and operational effectiveness are both essential to superior performance. Academic and practical research on strategy, operational effectiveness and culture have created a wide array of models and frameworks.
This includes operational efficiency and continuous improvement (also known as lean), which allow many organizations to work smarter and get more from their existing resources, leading to better business outcomes.
However, these are not the only techniques available for businesses wishing to gain a competitive advantage. Business model innovation, for example, can help companies stand out by using outstanding products, creating entirely new markets and answering unserved market needs.
Step 2—Transition through a series of experiments
The route to changing a culture is as important as where we are trying to go. Let me explain.
Your organization is navigating toward uncharted territories. You are in the process of changing:
- Where you are going (your strategy)
- How you do things (your culture)
This will unavoidably create some resistance in your company. This is also where the leadership behaviours mentioned above become useful in facilitating the various phases of transition.
Always keeping an eye on your “true north,” you need to provoke calculated experiments and assess the lessons learned as an executive team.
Having a plan (or a roadmap as consultants like to call it) would imply that the water is charted, that the outcome of any change is predictable. Yet each experiment needs to be clearly defined and operationalized by a multidisciplinary team with the necessary support.
As your organization progresses, it will find successes and failures, and require other parts of the business to be strong and stable to support these experiments.
Leaders must take advantage of all opportunities to explain the why behind “the way we will do things here,” as well as the fit and function of these changes within your strategy. Articulating this coherent message will create a clear sense of purpose, aligning and reassuring the troops. Remember: Misconceptions and outside influence will be daily sources of misalignments.