Why It’s Time for Technology-Enabled Continuous Improvement

Contributor: Terence T. Burton

Workplaces today are complex, global networks, writes contributor Terry Burton, and that demands a different

kind of approach to continuous improvement. Here’s why the future is about technology-enabled continuous

improvement and what that would look like.

The recent meltdown and slow recovery has taken over 80% of Lean Six Sigma initiatives off the tracks, and left

many organizations in a coma state in terms of the future of business process improvement. There are a few

fundamental reasons for this dilemma:

1. The age of "top down, enterprise-wide, train-the-masses, mandate compliance everywhere" improvement programs has served its useful life. No executive in today's challenging economy wants to commit to another large, multimillion dollar improvement program that takes 2-5 years to see results, so continuous improvement remains somewhat at an impasse.

2. The rapid evolution of technology is morphing the workplace into a complex global network of transactional enterprises. A few years ago everyone preached about "going to the gemba." Now the gemba is following us everywhere 24/7 in our hands or certainly within reach of an iPad or some other mobile device. Lengthy improvement projects must be replaced by a more rapid process of improvement that incorporates real time, event-driven performance dashboards and business analytics.

3. The need and urgency for improvement is high, the hidden costs of these transactional enterprises is astronomical, and a different approach is needed to harvest these new opportunities. These wastes do not have physical characteristics; we can only get at them through enabling technology and creative transaction stream analytics.

The Next Generation of Improvement

The next generation of improvement is a challenge of how to design and implement continuous and sustainable

improvement successfully in the new economy with the right approach, velocity, focus, simplification, and ease –

while eliminating or working within the dynamic operating models, realistic constraints, and absorption

bandwidths of organizations. What this means is the combined strategy of Deming back-to-basics, innovation,

the integration of enabling technology, and adaptive improvement across diverse operating environments. The

future of improvement is a nimble, systematic execution of this combined strategy that creates the continuous

cultural standard of excellence. This is a well integrated system of improvement similar to the Toyota Production

System (TPS) but a more dynamic system that leverages technology and harvests the larger enterprise and

extended enterprise opportunities.

The next generation of improvement is definitely not a new buzzword program. It is a renewed direction of

improvement that enables organizations to identify and harvest new opportunities rapidly, and prepares them to

cash in on the even larger opportunities that they do not know about yet . We refer to this new generation of

improvement as Improvement ExcellenceTM

: the mastery of developing and implementing successful strategic

and continuous business improvement initiatives, transforming culture, and enabling organizations to "improve

how they improve." Three key elements of this new framework is a more innovative process of improvement, a

different focus via the fusion of improvement and enabling technology, and the development of a new

organizational core competency of "improving how we improve."

The Emergence of Transactional Enterprises

The new economy is accelerating the transformation of organizations into a complex global network of

interdependent transactional enterprises. The physical content of work is being replaced with professional and

knowledge-based processes.

For example, what was once a well established

standalone automotive electronics manufacturing plant

in Detroit is now a complex global supply chain network

with several hardware and software development

contractors scattered around the globe. In healthcare,

the combination of consolidations, a focus on preventive

medicine, information technology, ambulatory surgical

centers (ASUs), and internet clinics are also moving

hospitals in the direction of interconnected transactional

processes.

Complexity in transactional business processes is

growing, but so too is the need for improvement. This

renaissance in improvement through technology is

creating the greatest opportunities for forward-thinking

organizations to improve, leapfrog competitors, and

dominate global markets in the new economy. The

future of improvement is definitely in the transactional

enterprise and extended enterprise space of

organizations, and the leapfrogging will occur at warp

speed.

Organizations are becoming more complex

& more global

Technology-Enabled Improvement: A Key Differentiator

Two trends will continue to radically change the face of improvement: the rapid emergence of enabling

technology and a higher value-add content in transactional processes. With physical processes, one can use the

senses to observe a machine' performance, talk to the operator, count and categorize scrap, listen for tool

vibration, or feel a leaky air hose . . . so the problems are very visible. As the shift in improvement occurs from

the manufacturing floor to the transactional process areas, our ability to use our natural senses to solve problems

diminishes greatly.

This calls for the need to blend continuous improvement methods with technology as depicted in the figure below:

Additionally, the problems are much more complex. One cannot readily see the root causes of an invoicing error,

a supply chain availability problem, a warranty issue, or product development leadership and process issues that

make new products late to market or way over margin targets. These problems typically surface after the

damage occurs, when it is too late for preventive improvement.

Reactionary damage control in the transactional process space is not improvement, but unfortunately it is the

typical first response and usually makes matters worse. People tend to focus on issues within their own silos and

are insensitive to the impact of their actions on the end-to-end process and the total value stream. The

challenge of transactional problems is that the "roots" of the root causes are buried deeper in these complex,

integrated processes. In fact, transactional waste has far reaching multi-directional consequences across the

enterprise, and the quantified costs of non-conformance are usually astronomical and beyond belief.

For those who find this hard to believe, think about the millions of lost market opportunities from late or unreliable

new products, excess/obsolete inventories, warranty and returns, premium freight, product availability, lost

surgery and lab revenue due to poor scheduling and resource utilization, or the cost of ECO activities after a new

product release to name a few. Each of these areas represents millions of dollars in lost growth, cash flow,

and/or P&L opportunities for many organizations. Cutting headcount and IT budgets is not the answer to these

complex but huge opportunities.

Transactional processes continue to become enhanced by new technology. Transactional processes are

integrated and interdependent . . . where major improvements in one area provide residual improvements in other

interconnected areas. The real challenge with improvement is in working one’s way through the transactional

maze, and in defining and scoping out legitimate, data-driven transactional improvement opportunities. This

process relies more heavily on information technology than it ever has before. With transactional processes, one

cannot pick up a part and measure dimensional characteristics to determine defects and quality levels. One

needs facts provided via real time event driven metrics, transaction stream mapping, digital performance

dashboards, and business analytics.

The improvement expert uses the organization’s integrated enterprise architecture and other applications to trace

the transaction trail like a forensic detective reconstructing and processing a crime scene to identify wastes and

root causes. The differences between root causes and outcomes is often fuzzy, and the challenge becomes one

of identifying and isolating the right pain point segments of these transactional processes with real facts.

Success requires a deep understanding of both improvement and key business processes. This is not your

traditional Lean or Six Sigma practitioner at work here.

Technology-enabled improvement plays a key role in this next generation of improvement. Technology is

enabling this warp speed transformation of organizations into global, multilevel networks of transactional

enterprises. Unlike most Lean Six Sigma improvement of the past, transactional improvement is transparent and

comprised of key business processes, information flows, knowledge-based employees, and complex,

contradictory decisions. There are literally hundreds of professional and knowledge resources managing

thousands of dynamic process touch points, a continuous churn in changing requirements, specific country

needs, time constraints, communications issues and exponentially greater opportunities for waste, variation,

human risk, and bad decisions.

A major consideration of technology-enabled improvement that must not be overlooked is that the real

intelligence lies in the improvement practitioner and the user community in the form of human intelligence. There

is no improvement intelligence software available that instructs and/or executes improvement automatically, and

we cannot replace the tough work of improvement with some new mobile application.

The process of improvement still relies on human intelligence to define and segment the right root cause

information, analyze data with the right methodologies and tools, draw the right, data-driven conclusions, take the

right fact-based actions, and close the loop with the right performance metrics.

This is the current disconnect with business analytics activities in organizations today. If one is missing this core

competency of structured and disciplined improvement, then technology is reduced to providing more information

quicker - the old data rich, analysis poor syndrome. It is the equivalent of replacing the war rooms of manually

prepared performance charts of the past, with digital dashboards that contain even more conflicting and non-

actionable information.

People, knowledge, and talent create the improvement side of technology-enabled improvement. The integrated

enterprise architecture provides the technology side of technology-enabled improvement, and this combination

also optimizes the value and ROI of enabling IT investments. In terms of Lean Six Sigma thinking, the interaction

effects of technology plus improvement combined produce much greater benefits than treating the two as

mutually exclusive. History clearly validates that organizations have tried one without the other for decades and it

does not create sustainable best-in-class business processes.

There is no doubt that technology is evolving faster than organizations can assimilate it successfully. The future

is all about the correct fusion of formal structured and deliberate improvement with enabling IT. This future

includes how to get the most out of existing technology and integrated enterprise architectures, and assimilating

emerging technologies such as mobility, real time enterprises, cloud computing, and other capabilities as a

strategic weapon of global competitiveness. For example, some of our clients running on SAP's integrated

enterprise architecture have built the capabilities of real time, event-driven and self-managed performance

dashboards, data visualization technology, business analytics capabilities, simulation, and instantaneous access

and monitoring of critical root cause metrics across the globe.

This is a huge game changer for improvement because it is transforming the traditional wave (batch), project-

based Lean Six Sigma improvement activities of the past into living, real-time improvement. Improvement occurs

in more of a Sense-Interpret-Decide-Act-Monitor (SIDAM) mode. Emerging technology is a major enabler of the

next generations of strategic and continuous improvement. The challenges of harvesting these large-scale

opportunities lie in an organization’s ability to evolve toward a state of Improvement Excellence™: improving how

they improve through innovation and the correct fusion of improvement and enabling technology.