In a 2019 survey conducted by Deloitte, nearly 81 percent of respondents who had conducted improvement programs reported that they had failed to meet their cost reduction targets. Of those that fell short, 65 percent missed by 25 percent or more. And this statistic is not new. Harvard professor Dr. John Kotter reported research in his 1996 book, Leading Change, that only 30 percent of all improvement programs succeed. This means that over the years, roughly 60-70 percent of all company continuous improvement programs have failed or have had limited success.
The Classic Model
The classic continuous improvement model incorporates steps that are designed to lead to success:
- Identify opportunities for improvement
- Study the processes and evaluate potential savings
- Select a problem for analysis
- Analyze the problem/develop action steps
- Implement the results/take action
- Measure the results/evaluate the approach
- Monitor performance/ensure changes are maintained
- Plan next steps/identify new challenges
The above list is an elaboration of Dr. W. Edwards Deming’s PDCA (Plan-Do-Check-Act) four-stage cycle of continuous improvement. It’s a good-looking list, but based on the statistics above, something must be missing.
What’s Not Working?
The question arises naturally: “Why do so many continuous improvement programs fail?”
The answer lies in a failure to properly execute activities that support these steps: communication, use of technology, and exercise of authority. Below are five important factors that might sink even the most carefully planned program.
Factor 1: Continuous Improvement Program in Name Only
Often, an improvement program is initiated, a team is named, and an announcement is made regarding the program’s goals. However, at that point, the project team is left to fend for itself as top management turns to other activities and forgets about the continuous improvement program. Employees figure out quickly that the project doesn’t have the support of senior management, and they likewise fail to support the program’s efforts.
Factor 2: Improvement Team Lack of Authority
If an improvement team is established but does not have sufficient authority to make changes, the team soon becomes discouraged, and the project languishes. Every project should have some mechanism in place to ensure improvements are implemented.
Factor 3: Failure to Incorporate Advanced Technologies into Project Methodologies
Perhaps the most essential element of a successful improvement program is the use of appropriate tools and techniques for data gathering and analysis. Historically, data was gathered manually and processed by analysts. This approach resulted in delays between when the events occurred and when problems were identified. Currently, powerful tools are available that support improvement efforts. These tools include on-line sensors, machine monitoring, and deep data analytics, which show where problems exist and provide guidance for solutions.
Factor 4: Failure of Management to Remove Obstacles to Achieving Goals
Once opportunities are identified, the improvement team must implement the needed process redesigns. Often, these changes impact areas that cut across lines of responsibilities. Organizational pressures may strive to stop or slow down these changes. To be successful, the team and its advisors must be confident that top management is willing to remove any obstacles that arise.
Factor 5: Failure to Achieve Short-Term Successes and Communicate These to the Organization
Securing “quick wins” in the short term is essential for the total success of the improvement team. Once a program has been initiated, employees and management closely watch to see if the team can produce any real results. Establishing a reputation for making changes and achieving real improvements is key to demonstrating effectiveness. Short-term victories can do this.
One of the most effective methods for identifying short-term opportunities is using real-time data gathered from focused equipment monitoring and smart analytics. Sensors attached to equipment communicate real-time data wirelessly to computers and provide the team with the information it needs. Data is then processed using smart analytics to highlight areas needing attention. These tools are a crucial element of any continuous improvement program.
Launching a continuous improvement program is a necessary undertaking in today’s competitive marketplace. Committing to reduced costs, quicker order fulfillment, better quality, and shorter production turnaround times adds urgency to any improvement program. A successful program should be built on excellent communication, clear goals, sufficient authority, and the best tools and technology available.
Real-time performance data and smart factory analytics provide both guidance for uncovering short-term improvements and tools to measure long-term success. The classic model for continuous improvement programs is an excellent approach, but one that should be supported by the best available digital technology. Combining the classic continuous improvement approach with smart factory technology gives any improvement team its best chance of success.