Until the 1980’s the focus for most businesses was to produce something that could be sold. In the 1980’s the focus changed to improving the quality of the products and the satisfaction of customers. This was when the Total Quality Management (TQM) movement started to pick up momentum. Kaizen based process efficiency was the main concept to reach a better competitive edge. In real life, process efficiency was usually not achieved as the perspective actually covered only a small fraction of the process, e.g. some part of the manufacturing function.
In the 1990’s the focus changed to consider also the service quality and the process performance (time, quality, and costs) as the means to satisfy the stakeholders. This meant that in addition to the concepts of TQM, companies started to look for additional ways of boosting the performance of operations. With the information technology boom ahead, this was a golden age for the introduction of the re-engineering concept to assure effectiveness of the operations. However, many of the (giant) IT investments turned out to be (giant) failures in terms of functionality, return-on-investment and overall performance improvement.
In the last decade the focus changed to consider also the process improvement quality as the means of improving the business and satisfaction of the stakeholders. In practice, this means assuring the improvement effectiveness (improving the right issues) and efficiency (improving the issues right) to improve the effectiveness and efficiency of the processes. Most companies, however, still operate with a hybrid of the logics of the 1980’s and 1990’s. Toyota, e.g., tries still to cope with the improvement needs of the 2010’s (!) using the 1980’s improvement mode (!). The gap is about 30 years – and increasing. What will be the real wake-up call for these companies? Very few companies are able to reach even a satisfactory level regarding the improvement effectiveness of the organization. This flaw provides an active bias towards activities related improvement efficiency (cp. e.g. six sigma), potentially with little impact on the competitive advantage, despite hefty investments in improvement efforts during the years.
In the 2010’s the essential issue is how to improve and maintain the company’s, or value chain’s, process improvement performance, in a fast and cost-effective way, for the benefit of solving the fundamental business equation: how to lower the costs, increase the price (value) of the company’s outputs, and sell more, without constantly sacrificing the satisfaction of one or more stakeholders. This equation is the high-performance process improvement equation (the “HPPI equation”).
Briefly put, high-performance process improvement (HPPI) is the umbrella term for improvement work conducted using improvement methods and solutions that actively contribute to a high improvement yield, within a certain time and cost limit. HPPI methods assure thus the improvement effectiveness and efficiency in a fast and cost-effective way, improving all end-to-end processes and the related ambition levels of the:
1) improvement work,
2) the focus processes, and the
3) produced output.
HPPI methods make it also possible to measure the improvement effectiveness and efficiency which provides the basis for defining the process improvement yield (PIY), i.e. the improvement quality output of the methods applied. The PIY score (%) tells how well the company solves the HPPI equation in practice. Without this knowledge you cannot really understand the real speed and direction of your improvement efforts. As all seasoned skippers know, the speed over ground and course over ground are the two parameters that count when boating. Why should improvement efforts be any different?
To get a maximum improvement performance, and thus a maximum improvement yield within any given time and cost limits, five areas have to be covered properly, according to the HPPI performance criteria:
1) company network analysis and synthesis,
2) process analysis and synthesis,
3) improvement education and training (improving staff knowledge and skills),
4) the implementation, and
5) the follow-up.
These five issues provide in their largest incarnation a generic end-to-end process improvement process that complies with the requirements of HPPI.