Recent Updates for High-Performance Process Improvement Solutions

Much has been going on in 2020 related to the High-Performance Process Improvement (HPPI) concept so I will provide an orientation about the advances in this blog post.

First of all the implementation solution, i.e. VISTALIZER for Enterprises has entered into version 3. This brings some fundamental changes to how to use the VISTALIZER for Enterprises app as it is now only available in English and via the App Store (iOS/iPadOS) and Google Play (Android). Check out the app stores’ product pages for more information. The Swedish and Finnish language versions of the software are discontinued. With the version update, the business model for this part of the high-performance process improvement process has also changed. The app is free to download. It contains in-app purchases, or more specifically auto-renewal subscriptions with different available time periods, starting with a one-week subscription. The subscription can be cancelled anytime according to the General Purchase and Subscription terms of App Store/Google Play.

The second new issues is the launch of VISTALIZER.com, the e-commerce site supporting first and foremost the use of the new VISTALIZER for Enterprises app. The site provides PDCA review and feedback services for the practical PDCA excercise of the app (called “PDCA2”). This service can also be used for real-life PDCA documents. The site includes also a (video) blog that deals with issues related to the app. The WordPress.com blog, i.e. the one you are reading currently, on the other hand, deals with the total solution and general theory and practice of high-performance process improvement. The two blogs have thus a different perspective and emphasis.

The third issue is the recent launch of the VISTALIZER YouTube Channel. The channel provides (brief) video tutorials and feature trailers mostly related to the new VISTALIZER for Enterprises app.

All in all, the VISTALIZER improvement technology provides now organizations with a very attractive way of assuring both the improvement effectiveness (VISTALIZER for Networks and VISTALIZER Report) and the improvement efficiency (VISTALIZER for Enterprises). Increasing and maintaining a sufficient process improvement yield, with increased ambition levels, requires a HPPI solution fit for the task!

Are Your Improvement Methods Old Scrap?

Original Title (in Finnish): “Ovatko kehittämismenetelmäsi vanhaa romua?”

Original Publisher: The Finnish Pharmacists’ Society

Publication: Proviisori Journal 4/2011 (pages 24-26)

The article is the second in a series of three articles providing a general introduction to high-performance process improvement.

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The value chain of process improvement consists of two interconnected processes: the diagnosis and implementation. The objective of the first is to assure the improvement effectiveness, whereas the objective of the second is to assure the improvement efficiency. Many improvement methods have in today’s dynamic circumstances only a nostalgic value – just like old scrap cars.

The diagnosis comprises the required analyses and syntheses, the objective of which are to assure the improvement of the right issues in the given improvement setting. The implementation embraces the improvement education and training, the practical realization of the identified improvement potential, and the follow-up. The objective of the implementation is to assure that the improvement objects are improved in the right way. It contains also analysis and synthesis phases that fine-tune the planning and execution. The total management and improvement of improvement activities, in today’s ever-changing circumstances, with scarce time and money resources, set new performance requirements to both the applied improvement methods and the improvement method development.

 

Neither Should a Ship Rely on One Small Anchor, Nor Should Life Rest on a Single Hope

There are numerous participants or actors taking part in the process improvement value chain. This is especially true in large or a bit more ambitious endeavors. The actual performance that relates to the participants’ knowledge and skills, learning and the concentration abilities, shows many times a great variation. This is an issue that is not often identified or taken into account well enough in the different improvement phases. An ominous illusion that obscures management is thus easily created from the outset between the presumed and actual improvement performance. This illusion loosens unnoticed the improvement efforts from the real world. If the illusion grows enough, it will pop with bad consequences, just as it did in the fairytale “the Emperor’s New Clothes” by H. C. Andersen.

To avoid such an outcome it is crucial to define, even on a rough level, the expected process or even project specific improvement yield level. This level determines in practice the success of the improvement effort. It provides in a fast way, if required even in advance, a strong indication of a potential illusion and the nature of it. The effort should not be executed as such if the improvement effectiveness in (pre)planning phase is not on a sufficient level (> 85 percent). Should for example the route plan of a ship cruising in the archipelago be only of an 85 per cent level, it is clear that sailing to the right quay, safely and economically, would require extraordinary efforts and good luck. The improvement effectiveness seldom exceeds 20 per cent in companies. The saying by Epictetus, “neither should a ship rely on one small anchor, nor should life rest on a single hope”, is striking.

 

The Know-How Level is the Problem

A company should allocate annually about 4 per cent of the working time to process improvement, i.e. about 10 working days for each employee per year. Not more, but neither less. Of this time, 10 per cent should be allocated to the diagnosis, the rest on the implementation.

The improvement effectiveness is directly related to the output of the diagnosis, i.e. the quality level (0-100 percent) and scope (0-100 percent) of the synthesis (the process improvement plan). Large-scale gains can be realized not until 40 percent of the personnel understand in practice the process improvement philosophy, the approaches and practical tools. Few companies have a score better than a few percent. The level is rather a few tenths of a percent. Even in comparably large companies there is in practice not even a single person with adequate process improvement know-how. A process improvement related title does not guarantee an adequate understanding level. Studying and implementing improvement tools will not do because these do not provide any means to take the operations to the next ambition level where more strenuous challenges and demands wait for their solution.

How could one then manage this knowledge and skill related, most dynamic improvement issue, bearing in mind also time based prerequisites?

The level of difficulty of this challenge is Mt. K2 of process improvement, because traditional approaches to process improvement education and training provide at best only a solution that comes half the way. Coming all the way requires the identification and management of the substance that should be mastered, combined with a sufficiently performing method that enables personal learning, and the measurement and assurance of the transferred know-how. The real quality level of the know-how is eventually measured by how well the organization realizes the improvement potential in practice.

 

Basic Mantra 3.0

Customer orientation and minimizing quality defects, variation and waste are only one part of modern process improvement. Producing defect free what customers want is the basic mantra (version 1.0) that puts the ambition level on a too low a level from the beginning. A perhaps more sophisticated version of this basic foundation related to total quality management (TQM) is to “do the right things right”, which can be considered the basic mantra 2.0. It means that the processes should both be effective and efficient. Besides customers, the company should also satisfy other stakeholders, such as the personnel and owners, as well.

The basic mantra 2.0 requires already a considerably better process improvement method performance than is possible to achieve with traditional improvement methods. Many organizations have sunk into this improvement swamp, and many are yet to sink, because the applied improvement methods have not changed despite changed circumstances and challenges.

It is not sufficient that the processes are competitive today. The essence of modern process improvement is how well the performance can be maintained and improved in spite of dynamic conditions and needs.

How is, for example, the improvement effectiveness assured, and by this also the effectiveness of the operations, if there is no verified and well-performing logic in use that ensures that the organization is focusing on the right issues? One very popular guarantor of the decision quality is the widely applied gut feeling. As the decision makers do not know of any better approach, it is applied year after year, despite having the best people dealing with the improvement efforts. Organizational changes, process models, score cards, surveys and studies, outsourcing activities and IT system projects consume time and money, and many times also nerves, often without a considerable payback and impact on stakeholder satisfaction.

In continuously changing conditions it is crucial to do ”right things rightly, in a fast and cost-effective way”. This is true for all processes, including the improvement activities. More and more organizations have moved, or are moving, into a business environment that is formed by this basic mantra 3.0. In such a setting, many improvement methods have only a nostalgic value, just like old scrap cars.

 

Managing a Contradictory Equation

A high measurable improvement performance keeps the organization continuously competitive. In the company world the practical implementation of this strategy means a concrete solving of a contradictory improvement equation: how to lower the costs, increase the price of the outputs, boost sales, without the dissatisfaction of any stakeholder. The process improvement yield provides the understanding regarding the current solvability level of this equation (0-100 percent) for any given company. This understanding provides also a perspective of the magnitude of lost opportunities that go down the drain currently.

A similar equation providing the direction and meaning to the improvement efforts can also be defined in the public sector. Based on this it is possible to select such improvement methods that solve the total equation as well as possible.

Should appropriate improvement methods not be readily available, these can be created using reverse engineering concepts and a constructive research approach. None of the traditional improvement methods have been designed using such approaches. This explains their poor total performance and unsatisfactory fitness for solving contemporary challenges. A good way to assure the improvement method performance is to study how it has been developed, including the method’s prerequisites.

 

The Improvement Culture Cannot be Copied

The greatest quality weakness of the improvements methods used by car manufacturer Toyota is that the methods do not assure the improvement effectiveness, i.e. that the right issues are really improved from a total perspective (see also the first article in the series).

The greatest quality strength of Toyota’s set of methods is that the PDCA logic (plan, do, check, act) assures the efficiency of the improvement work, i.e. that the issues are improved in the right way. By applying an indicator that shows how well the PDCA logic has been used in the practical improvement work it is easy to define the quality level of the implementation. It should be at least on an 85 percent level for the organization to improve its operations in a sustainable way. The core of the PDCA logic is the setting and testing of a hypothesis, which is also the spine of scientific work

Process improvement based on lean thinking focuses per se on waste and quality defect (variation) reduction, especially in the production. Such a narrow perspective is today insufficient. Paradoxically, many organizations have in their lean thinking application gone unwittingly in for the end-results of the PDCA logic used by Toyota. The improvement object has not been the understanding and thorough application of the PDCA logic, which would create on the practical level the right improvement culture. This deficit is not lessened by analyzing the end-result in a systematic and result-oriented way using benchmarking.

It is not possible to improve commitment, understanding and operations in general by applying or even copying the end-results of other organizations’ improvement methods. Applying end-results omits many crucial issues such as the identification of the right improvement objects and the setting and testing of hypotheses. The organizational and cross-functional learning is also desisted in such an approach. Best practices should be utilized with caution when improving processes, because this may lead to a situation where the organization never learns the true dynamics and character of process improvement.

 

Four Crucial Variabels

In many organizations, process improvement equals the creation of a process model accompanied by a quality handbook. In a best case scenario, these issues support the organization’s quality assurance efforts. In a worst case scenario, they create a comfort zone where the executives and other personnel enjoy themselves until the organization is demolished. A process is by definition the interaction of people, technology, information and material (stuff) to produce the desired output. It is clear that without active improvement efforts, the interaction between these four variables will not remain, but declines continuously. Even good quality assurance efforts cannot stop this trend as these only affect the absolute quality level, not the relative quality level that also takes into account changed conditions.

 

About Average Thinking

Every process has a unique set of prerequisites, interfaces and priorities. Therefore average thinking should be applied with deliberation, even if it could provide from a certain perspective a tempting advantage. A soccer team cannot procure sneakers based on the players’ average feet size, even if such an approach would provide a better discount and an easier procurement bureaucracy. Each phase in the improvement value chain has to be customized, verified, prioritized and implemented in a total and optimal way, despite limited time resources.

Moving from average thinking towards precision improvement requires from a management point of view the adoption of new perspectives and the sharpening of attitudes to maintain attention on crucial improvement details as the improvement work advances.

The continuous improvement principle means that the organization’s process improvement yield is constantly on a high level. The ability to maintain a high level in the long run using resources scarcely shows that the organization has come a very long way in providing its stakeholders with a higher level of satisfaction.

Nothing delights more than real improvements achieved year after year. A good performance can always be improved, and even the best can be better!

The Process Improvement Yield Reveals Your Actual Improvement Traction

It’s striking that much is written about improving the quality and performance of processes, whereas little has been written about the quality and performance of the improvement methods themselves. If the quality of the improvement method is low, it is of little help implementing it correctly. A bad, undisclosed improvement performance not only wastes resources and opportunities, but more importantly also lulls the organization into a false feeling of security, resulting sooner or later in a harsh awakening. When asking executives or improvement experts what’s the quality of the improvement methods they use in their organization, most of the people do not even understand the question.

To achieve a mode of systematic and result-oriented improvement throughout the organization, you need to truly know what kind of performance your set of improvement methods deliver. The tricky part is not to understand the cost implication, or even the time dimension of the applicable improvement method, but to understand the quality of the delivered improvement output.

The crucial issue in process improvement, as in all operations, is to achieve as good an interaction as possible between people, technology, information and material to produce the desired output. The quality of this multidisciplinary interaction can be evaluated based on how well it satisfies the stakeholders as a whole. The desired output of process improvement efforts is the achievement of a better real-life interaction in the value chain, organization or process. Thus, the organization needs to master and improve two kinds of interactions, the one required in the improvement work, and the ones required in the wholes that are being improved. Sticking to improvement methods that do not support the organization’s current and desired ambition levels is a bad strategy that many companies do not recognize. Improvement methods should come with a best before date, just like groceries.

How well a specific set of improvement methods deals with today’s improvement needs should be judged based on how well it is able to solve the fundamental business equation: how to lower the costs, increase the price of the output, and sell more, without constantly sacrificing the satisfaction of one or more stakeholders. This can be done simply by analyzing the quality and scope of both the improvement plans and the practical realization of the improvement potential. The synthesis of such an analysis, i.e. the process improvement yield, can be quantified as a percentage point score (0-100%) that reveals how effective, efficient, and impressive the company’s improvement work is in real-life.

My analysis of the process improvement yield in some 30 companies in the electronics industry reveals that the average yield level is somewhat below 3%. To put this in perspective: What would Toyota’s estimated score be using the same analysis and synthesis logic? The well-known improvement methods of Toyota, hoshin kanri and nichijo kanri, have a combined theoretical score of 60%. However, a well-educated estimate of Toyota’s real-life score suggests that the level is approximately 15%. This score, achieved in some 20 years and maintained at that level for some additional 40 years, is more than five times higher than the average company. Although the end-results achieved by this yield level include lean thinking and the Toyota Production System, it is, nevertheless, modest from an improvement performance point of view. For a company that really wants to improve its operations in today’s dynamic business environment, it does not make much sense following the best student that did not pass the test.

What’s the quality of your organization’s process improvement plans? The quality level of the improvement plans in the average company is 16%. With such a low-quality improvement plan, it is likely that the organization improves, more or less randomly, within its comfort zone and current understanding what it can, not what is actually needed. Despite rigid and formalized project approval procedures, the actual quality of the improvement project portfolio in many large companies is so low that the customers, employees and shareholders should beware. There is no need for an organization to find or implement other improvement objects until it utilizes high-class improvement plans that assure the improvement effectiveness.

Achieving and maintaining a process improvement yield level of at least 75% within a few years should be high on any executives to do list. Such an improvement performance would work wonders in any company – including Toyota.