By Scott Whitbread
20 years ago continuous improvement (or CI) was but a blip on the management radar compared to the pillar of operations lore that it represents today. Most industrial and manufacturing organizations have since adopted some form of CI and, in parallel, the professional services marketplace for all things CI (training, certification, direct facilitation, organizational development, etc.) has ballooned, stratified and, in many domains, commoditized.
As any phenomenon proliferates towards commoditization, it begs the question: what comes next? “That’s easy”, some would say “more CI - it’s in the name!”, touting a never-ending journey of incremental gains that will will eventually cure all ills. But not so fast. Let’s first consider what we can learn from one of the most iconic precursors to modern CI: The Toyota Production System. While it is often cited as the founding example of the gradual, eternal improvement process, Toyota’s success during that time period tells a different story.
Back in the 1970’s the US automakers operated under the assumption that long, uninterrupted production runs were the key to achieving a low per unit costs. These production runs were facilitated by substantial investments in working capital to hold inventory between changeovers and to store and rework quality defects without stopping production. Toyota, without the scale and financial strength to make such working capital investments, could not compete on these terms. No amount of gradual, incremental gains would allow Toyota to win at this game. Instead they sought to test and overturn this assumed trade-off between run length and unit costs and most of us are familiar with the outcome: through a combination of self-developed improvement techniques, underpinned by a fundamental cultural shift, they achieved both low per unit costs AND short production runs, producing only the units required for just-in-time fulfillment. They captured all the benefits of an efficient production line (little unplanned downtime, little time lost to setups), just as the US automakers did, but were able to do so without the massive working capital commitment (little inventory, no rework). As such they were able to offer higher quality cars at a lower price point and experienced a sustained period of market dominance.
This outcome was the result of a conscious effort to ‘engineer’ a breakthrough in performance by challenging a fundamental assumption within the auto industry at that time. It was not the product of a gradual, incremental journey with no end in sight. Toyota did not seek to get some “quick wins” by capturing the “low-hanging fruit” (such language implying that subsequent improvement efforts will be relegated to slower wins, from harder to reach fruit, until the tree is picked clean or we can’t climb any higher.) Instead they recognized the need to harvest improvements in a different manner by challenging the conventional assumptions of the industry rather than tinkering within them. And while the view of CI as a gradual, incremental progression signifies an inevitable plateauing of results, creating breakthroughs in performance by overturning limiting assumptions is more akin to the diffusion of disruptive innovations via an ‘S-curve’.
While the path of a breakthrough improvement may be tough initially, as the controversial ideas take time to adopt, it then takes off once a critical mass of innovators and early adopters are on board. Rather than getting harder with time, it gets easier. Rather than progressively taxing the organization for increasingly hard-won gains, it revitalizes the organization by pushing out the frontier of potential.
Recognizing when a continuous improvement effort has plateaued and successfully shifting to a focus on breakthroughs is a big challenge but, in our experience, well worth the effort. And while it is seemingly appealing and straightforward to draw from the Toyota Production System’s playbook of tools, it would be far more fruitful to replicate the journey that led to its creation.