Tag Archives: business environment

The Collaborative Improvement Environment

The responsibility of every employee, from the front-line to the executive suite, is business performance improvement. But barriers exist to realizing positive bottom-line impact, operational efficiency, organizational effectiveness, and a continual flow of improvements built on the knowledge of a firm’s employees.

According to a McKinsey & Company study, amazingly 70% to 75% of companies do not have an improvement process defined and implemented on a broad basis. Senior executives seeking performance improvement face formidable tasks such as:

  • Rallying and enabling all employees to seek improvements everyday
  • Defining and implementing a truly sustainable improvement process, sustainable for 10 years or more
  • Shifting an organization’s culture to one of collaboration and improvement
  • Leading the 4 generations which comprise the typical workforce within an enterprise, each with its own preferred style of communication and comfort with current technologies
  • Leveraging constant improvements to gain defensible competitive advantage for a firm.

Improvement Trends

Over the past several decades, stretching back to the mid-20th century, several trends exist in how businesses improve.

  • Many improvement methods have been attempted through the years with varying results
  • Each improvement method has a finite lifecycle of impact to an organization’s performance gains (see my previous blog on “Patterns of Improvement”
  • Sustainable, continuous improvement has been a promise that is seldom realized
  • True sustainability has been hampered by numerous root causes.

Root Causes of Decaying Impact

Root causes of impact decay I have observed over the years include:

  • Improvement is a special program within a firm and is not treated as part of employees’ day-to-day jobs
  • No structural incentives exist to motivate improvement behaviors
  • Outside experts, such as academics, gurus, and consultants, drive improvement programs creating the risk of high levels of organizational resistance
  • At most, only 1% to 2% of an organization’s workforce is asked by senior leadership to participate in improvement efforts, e.g. 300 to 600 people in a 30,000 person company
  • Distribution of deep improvement know-how and tools is limited to a central team or a select few specialized resources, e.g., Six Sigma Black Belts, the Quality Department, or the Office of Reengineering
  • Organizations run out of energy and endurance beyond a 3 to 5 year period
  • Special improvement programs lose focused, visible leadership from senior executives after 12 to 18 months or leadership of the firm changes and along with that comes a new executive agenda
  • New improvement methods hit the market every 4 to 6 years creating systemic discontinuities caused by implementation ramp-up times of 6 months to 2 years.

The Collaborative Improvement Opportunity

To manage through the long trough of the global recession and the protracted recovery, senior executives must improve how their business improves. Root causes of the decaying impact of improvement processes must be attacked through a focused effort to create a high performance collaboration environment.

I believe a window of opportunity exists for an enterprise to leap forward beyond its competitors by requiring and enabling employees to adopt improvement behaviors executed on a routine basis. Also, a window of opportunity exists for an enterprise’s senior leadership team to create a lasting improvement legacy for the organization.

What’s Next?

A thriving enterprise requires continual performance improvement in order to thrive. Truly sustainable improvement methods have been elusive over the past several decades. The impact of improvement programs decays as a result of a myriad of root causes, which must be addressed with a hybrid of traditional and modern techniques. Senior executives must role model improvement behaviors to drive a cultural shift in their organizations towards collaboration and the search for business improvement everyday and in every way.

Risk and Change

Risk-Change Matrix

People love control and abhor chaos.  Yet most of our daily lives are filled with uncertainty and change.  The first step to maintaining a sense of order amidst the chaos is awareness of change and awareness of the type of uncertainty (risk) with which you are faced.  An understanding of the current state of your environment will inevitably benefit you in your quest for control.

To aid awareness of the chaos-control state of your environment, we can use the simple matrix shown here.

Type of Environment

Type of Risk

Static

Dynamic

Deterministic

1. Certain, stable state

“Business as Usual”

3. Certain, changing state

“Transformation”

Stochastic

2. Uncertain, stable state

“Non-linear”

4. Uncertain, changing state

“Chaos”

Risk is broken down into two types: deterministic and stochastic. Actions and decisions in a state of deterministic risk produce outcomes that are linked to past and present known behaviors in the system. In other words, future system behavior can be predicted with certainty based on the knowledge of previous outcomes. We label this state’s risk as “certain” but one must realize that this is an extreme case. Nothing is ever certain but to serve the purpose of this matrix we assume that this deterministic state can exist.

Stochastic risk is risk that has uncertain outcomes, outcomes that are not necessarily linked to past history of events or occurrences. Probability does play a role in the stochastic state. Expected outcomes can be used in decision making with the understanding that the past does not play a strong predictive role in system behavior. One can look at this state as one of a complex, non-linear system. Decisions and actions can cause completely unexpected system behavior.

Environment is also broken down into two types: stable and dynamic. Stable environments do not change in the short to medium term. Drivers of a business’s state are relatively constant. For example, an industry’s competitors, customers, and suppliers are not undergoing major changes or shifts in relative power.

Dynamic environments are undergoing major changes that could be caused by industry consolidation of suppliers, customers, and/or competitors. Other drivers of dynamic environments are disruptive technologies that enable disintermediation or cause obsolescence of particular products or services.

Looking at the 2×2 matrix formed by type of risk and type of environment, we see four possible states for a business at any one time.

1.   Certain, stable state

  • Future system behaviors can be predicted by prior, historical behaviors
  • No disruptive change is occurring on the business’s landscape
  • “Business as usual” characterizes this type of environment

2.   Uncertain, stable state

  • Future system behaviors cannot be predicted by knowledge of past responses to decisions and actions
  • No disruptive change is occurring on the landscape
  • “Non-linear” characterizes this environment

3.   Certain, changing state

  • Future system behaviors can be predicted by prior, historical behaviors but only on a short time horizon given the dynamic, changing industry state
  • Disruptive change is occurring on the business landscape that might or might not be caused by an executive’s own business
  • “Transformation“ characterizes this environment

4.   Uncertain, changing state

  • Future system behaviors cannot be predicted by knowledge of past responses to decisions and actions
  • Disruptive change is occurring on the business landscape that might or might not be caused by an executive’s own business
  • “Chaos” characterizes this environment and presents the greatest challenge to an executive’s decisions and actions to be taken by an organization

Where do you see your business?  Would others agree with you?  How do you conduct your daily life and under what assumptions about the state of your business? Where are you the most comfortable?  Where are you the least comfortable? Is your business properly prepared to thrive in its current state? What about your competitors?