There are 6 key terms that relate to 6 business-critical managing processes that should be well-established in every organization. Check them out below and find out how those managing processes connect back to an overall continuous improvement effort:
6 Key Terms Defined
- Strategic Objective – a future state that the organization hopes/expects to achieve on at least one aspect of performance that is critical to its success. Strategic objectives should operate on a pre-defined time scale (i.e., 12 months, 24 months, etc.) and should directly connect to one or more key performance indicators that matter to the business.
Strategic objectives should flow from the enterprise-level to the smallest unit of management in the organization. The process for defining strategic objectives is often called “strategy setting” or “hoshin kanri” and typically takes place at least once per year aligned to the annual budget cycle.
- Project – a discrete set of related activities involving the combined efforts of multiple people (i.e., a project team) in order to solve a problem or improve performance in support of the business strategy. Improvement projects should be well planned and adhere to a particular method (e.g., DMAIC, PDCA, etc.) in order to ensure they are executed on time and according to plan. Like strategic objectives, every project should operate on a defined time scale and have known and measurable outcomes.
- Process – a discrete and standard set of interrelated activities, usually involving more than one person, that are repeated at some frequency in order to ensure consistent and high quality business outcomes. All processes, or at least those that truly matter to organizational effectiveness and performance, should be documented and trained. Additionally, there needs to be a mechanism in place to assess that key processes are followed.
- Action Item – a defined task or activity that will help to advance a project or improve a process. A set of related action items is called an action plan. All action items should have defined owners and due dates. Additionally, every organization should implement a closed loop process to ensure that action items are completed.
- Reporting – refers to the regular dissemination (e.g., daily, weekly, monthly, etc.) of a measurable “snapshot” for one or more key performance indicators against a pre-determined target. The purpose of reporting is to identify near-term operational or financial risks that require immediate action. Reporting is sometimes referred to as “scorecarding” or “KPI tracking.”
- Analytics – the process undertaken to closely examine multiple aspects of performance across an extended period of time compared to a perfect or “world class” standard. The results are often translated into financial terms so that seemingly unrelated performance categories can be compared on an “apples to apples” basis.
Now clearly there are points of intersection in the above, and understanding how they relate to each other is critical. In other posts we have addressed common mistakes made when deploying and managing strategy, tactics used to drive disciplined project execution, and the relationship between reporting and analytics. The only additional point worth making is that the strategic objectives of the organization are the umbrella under which all of these other managing processes reside.
In other words, all projects commissioned, business processes implemented, KPIs reported, analytics completed, and action items assigned should be driven by a well-defined and aligned set of strategic objectives. Otherwise, you run the risk that the work being done ostensibly in support of the organization is actually not advancing its true interests.
How CI Fits into the Picture
Now that we have some clarity on the above terms, continuous improvement can be properly positioned as the application the right combination of methods and tools to improve the way the enterprise defines and implements its strategy, manages projects, streamlines processes, takes action, reports progress, and analyzes performance. In other words, continuous improvement doesn’t exist in a vacuum from strategies or projects or analytics. Quite the opposite, CI needs to work within and through strategies, projects, processes, etc. to advance the interests of the organization. And when contextualized in that way, it becomes significantly easier for employees to understand what CI is all about and buy into it.
So the best answer to the business leader’s question, “What is continuous improvement delivering to the business?” might be, “Great question. Let’s start by taking a closer look at your strategic objectives, and I can show how we’re using CI to achieve them.” Or when engaging an operator, “You know that problem we’ve been having with contamination in the finished product? Let me share with you how CI is helping us to isolate and solve that problem and how you can help given your experience.”