How Continuous Improvement can render your company obsolete

I’ve briefly touched upon the dangers of relying on Lean Management’s Continuous Improvement Process (CIP) instead of innovation management in our post from two weeks ago. After reading an article from independent consultant Fred Schulemann that sparked an interesting discussion in the XING community where it was posted (both sources in German), I’ve come to realise just how dangerously misleading the (mis)use of CIP can be for a company’s future viability. Since it is a commonly used practice we’ve decided to further explore the issue in this article.

Most companies we speak with, when asked about their plans and goals for the future respond something along the lines of “We strive to innovate both our organisation and our products/services to continue delivering the best possible performance and solutions to our customers and to offer our employees an engaging and secure workplace in the future.”

If you take this statement to heart, it means you must focus on the following elements:

  • Your customers
  • Your product/service portfolio
  • Existent and emerging market trends/megatrends

I’m not including your organisation and your employees in this list for a reason; you’ll see why in a moment.
If you ask the same companies how they are working to achieve these goals, the answer is often Continuous Improvement and other Lean Management/Six Sigma/Kaizen practices. What oldschool CIP teaches is – among other elements – the following (see the Wikipedia article linked above for more details):

  • Small, gradual improvements are better than radical changes because they require little financial invest.
  • Ideas from workers themselves (rather than ideas from experts/consultants) are likely only of small magnitude – this is good because it makes them easier to implement than big ideas.
  • Ideas emerge from the already existing know-how and skills of the workforce; there is thus no need to invest in any other learning, research, equipment or other.

In a condensed way, CIP is telling you exactly what many managers want to hear:

  • The system you are running is fundamentally good, it just needs optimising and fine-tuning.
  • If you can shave off 8 % time waste in a value creation stream that’s a great success in and of itself.
  • You don’t need to change in a radical way that might be uncomfortable.

The result is that your focus turns inwards and backwards: Inwards, because you focus on your own, already established processes and search for  ways to “trim the fat” a little more – you’re trying to be better without being different. Backwards, because you study the trends that have led from the past to the present; believing they will tell you how things will continue to evolve.
The problem here is that neither your processes nor your history have any inherent value. Their only value is determined by how well they help aligning your organisation’s efforts with the outside and future world. This is also why we don’t recommend to focus on your organisation and your employees in step one; you will need to align structures, processes and work practices with outside/future factors for them to be of any value whatsoever. Fred Schulemann does a good job driving this point home with the headline of his article: “Stop solving your own problems – solve your customers’ problems instead.”


So when you run a CIP program, you also run a great danger of losing touch with future market reality and to enable a culture in which your own processes appear to create value regardless of what you’re achieving through them. This is a dangerous belief that you may have heard express through sentiments such as “We have 100 years of history and hand-picked experts on board – we’ll be fine no matter what.”

Continuous Improvement, Lean Management and Six Sigma do a great job at fine-tuning the solutions of yesterday and today – but keep in mind that’s all they do: They may grant you a few more percentage points of margins today but they will not enable you to invent the future – and you should absolutely strive to do so, because in an era of exponential progress the future is evolving at an ever-increasing speed and CIP iterations performed on established processes will naturally yield decreasing results over time.

So by all means, keep fine-tuning the status quo and keep perfecting today’s solutions – but don’t mistake doing so for creating the innovations your customers will demand tomorrow.


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