Continuous Improvement:

Principles for Reducing Variance and Accelerating Growth


An organization’s ability to scale is limited by how it handles 3 things. Problems, challenges and opportunities.

Organizations without a standardized system for identifying constraints, experimenting with solutions and measuring performance have a ceiling on how much they can grow. Mind you, the height of this growth ceiling is influenced by a number of factors… business models, funding, domain expertise and experience, macro environmental factors, etcetera. But that is not the focus here.

Below are 3 principles for any organization and/or team looking to take the lid off their growth ceiling by managing their problems, challenges and opportunities through continuous data-driven improvements.


Principles:

  1. Understand your organizational variance.

2. Prioritize your improvements.

3. Enable change.


1. Understand your organizational variance.

The old adage of “you’re only as strong as your weakest link” holds a lot of weight when observing organizational performance. Particularly, when evaluating variance. Variance being the difference between the highest and lowest points at which you perform.

Understanding your organizational variance and not the average of how good you are, allows you to better identify constraints and/or bottlenecks in your organizational system. And, by extension, find areas in which you can improve. For example, a basketball team looking back on their season determines they scored an average of 100pts per game, with opponents scoring an average of 98pts per game. Based upon these figures they have a NET average of +2pts per game. Terrific.

Alternatively, the same team analyzes the score of each game played, identifying several games where they lost by > 10pts and only a couple where they won by > 10pts.

What analysis do you think provided the most insight on performance and potential areas of improvement?

Ultimately, organizations live and die as systems, not as processes. And scaling them requires understanding the constraints found within the interrelated processes that make-up the whole… Because of this, it doesn’t matter how much effort you put into improving process in general. Your largest performance boosts are garnered from improving the weakest components of your system. Your constraints.

Wondering where to start?

Your first — and somewhat obvious step to understanding and addressing organizational variance is as follows:

  1. Develop a solid understanding of a problem your experiencing and establish an “As-Is” position. Doing so equips you with a baseline to measure against in future. Without one, you are lost.
  2. Establish a “To-Be” goal you intend to reach. A best-case result or problem resolution.
Note: tools to establish “As-Is” and “To-Be” found below in Principle 2.

Understanding the variance and not the average of how good you are is the key to defining problems, challenges and opportunities.

However, one misconception with the saying “you’re only as strong as your weakest link” is its common reference to human error. The purpose of understanding organizational variance is rooted in transitioning accountability from individuals to teams. And having a laser-like focus on process.

Individuals are not your weakest link.

The processes in which these individuals, or teams, operate within are.


2. Prioritize your improvements:

Figuring out what problem and challenges to improve upon first is critical in reducing overall organizational variance and capitalizing on opportunities. That said, the generic high, medium, and low prioritization technique provides little distinction between the potential impact each item can have on your organization. A framework for prioritizing improvement is needed.

There are 4 types of conversations you need to have with your team(s) on a regularly recurring basis (i.e. daily, weekly, monthly).

Plan. Do. Check. Act.

A “Plan” conversation to set intentions for a set period of time. Your goals.

A “Do” conversation to determine who will be accountable for executing on your goals. And of course “do” the necessary work.

A “Check” conversation to track progress on your goals and identify problem areas.

An “Act” conversation to engage other team members when needed to help meet the goals established in your plan.

How you structure the agenda of each conversation varies depending on your organizational-type — a sports team versus a start-up, for instance. In many cases combining conversation-types is effective (i.e. Plan/Do and Check/Act meetings). However, the underlying purpose remains the same.

Establish a plan.

Determine who’s doing what.

Check on your progress.

Act upon your findings.

Having a structured meeting calendar, allows you to measure. Generally speaking, humans have a natural inclination not to use metrics. It’s easier. But in order to know and — more importantly, remember what’s worth improving, a quantitative approach is required. Taking a scattershot approach to implementing improvements has obvious draw-backs.

The purpose of your “check” meetings are to report on how you’re progressing toward your goals and to identify any potential impediments for your team members. Your immediate reaction may be to determine who else can help solve the problem. But more important to your team’s long-term success is understanding why a problem occurred in the first place — “What stopped you from meeting your goal(s) this week?”.

Note: phrase this question toward process issues. Not individual competence.

Once these process issues are identified, then what?

Record them.

A Pareto chart (shown below) is a useful tool for recording problems. It segments issues into process-related categories, thereby removing the finger-pointing and aligning your team around the problem itself.

When a team member has something stop them from completing their goal, categorize the impediment and score it on the amount of time lost.

By giving each item a score, or weight, you’re then better able to identify chronic problem areas for which you can create solutions. A digital version of a Pareto chart linked here: https://trello.com/b/8iry1ebo.

After you’ve accumulated enough information to identify persistent issues, you’re ready to ideate potential solutions. Similar to your routine plan/do, check/act meetings, an improvement meeting allows your team(s) to propose and review potential solutions for some of your most chronic problems. In many cases you’ll find yourself with more ideas than you know what to do with.

How then do you prioritize each potential solution?

A simple 9-square grid can be very effective. While analyzing your organization’s Pareto chart, you can begin to populate your 9-square board to prioritize “improvement projects”.

During your improvement meeting you’ll categorize solutions by 2 criteria:

  1. Degree of difficulty. Usually measured by the number of people involved or time required.
  2. Potential impact a solution could have on your organization. Impact being categorized by time-saved, dollars-saved, expenses diverted, etcetera…

Anything you don’t prioritize is placed at the bottom of your 9-square for a later date. Once you’ve categorized solutions, focus only on those in the top-right of the board (i.e. ones both easy to implement and hold a high potential impact on your organization).

What next?


3. Enable change.

Don’t just fix things that are not working. Fix them, then enable them.

Pulling from Principle #1 — you need to establish an “As-Is” and a “To-Be” for each of your process improvements before taking action.

A simple and useful tool for recording improvement projects is a project charter (below).

Set a time-bound goal. Determine a baseline. Establish a metric to indicate if you’ve moved the needle in the right direction. Make note of your assumptions. Identify project leads. Deem what is in and out of scope. And set a check-in date.

Once your time frame has expired, measure your performance and make a judgement call. If it’s working, keep it. If not, pull the plug.

But. How do you sustain all of these changes?

Create improvement champions — someone equipped to lead a given improvement project. Then assemble a team around them to help with implementation. This has benefits outside of just process improvement. It’s an effective method of onboarding new people to your organization. Bottom line. Give people ownership and everyone stands to benefit.

Another obvious, yet under-utilized strategy; create check-lists for your process. And agendas for your meetings. You’d be amazed at how the simplest of tasks can become such effective productivity drivers.

With all of this said. A word of caution…

Before diving into applying the above principles, it is critical to fully understand the current network of process making up your organizational system.

Without knowing where you are, it’s impossible to get where you want to go.


In Summary.

Principle 1: Understand your organizational variance.

  • Solving problems, requires that you first understand them.
  • Transition accountability from individuals to teams.
  • Focus on process-related issues impeding your teams’ success.

Principle 2: Prioritize your improvements.

  • Plan. Do. Check. Act.
  • Track chronic issues.
  • Evaluate solutions.

Principle 3: Enable change.

  • Create improvement champions.
  • Use project charters.
  • Institute agendas and checklists.

Thanks for reading!



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