What continuous improvement process do you have across the whole of your organisation that helps to consistently widen the gap between you and your competitors?
Ensemble Partners has an experienced team that lives and breathes continuous improvement. Whilst we have access to a wide array of models, we have chosen as our guiding framework the Five Focusing Steps from Goldratt's Theory of Constraints (TOC), as it is simple, pragmatic common sense, and it is based on solid scientific principles.
The Five Focusing Steps begins with the assumption that any goal oriented system has something preventing it from achieving more of its goal – a constraint. It should be obvious that systems have constraints for if it were not the case then the output of the system would tend to infinity. A world without constraints would be the equivalent of having a perpetual motion machine, where a finite amount of effort produces an infinite amount of output. This is why it is sometimes said that if you are not managing the constraint then the constraint is managing you! Thus, finding whatever it is that prevents you getting more of what it is that you want is the first step in creating a continuous improvement cycle.
The Five Focusing Steps process helps us in knowing the whole and focusing our efforts on those few key things that maximise system-wide improvement. Once your organisation has established its goal, the Five Focusing Steps continuous improvement cycle delivers results by doing the following:
Step 1 - Identify the constraint.
If a constraint governs the output of a system, then before the system output can be improved, there must be a clear idea of where that constraint is!
Those organisations that sell the product or service with the highest contribution per unit of their constraint will maximise their profits. Therefore, not identifying the constraint means that profit maximisation is at best hit and miss.
Step 2 - Exploit the constraint.
If a system is only capable of producing at the rate of its constraint (a chain is only as strong as its weakest link), then that part of the system must be kept busy all of the time and squeezed for all it is worth! One unit lost at the constraint is a unit lost for the system as a whole.
Step 3 - Subordinate to the constraint.
If there is a weakest link in a chain, then it follows that the rest of the chain has the ability to produce more than the weakest link. The role of the rest of the chain is not to produce more than the weakest link. Instead, it should help support it or be subordinate to its needs, ensuring the constraint is able to focus on doing only thatt which only it can do.
As Deming so eloquently stated; "The object of any component is to contribute its best to the system, not to maximise its own production...some components may operate at a loss themselves in order to optimise the whole system..."
Step 4 - Elevate the constraint.
Eventually the system will reach a point where its constraint has been exploited or squeezed to its maximum. At this point, investment in additional capacity is usually considered, and this is known as “elevation” of the constraint. The elevation step is usually, but not always, a strategic decision.
Step 5 - Do not let Inertia become the constraint.
Once the system constraint has been elevated, the constraint will move to a new point in the system! The system therefore cannot be managed the same way as before and Step 1 must be revisited. In this way, a process of continuous improvement begins.
Perhaps more than ever before, global economic forces are placing companies under extraordinary pressure to continually scan their internal and external environments for sources of sustainable competitive advantage. Competing on cost alone is not the answer. Those companies that harness the creativity and will of their people to form working cultures and systems that nurture innovation and improvement across their products, services and processes will be at great advantage. Having a systemic and systematic approach to the development of a continuous improvement culture can deliver just such an advantage.
Ensemble Partners will help your company by engaging your people; head, heart and hands, in developing a continuous improvement strategy. Ongoing improvement initiatives require engaging people in a way that inspires them to contribute to something greater than themselves. They require inviting people to live into a possibility and to feel ownership and connection with the vision of the company. They also tap into potentially unsurfaced sources of wisdom and experience; all the way from the shop floor to the boardroom.
The ultimate goal of the Five Focusing Steps is to help organisations strategically elect the rate determining step that governs growth and profitability and act in ways that leverage such insight. This is in sharp contrast to most organisations who more often than not are managed by their constraint, blindly unaware of its high leverage potential and clueless about the power of such a simple idea.
With more than a decade of experience in developing continuous improvement systems, Ensemble has helped clients across the globe to deliver persistent high performance.
Call us on +61 2 9387 3955 to find our more.
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