10.27.2010

The Improvement "Trap"

During the past few years, I've attended many insightful presentations given by Michael Bremer while participating in conferences focused on Lean initiatives and performance improvement (most notably at the Association for Manufacturing Excellence's annual conference). Michael has currently authored a book (along with Brian McKibben) titled Escape the Improvement Trap: Five Ingredients Missing in Most Improvement Recipes. I recently met with him, and during our conversation, I asked him to explain just what is the "improvement trap" and how can companies escape it. I'm reproducing his reply here:

"For the most part, companies typically approach the business of improvement in very much the same way their competitors do. They appoint some smart person to lead the effort, and that person finds areas to improve, typically using improvement teams to attack waste and remove obvious non-value adding activities. Meanwhile, the organization conducts its business in the same manner it always has. Performance and efficiency might get better, but they get better in the competitor’s company also, so as a result, nothing much changes. That is the trap.

If an organization wants to break out of that trap, it must look for levers that can truly differentiate the organization from the competition. People laud and strive to emulate the Toyota Production (or Thinking) System (TPS). And it is indeed very powerful -- one of the best improvement methodologies of all time. But when did Toyota start to make lots of money? It was not after 20 years of TPS, although that did provide a solid foundation. Toyota started making the big dollars when they launched Lexus and redefined the customer buying experience for purchasing a luxury car. New value creation rarely gets talked about in improvement programs, yet is one of the most important areas an organization can develop."


Have you worked for a company that has invested much time and capital into an improvement initiative only to ultimately retain (or lose a bit of) the established market share? What do you think of Michael Bremer's point about the importance of new value creation?

13 comments:

Bill Waddell said...

Mike is right on the money. With our collective short term focus it can be easy to be deceived by a company that realizes a quick gain from some cost reduction effort - a move to China, an investment in automation, or the like. Long term success goes to the company with the best value proposition, however, rather than to the company that simply has the lowest cost. His book is in the 'must read' class for evey manufacturing manager

Griffin Caprio said...

I agree. All too often companies get stuck in a modified arms race to cut the most costs. That benefits no one. True improvement must come from a culture change and identification of ways to create new value for their customers.

Jean said...

I so agree with Michael. The value of reducing waste is not really for cost reduction but to create capacity to focus on the specific needs of the customer. If that is in the accounting, HR or IT areas, that capacity that is freed up can be used to more directly assist the end customer, or to assist the business customer (like manufacturing, sales, product development.) For instance, when we reduced waste in accounts payable, we took capacity to work directly with purchasing on kanban. When we reduced time on cost accounting, we added support to product development.

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