Creating operational excellence and instilling a culture of continuous improvement is a utopia that most organisations never reach. Nonetheless, certain industries have witnessed much greater success than others in the quest for continuous improvement. The manufacturing industry, for instance, wholeheartedly embraced the quality movement many decades ago, which has led to continuously improving organisations.
White-collar environments, on the other hand, still struggle to achieve the desired outcomes of their business improvement, or more recently their Lean Six Sigma efforts.
What sets some industries apart from others, and what steps can whitecollar organisations take to replicate the success witnessed by their high-performing peers in other industries?
High-performance organisations embrace clear and consistent measurement as the cornerstone of continuous learning and improvement. They have a deep understanding of their current performance based on a robust system of metrics (feedback) that has been firmly entrenched in the organisation.
In these organisations, it has become inconceivable to think about continuous improvement without this rigorous system of metrics that systematically provides performance feedback to those responsible. To further illustrate this point, let us look at how high performance is attained in the sporting and manufacturing industries.
The sporting industry is synonymous with high performance and continuous improvement. So how do athletes go about achieving world-class performance? What specifically do they do, and what benchmarks do they use?
These were the type of questions Australia reflected on after failing to win even a single gold medal at the 1976 Olympic Games in Montreal.
The national pride of the sports-proud country was wounded, prompting the industry to radically reinvent itself. The results over subsequent Olympic Games were staggering. Performance continuously improved to the extent that by the 1996, 2000 and 2004 Olympics, Australia was the highest per-capita winning nation in the world.
In 2000, Australia – with a population of 23 million – took home a whopping 16 gold medals and 58 medals overall, the same overall medal tally as third-placed China – a country with a population of 1.3 billion.
How were Australian athletes able to so radically improve their performance and achieve these spectacular results? As a first step, Australia organised its continuous improvement efforts by establishing the Australian Institute of Sport (AIS).
The AIS called in athletes with high potential and started measuring every single aspect of performance, such as the athlete’s diet, weight, exercise, sleeping patterns, heart rate, strength and resting practices.
This information was then fed back to the athletes and their respective coaches to understand what determined top performance, to challenge underperformance, and to reinforce excellence. It was this process of embracing measurement as the basis of learning and providing continuous feedback to those responsible for performance that led to Australia’s phenomenal results.
The manufacturing industry has a reputation for its dedication to operational excellence and continuous improvement initiatives. Yet this was not always the case.
For example, in the 1960s, the cars produced by automotive companies were still riddled with many faults. My grandfather and father, when buying a new car, even used to keep a logbook on the dashboard in which to document the many dozen issues they encountered, for later feedback to the dealer at the first service session at the 3-month mark.
Then in the 1970s and 1980s, the quality of cars improved radically when the Japanese started releasing cars with 1- to 3-year, 50- to 100-thousand-mile warranties, while recording almost no defects! The world watched in astonishment as these massive leaps of improvement were made.
How did the automobile industry evolve to achieve such drastic leaps of improvement over the past decades?
The answer is, once again, that companies such as Toyota began measuring every single aspect of performance (e.g. defect rates, mileage, quality and efficiency), then used this information to provide feedback to the most appropriate person within the organisation who could take action.
These days, the concept of measurement as the cornerstone of continuous learning and improvement has become so deeply engrained into the very DNA of the industry that it would be inconceivable to run a manufacturing plant without robust metrics, management methodologies and an organisational culture that openly embraces measurement.
White-collar environments are still struggling with their continuous improvement initiatives. From over 20 years of experience in introducing metrics systems into the back and middle offices of large institutions, I suggest there are 3 areas white-collar organisations must address before they can achieve their operational excellence and continuous improvement objectives: