Continuous Improvement

Luis Miravitlles. Professor. IE Business School

20 June 2006

The concept of corporate improvement can be divided into two main theories – Radical improvement and Continuous improvement. The following article takes a closer look at what these two concepts entail.

Radical improvement – what is it and when is it used?

The business world divides the concept of improvement into two main theories. The first one, which is mainly associated with Western culture, is that of ¨radical improvement.¨ This theory envisions a complete and drastic change in one area of a company, such as its products, processes or organization, and is designed to have a significant impact on the profit and loss account. This concept of change is closely related to the idea of a ¨hero¨ who, with one contribution, often based on personal effort and inspiration, turns the company around and boosts results.

Many companies with little or no previous experience in improvement often encounter stumbling blocks that hinder progress. These enterprises usually have deeply entrenched hierarchies, coupled with mature products, obsolete information systems and inflexible processes that together impede a steady rate of improvement. In order to overcome these substantial barriers, radical changes must be introduced to shake up the company and force it to move in a specific direction. When a company achieves this type of improvement, progress is usually irregular and made up of long periods of stability followed by short periods of convulsion.

Continuous Improvement and its three main elements

There is a second theory of improvement called ´continuous improvement´, which is based on the idea that every aspect of a company is open to methodical and systematic improvement. What is notable about this theory is the idea that the entire organization is seeking continuous improvement, which is focused more on the rate of improvement than on the size of the improvements. This concept of smaller yet more continual change is more in keeping with Eastern cultures and is based on three critical elements:

::The entire company must take part in the process and adopt this idea in its day-to-day work ethic.
::The continuous improvement process never ends. Once an improvement has been achieved, new improvement opportunities must be found.
::There must be a strategic method for approaching continuous improvement that ensures consistent benefits for the company.

Continuous improvement and the idea of total quality management

These three points are the underpinning of total quality management, a concept made fashionable by Japanese companies in the 1970´s. Interestingly, the father of the continuous improvement theory is the American Edward Deming, who moved to Japan after having met with little success in his own country. In Japan he laid down the basis for the philosophy of modern quality and went on to develop the first methodological model for continuous improvement, the famous PDCA cycle (Plan, Do, Check, Act).

The acronym PDCA stands for the steps that a company must follow in order to achieve continuous improvement. First, “Plan” by identifying improvement opportunities and analyzing them systematically in order to design the needed changes. Secondly, “Do” – by implementing the changes. Thirdly, “Check” – by measuring the results and verifying that they meet expectations, and lastly, “Act” – by consolidating the improvements.

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