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7 Steps to Create a Culture of Continuous Improvement for Your SME

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Derin Hildebrandt July 29th, 2021

As an ERP implementation partner, we see a common challenge in the small to mid-size companies we work with – they’ve been running with the “this is how we’ve always done it” mentality. But then they’re hit with the heavy realization that this simply doesn’t work anymore. With increasingly competitive markets and big growth goals, they’re forced to acknowledge that what worked yesterday, last week, last year (or five years ago) isn’t good enough for tomorrow.

This is often one of the underlying factors that pushes them to implement ERP software – they need to simplify their processes and move to a better way of doing business. We go deep into their current processes to uncover what’s not working, then determine how we can help them do it better. Even a few months in that mode of thinking during their ERP project tends to start the shift toward a continuous improvement mindset.

But it’s not enough to just create a continuous improvement plan and expect your team to get on board. It’s a shift in your company’s belief system that promotes the continual search for new and better ways to run the business. You need to nurture the right set of behaviors and get buy-in from the entire organization to make continuous improvement an embedded part of your culture.

Why small and mid-size companies should prioritize continuous improvement

Before we dive into how you can create a culture of continuous improvement, let’s talk about why you need it. Business leaders can easily dismiss the benefits of continuous improvement – especially if they’re tight on resources. It takes time and effort to change your culture and implement new processes. But that’s precisely why small and mid-size companies need to invest in continuous improvement – so they can do more with fewer resources.

Research from KaiNexus shows strong ROI on continuous improvement efforts:

  • 1 in 3 improvements has a financial impact

  • 1 in 4 improvements will result in time savings

  • 54% of all improvements impact product or service quality

  • 54% of all improvements increase satisfaction of staff or customers

  • 13% of improvements will save you money

And keep in mind that the benefits of each improvement can span multiple categories. Even small tweaks to a process can make life easier for your team, improve the customer experience and save time. Not to mention that, if rolled out properly, continuous improvement enhances creativity among your team and can lead to a greater sense of fulfillment.

How to build a culture of continuous improvement

Continuous improvement is a long game. You’ll see small wins to start, but each improvement builds on the last, giving you an edge over your competitors as you continually refine every part of your business. Remember that you’re building new habits, so patience is required. But if you take a systematic approach that reinforces the right behavior, those behaviors become habits that eventually become second nature.

How do you get to this future state? Follow these steps.

1. Start with why

Humans are curious by nature. They want to understand the 'why' behind big changes like this. Tackling this up-front will give them the context they need to get on board and increase your chances of success. Seek to answer these questions for your team and be specific. Put it in terms that will matter to them, not a big pie in the sky vision.

  • What’s our objective? What future state are we working toward?

  • Why does this matter to the business? To your department? To you, as an individual contributor?

  • What are the benefits? How will continuous improvement positively impact the business and your role?

2. Get input from your team

According to a Harvard Business Review article, people tend to resist change that’s imposed on them, so you’re more likely to get buy-in at all levels with a collaborative approach. Now that you’ve explained the why and everyone understands the goal, pull your team into the conversation to talk about how you’re going to get there.

You’ll need a plan to manage your continuous improvement initiatives – right down to the details of how employees submit ideas, where they’re tracked and how you measure progress. Ask for input from your team on the best way to do this. Getting different perspectives from all levels of the organization will help you develop a system that’s simple and easy-to-use. And involving your people at the early stages will increase adoption.

3. Lead by example

As a leader in the business, it’s up to you to show people the way. It’s not enough to just preach about continuous improvement – you need to live it openly. In fact, every member of your leadership team should be regularly implementing improvement ideas in their day-to-day and, most importantly, sharing about it. Talking about the successes – and the process itself – is important to reinforce that continuous improvement is a priority. The more employees hear about these initiatives, the more likely they are to follow your lead and make it part of their day-to-day as well.

4. Provide clear guidance

Be specific about your goals and expectations. Do you have a certain number of improvements you want to implement every month or quarter? How many hours are you allowing in each person’s week to improvement initiatives? These are KPIs that you can use to track your progress and they illustrate the importance of these initiatives to the organization.

Give your team examples to help them put continuous improvement into practice. Don’t just focus on ideas that have a direct financial impact. Improvements in efficiency, profitability and customer satisfaction offer value as well – and the financial impacts will come indirectly. Sometimes the best place to start is asking, “How can we make your job easier, safer or better in some way?”. It’s all but guaranteed that your employees will have ideas on that front.

Keep in mind that not every improvement needs to be a big project. Reinforce the idea that small things can make a big difference. “In many important aspects of business – customer service, quality and managing costs – you just can’t achieve excellence without getting the little things right,” says Alan G. Robinson, author of Ideas are Free: How the Idea Revolution is Liberating People and Transforming Organizations.

5. Empower your people

If you want continuous improvement to be part of your culture, you need to let your team execute on their ideas. This means letting them take ownership of daily improvements and their results. Does every idea need to be approved before it’s implemented? Probably not. If an employee sees a way to improve their everyday tasks, give them the autonomy to do so. You’ll still want to track these so you can measure the results and recognize the win. But it doesn’t necessarily need management approval.

Of course, you should have a clear and simple process for those bigger ideas that impact multiple departments. Make sure everyone on your team knows how to submit ideas, use the tools and communicate the results. Research shows that companies with high employee engagement are 21% more profitable, so giving people a way to participate in the process is key.

6. Close the loop on every idea

Some ideas will be quick and easy to implement. Larger initiatives may require a full project plan and dedicated resources. In either case, it’s important to close the loop. For every improvement idea that’s submitted, make sure the employee receives feedback – either an approval or an explanation as to why it’s not approved. Companies with a strong culture of continuous improvement implement about 80% of their employees’ ideas. And for good reason – they understand that a bad improvement idea can still highlight a real opportunity for improvement. Rather than dismissing these ideas outright, it’s up to your management team to coach employees and help them find a better approach to solving the problem.

7. Celebrate the wins – big and small

Recognizing success is essential to reinforcing a continuous improvement culture. In fact, 37% of employees consider recognition to be the most important thing a manager can do to help them be successful. Whether you’ve just wrapped up a 6-month long initiative or tweaked a process that saves an employee 30 minutes a day – celebrate that win. It proves that people’s ideas are working and the effort you’re putting into continuous improvement is worth it. And the more often you recognize your team, the more motivated they’ll be to keep delivering even bigger and better results.

Final thoughts…

Continuous improvement work is never done. It’s an ongoing process, with the aim of getting to “better”, not “perfect”. Like any major change in your company, you’ll need to guide your people and reinforce the new behaviors you want to see. Don’t overwhelm your team by starting off with a major, intensive project. Start small, measure the impact, celebrate the win and use that to build momentum.

July 29th 2021
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