Continuous Improvement is often associated with streamlining operations and shrinking the bottom line. Many companies using CI seek to optimize existing processes under the assumption that these processes are delivering exactly what the customer or market has the greatest value for. What happens when your company’s products and processes get out of alignment with the market? Since the customer’s perception of value is a moving target; isn’t misalignment inevitable? Peter Drucker, widely known as the father of modern management, said that “perfecting a process that should not be done in the first place is the worst type of waste”. This post explores using the mechanism of Continuous Improvement for growth in sales and revenue.
Let’s face it, there’s a good chance your company has turned to Continuous Improvement because sales numbers are soft so its looking to cut bottom-line costs in order to increase margins. The irony is that Toyota and Ford, often viewed as the birthplaces of modern CI, originally applied these methods to grow top line revenue. So why aren’t today’s companies looking to CI to fix their real problem, which is sluggish growth, or worse, declining revenue? After all, the best way to increase operational efficiency is to increase sales for at least 2 very real reasons:
- The incremental increase in production volumes absorb overhead costs, which for some companies, especially small and mid-sized manufacturers can be enormous
- The increased revenue also affords the company the resources to upgrade technology, processes, customers, suppliers, products, and even talent
Growth in sales is very much a Continuous Improvement process. You don’t need CI as much if you goal is to stay where you are – but growth means keeping current customers happy as well as finding new ones, which requires you to innovate and improve upon current processes.
The Sales Problem
There could be any number of reasons why your company’s sales aren’t where you want them to be. The most prevalent one is that your product, or supply, may be out-of-alignment with demand. The greatest products sell themselves. Likewise, as any salesperson can tell you, some products are just impossible to sell. Top salespeople, who have their pick of companies to work for and products to sell, will choose those that just sell. The second main reason is that your business model may be out of alignment with the market. This includes the other 3 P’s of marketing, which are price, placement, and promotion. It’s challenging enough getting these factors dialed in to build a business in the first place; but its inevitable that they will become out-of-alignment with the market as time passes. Forces such as technological innovation, competition, fashion trends, and demographic shifts are always at play, changing the landscape for the market in which you serve. How can you maintain pitch perfect alignment with your market, meanwhile growing into new markets to ensure top line revenue growth?
Using Continuous Improvement for Growth
You may be familiar with some of the most common Lean and CI tools such as Visual Management Boards, Value Stream Mapping, 5S, and Gemba Walks. These are some of the more visible outputs of a CI program. Many times they are just cut and paste facades of a healthy program but we can go into that over drinks sometime. You may have also heard of Agile software development, Toyota KATA, Lean Startup, and Growth Hacking. These are all great approaches that have produced incredible outcomes for the companies that have applied them well. If you break these approaches down to their base element, they’re all essentially the same thing: applying the scientific method to improving business results. That’s right, the exact same process that creates cures for diseases, enabled travel by flight, and will ultimately give us the time machine, can be used everyday in your business to make great things happen. The underlying theme of the methods mentioned before is to optimize the processes used to execute your business functions, including sales.
You may not consider Sales to be a system of processes like you think of for operations. Many companies approach sales by finding a rainmaker with a magic wand for winning business and staffing up the department with others whose job is to try to mimic the rainmaker. Just like any function, sales departments can be ranked into 10% stars, 70% average, and 20% laggards. The challenge for any sales function is to figure out how to get the 70% to produce the results of the upper 10%; and since they probably don’t have the rainmaker’s magic wand, they have to rely on rock solid processes. Here is where Continuous Improvement comes in.
CI is the process of setting target conditions and experimenting, or innovating, your way to successfully meeting the objective of the organization. This works much better if the organization is crystal clear about what it’s trying to achieve. The approaches listed above all apply the following method to improvement:
- Set a target condition that aligns with what your company is trying to accomplish
- Meet regularly, preferably with a cross-functional team (often weekly, however more frequent is better)
- Review what single process change was made last week (key word is single – one change at a time) and what you learned from it. This is greatly aided by carefully selected data to measure the impact made by the process change being studied
- Decide what the team will try, or experiment with, next in order to produce a better result
Of course there’s a lot more meat to put on these bones but the simple practice of blocking off time weekly (or more frequently) on the appropriate people’s calendars to meet and work through this process provides a structure that encourages constant innovation. This same fundamental process can be applied to product development, business model, bottom line operations improvement, or any other aspect of your business or personal life.
Technologies like Impruver provide the strategy deployment, problem solving, metrics, project management, and communication tools needed to facilitate Continuous Improvement for Sales, Operations, Product Development and all other functions in one seamlessly integrated platform.