Two dimensions for process improvement

Lean Mentality & Diffusion-3There are two essential dimensions you need to consider when building a culture of continuous improvement: Diffusion and Mentality. Centralized responsibility/Cost savings mentality: This quadrant is the realm of "Chainsaw" Al Dunlop. The focus is on cutting costs, and decisions reside with one person -- usually the CEO or CFO. The result is a culture of fear, demotivated employees, and ultimately a weaker long-term strategic position.

Centralized responsibility/Value creating mentality: This is a better quadrant in which to live, but progress is slow because the "lean team" (or kaizen promotion office, or HR, or whatever) becomes the sole repository of improvement knowledge. Even worse, everyone else in the firm abdicates responsibility for improvement, passively waiting for the lean team to come to the rescue. Which might not happen for two years.

Diffused responsibility/Cost savings mentality: This is where many companies pursuing improvement find themselves. The good news: in this quadrant, you're getting everyone engaged rather than relying on an internal team of experts. The bad news is that with a focus on reducing costs, you'll have diminishing marginal returns (there's a limit to how much cost/waste you can take out of any system). Eventually you'll start to lose ground and end up only slightly better than where you started.

Diffused responsibility/Value creating mentality: Clearly, the place you want to be. (You can tell because it's green.) In this quadrant, everyone is engaged in improvement, and people are thinking about how to increase the value they provide to their customers -- internal or external. As a result, you see breakthroughs in lead times across the organization; innovations in product or service delivery; better customer service -- and lower costs. People are engaged and creative, because they're using their imaginations for lateral thinking, not just cutting and cost reduction.

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