Continuous Improvement and What It Means for Your Bottom Line

Organizations face a lot of pressure to transform themselves—to be bold and take risks, to push the boundaries of what’s possible and to constantly tinker with what already works.

But sometimes constantly changing course and trying to make big leaps can lead to frustration, anxiety, and even burnout.

Sometimes what a business needs most is to build on what already works, and to take smaller steps to make it work even better. 

Consultants and managers will sometimes refer to this process as “continuous improvement” (CI), and if you’re like most organizations today, CI could be the key to unlocking unrealized efficiencies, becoming more profitable and building a stronger work culture for the long term.

What is Continuous Improvement?

Also referred to as “Kaisen” or “change for the better,” continuous improvement (CI) was first pioneered at the Toyota Corporation in postwar Japan. Since then, it’s become a popular change management technique for businesses looking for tried and true ways to improve processes, work culture and ultimately their bottom lines.

CI methodologies and frameworks can get pretty complex, but the fundamental idea is pretty simple: to become better as an organization, you need to commit to making small, gradual changes and improvements every day, with the expectation that those small improvements will eventually add up to something significant in the future.

Adopting Continuous Improvement: Starting Small

Adopting CI involves abandoning the instant results-oriented mindset, which is a tempting state of mind to fall into when you’re a growing business.

This “quick wins” approach can be satisfying, even addicting in the short term. Teams get excited and buy into new projects quickly, your investors are happy, and if you’re an ambitious business owner focused on expansion, quick wins can feel like a godsend. But they can also be a trap.

Constantly hunting for low-hanging fruit can cause us to ignore the slow, continuous work we should be doing in the long run—the more boring, less visible parts of improving our businesses.

But improving a process by even as little as 1% every day can have huge effects in the long run—if you do it consistently.

Why small but continuous improvements matter

If you have a savings account, you’re already benefiting from some form of continuous improvement: in this case, from compound interest.

Holding your money in a savings account might not feel very lucrative. How much could a few percent interest a month really add up to?

It might not add up to a lot in the short term. But as any financial advisor worth their salt will tell you, the interest and principal in your savings account doesn’t grow linearly. It compounds, meaning that the interest you collect today will get you more interest tomorrow.

Ed note: this diagram, but replace “Simple Interest” with “Linear Growth,” and “Compound Interest” with “Compound Growth”

Wait long enough, and the interest you gain will also start gaining you interest. And then those gains will gain you even more interest: and so on. 

As author James Clear points out, “if you get one percent better [at something] each day for one year, you'll end up thirty-seven times better by the time you’re done.” That’s just simple math.

The point here is that there are very few situations where small, constant improvements to any part of your business won’t compound and result in impressive long-term gains.

That means that to truly leverage the power of CI, your business needs to figure out how to get the other parts of your business compounding the same way the cash sitting in your savings account is.

Improving efficiency, cutting costs, and building a culture of constant improvement

Entire textbooks have been written about CI and what it can do to transform a business. If you’re a smaller business with little time for big shifts in management strategy, it can sometimes be hard to know exactly where to start. If you’re stuck, try experimenting with one of the following:

Checklists

Popularized by surgeon and writer Atul Gawande, the checklist strategy might be the single most powerful, straightforward, all-purpose CI tool.

It consists of four steps:

  1. Evaluate the processes your organization needs to operate on a day to day basis
  2. Create an exhaustive, step by step checklist for each of them
  3. Use the checklist when you work to make sure you aren’t missing any steps
  4. See if there are any ways to improve the checklist

When surgeons at Michigan hospitals began using checklists in their ICUs in the early 2000s, they noticed something remarkable.

Despite the fact that they hadn’t implemented any new technologies or processes, within months they noticed infections during surgery had dropped by more than 50%. Within two years, the strategy was saving the hospitals tens of millions of dollars, and the extra precautions surgeons were taking had saved more than 1,500 lives.

The lesson here is a simple but profound one: even when we know something works, even when it’s something we do every day, we will sometimes skip it.

Checklists are like a laser scan of everything that works for your organization: a set of magic goggles that allow you to see through the boringness of repetitive tasks and give them the attention and care that they deserve.

Checking, revising and improving your checklists isn’t just a great way to drive continuous improvement in your business: they’re also a hedge against you backsliding and sustaining tiny losses, which can sometimes be just as impactful.

Make team members the bedrock of your CI process

Changing employee behaviour is difficult, but it gets a lot easier if you involve them and even put them in charge of that change.

If you’re struggling to think of where to start with CI, involve your team members in the process. Get their input about what’s working, what they think could change, and what steps you all need to take to enact that change.

Team members should come away from this process feeling like this is their project just as much as it is yours. Because CI is all about the details—the parts of your business that are harder to see—the best CI processes don’t just consult employees for ideas on how to improve. They rely on them.

Increase transparency and get data out of silos

Large companies usually turn to CI when they have problems with efficiency: i.e. ballooning budgets, equipment and resources sitting idle and unused, rules and bureaucracy getting in the way of innovation on the front lines, etc.

If your business’ priority is to address efficiency problems, one way to spur continuous improvement is to increase and promote a culture of transparency.

Openly sharing important goals and milestones, tracking utilization, sharing data across all levels of the organization—all of these actions can help you and your team members get deeper insight into what works and what doesn’t work in your organization. 

Creating a more transparent business makes it so that even if you don’t know where potential areas of improvement are, one of your team members might.

Make a week of it

Some organizations might simply be too small or strapped for time to pursue a regimen of continuous improvement, but that doesn’t mean they still can’t pursue CI.

If you find yourself in this position, consider a weeklong CI pilot project instead. Sit down with your team, pick one organization-wide process you want to improve on, nail down a list of to-dos, and spend the next week focused on improving that one process.

Doing so isn’t just a great way of addressing long-standing inefficiencies or problems: it can also get your team in the habit of approaching issues with a CI mindset after the weeklong pilot is over.

Conclusion

Organizations have every reason to ignore the longer-term aspects of their work: most operate in a business environment where quick wins and instant gratification reign supreme.

But organizations that adopt cultures and processes of continuous improvement stand to gain tremendously in the long term. They’re more efficient, they have teams that feel empowered to change and improve the way they work, and their managers aren’t constantly occupied by the search for quick wins.

If you feel like you’re constantly playing catch up and aren’t giving your organization’s long-term plan the attention it deserves, consider giving continuous improvement a try.


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