Making Process Improvements Stick

Managers, led by Frederick Taylor and W. Edwards Deming, have long been obsessed with ways to improve business processes. Over the past 20 years, improvement initiatives such as lean manufacturing, Six Sigma, and agile have spread rapidly across many industries. Research shows that companies that adopt such techniques achieve significant improvements in productivity and cost. But when Brad Staats of the University of North Carolina and Matthias Holweg and David Upton of the University of Oxford examined the benefits, they noticed something missing. ''These things always start out beautifully, but then their benefits fade quickly,'' says Holweg, adding: ''Researchers always seem to tell only half the story. It's not just about putting programs in place; making them last is also important.'' 

To understand why some improvements are sustainable and others aren't, the researchers examined 204 lean projects launched between 2012 and 2017 at a European bank with more than 2,000 branches and 16 million customers in 14 countries. The lean initiative, created by the head office, was supported by a global consulting firm. As a result, an in-house academy was set up to train lean ''champions'' in each regional affiliate. The first projects focused on processes common to all regions (such as opening an account and making an electronic money transfer) that would benefit from reduced handoffs and fewer steps. The regional offices then identified additional projects based on their needs. These projects had an overarching goal: increasing labor productivity, a key variable in service operations.

At first glance, the initiative seemed successful. Over the first four years, the bank launched 33 to 51 projects every six months, each averaging 1,600 employees. While the first improvements averaged 10 percent in productivity, the gain rose to 20 percent after one year and 30 percent after two. According to the researchers, these figures were consistent with the best-performing lean implementations in any industry, and the bank was naturally pleased.

However, when the researchers took a closer look, they encountered a more complex picture. Despite the impressive gains, 21 percent of the projects achieved no improvement at all. Of the 79 percent that initially showed improvement, many regressed: only 73 percent were still producing results above the baseline one year later, and after two years that figure had dropped to 44 percent. When we add together projects with no improvement and those with only temporary improvement, only one-third of the projects were still producing gains two years later.

The researchers also looked at whether the initially successful projects not only maintained their gains but continued to improve (the goal of many lean projects: continuously getting better). Only 51 percent of these were still improving a year after launch; after two years, that figure dropped to 36 percent.

To make sense of these findings, the researchers examined factors that influenced the initial success of lean projects in prior research: the experience of the local leaders implementing the initiative, the level of training provided, and whether the team was used to working together. None of these explained the difference, suggesting that the reasons for initial success differed from what was needed to sustain gains or achieve further improvement.

Interviews with the bank's ''lean'' champions in the 14 countries provided insights. Managers said the condition required to sustain improvement was visible support from board members and senior leaders. Without this support, customer-facing employees come to believe that the company's enthusiasm for the effort has waned, and as a result, things go in the wrong direction. Managers also pointed to the need for continuous measurement and tracking, and said problems arose when early improvements led to diminishing-returns gains. One lean champion told the researchers, ''It's easy to pick the fruit while it's still solidly on the branch; it's hard in the long run.''

The data corroborates these observations. Projects with strong support from headquarters improved 35 percent more after one year than those without. Moreover, they were less likely to regress: at the end of one year, 79 percent of these projects were performing above the baseline. For projects without head-office support, that figure was 61 percent. The researchers interpret this as: ''Having senior leaders who are mindful of lean improvements plays an enormous role in sustaining the gains.'' Some companies hope that a continuous-improvement mindset will permeate their culture and motivate customer-facing employees even without senior leaders being involved. But this study suggests that such hope is unrealistic.

Based on interviews with senior managers from a variety of industries who have extensive experience managing lean initiatives, the researchers also identified three approaches that can help organizations achieve sustainable improvement.

The first is to articulate a program that is clearly aligned with the organization's purpose. For example, a hotel might focus on how a lean process will improve guest satisfaction. This approach is more likely to motivate employees than to save costs. The second is to focus on problems whose solutions will benefit employees. An example is a hospital initiative to reduce the time medical staff spend on paperwork, thereby allowing more time for patient care. The third approach is for organizations to have senior leaders act as coaches, helping to achieve small wins that boost employee motivation and engagement. 

An obstacle to sustainable improvement, according to the researchers, is initiative-based burnout. This occurs when leaders move too quickly from one improvement to the next. (One of the researchers joked about the danger of airport bookstores. This pushes traveling senior managers to buy business books that can help them prepare a new improvement plan.) Embarking on a new project is generally more exciting than staying the course. But that doesn't necessarily yield the best long-term results. Staats comments on this: ''Starting something is always easier: losing weight, going to the gym, quitting smoking… The hard part is making individual changes stick. Making organizational changes stick is much harder.''

ABOUT THE RESEARCH ''Making Process Improvements Stick,'' Matthias Holweg, Bradley Staats, and David M. Upton (working paper)

IN PRACTICE

Helen Bevan 

''Leaders must make sense of these.''

Helen Bevan oversaw change initiatives for 25 years at the British National Health Service, which serves more than 50 million patients and employs 1.2 million health-care workers. Helen shared with HBR the challenges of preserving the gains of an existing initiative while embarking on a new one. Below are highlights from the interview.

Why is it so hard to sustain the improvements an initiative delivers? It's a question of energy. When a new initiative emerges, people ask: ''What are we going to do with the old initiative?'' A large part of our workforce takes its cues from senior leader behavior. When those leaders direct their energy to something else, it becomes difficult to sustain things.

What distinguishes lasting change from others? Sustainability comes first: the way we approach a project and what it means for our organization and purpose. This is the difference between behaving like a seller and behaving like an investor. If we ask doctors to get involved in an issue that is still being built, it's already too late. Before the project starts, we need to make them committed and feel like the project is theirs. When I look at the difference between sustained and unsustainable projects, I usually see that it comes from the time set aside at the start to build the project, frame it correctly, and get people committed.

Does this pose an additional challenge in a health-care system where efficiency may appear to conflict with quality service? Our purpose is health and well-being. That is what motivates people in this industry; not money. If we can frame the project to relate to things that really matter to the people working here, people feel emotional commitment to it. Even doctors who make decisions based on logic tend to be more motivated and committed when it comes to initiatives that align with their emotions and values. So we show the data and avoid jargon. If we talk about ''lean'' and ''agility'' and use words like kanban, kaizen, and scrum, we eliminate people's autonomy. We can convey these concepts perfectly well without using these words.

But don't people worry whether the programs are actually about cost-cutting? Of course we focus on cutting costs; we have limited resources. But it's about how it's handled. Instead of talking about waste, we focus on the different unfounded practices in health care. Every patient suffering from the same illness should receive equally high-quality treatment. Failing to do so becomes a life-and-death matter. Different practices also require additional cost; therefore, reducing these unfounded different practices both improves service and saves money. We achieve greater success when we frame things in line with our existing mission of providing health care. 

How do you embark on a new initiative without losing the gains brought by the previous one? Four years ago we did a crowdsourced study. We asked people working in the same field what the biggest barrier to change is. The most common answer was ''confusing strategies.'' People said that when a new initiative was launched, target, purpose, or focus was created, they did not know whether it was more important than the previous one. We must find a way to sustain the energy of the journeys we've started while making room for new ones. Managers and leaders must make sense of these and reduce uncertainty. 

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