You’ve evaluated your business, you’ve identified where your major issues are, and you have created a few processes using the IPO model designed to make things more efficient. But, you know you’re not done. The work is never finished! This is an infinite game and you’ve just started.
This is where the PDCA Method comes in. Designed by W. Edwards Deming in the 1950’s at a statistical quality control seminar in Japan, the wheel you are used to seeing in fact has its roots in the Shewhart cycle. Shewhart was an American physicist and sometimes acclaimed “father of statistical quality control”. In 1939 he changed the core concept of his cycle from a linear process to one that is circular, with no end.
Deming took this already good idea and added a fourth step. To Shewart’s initial three step process of specification – production – inspection he added redesign. Therein the structure of the model was in place even if the wording had yet to fully take shape. Finally, after the conference Deming attended, Japanese manufacturing executives recast the concept in the now familiar terminology.
Not Just for Operations!
While PDCA is typically associated with the operations functions of a business (i.e. producing goods and services or improving processes within the business), its ubiquitous use across the entire business is noteworthy. Since the four functions are generally performed as a series of processes, the process for process improvement applies for all.
Each of the four core business functions can benefit from the PDCA cycle for improvement:
- Plan
- Do
- Check
- Act
For example, if a company wants to increase the number of leads given a fixed marketing budget, the Marketing Department should look to improve their lead generation process. Initiating the planning phase of their effort, they may plantheir next marketing campaign based on past campaign experiences, keeping what has worked well in the past and planning to try something new that their recent studies indicate may respond well with prospective customers. Often, the use of A/B testing is used to maximize the opportunity to find the best results.
Planning should also include the measures that will be required to assess the effectivity of their efforts and to determine if an improvement in performance actually has happened. This measure must also include a baseline measure to compare against. One example here could be the number of leads per $100 spent since they are planning on a fixed budget. If they demonstrate they can increase the number of leads per $100 spent, they will inevitably be able to increase their overall number of leads given their fixed marketing budget.
Then they do it – they execute the marketing campaign per the plan. When the campaign is complete, or even during the campaign, they check to see how the campaign is performing, comparing the number of leads per $100 spent to the baseline of previous efforts. If all this work is confirmed by real world results, they act by implementing this as the new standard for the organization. PDCA illustrations typically show this as a sphere or a ball being pushed up a hill. The standard is a plateau that juts out from the hill, protecting the upward progress of the workers. Either way, the PDCA cycle begins again to drive even further improvements in their process performance.
The key insight of PDCA for process improvement is that it is circular. A process is never “perfected”. Perfection is never achieved but must be relentlessly pursued. Continuous improvement is a mindset and a culture adapted by all high performing organizations.
There are both external and internal forces that may erode an organization’s performance. Externally, technological change prevents even the best process from becoming reliable for too long. Likewise, competition and rising consumer expectations would disallow this even if technology was static. Internally, all processes experience decay if left alone. Employees may try to shortcut things out of ease and managers may become complacent because performance is “good enough”. If businesses are not in a constant state of renewal and improvement, they will fall prey to attrition. If a business is not moving forward, it is falling behind!
The Culture of Improvement
At its heart, PDCA is part of a larger way of thinking. PDCA is all about a cultural shift. It is meant to facilitate the mindset of continuous improvement. This requires a lot more than a forensic affirmation of the need for ongoing improvements. Continuous improvement requires that everyone, from the hourly employee to the CEO and Board of Directors, be searching for ways to decrease waste and improve the company.
PDCA allows management to show this commitment and make it felt throughout the organization. It is the process of process improvement. By institutionalizing continuous improvement in the very way the organization runs and thinks, managers can show that this is not just another corporate initiative that needs to be survived until it passes, but rather that a commitment to improvement is a radical shift in the thinking of the company.
Having looked into process creation (the IPO Model) and continuous process improvement, it makes sense to examine next what to do when something inevitably goes wrong. When a process or event is beyond the simple helping hand of the PDCA Model and needs to be addressed so that it does not happen again, it needs something a little more robust. Next week, we will discuss what this something else is.