We love answering questions in our "Ask Us Anything" video series, but sometimes we get questions that are best answered in a blog post.
Here is a question from somebody in our KaiNexus community who works in a healthcare system:
"In our Continuous Improvement department, we are often evaluating and re-evaluating how we measure the success of what it is that we do. It honestly can be a struggle sometimes, and we want to better convey it to our senior leadership and especially how it aligns with our strategic objectives year-to-year.
Some things are easier [to measure] than others.
For instance, Kaizen events - we can get a good idea of our success with how many of our action plans were closed out and other sustainment checks. The other things - coaching, teaching, being a mentor, project management, etc. - are much harder to gauge and really "measure."
I was curious - what are the ways you know of and have researched that are great measures of success in a continuous improvement or process improvement department?"
Thanks for the question - or, actually, it's many questions.
It's good (and necessary) for a C.I. department to think about how it demonstrates value to the organization. Otherwise, there's too much risk that the C.I. group might be downsized or laid off as part of cost-cutting. Of course, an effective C.I. department should be helping to reduce cost. One benefit that our customers get from KaiNexus is the ability to track all sorts of benefits.
These benefits, of course, go beyond cost. I'm preaching to the choir here, I'm sure, but a C.I. department (or a "Lean group" or "process excellence" or whatever) should be helping people deliver benefits in the areas of safety, quality, access to care, cost, and staff morale. We generally view cost reduction as the end result of doing everything else well. I think C.I. programs get off track when there's too much (or exclusive) emphasis on cost reduction instead of looking at a balanced set of objectives.
Hopefully, your executives have strategic objectives that go beyond cost and finances. Like you said, the C.I. department should align your goals with your organization's goals.
Some of the things you mentioned in your question could be called "process metrics" -- things like the number of events, the percentage of action items closed out, etc. Some organizations also measure the number of small Kaizen ideas that are submitted by staff, along with tracking the percentage that gets closed out. Those are two other good process metrics.
It's one thing to count or measure "the what" of your C.I. department's activities. But, it's very important to make sure your process metrics are leading to a positive impact on the "results metrics."
The only reason to have a C.I. department is to help the organization improve and sustain its performance in all of the areas that matter, for the long term. We have a hypothesis that says, for example, "If we practice Lean or Six Sigma or continuous improvement, the way we're doing that will have a measurably positive impact on the organization."
Can we always prove precisely that a certain Kaizen Event led to an X% reduction in emergency patient waiting times when there are other improvements and initiatives taking place in parallel? Probably not.
But, an effective C.I. department will be just one contributor to the overall metrics of the organization. We want to avoid situations where a C.I. department leader claims "we saved you $5 million last year," when the organization's bottom line is worse than before. Can we make the argument that says, "Well, our loss would have been $5 million worse without C.I."? Sure, but can we prove it? It depends on our relationships with our executives and their belief in C.I.
You're right that some things are easier to measure than others. That makes me think of some quotes:
"Not everything that counts can be counted, and not everything that can be counted counts." (attributed to Albert Einstein)
"It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth.” (written by W. Edwards Deming)
It's difficult, if not possible, to measure the impact of coaching and the development of people. Yet, that's an investment that we have to make. Or, I should say, that many organizations (like Toyota) choose to make. Can Toyota prove that an emphasis on developing people has been good for their business? It seems like a reasonable hypothesis to me and it's hard to argue with their success.
I hope that helps! Thanks again for your question.