Article originally published in the American City Business Journals on January 8, 2019
One of the most important objectives that a company can adopt is to achieve preferred provider status for products and services to its market — the company that customers and clients preferentially go to first before going to the competition.
This is the Holy Grail of any company.
In August 2014, I wrote an article headlined, “A culture of continuous improvement is no management fad … In fact, it could be the Holy Grail.” However, I no longer consider it to be the Holy Grail. It’s an enabler — it helps companies to be a lower-cost provider of products or services, which builds competitive advantage and enables a company to achieve preferred-provider status —the Holy Grail of any firm.
Given the importance of continuous improvement to building competitive advantage, I would like to offer an update to the August 2014 article on continuous improvement.
Over the years, many corporate initiatives have been proposed by consultants such as Six Sigma, Baldrige Quality Award and Kaizen. Many of these initiatives are not sustainable without significant time and effort by management. Today, some are rarely practiced.
At PQ Corporation, we found that the one initiative that generated results and was sustainable over time was the culture of continuous quality improvement, or CQI.
How was CQI different than other improvement initiatives? It was the way in which we implemented it.
We had employees get directly involved in the effort. Instinctively, most employees realize that continuous improvement is needed to grow the company and build competitive advantage. To not continually improve means that you fall behind. No other initiative has this innate imperative.
Even though CQI at PQ was led by the CEO and other senior leaders, it was driven by the employees at every level within the company. The senior leadership of the company was charged with creating an environment where employees developed a sense of ownership in that part of the business in which they work.
This cultural change put power and responsibility into the hands of employees, not managers, to initiate and drive improvement projects. Each of the production unit teams within our manufacturing plants was given $50,000 to spend on projects chosen by the team to improve their manufacturing processes.
Creation of a CQI culture required training of all managers to be coaches and counselors to their staff, empowering them to develop and implement their own improvement ideas. Training was needed to help employees analyze data to determine the root cause of issues, so proper solutions could be identified.
By adopting CQI, my company saved millions of dollars from ideas generated and implemented by our employees.
By relying on our employees to identify and execute these projects, it brought out the creativity in our people, encouraged them to be more proactive, and showed them in a tangible way that they mattered to the success of the company. This helped us be more competitive, and provided funds to reinvest in and grow our business.
There is nothing like having employees throughout the organization, hourly and non-hourly alike, develop and execute their improvement projects so they could develop a sense of ownership in what they do.
So, if you are looking for a way to build competitive advantage to help achieve the Holy Grail — becoming the preferred provider of products or services to the market — adopt a culture of continuous improvement. Companies that do not continually improve will be left behind. Those that do will win the competitive race in the long run.
Stan Silverman is founder and CEO of Silverman Leadership, and is the former CEO of PQ Corporation. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.
Nice article Stan. The worst thing a company can do is become complacent. You need to continue to look to not only improve operational methods but also improve existing products while also developing new products. Competitors can many times quickly catch up regarding operational improvements, which can result in lower market pricing, which in turn may affect a company’s P&L. That’s why continuous improvement must include many aspects of a business.