Six Sigma, Kaizen, Lean, and other variations on continuous improvement can be hazardous to your organization’s health.  While it may be heresy to say this, recent evidence from Japan and elsewhere suggests that it’s time to question these methods.

Admittedly, continuous improvement once powered Japan’s economy.  Japanese manufacturers in the 1950s had a reputation for poor quality, but through a culture of analytical and systematic change Japan was able to go from worst to first.  Starting in the 1970s, the country’s ability to create low-cost, quality products helped them dominate key industries, such as automobiles, telecommunications, and consumer electronics.  To compete with this miraculous turnaround, Western companies, starting with Motorola, began to adopt Japanese methods.  Now, almost every large Western company, and many smaller ones, advocate for continuous improvement.

But what’s happened in Japan?  In the past year Japan’s major electronics firms have lost an aggregated $21 billion and have been routinely displaced by competitors from China, South Korea, and elsewhere.  As Fujio Ando, senior managing director at Chibagin Asset Management suggests, “Japan’s consumer electronics industry is facing defeat.  “Similarly, Japan’s automobile industry has been plagued by a series of embarrassing quality problems and recalls, and has lost market share to companies from South Korea and even (gasp!) the United States.

Looking beyond Japan, iconic Six Sigma companies in the United States, such as Motorola and GE, have struggled in recent years to be innovation leaders.  3M, which invested heavily in continuous improvement, had to loosen its sigma methodology in order to increase the flow of innovation.  As innovation thinker Vijay Govindarajan says, “The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation.  The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different.”

So should we abandon continuous improvement?  Absolutely not!  It has created tremendous value and still drives competitive advantage in many companies and industries.  But perhaps it’s time to nuance our approach in the following ways:

Customize how and where continuous improvement is applied.  One size of continuous improvement doesn’t fit all parts of the organization. The kind of rigor required in a manufacturing environment may be unnecessary, or even destructive, in a research or design shop.  Sure it’s important to inject discipline into product and service development, but not so much that it discourages creativity.

Question whether processes should be improved, eliminated, or disrupted.  Too many continuous improvement projects focus so much on gaining efficiencies that they don’t challenge the basic assumptions of what’s being done.  For example, a six sigma team in one global consumer products firm spent a great deal of time streamlining information flows between headquarters and the field sales force, but didn’t question how the information was ultimately used.  Once they did, they were able to eliminate much of the data and free up thousands of hours that were redeployed to customer-facing activities.

Assess the impact on company culture.  Take a hard look at the cultural implications of continuous improvement.  How do they affect day-to-day behaviors?  A data-driven mindset may encourage managers to ignore intuition or anomalous data that doesn’t fit preconceived notions.  In other cases it causes managers to ask execution-oriented, cost-focused questions way too early, instead of percolating and exploring ideas through messy experimentation that can’t be justified through traditional metrics.

Continuous improvement doesn’t have to be incompatible with disruptive innovation.  But unless we think about continuous improvement in more subtle, nuanced, and creative ways, we may force companies to choose between the two.

Cross-posted from Harvard Business Online.

Bio

Ron Ashkenas is a Senior Partner of Schaffer Consulting and an internationally recognized consultant, executive coach, and speaker on organizational transformation, post-merger integration, and simplification.  He also holds an appointment as an “Executive in Residence” at the Haas School of Business at UC Berkeley.

Ron’s clients have included many of the Fortune 500 companies, as well as prominent financial, governmental, and non-profit organizations such as Cisco Systems, Bausch + Lomb, The Federal Reserve Bank of New York, Merck, Pfizer, The World Bank, GlaxoSmithKline, Johnson & Johnson, Zurich Financial Services, Lloyds TSB,  Thomson Reuters, and ConAgra Foods. Ron was part of the original team that collaborated with then-CEO Jack Welch to develop GE’s Work-Out approach for creating a faster, simpler, and more nimble organization. He also helped to develop GE Capital’s approach to acquisition integration.

Ron is the author of Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done (Harvard Business Press, 2010), as well as the co-author of Rapid Results! (with Robert Schaffer, Jossey-Bass, 2005), The GE Work-Out (with Dave Ulrich and Steve Kerr, McGraw-Hill, 2002), The Boundaryless Organization (with Dave Ulrich, Steve Kerr, and Todd Jick, Jossey-Bass, 1995 and 2002), and The Boundaryless Organization Field Guide (Jossey-Bass, 1999). In addition to his books, Ron’s publications include dozens of articles. Six have been published in the Harvard Business Review, including “The Merger Dividend”, “Making the Deal Real: How GE Capital Integrates Acquisitions” and “Why Good Projects Fail Anyway”. Ron is also a regular blogger for Harvard Business Review and Forbes.

Ron received his BA from Wesleyan University, his Ed.M. from Harvard University, and his PhD in Organizational Behavior from Case Western Reserve University, where he has also held several teaching assignments. He has conducted executive education programs at Case Western Reserve, the Kellogg School of Northwestern, Stanford University School of Business, and the University of Michigan – and has lectured in Israel, South Korea, Canada, Germany, the U.K., and many other countries around the world.

Follow Ron Ashkenas on Twitter: www.twitter.com/SchafferResults.  203-322-1604 • www.SchafferResults.com