Process-Problems: Hidden Treasures, Part I

By: Randy Cook and Alison Jenkins, McKinsey & Company

When a company engages its people in problem solving as part of their daily work, they feel more motivated, they do their jobs better, the organization’s performance improves, and a virtuous cycle starts to turn. Such an approach can tap enormous potential for the company and its customers.

At one auto-parts manufacturer, each employee generates an average of 15 suggestions for improvement every year. Over a period of 16 years, these suggestions have helped secure major advances that reached well beyond productivity and into safety and quality.

Openness to talking about problems

On the face of it, talking about “issues” or “opportunities” rather than “problems” sounds like a good way to avoid sounding negative or critical. In practice, though, great problem solving begins with the ability to acknowledge problems and a willingness to see them without judgment. When an organization treats problems as bad things—as mistakes, defects, or failings—bringing them out into the open will make people uncomfortable. But problems that stay hidden will not get fixed. And problems that go unfixed keep the organization from reaching its objectives.

Neither attributing blame nor brushing a problem under the carpet is helpful. Organizations that embrace continuous improvement take the opposite approach. They understand that when a problem is properly identified, the root cause usually turns out to be not a particular group or individual but an underlying factor that the organization can address, such as a lack of transparency, poor communication, inadequate training, or misaligned incentives.

This means that organizations should see problems as something to prize, not bury. Raising and discussing problems is not just normal but desirable and critical to success. As one lean leader told us, “Problems are gold nuggets we have to search for. It’s when we don’t have problems that we have a problem.”

Willingness to see problems wherever they may be

Before you can acknowledge a problem, you have to be aware of it. Identifying problems, particularly before they grow into a crisis, is a skill that can be learned. In lean thinking, all problems can be attributed to some form of waste, variability, or overburden. Learning how to spot these factors as they arise is one of the most important skills leaders and their organizations can develop.

Picture a bank supervisor who takes a call from an irate customer demanding to know what has happened to the loan she applied for two weeks ago. What should the manager do? Tell the customer her application is in the system and she should get her decision soon? Track down the application and quietly expedite it? Or go and find out what is causing the delay and whether it is affecting other applications as well? Only the third option will enable the manager to bring the problem’s real causes to light and get the team involved in identifying and fixing it.

Problems are particularly difficult to see when they are hardwired into “the way we do things around here.” For instance, some organizations place a lot of value on certain tasks that their best employees perform in order to work around uncooperative business partners or cumbersome IT work flows. Yet under closer examination, many of these tasks turn out to add no value as far as customers are concerned.

Organizations can often achieve significant improvements simply by exploring what is preventing them from applying current best practices consistently across the entire workforce. Once they reach stable performance at this level, raising the target creates a new gap to be explored.

Understanding that small problems matter

Most large organizations design their processes to manage big, top-down strategic interventions—reorganizing, migrating to a new IT platform, or outsourcing a process. They have well-honed routines for handling them: appoint a manager, set objectives, and check progress at regular intervals. If the effort fails to move in the right direction or at the right speed, leaders intervene. Leaders themselves, having grown up in this kind of environment, believe that implementing these big strategic projects is central to their job—and perhaps their next promotion as well.

However, this view misses an important truth. Businesses don’t stand or fall by big projects alone. Small problems matter too and are often more critical to great execution. If a project-based approach doesn’t work, what will? In fact, the only way to manage these small, everyday issues is to detect and solve them as they arise (or even before). That calls for leaders to shift their dominant mind-set from that of “knowing the answers and directing employees” to “learning from and coaching the people who are closest to the problems.”

Solving hundreds of small issues each year—as opposed to managing a dozen big projects—requires an organization to develop a more distributed problem-solving capability. Leaders carry the responsibility for modeling coaching and analytical problem-solving behavior and ensuring it is adopted at all levels of the organization. It can take years of practice for this way of working to become truly ingrained, but when it does, organizations see the results year after year.

Randy Cook is an expert in McKinsey’s Detroit office, and Alison Jenkins is a senior expert in the Washington, D.C. office. Copyright © 2014 McKinsey & Company.
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