Not All Improvement Ideas Require “Projects” It's Not All About Cost Savings, Either
When I hear the word “project,” I think of long team-based initiatives that last for weeks or months.
1. something that is contemplated, devised, or planned; plan; scheme.
2. a large or major undertaking, especially one involving considerable money, personnel, and equipment.
Miriam-Webster doesn’t necessarily define it as “large or major,” but I think that’s the implication in most organizations.
1: a specific plan or design
3: a planned undertaking: such as
a : a definitely formulated piece of research
b : a large usually government-supported undertaking
Last week, I shared (on Twitter and in this blog post) this slide from the presentation given by Tim Pehrson who is CEO of North Region (five hospitals) & VP of Continuous Improvement for Intermountain Healthcare.
There always some risk when you share snippets from a presentation. As Donald J. Wheeler, PhD says, data without context have no meaning.
My best attempt at sharing context is that Intermountain first embraced continuous improvement within the North Region. I first had a chance to visit McKay-Dee Hospital, which is part of that region, somewhere between 2008 and 2010 or so. There are a few references to Intermountain in our book Healthcare Kaizen, as a result of the few visits I’ve made there:
That “idea card” is a classic example of what’s used to facilitate small Kaizen… the types of improvements that are too small to be labeled “projects.”
In Tim’s slide above, the data there is for the entire Intermountain system. They are still in the process of rolling out the continuous improvement process from the North Region to the entire system.
12,787 ideas means implemented ideas, not just idle suggestions that didn’t go anywhere. These are actual changes… improvements.
In addition, 892 projects means some of those were larger ideas with more involved work.
The $7.4 million in cost savings wasn’t the only measure that mattered to them. Cost savings is often the easiest measure to add up….
But if we look at another slide Tim showed, here are the results from the continuous improvement work in the North Region over previous years:
They’re looking to improve quality and safety, service to patients, and employee engagement. It all goes hand in hand. It all leads to cost savings, as an end result, which is different than doing “cost cutting.”
Notice the ratio of projects (bigger changes) to ideas (small changes) is about the same:
- 892 / 12787 = 6.9%
- 2000 / 57293 = 3.4%
Not everything has to be a “project.” I have one client who is trying to break a habit of referring to improvements as “projects.” Their default was long TQM-style projects. They are trying to switch to a Kaizen model of continuous improvement, where 80% of improvements are “quick and easy,” as Norm Bodek would call it. But, for a while, they were still calling the small stuff “projects.” They’re getting better at this.
The term “project” tends to scare people off a bit. They think a project means a lot of work and that they don’t have time for a project.
When I posted the first slide on LinkedIn, the comments there reflect some of the biases people have about improvement.
A person with a Six Sigma background commented:
“Interesting topic, it seems that the Healthcare sector is SO ripe for improvements, there is opportunity in every direction. The average save comes out to be ~8,300 per project seems very low. I just think that the results of an effort in this space would yield much greater financial results.”
He had done the math of 892
I might have been a bit snippy in my reply, but I asked:
- Why do you think this is all about projects?
- Why do you think this is all about cost savings?
There’s another common bias that says you HAVE to set targets or goals for improvement. I’ve found that the thing that really matters is the behavior of leaders. If they do the things that encourage participation and improvement, then you’ll see improvement that’s very self-motivated. Goals and targets can get dysfunctional.
The commenter wrote:
“As a data driven person I see the value in tracking ideas. The quandary I have is whether to set goals or just track and try to improve. I have seen world class automotive companies set goals and work hard to achieve them yet others say shouldn’t set goals for ideas just encourage them.”
I’m in the “just encourage them” camp (and that would include coaching, facilitating, recognizing, and other behaviors).
There’s also another assumption or bias (or experience shows) that a large number of “ideas” don’t lead to any improvement.
A commenter wrote:
“If ideas create projects and projects create savings then basically they are turning 7% of the ideas into projects that are worth about $8,296 per project. that would seem to have a couple consequences. just under 12,000 of the ideas didn’t get any action which can cause some moral issues if people feel they are being ignored. At $8300 per project if there is any cost at all the net savings is at best 50% of that number.
The point is that big numbers trigger emotional responses but they don’t necessarily make business sense. This program could very easily be running at a loss and people will run around all jacked up over these numbers and then wonder why management shuts it down. Out of 12 thousand projects nobody had the insight to put enough money on the table to keep management interested. It looks like the people doing projects are doing their part. The people managing the program seem to off target.
For one, there’s a bias that says management only cares about money and cost savings. I don’t think that’s the case here.
The commenter had misinterpreted the slide and the numbers. The difference between projects and ideas is in scale/size. They were all implemented projects or ideas. The commenter mistook 892 / 12787 to be an implementation rate, which would have only been 6.7%… which would be more like a suggestion box than a Kaizen system.
6.7% would actually be a HIGH implementation rate for a suggestion box system.
What we see in an effective Kaizen system is closer to 90% implementation rates. Again, that slide that Tim showed had numbers for implemented ideas and projects.
Someone else wrote that the cost savings number doesn’t look that big in context of the organization’s revenue:
“Considering that this is a $7 bn /year organisation, $7 million saving being discussed, is just 0.1%… seems they still have tremendous potential for improvements…which they need to tap.”
I think that’s fair. Tim was presenting about STARTING to spread this methodology throughout Intermountain. They’d probably agree there is still tremendous potential.
I think every health system has this sort of potential. I applaud Intermountain and others who are making progress in this direction. What about your organization? What about your local health system, if you’re a patient?