The Power of Continuous Improvement

baby_stepsMathematicians will tell you that the only way to learn math is to do math. Lots of it. The same is true in music and sports. While with math you quickly find out whether you’re right or wrong at a very atomic level with each problem you try to solve, with music a student listens to a song many times before she tries to emulate it — and then gets feedback on a note-by-note basis. And the same goes for sports — the stroke, the kick, the catch, the swing, the run and so on. Practice makes perfect, right?

Yet in business you often find people who have been doing something for a long time and just aren’t very good at it. Why? Lack of feedback. After all, imagine trying to solve math problems and waiting an entire year to get the answers, or hitting 1,000 serves and getting a summary of your performance at your “annual review” rather than after each serve or at the end of a game. Practice only makes perfect when there is frequent, high-quality feedback so that the right adjustments can be made, be it in math, sports, music — or business.

The Corporation and Feedback Systems

In certain disciplines, like engineering and sales, there is somewhat objective and frequent feedback. Your program compiles without an error and does what it was meant to do. Or you close the deal and make your quota. If, however, you’re in one of the many disciplines in which immediate and objective feedback is not available, practice may not lead to perfection so much as enforce bad habits.

Let’s say you’re a mid-level executive — a GM or product manager of some sort. More than likely, you’re measured by how well you interact with and present to your manager and senior executives. Consequently, you optimize to managing the bureaucracy (your boss in particular) rather than delivering the right product or service to customers. And so does your boss, and her boss, and so on and so on. Here the only thing that you’re practicing and perfecting are your brown-nosing skills. How can you expect to learn in an organization with that type of feedback and incentive system? How can such an organization, by extension, possibly produce excellence?

Product Development and Continuous Improvement

The organizations that produce excellence are those that continuously improve. The more granular and frequent the improvements, the better. For illustrative purposes, let’s compare two hypothetical companies that are going after the same opportunity with a similar product concept.

Company 1:  Large Web Company

It’s August 2009 and the annual plan has just been completed, a few months late. Regardless, the road map is set through August 2010, so it’s time to get to work. But new features continue to roll in from various executives, and since none of the older features are being dropped, the schedule is continuously moved out. Finally, after a death march, you launch your product — in October 2010. The press doesn’t like it. Millions of expected customers don’t show up. Somebody screwed up. Time to go back to the drawing board and start over again.

Company 2:  Web Startup

It’s August 2009 and you and a few friends are fired up to change the world. You decide that you’re going to launch your product in 90 days. You’re resource-constrained, so you add nothing to the requirements list and launch on time. The press doesn’t like it. Millions of expected customers don’t show up. Investors aren’t interested in what you have to offer. Every week you ship a new feature or two and learn what works and what doesn’t work. After several months of failure, some feature you cranked out late on a Sunday night leads to an uptick in traffic. Over the coming weeks and months you pull that thread. It’s now October 2010 and millions of people are using your product. You raise a hefty Series A and the press declares your company an overnight success.

This comparison in how organizations react to “failure” reveals the key reason why innovation comes from startups more often than large organizations (and why startups are often a very good training ground for product development and business talent). Large organizations generally aim to “get it right” from the get-go — an unreasonable requirement that leads to fear, posturing and endless delays. Startups, on the other hand, are just trying to get it right before they run out of money.

Human Resource Development and Continuous Improvement

Consider as well the feedback cycles in these two organizations. In the large organization, you likely get feedback when you do periodic releases — perhaps every six or 12 months — with the really important feedback saved for your annual review. In the startup, you get feedback after 90 days and then every single week. And there exists both carrot and stick in terms of providing honest and meaningful feedback — the carrot is equity and the rewards of creative ownership while the stick is running out of money.

Overnight successes make for great stories, but that’s largely because they’re so rare (and more often the stuff of fiction). Success, the kind that leads to great products and businesses, is built on the foundation of a huge amount of hard work over many years. Baby steps are the sure path to excellence in everything from product development to managing your own career — continuous adjustments based on frequent feedback lead to cumulative gains.

Mike Speiser is a Managing Director at Sutter Hill Ventures. His thoughts on technology, economics and entrepreneurship will appear at this time every week.

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