At its core, innovation is the ability to adjust quickly to new conditions and situations in novel and useful ways. As Stephen Hawking, world-renowned physicist, famously said "intelligence is the ability to adapt to change." It's just as true in businesses as in biology.
Toyota has been one of the best companies to leverage this idea over the last decade. They have built a culture centered around the idea of continuous improvement and have used that to dominate the automotive market since the late 1990s. By systematically looking at what's working and what's not -- a process Toyota calls Kaizen -- they find root causes to waste and then build systemic solutions that foolproof procedures and bake in quality.
Another organization to leverage the art of continuous improvement is the US Military. Teams like the Navy Seals use After Action Reviews -- AARs as they are known -- to systematically review recent performance and critically examine what went right, what went wrong, and what needs to improve.
The rate that an organization can learn from its own successes and failures defines how quickly it can evolve its own business. Just like in biology, the organization which can learn and adapt the fastest will rise to the top.
While building a learning-centered organization is not easy, continuous improvement starts with a simple process that any team, in any company, can easily adopt. It's called a Retrospective. Here are the core steps to creating a successful retrospective and how you can introduce it into your organization or business.
1. Create a safe environment
Before engaging in any type of critical review you need to create a place where people feel safe to discuss failures and shortcomings. If not, you'll never get the right information on the table. And it's not just the things that might make the person offering the feedback look bad. People may be willing to risk themselves, but without assurances of safety they won't say anything that will jeopardize someone else's reputation.
The best way to do this is to have the senior team members model this behavior. They should talk about mistakes they've made and mistakes other senior folks have made and how discussing them honestly leads to critical improvements.
2. Collect relevant data
Start with the facts. What data do you have about what happened and what was achieved? Keep it neutral and without judgment. I like timelines where people can post notes on what occurred in time sequence. Have people use calendars, emails, etc. to get the details correct and accurate.
More is better than less in this stage and I generally make sure we allocate plenty of time collecting this important data. Often critical details come to people after they've sat in silence for a while thinking. Don't rush this stage.
3. Develop insights and inferences
Once you have the data on the table, you can begin to process it into insights and inferences. This is second-order thinking. The goal here is to make connections between the data; look for relationships, patterns, gaps/omissions, and correlations.
Key to this step is digging into what you see to find root causes. Toyota developed a process called The Five Whys, whereby they look at something that went wrong and ask 'why?' five times to get to the source of the problem. Other approaches include Fish Bone Diagrams and Mindmapping.
4. Brainstorm possible changes to make
At this point you can begin to develop ideas for possible actions to take. It's important here to not jump to commitments too quickly. Stay in brainstorming mode and encourage any idea, regardless of how crazy it sounds. Consider any option that comes up, and build on ideas to create new possibilities.
5. Focus and commit to specific actions
Once you have several ideas and options on the table, sort by impact and complexity. Get quick commitments on the easy-to-implement/high-impact ideas and then move to the harder-to-implement/high-impact ideas. Make sure your commitments include who will do what by when. Capture these and distribute them to the entire team.
6. Track and measure impact
Finally, track the impact and outcomes of your changes. Put a reminder in the calendar or add a step to your next retrospective to review changes that have been implemented to ensure they are achieving the intended results. If not, retrospect those and find new approaches to take. If you're still getting the same results, you're most likely not effectively addressing the root cause of the issue.
While the art of continuous improvement takes a long time to truly master, these steps will get you off on the right foot with the right structure. And of course, what's the best way to improve your retrospective process? Run a retrospective on your retrospective of course.