In a recent article, I mentioned the concept of continuous improvement and want to expand the conversation around that management model.
I am blessed to work with dairy producers who possess a wide range of skills and abilities. Many are excellent managers whose names some of you would recognize with strong track records of success. One of the most common traits I encounter across the spectrum of my clients’ management abilities and styles is: Too many of these owners get so involved in the day-to-day grind they are unable to maintain a constant drive to find new, innovative (or even incremental) improvements to their businesses.
Only a select few have developed a culture of what I can best label as “ continuous improvement mixed in with a healthy dose of radical change.”
Continuous improvement has been described in various forms since the beginning of the Industrial Revolution. Continuous improvement gained its most significant momentum in the world of automobile manufacturing in the 1950s. W. Edwards Deming, an American engineer, statistician, professor and, most notably, management consultant, is among those largely credited with continuous improvement’s immense popularity.
Deming described continuous improvement as any improvement initiative that increases successes and decreases failures. Variations of continuous improvement include lean production, Kaizen, Six Sigma and total quality management.
For the purposes of this discussion, I’d like to think of continuous improvement in very broad and general terms similar to Deming’s definition. Here are a couple examples:
Aha moment
Several years ago, I was in the middle of a work session with a client to help develop their operating and capital expense budgets for the coming year. As part of the process, I had requested diets for the mature and replacement herds – and was surprised to see just one diet for lactating animals.
The surprise was not so much the one-group TMR but the combination of the one-group strategy and amount of somewhat costly additives and supplements present in the diet.
When I inquired about this, the nutritionist and producer looked at one another and replied: “We just haven’t gotten around to returning to the normal multi-group strategy after the major expansion earlier this year.”
When I pointed out the design elements and the fact the expansion had been completed several months prior, they did some quick math and realized they had let the equivalent of $500,000 in annual feed costs swirl down the drain.
Disruptive innovation
Another scenario I experienced involved a relatively new client. In an early conversation, he listened intently as I described one of my favorite innovation exercises which, if adopted, involved the farm’s team of managers, advisers and consultants. I encouraged a two-hour session complete with a formal invitation, agenda and expected follow-up.
Each member of the farm’s innovation team would be expected to come to the meeting prepared to outline three suggestions for change/improvement that would provide the farm with its quickest and biggest bang for the buck in improving the efficiency of production and profitability.
Each person would have five minutes to provide a brief description of their three suggestions, and the group would then rationalize and prioritize any suggestions that merited adoption. For each project adopted, a project manager would be assigned to ensure timely implementation and in-depth analysis of its results.
Less than a month after I had introduced the client to the innovation team concept, he called to let me know he had partially adopted the idea. He had scheduled a one-on-one conference with his nutritionist to probe areas of opportunity in their ration design and nutritional and forage production strategies.
That meeting resulted in a completely revitalized and energized consulting relationship between the farm and the nutrition consultant. It also generated an annualized improvement in net farm income of nearly $175 per cow – an almost staggering amount of money in total.
So how do these kinds of opportunities sometimes pass by some of the very best dairy owners and managers? I think the answer is fairly straightforward: Too often, we aren’t looking for those opportunities. A particular word comes to mind when I think about continuous improvement. It’s a perfect antonym for continuous improvement: complacency.
We are all guilty of it to some degree. When our work, our business and our relationships evolve to the place where they are very familiar and we become at ease with them, it is entirely too easy to let ourselves become complacent in them as well.
The folks who have mastered the continuous improvement process are people who I sometimes describe as being “never satisfied.” The analogy I often use to describe continuous improvement is to think of your business as a collection of rocks laying out on a table.
Each rock represents a process, enterprise, cost center or perhaps an employee. These “never satisfied” owners are constantly identifying the next best rocks to turn over to find new opportunities for growth and improvement. But, like all of us, they don’t have time to just constantly turn over all the rocks.
They use the knowledge gleaned from the various information systems at their command to guide them to the rocks which are the next best candidates to be turned over and explored. Because of the insights generated by managerial analytics and benchmarking (internal and external), they can more easily identify the rocks that are their next hurdles to greater efficiency and profitability.
How to implement continuous improvement?
You’ve heard me say this before, but it’s really not that difficult; the only real exception may be the first step:
1. Commit. You must commit to the concept of continuous improvement, which will require time and discipline.
2. Build analytical insights. Refine (and supplement if necessary) the tools which will give you detailed insights to the performance of your business from a multitude of dimensions – everything from cost to produce an acre-ton of milk from last year’s corn silage to what it costs you to get a cow pregnant in the first quarter.
3. Empower. Build a culture among your management team, staff and outside advisers to embrace change and seek improvement. It will take time for this to evolve and won’t happen without setting and communicating clear expectations for everyone on the team.
4. Identify which rocks to turn over next. Based on current performance compared to best-of-class, identify your first hurdles to improvement and determine a plan of action for improvement.
5. Monitor results. For each change process, make sure to carefully monitor and measure actual outcomes and evaluate efficacy.
I have seen demonstrated, by a couple of very comprehensive dairy farm financial databases, that management is hands-down a greater determiner of long-term profitability than size. I absolutely believe the concept of continuous improvement is among the most powerful dynamics among dairy farm management styles.
Andy Grove, one of the co-founders of Intel, is credited with this quote: “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” How paranoid are you willing to become? 
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Greg Squires
- Dairy Enterprise Services
- Email Greg Squires
