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Executives don't lose sleep over Lean tools. They lose sleep over survival, growth, quality failures, talent retention, and staying relevant in markets that keep moving. Most continuous improvement pitches miss this entirely -- they lead with methodology, jargon, and "why this is the right thing to do." Senior leaders tune out within minutes.
In this session, Allan Wilson, CEO of KaiNexus, and Mark Graban, author of Lean Hospitals and co-author of Healthcare Kaizen, work through how improvement leaders can talk to executives in terms executives actually care about -- and how to build the kind of program a CEO will support, defend, and amplify rather than tolerate.
The two pillars: survival and growth.
Survival means staying relevant. Allan points to Hewlett-Packard, once the company everyone looked up to in the 1980s and 1990s, now eclipsed by Apple as the default reference for innovation. It means quality. The damage General Motors absorbed during its quality crises showed how quickly stock price, customer trust, and brand confidence collapse when quality slips. And it means winning and keeping customers in markets where brand loyalty is thinner than it used to be.
Growth has three flavors that executives think about constantly: top-line revenue growth, bottom-line profit and margin growth, and market share growth. Each one looks different from the inside. A hospital CEO thinks about growth as becoming the provider of choice for cancer care, attracting patients from a wider geography, and earning the kind of word-of-mouth that brings the next patient through the door.
When you frame continuous improvement against these concerns, executives lean in. When you frame it as a methodology or a culture-change project, they tune out.
Allan is direct on this point: nothing makes a CEO's eyes glaze over faster than an improvement leader saying "we should do this because it's what Toyota did, and it's the right thing to do."
The problem isn't the principle. The problem is the framing. Senior executives are accountable for outcomes. They need to hear how improvement work moves the metrics they're being measured on -- and they need to hear it in business language, not Japanese terms. As Mark puts it in the conversation, you can talk about continuous improvement for hours without using a single Japanese word.
The companies that get this right -- Allan cites Danaher and Bosch as examples from his own career -- treat improvement as a component of strategy execution rather than a parallel track. Danaher uses hoshin kanri as the connective tissue. Their executives are measured on improvement initiatives within the strategy framework, not separately from it.
Most executives spend significant effort recruiting talent, then fail to leverage it. They look at the P&L, see headcount, and treat people as expense rather than asset. When margin pressure hits, the instinct is to cut 10% of labor rather than ask the workforce to help find a better way.
A specific story from Allan's career: an electronics manufacturer in South Florida with about 1,000 employees. The local market norm was 20% annual turnover. This company ran under 2% -- while paying lower hourly wages than competitors. Why? Every month the CEO held a company-wide meeting, reported progress against strategy, and personally recognized individuals and teams for improvement contributions. Employees told Allan they stayed because they felt like part of the company, because their ideas were heard, and because the place respected them. Lower turnover, lower recruiting cost, lower training cost, higher engagement -- all from a leadership behavior that cost nothing to implement.
A parallel from Robert Bosch: when the company started organizing kaizen teams across the business and bringing frontline workers into product and process improvement work, a senior executive told Allan they discovered talent they didn't realize existed. Several of those people were promoted into positions of authority and went on to drive major business results. They were already on the payroll. The company just hadn't created a structure where their thinking could surface.
The conversation lands on a handful of practical shifts for CI professionals trying to communicate with the C-suite.
Ask the executive what keeps them up at night, then walk a mile in those shoes. Don't show up with a Lean agenda. Show up curious about what they're accountable for and how your work could help.
Frame every recommendation around business impact. Some impact is financial -- savings, revenue, margin. Some isn't -- patient safety, employee retention, time to market, regulatory risk. Both count. What doesn't work is improvement work framed only as cultural virtue.
Volunteer to be measured. Allan's strong recommendation: tell your executive sponsor "give my team the opportunity to prove the impact, and measure us on it." This shifts the conversation from defending the program to demonstrating it.
Connect daily improvement to strategy. If your organization uses contin or any form of strategy deployment, every kaizen, A3, and improvement project should have a visible line of sight to a strategic objective. If it doesn't, either the work is misaligned or the strategy isn't being deployed effectively to the front line.
Recognize talent visibly and frequently. The South Florida company example wasn't unique because of the recognition itself. It was unique because the CEO did it consistently, in person, every month, for years.
Brian Dieter, CEO of Mary Greeley Medical Center, framed his organization's improvement journey in three lines that have stuck with the KaiNexus team: keep it simple, avoid jargon, and get better at getting better. Don't wait for the breakthrough idea. Stack incremental improvements until the breakthrough surfaces on its own. Mary Greeley went on to win the Malcolm Baldrige National Quality Award in 2019 -- the first organization in Iowa to do so.
Another KaiNexus customer story Mark references in the webinar: a hospital realized many of its patients were leaving the clinic and filling prescriptions at outside pharmacies, even though the hospital had its own on-site pharmacy down the hallway. A small, low-cost change -- making sure clinic staff informed patients about the convenient option -- moved roughly a third of those prescriptions back inside the system. The result was about $700,000 in additional annual revenue from a process change that took almost nothing to implement.
These are the kinds of stories that change executive conversations. Specific. Measurable. Rooted in the work the organization was already doing.
Most organizations don't have a visibility problem about whether improvement matters. They have a visibility problem about what's actually happening, where the impact is showing up, and whether the program is sustainable.
KaiNexus is purpose-built to give executives, improvement leaders, and frontline contributors a shared view of improvement work across the enterprise -- ideas being submitted, projects in flight, impact tracked over time, and successful improvements ready to spread to other sites. It's the infrastructure that lets a CI program scale beyond what spreadsheets, suggestion boxes, and email threads can support, and the evidence base that lets an executive sponsor defend the program in any boardroom.
If your improvement work is generating real results but they're hard to see, hard to measure, or stuck in one corner of the organization, that's the problem KaiNexus solves.
This transcript has been edited for readability.
Mark Graban: Welcome to our webinar, How Continuous Improvement Helps the C-Suite Sleep Better. Thanks for taking time out of your busy schedules to be here. I'm Mark Graban, your host. I'm VP of Customer Success for KaiNexus, author of Lean Hospitals, and co-author of Healthcare Kaizen. Our primary presenter is sitting right next to me: Allan Wilson, CEO of KaiNexus.
Allan Wilson: Thank you, Mark. I'm delighted to take part today and share my experience from the last 20 years or so of being involved in Lean and continuous improvement.
Allan Wilson: The insights I'll share apply to both executives and continuous improvement leaders. For about five years, I was in charge of the Lean program for a major corporation. We had several thousand customers, and about 800 of them were explicitly involved in deploying Lean and continuous improvement. Some of my insights come from those customers and the executives I visited.
Allan Wilson: The subject of this webinar is what keeps executives up at night. It's important for continuous improvement leaders to engage with senior executives and ask what drives them. Another way of thinking about it is walking a mile in their shoes. If you ask, and they share their concerns, and then you walk a mile in their shoes, you understand what's truly keeping them up at night.
Allan Wilson: Among the customers I worked with around the world, the ones that excelled -- Bosch, the big German automotive supplier, was one -- were able to link continuous improvement to the company strategy. First, you have to understand the strategy, and then articulate how continuous improvement can help meet it. Many companies, like Danaher, a big U.S. conglomerate, use Hoshin Kanri as their strategy structure, and integrating continuous improvement as a component or a driving focus of that is extremely important.
Allan Wilson: Another insight: don't try to sell Lean and continuous improvement as "the right thing to do." If anything makes a senior executive's eyes glaze over, it's someone in continuous improvement saying, "We have to do this because it's the right thing to do. It's what the Japanese did." You'll lose their interest almost immediately.
Allan Wilson: Instead, articulate impact. Continuous improvement needs to be framed with some context so a senior executive understands the impact. It could be return on investment or savings to the bottom line. It could also be non-financial impact. In a hospital, that might be patient safety or patient outcomes.
Allan Wilson: And the final point is leveraging talent. One thing I found in my travels is that executives, to be honest, didn't do a good job of having a structure to let people bring their talent to the table. They spend a lot of time recruiting people, but they don't really leverage that talent. When we talk about empowerment and respect for people, all of that is designed to leverage the talent inside the organization.
Allan Wilson: If I'm a CEO reporting to a board of directors or stakeholders, the two primary pillars are survival and growth. What does survival really mean? First, it's remaining relevant. In the '80s and '90s, a company we really looked up to as the leader in technology and innovation was Hewlett-Packard. I'd say HP has failed to remain relevant in innovation and improvement. They've been overtaken by Apple as the company that first comes to mind for innovation. It will be interesting to see how Apple does in the post-Steve Jobs era.
Allan Wilson: Survival also means a focus on quality. We've seen General Motors' quality problems lately. That can have an enormous impact on the value of a company: the stock price, consumer confidence. And if you fail to innovate, you fall back. That's part of why HP hasn't kept its leadership position. It's thought of as a deliverer of technology rather than an innovator. You won't survive and stay relevant if you don't innovate. If you do innovate and focus on quality, you'll win and retain customers. Retention is vital, because there isn't the brand loyalty there used to be. If your quality suffers, customers will go elsewhere. And, as I said, finding and retaining good talent and managing costs are very important.
Mark Graban: That's a really relevant framework. For people in healthcare, it's fairly rare for a hospital to shut down completely, but survival is often framed as wanting to remain independent. A community may value having an independent community hospital rather than being absorbed by a larger organization.
Allan Wilson: I agree. And with community hospitals in particular, what people say about their experience when they walk out of the hospital is important. If patients go out into the community and share a bad experience, that will have a real effect on survival.
Allan Wilson: How do we define growth? There's top-line growth, increased revenue, and bottom-line growth, increased profit or margin. If continuous improvement people can communicate how improvement and innovation will affect both -- not just paying lip service, but truly articulating it to leaders -- we'll really succeed.
Allan Wilson: Then there's market share. If you accomplish the first two, you begin to dominate your market segment. In healthcare, you'll be recognized as a quality organization, or as the dominant player in cancer treatment or some other service line. And there's new market penetration. A company may be successful today manufacturing handheld devices, but what about becoming dominant in software as a service instead of only manufacturing hardware?
Mark Graban: In manufacturing, new markets might mean moving into different countries. In healthcare, a lot of new market penetration comes from attracting patients to our existing locations because we're the provider of choice in different dimensions.
Allan Wilson: So what actions can we take to ensure survival? Job number one is focusing on value. I'm sure people on this webinar recognize voice of the customer. If you're not listening to the customer and delivering products, services, and capabilities they need and are willing to pay for, your survival is at risk. We've talked about quality, innovation, and talent. Leverage the talent.
Allan Wilson: Many organizations do cost-cutting. But it's not just about cutting costs to survive. It's about cost control within the framework of everything else we're discussing. Improvement and innovation leaders can tell senior executives, "We can reduce costs and increase effectiveness, but we do it through continuous improvement," as opposed to looking at the P&L, counting heads, and cutting 10 percent, which happens many, many times.
Mark Graban: We're preaching to the choir here, but whether through Kaizen or Lean, we view cost as an end result of reducing waste and improving processes, as opposed to attacking cost directly, which often means slashing labor and closing things down. That's the death spiral of cut, cut, cut, as opposed to getting costs under control as a result of doing other things well.
Allan Wilson: One of the best examples I've seen of integrating strategy, involving employees in that strategy, and focusing on quality and talent was an organization in South Florida with about a thousand employees. Every month, the CEO held a company-wide meeting. He reported how well the company was doing against the strategy, and in that meeting he complimented individuals and groups for their continuous improvement and innovation contributions to that strategy. Every single month. In Lean, we talk about recognition and reward, and this organization really excelled at that. The CEO made it his business to be visible and to recognize people for their contributions.
Allan Wilson: Revenue growth relates to product: do our products match the voice of the customer? The main drivers of profit and margin growth are efficiency and reduced costs. If we do that within a framework of continuous improvement, we'll get there. People make it happen, and in my experience a lot of CEOs don't really get this. They don't think, "I have a thousand people in my organization. Let's use them." In the majority of cases they think, "I have a thousand people. Why shouldn't it be 800?" The question should be: can I use that talent and embedded capability to improve the goods and services we deliver? It's about innovation and improvement, and focusing talent on both.
Mark Graban: That's the distinction: viewing employees as an asset -- not literally on the balance sheet, but as people who can all contribute to improving the organization. That increases employee satisfaction and engagement, which means the creative people with ideas stay with us instead of leaving for a competitor. Too many leaders still view employees as just an expense.
Allan Wilson: Exactly. So why am I the CEO of KaiNexus? KaiNexus is an enabler for leveraging talent and creating a collaborative environment. It's an enabler for improving and accelerating innovation, and for individuals to contribute and be recognized. We've embedded virtual rewards that are given to individuals and groups who contribute to the success of the business.
Allan Wilson: Our website has a couple of CEOs talking about their Lean and continuous improvement journeys using KaiNexus. One is Brian Dieter, CEO of Mary Greeley Medical Center. What does Brian say? He says, "Keep it simple." Don't look for the great big breakthrough idea. Look for small, incremental improvements, and eventually the big idea and the big innovation will show itself. But don't do nothing while you wait for the big idea. Improve incrementally along the way.
Allan Wilson: Avoid jargon. In my experience, one of the turn-offs I've seen with senior executives is when continuous improvement people constantly use Japanese terms. I can talk about continuous improvement for hours without using one Japanese word. Executives sometimes view that jargon negatively, and we should find a way of communicating that connects with them.
Allan Wilson: Brian also says, "Get better at getting better." I think that's a fabulous statement. Why don't we work at getting better at improving? He says KaiNexus gives them a framework to sustain that behavior and the impetus to keep it going.
Mark Graban: I appreciate that Brian isn't just focused on short-term results and ROI. By getting better at getting better, we're developing and leveraging talent and engaging people in the workplace. That's win-win-win: good for employees, the organization, and patients or other customers.
Allan Wilson: The takeaways are meant for both the executives and the improvement professionals on this webinar, to think about how to communicate effectively together. Continuous communication facilitates continuous improvement. Ask for an appointment to talk about improvement. Don't just show up; make a habit of talking about improvement.
Allan Wilson: One technique I found very effective in my travels is asking your stakeholders, "How can I do a better job in what I deliver to you?" We all have internal customers, the recipients of our work in the company. Go to them and ask, "How can I do this better? Am I focused on the right things? Are there things I can drop so I can focus on what you want me to prioritize?"
Allan Wilson: Here's an example from a very large software company. Every month, about 600 people worked on producing month-end reports. I was teaching Lean internally, and I asked the leader of that group, "Have you ever sat down with the board, gone through the monthly report page by page, and asked what they do with it? Are there areas where the analytics need to be improved, or areas that could be dropped so you can focus on doing a better job?" That worked really well. Understand the world of the people you work for and with, do your homework about what's important to them, and that communication will surface the areas you need to improve together.
Allan Wilson: I strongly suggest framing the discussion around business impact. Don't frame it as, "It's the right thing to do," or "We need a culture of improvement," or "We need respect for the individual." Those are very important elements of continuous improvement, but frame them in terms of how they affect the business and our ability to execute the strategy. If you can say, "If we do this, we'll find more quantifiable ways to improve how we deliver our products and services," you'll get senior executives' attention, rather than just saying, "We need to do Lean."
Allan Wilson: Explain how it enables execution of the company strategy. Look at the conglomerate Danaher's stock growth over time. Danaher is absolutely manic about strategy and Hoshin Kanri, and about how Lean and continuous improvement fit into that. Their executives are measured on their improvement initiatives within the framework of the strategy. It's vital that we explain our Lean and continuous improvement activities within that framework.
Allan Wilson: Talk about leveraging talent, in a question-and-answer way. Does the executive think we're properly leveraging talent, or are they disappointed? If you agree that a better job could be done, the way is clear for you to recommend how. That might be better communication, or more Kaizen events where teams work together and are challenged to come up with creative ideas.
Allan Wilson: Ask the executive for help: "We want to do a better job. Most people here want to improve quality and be proud to come to work every day." If you regularly and proactively sit down with the person you report to and have that kind of discussion, there's nothing to worry about. There are no surprises. You have an open dialogue: How can I do my job better? How can I make sure my team is working on what you want, and doing it better? Ask proactively rather than sitting back and waiting.
Mark Graban: I'm sure executives don't want the continuous improvement person coming in and lecturing them about what they should be doing. It has to be a dialogue: What do we need to do? How can we support you?
Allan Wilson: And be measurable. Volunteer: "Give my team the opportunity to prove the impact we can make. If you support more Kaizen events, and you send the message from the C-suite that continuous improvement and innovation are important to executing the strategy, and you challenge teams to compete in a positive way to bring new innovations forward, then you're part of that dialogue." We're all working on it together, and that creates a very impactful environment. Open yourself up: go ahead and measure us.
Mark Graban: Even softer things like respect for people can translate into fairly immediate measures. As morale improves and people are engaged, absenteeism and sick-out rates go down. Voluntary turnover goes down, so the company spends far less recruiting and replacing nurses or software engineers. Things that sound soft and fuzzy can have measures assigned to them, with clear cause-and-effect relationships.
Allan Wilson: That reminds me of something a senior executive at Robert Bosch in Germany told me. Four or five years earlier, they hadn't been on a continuous improvement journey. They brought in an executive to lead it and created Kaizen teams across the business, reporting into quality, looking at product improvement as well as process improvement. He said, "When we did that, we discovered talent we didn't realize existed, and we promoted that talent into positions of authority where they've been extremely successful. We would never have found them if we hadn't given them the opportunity to express themselves within this framework." That's another way to talk with executives: they can find the hidden talent in their business by bringing people together and giving them a voice.
Mark Graban: That mirrors what I've seen in healthcare. You see who the change agents are and who has leadership ability -- which nurses you want to start grooming to be managers, directors, and executives. Participating in improvement lets people with that extra drive for innovation shine.
Allan Wilson: It's human behavior. Many organizations bring in outside consultants because they think people outside the business know more about it than the people inside. That's almost counterintuitive. They're looking for the silver bullet, and that kind of thinking doesn't sustain. You can bring in consultants to work with your internal staff and help bring their creativity forward. I'm not being anti-consultant. I'm saying that rarely does a consultant come in from outside and find the silver bullet.
Mark Graban: There's a role for consultants, but you often see executives bringing in a consultant to tell them what their strategy should be. Executives should know their business and industry well enough to set the direction that the rest of the organization's improvement and innovation efforts point toward.
Mark Graban: Allan is so focused on voice of the customer that he heard feedback from other webinars -- where Greg Jacobson and I are chatty and run short on time -- and left plenty of time for questions. Here's one: if you're a middle manager and you had a few minutes in an elevator with the CEO, what one question would you ask?
Allan Wilson: "Are you going to fire me tomorrow?" No. If I were a direct report of the CEO, I'm very much in favor of asking for a scorecard. I constantly ask the people I work for to give me an interactive scorecard, because that's my road map. Are there areas of my work that need to improve? Are there things I do that I don't need to be doing? How can I do a better job?
Allan Wilson: We're all in this together. We come to work to earn a living for our families, but also because we enjoy it. If you're in a job you don't enjoy, my recommendation is to find other employment, because you won't do a good job and the people you work for won't think you're doing a good job. So my question would condense to: How am I doing, and how can I do it better?
Mark Graban: Another question: do you have recommendations or success stories for helping a command-and-control C-suite become more delegating and trusting, so a continuous improvement culture can even get started?
Allan Wilson: What a great question. Compare today's military to the military of years gone by. Today's military gives more real-time responsibility to people in the field to make decisions, and command and control is about overall coordination and strategy. That's what I've been saying today: how do my individual actions fit into the overall strategy? So the conversation I'd have is: tell us the business strategy and what's keeping you up at night, and then challenge us to come up with ideas. As the people you've hired to be part of your business, we'll bring ideas forward to help you be more successful, and move toward a modern command and control rather than an ancient one.
Mark Graban: It's funny how military language shows up in business. As I've met people, especially those who have been in military medicine, it sometimes seems the military culture is actually less top-down -- less "do as I say" -- than private organizations. The military talks about commander's intent. The commander says, "Here's the intent: take that hill," and there's room for creativity and flexibility in exactly how we take that hill.
Allan Wilson: I'll share something personal. My son is a former Marine, in the Corps for about eight years. When he joined straight out of high school, he felt he could take on al-Qaeda single-handedly. He was that kind of guy. What the Corps taught him was how to be part of a team, communicate with teammates, and accomplish an objective within a framework of overall intent, which is your point. The military has evolved from ancient command and control to distributed command and control, distributing control down to what I like to call the coal face, letting the miner who's picking the coal make decisions about the environment they're in.
Mark Graban: In a Lean context, we're trying to push decision-making down where we can, while leaders stay involved and supportive. On the culture transition, I've seen awkward starting points where C-level executives ask their vice presidents, "What do you think?" and people freeze. They're not used to giving input and may not feel comfortable yet. Leaders need to be sensitive to why people might not speak up immediately. And people speaking up -- easier said than done -- need to be a little brave and take the chance, hoping leaders respond positively. The culture changes by doing that.
Allan Wilson: Sometimes when people are promoted into positions of authority, they lose the very capabilities they were promoted for. They suddenly take on the mantra that they have all the answers. I don't think businesses do a good job of teaching people how to lead and take responsibility, because true leadership is about leveraging your team, not having all the answers. Continuous improvement and Lean people can help educate on that, and have that conversation, so we create an environment where we're all in the boat together.
Mark Graban: Dr. Greg Jacobson, our co-founder, who does many of these webinars, tells a story about trying to be collaborative as an emergency physician. He'll ask nurses, "What do you think we should do with this patient?" and a lot of them freeze because they're not used to a physician asking. You have to build a comfort level and trust, and the same is sometimes true with executives.
Allan Wilson: To make it safe for people to speak up. And this isn't about kumbaya, where we all hold hands and make every decision collectively. In the end, there has to be a leader. The surgeon makes the decision. The head of supply chain or manufacturing makes the decision. But the quality of that decision is greatly enhanced by leveraging the talents of the team. In my experience, team decisions are in many cases far better than what one individual can come up with.
Mark Graban: Another question: how do you reconcile it when the voice of the customer heard at corporate headquarters differs from what local hospital executives are hearing?
Allan Wilson: Ask. Have a conversation. If senior leadership says, "This is what we hear," they'd be foolish not to listen to other opinions. That's why it's important to have direct customer feedback. I get a little frustrated by the automated emails asking me to fill out a checklist about my experience. Some of those are designed to make the organization feel good rather than because they're really interested in your opinion. If senior leadership's perception of the voice of the customer differs from the rest of the organization's, senior leadership needs to listen. I can't think of a great senior leader who runs their business with their head in the sand.
Mark Graban: That reminds me of Hoshin Kanri, which you mentioned earlier. It's not traditional top-down management by objectives, where executives set strategy and goals and cascade them one way. There's an intentional back-and-forth. The senior team has its view, and the next level down will hopefully push back if they disagree, and they work it out as a team.
Allan Wilson: The other point is that voice of the customer is sometimes taken literally: we'll just do what the customer tells us. That's not voice of the customer. Voice of the customer is listening and then distilling that into ideas and innovation. Do Apple and other creative, innovative companies come up with innovation on their own in a closed conference room? They don't. They take the voice of the customer, distill it, and ask how they can innovate within it. If customers want a better interface on the phone, the question is how to create a better interface, not whether to move one icon from here to there.
Mark Graban: Business leaders from Henry Ford to Steve Jobs have pointed out that the voice of the customer is only part of the puzzle. Ford would have said people would have asked for a better horse and buggy, not a car. Jobs would probably argue people wouldn't have asked for an on-screen keyboard; they'd have asked for a better physical keyboard. People in the Lean Startup community talk about listening for the problems customers need solved. Customers won't necessarily tell you how to solve them. That's the role of the innovator, the problem solver, the entrepreneur.
Allan Wilson: These webinars are a mirror that let us assess our own shortfalls. One thing I think the improvement and Lean community could do better is to embrace technology. Obviously, it's about people collaborating with people, through Kaizen, value stream mapping, and other techniques, and I'm not suggesting we deviate from that. But my personal opinion is that technology does change behavior. If the organization isn't collaborating well or isn't generating ideas for innovation and improvement, we should look at technology to push us along.
Allan Wilson: Brian Dieter at Mary Greeley said they had been on the journey for a while and had lost their way a bit, without the impetus and focus to prioritize ideas. This isn't a marketing pitch for KaiNexus. In general, you should look at modern technology for collaborating, to make sure the talents of people in the business are focused the right way. That's what Brian was saying: it gave them a push to move forward.
Mark Graban: Another question: "Our executives just ask us to cut costs and expenses. How can we help them see growth and revenue opportunities where continuous improvement can help?"
Allan Wilson: It's an age-old problem. The short-sighted, or perhaps less experienced, executive picks up the P&L, looks at headcount, and says, "I need to cut headcount by 10 percent to get profits back in line." I'd say that's an inexperienced and ineffective leader, because that kind of action doesn't sustain. Is he going to cut the workforce by another 10 percent next year? Manage the business by shedding labor? Good organizations manage their business by bringing talent in, not divesting it. The question is how to leverage talent to drive cost out. It's about making things cheaper, better, and faster -- improving healthcare, patient outcomes, and value, and doing it less expensively. That's the fight.
Allan Wilson: The way to do it is to challenge the executive, as I said earlier: "We're in this together. We want to make this hospital system better. Challenge us. Tell us what improvement target you want, and we'll work together to reach it. You want a 10 percent reduction in labor cost? Let us look at creative ways to do that instead of taking a red pen to the P&L."
Mark Graban: Sometimes a reduction in labor cost, if it's really cost per product or cost per patient visit, can be achieved by increasing volume and throughput without adding staff. When improvements free up capacity -- say, getting patients discharged without delay because the process problems are gone -- we can bring more patients through and do more procedures in the operating room, which brings in revenue and lowers the cost per case.
Allan Wilson: It comes back to whether the executive values the people in the organization and their opinions. If the answer is yes, find a mechanism for them to work on the problem with you. If I were a CEO and the market or my board told me I needed to cut costs or increase margin, I'd share that challenge with the people in my organization. Why wouldn't I? If I don't share it with my management team, why have a management team? If they don't share it with their direct reports, why are they in their roles? Share the challenge in a positive way instead of drawing a red line through the P&L.
Mark Graban: Here's one example from a KaiNexus customer where a small innovation had a big revenue impact. A hospital realized many patients were leaving the clinic and going to outside pharmacies. They asked, "What if we just let patients know we have a convenient, top-notch pharmacy right down the hallway where they can fill their prescription before they go home?" That didn't cost anything, and something like a third of their patients started using the internal pharmacy, generating $700,000 in additional revenue that had been walking out the door. When you have real examples like that, it's not just theory that we can help boost revenue. And if you were an executive, why wouldn't you want to spread that idea to other clinics?
Allan Wilson: Let me go back to the South Florida organization where the CEO held a company-wide meeting every month. South Florida has a heavily Cuban community, especially among people who work in the region's electronics manufacturing companies. Most organizations there have about 20 percent labor turnover a year, so in five years they've turned over their entire workforce. This organization had less than 2 percent turnover, and it paid less per hour than other organizations in the region. I found that really strange, so I asked people why they worked there. Their answer was simple: "Because we like working here. We enjoy coming to work every day. We feel we're part of the company. The CEO comes down every month and recognizes some of us for the good work we're doing. We give our best because this organization respects our talent and our work and is trying to make us better." They had a lower labor rate and less turnover, so their cost structure was lower -- because of their behavior.
Mark Graban: That's good all around: for employees, for customers, and for the company. Our time is about up. Thank you all for attending, and thank you, Allan, for sharing your thoughts and experiences and taking these questions.
Allan Wilson is the CEO of KaiNexus and a veteran leader in Lean and continuous improvement with more than two decades of experience helping organizations improve performance and execute strategy. He has led enterprise improvement programs across global companies including major automotive and electronics manufacturers, and brings a practical, executive-level perspective on how improvement connects to growth, quality, and competitiveness.
Mark Graban is the author of Lean Hospitals and co-author of Healthcare Kaizen, and a Senior Advisor to KaiNexus. He has worked with organizations across healthcare, manufacturing, and technology to build cultures of problem solving and learning, and hosts multiple podcasts on leadership and continuous improvement.
Why don't executives respond to continuous improvement initiatives framed as "the right thing to do"?
Senior leaders are accountable for measurable outcomes -- revenue, margin, quality, safety, retention. When improvement is framed only as a cultural virtue or methodology, it sounds disconnected from what they're being measured on. Framing it in terms of business impact, strategy execution, and competitive position gets a different reception entirely.
How do you link continuous improvement to company strategy?
Start by understanding the strategic priorities your executive team is committing to publicly. Then map your improvement portfolio against those priorities. Strategy deployment frameworks like hoshin kanri make this connection explicit by cascading objectives through the organization with two-way dialogue at each level, so daily improvement work has a visible line of sight to the strategic plan.
What does it mean to leverage employee talent in continuous improvement?
It means treating frontline workers as problem-solvers whose ideas matter, then building systems that capture those ideas, route them through to implementation, and recognize the people behind them. Most organizations recruit well but underuse the talent they already have -- partly because they have no structure for surfacing and acting on employee thinking.
How does engaging frontline employees in improvement affect the bottom line?
When employees feel their ideas are heard and acted on, voluntary turnover and absenteeism drop, recruiting costs drop, and engagement-driven productivity gains compound over time. The South Florida example in the webinar shows a company running 2% turnover in a 20% turnover market while paying lower wages -- because employees stayed for the culture and the recognition.
What's the difference between cost cutting and cost control through improvement?
Cost cutting takes a red pen to the P&L: reduce headcount by 10%, close a facility, freeze hiring. Cost control through improvement reduces waste in processes -- shorter cycle times, fewer defects, less rework, less wasted motion -- and lower cost emerges as an outcome rather than the goal. The first is one-time and damaging to morale. The second compounds.
Find out how software can help with your continuous improvement work! Whether you're a process improvement specialist, a front-line employee, an executive leader, or anything inbetween, this eBook provides valuable information that you need!
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