Continuous Improvement: How It Works and How to Master It ON THIS PAGE What is Continuous Improvement? How Does Continuous Improvement Work? Continuous Improvement Tools All Continuous Improvement Articles What is Continuous Improvement? Let’s define continuous improvement. Continuous improvement is a dedication to making small changes and improvements every day, with the expectation that those small improvements will add up to something significant. The typical approach to self-improvement is to set a large goal, then try to take big leaps in order to accomplish the goal in as little time as possible. While this may sound good in theory, it often ends in burnout, frustration, and failure. Instead, we should focus on continuous improvement by slowly and slightly adjusting our normal everyday habits and behaviors. It is so easy to dismiss the value of making slightly better decisions on a daily basis. Sticking with the fundamentals is not impressive. Falling in love with boredom is not sexy. Getting one percent better isn’t going to make headlines. There is one thing about it though: it works. How Does Continuous Improvement Work? So often we convince ourselves that change is only meaningful if there is some large, visible outcome associated with it. Whether it is losing weight, building a business, traveling the world or any other goal, we often put pressure on ourselves to make some earth-shattering improvement that everyone will talk about. Meanwhile, improving by just 1 percent isn’t notable (and sometimes it isn’t even noticeable). But it can be just as meaningful, especially in the long run. In the beginning, there is basically no difference between making a choice that is 1 percent better or 1 percent worse. (In other words, it won’t impact you very much today.) But as time goes on, these small improvements or declines compound and you suddenly find a very big gap between people who make slightly better decisions on a daily basis and those who don’t. Here’s the punchline: If you get one percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done. This is why small choices don’t make much of a difference at the time, but add up over the long-term. For much more on this concept (and an example of a coach who used it achieve huge Olympic success), read this: This Coach Improved Every Tiny Thing by 1 Percent and Here’s What Happened. Continuous Improvement Tools Now, let’s talk about a few quick steps you can take right now to start focusing on continuous improvement. Step 1: Do more of what already works We often waste the resources and ideas at our fingertips because they don’t seem new and exciting. There are many examples of behaviors, big and small, that have the opportunity to drive progress in our lives if we just did them with more consistency. Flossing every day. Never missing workouts. Performing fundamental business tasks each day, not just when you have time. Apologizing more often. Writing Thank You notes each week. Progress often hides behind boring solutions and underused insights. You don’t need more information. You don’t need a better strategy. You just need to do more of what already works. Read more: Do More of What Already Works Step 2: Avoid tiny losses In many cases, improvement is not about doing more things right, but about doing fewer things wrong. This is a concept called improvement by subtraction, which is focused on doing less of what doesn’t work: eliminating mistakes, reducing complexity, and stripping away the inessential. Here are some examples: Education: Avoid stupid mistakes, make fewer mental errors. Investing: Never lose money, limit your risk. Web Design: Remove the on-page elements that distract visitors. Exercise: Miss fewer workouts. Nutrition: Eat fewer unhealthy foods. In the real world, it is often easier to improve your performance by cutting the downside rather than capturing the upside. Subtraction is more practical than addition. One of the best ways to make big gains is to avoid tiny losses. Read more: To Make Big Gains, Avoid Tiny Losses Step 3: Measure backward We often measure our progress by looking forward. We set goals. We plan milestones for our progress. Basically, we try to predict the future to some degree. There is an opposite and, I think, more useful approach: measure backward, not forward. Measuring backward means you make decisions based on what has already happened, not on what you want to happen. Here are a few examples: Weight Loss: Measure your calorie intake. Did you eat 3,500 calories per day last week? Focus on averaging 3,400 per day this week. Strength Training: Oh, you squatted 250 pounds for 5 sets of 5 reps last week? Give 255 pounds a try this week. Relationships: How many new people did you meet last week? Zero? Focus on introducing yourself to one new person this week. Entrepreneurship: You only landed two clients last week while your average is five? It sounds like you should be focused on making more sales calls this week. Measure backward and then get a little bit better. What did you do last week? How can you improve by just a little bit this week? Read more: Measure Backward, Not Forward Essential Reading on Continuous Improvement Process Improvement: This Coach Improved Every Tiny Thing by 1 Percent and Here’s What Happened Forget About Setting Goals. Focus on This Instead. The Proven, Reasonable and Totally Unsexy Secret to Success Best Continuous Improvement Books The Goal by Eliyahu Goldratt Running Lean by Ash Maurya Want more great continuous improvement books? Browse my full list of the best self-help books. All Continuous Improvement Articles This is a complete list of articles I have written on continuous improvement. Enjoy! The 1 Percent Rule: Why a Few People Get Most of the Rewards The Beginner’s Guide to Deliberate Practice How to Master the Invisible Hand That Shapes Our Lives The Proven, Reasonable and Totally Unsexy Secret to Success Pat Riley on the Remarkable Power of Getting 1% Better Do More of What Already Works To Make Big Gains, Avoid Tiny Losses Measure Backward, Not Forward How to Solve Big Problems This Coach Improved Every Tiny Thing by 1 Percent and Here’s What Happened Forget About Setting Goals. Focus on This Instead.
Little, baby steps, towards a big goal. Say Elon & Space-X. How many knew, that during the first days of Space-X, Elon flew to Moscow (?), to negotiate, in order, to buy a rocket,. From Russians. Yet Russians, asked too much. ($30 000 000 ~) Word. And now. Now they're talking about ,,Falcon/Dragon'' that could be used multiple times and carry up to 500 people. Baby steps, counts.
In many cases, improvement is not about doing more things right, but about doing fewer things wrong. This is a concept called improvement by subtraction, which is focused on doing less of what doesn’t work: eliminating mistakes, reducing complexity, and stripping away the inessential.
"incremental improvements" would probably better describe what you are saying than "continuous improvements", because at some point marginal changes approach the zero line.
The goal is an excellent book but not relevant to trading in my opinion. continous improvement is about improving your process. In manufacturing, the feedback of continuous improvement is obvious and it is very easy to build processes to encourage and study it. In finance because the output is so variable, it’s a lot harder unless you look at other metrics (like speed to make an investment decision).
One key aspect the precedes CPI, is that you have to measure. Without measurement, there cannot be any knowledge of improvement. Most people don't know what or how to measure the internal mechanisms that lead to a final result.
In manufacturing process, great effort is put into variability aka process deviation reduction. To Make Big Gains, Avoid Tiny Losses In trading, using whatever edge, it's still a bet. As such, taking tiny losses is better than big ones.
I used those PDCA, 8D, fishbone, Pareto, D.O.E ... things before I became a full-time trader. Those were the days.