But then complaints start rolling in from field. Products are breaking down faster. Technical support costs rise, and customers start reducing their orders. Not only do profits evaporate, but customer goodwill does too. To offset this, your first reaction might be to switch back to old supplier. This is much easier and it fixes immediate problem, but it won't recapture lost sales, customers and damage to company’s reputation.

But, again, you need to focus on most important issue. There is a limit to amount of costs one can reduce in any process – zero. You can’t reduce costs below zero. On other hand, there is no limit to process potential we can achieve. Process evolution concerns numerator (the output), not denominator (the costs) in efficiency equation above.

Change in Process Evolution = New Output / Old Output (Assuming costs are held constant)

By focusing on process evolution instead of costs we can continue to increase our output forever. We just have to make sure that output increases faster than costs. Then what we have is incremental improvement. But what procedures can you use to achieve this?

Process Training

It’s all about collecting feedback to set right priorities for your change process. You need feedback to drive change process. The more feedback you get better you will be able to evolve your process. So let’s take a look at what your change process needs to include.

1.Feedback Records with Deficiency Notations 2.Trend Analysis 3.Corrective Action Process and Criteria for action 4.Audit Process 5.Management Review Process

And then ask yourself following questions about your change process:

•Are process feedback records created? •Have feedback records been analyzed for process deficiencies? •Are deficiencies analyzed for statistical significance? •Are deficiencies of statistical significance written up for corrective action? •Is corrective/preventive action implemented? •Is there an objective review of all processes to ensure change process is working? •Does management review all findings to ensure change process is working -- and that processes are evolving to meet or exceed organizational requirements?

Next week: Business Modeling

With these thoughts in mind, you can see how important it is to first define continuous improvement and note how it can actually affect your business.

But you can't gather feedback from all processes at once. If you did, that would generate a process overload. So where do you start?

Next time we will show you show how when we discuss business modeling. Business modeling prioritizes which core processes you should improve. It tells you which processes are most important to not only achieve your company goals - but also to survive as a profitable business.

Chris Anderson is currently the managing director of Bizmanualz, Inc. and co-author of policies and procedures manuals, producing the layout, process design and implementation to increase performance.

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Jakob Jelling is founder of http://www.cashbazar.com. Visit his website for latest on personal finance, debt elimination, budgeting, credit cards and real estate.