Continuous Improvement Vs. Transformation: What's the Difference?

Continuous improvement vs. transformation — what’s really the difference between the two? Is there even a difference between the two? The short answer: yes, absolutely. While the two concepts share similar goals — namely, to make an organization better — they’re applicable in different situations.

But they’re also not mutually exclusive. Continuous improvement principles can be used to drive transformational change, and a set of transformations over time can also technically be thought of as continuous improvement in a larger, more holistic sense.

If you’re sufficiently confused, don’t worry — and read on. The delineation between these two concepts can get blurry, but this article will clarify both terms, explain how they work in practice, and demonstrate real-world applications for both using examples from LeanIX clients.

Quick Takeaways

Continuous improvement is the consistent but incremental commitment to making an organization better.
Transformation is motivated by the need for significant and fairly immediate change.
Continuous improvement has become central to software development alongside the rise of agile, DevOps, and CI/CD.
Transformation can be thought of in enterprise architecture terms as a target state — an ultimate goal that is necessary but can’t be achieved overnight.

Continuous Improvement: A Culture

The term continuous improvement is rooted in the Japanese concept of kaizen, which means to continuously strive to get better in everything you do. During his work to help rebuild the Japanese economy after the Second World War, American Engineer William Edwards Deming translated kaizen into what we now know as continuous improvement.

The goal of continuous improvement has been applied to every area of business — most recently to software development and IT management. To understand how it applies in this use case, let’s first look at how Deming defines it as a systematic process (Plan-Do-Study-Act).

The PDSA Cycle breaks continuous improvement down into four primary actions:

Plan - Establish objectives and determine what needs to be done to achieve them.
Do - Execute the plan.
Study - Compare actual results with those you initially expected.
Act - Work to improve the process to achieve greater results next time.

Done over and over again — continuously, if you will — organizations can achieve new levels of efficiency, productivity, profitability, and innovation. Continuous improvement has become a priority for organizations in every industry and a culture for software developers, engineers, and IT teams alongside the emergence of agile, DevOps, and CI/CD.

Transformation: The Target State

While continuous improvement is constant, it’s also incremental. That means its impact will be seen over time rather than in the form of a single significant change. Transformation, on the other hand, involves altering an organization in a foundational way, affecting both what the company does and how it does it.

In enterprise architecture terms, the transformed organization can be thought of as the target state — the ultimate form that the organization will take but one that clearly won’t be achieved overnight.

Today we hear a lot about digital transformation, which has a lot of definitions, but which boils down to reorganizing the business around the limitless, evolving potential of digital technologies. What many companies fail to realize is that a transformation like this cannot happen without a mindset similar to that of continuous improvement. In other words, it requires ongoing, incremental (often referred to as “phased”) changes that ultimately result in a transformed state of the business.

When do you need continuous improvement vs. transformation?

The difference between continuous improvement and transformation lies in the different concepts of change at play. Continuous improvement seeks to make changes to a base state, changes that improve performance over time. Transformation seeks to change the base state itself.

Continuous improvement can — should — be the goal even when we're talking about processes, tools, roles, and operations that, in essence, working perfectly fine. At the core of continuous improvement is the understanding that there are always ways to get better, and even successful areas of a business can be improved with diligent effort.

Transformation, however, is driven less by the need to improve what you're doing, and more by the need to do something totally different. Sometimes this need can arise from within the company, driven by new leadership or a restructuring based on mergers and acquisitions. Sometimes the need can arise from without, driven by competitive pressure or changing customer behavior. In any event, the necessary changes cannot be brought about through improvement alone. Instead, the organization needs to take on a totally new form.

Continuous Improvement vs. Transformation: Two LeanIX Client Examples

Continuous Improvement: NORMA Group uncovers rationalization potential

The NORMA Group acquired more than a dozen companies over the years, but lack of IT integration led to many misaligned and/or redundant applications. The company adopted the LeanIX EAM platform to develop an application rationalization framework and achieve better technology harmonization across the enterprise.

They decided to take this path because the business case alone uncovered potential savings in the millions of euros. And it didn't involve overhauling the whole company, just getting better at doing something they were already doing: managing the internal IT landscape.

Transformation: Marc O'Polo accelerates its transition to SAP S/4HANA

To support a corporate strategy focused on internationalization with a consistent commitment to sustainability, European fashion retailer Marc O'Polo realized they needed to embark on a radical transformation project and move to SAP S/4HANA as its central ERP system. They adopted LeanIX with the goal of gaining a holistic view of the entire software landscape.

They used the platform to quickly gather current information on their entire IT estate. With the help of LeanIX, Marc O'Polo established transparent views of the entire IT landscape and interdependencies and laid a foundation for a successful transformation.

Achieve results – both incremental and transformative – with LeanIX

LeanIX solutions can be applied to a multitude of use cases, whether you’re looking to improve particular processes and functions or achieve organization-wide business transformation.