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How Lean are You?

November 29th, 2012 Comments off

You’re talking to a friend and they say “I work at a lean company” or “my boss wants me to do lean in my department”.   What comes to mind?  There isn’t a specific measurement for lean.  There aren’t sigma levels.  So what does it mean to be a lean company or to run a lean process?

There is a central theme or definition.  One can describe a lean company or process as a streamlined, high quality system that produces finished goods or service deliverables at the pace of customer demand with little to no waste.  But there aren’t any metrics in that description.    So we have to go further.

First, let’s recognize lean is multi-dimensional.  It encompasses a wide variety of management techniques.  They aren’t interdependent but, in the perfect world, but they are integrated.  Of course, we don’t live in a perfect world so organizations apply different combinations of the techniques at various levels of integration.  Their level of satisfaction with results may be the ultimate determinant of how far they go in introducing and integrating the various techniques.

Download Lean Overview and Primer Kit Our popular Lean Primer Kit …

The point being that while you can’t declare “this service is completed in three hours therefore it is lean (or it isn’t lean)”, there is a level of behavior that evidences lean.  And that behavior can be modeled and, to a certain extent, measured.  In other words, you can act lean and even determine how lean you’re acting and how well you are acting lean.

This isn’t to say you shouldn’t measure performance or that measuring behavior is more important than performance.  Not at all.  You should still hold performance relative to customer expectations, stakeholder requirements and competitor performance as the final report card.  But if you need to close a gap and you wish to either introduce lean or push its use farther, you can examine your application of lean.

So given the number of components and the complexity of any interrelated systems, how can you gauge where you or your organization lie and how you can optimize your next effort?  I’d argue you begin by examining how many of the various techniques you currently apply and how completely you apply them as measured by their various components.

I’d start by creating the categories that all contribute to a lean organization separating them into two spheres – internally and externally oriented lean practices.  Internally oriented practices include JIT, Production Flow, Set Up Time, Use of Quality Tools and Employee Involvement.  Each of these has different practices, tools and techniques and you can evaluate their use.  Then there are the externally oriented lean practices such as suppler and customer programs.  Again, each has their own practices, tools and techniques and you can evaluate their use.

Once you’ve created a master inventory, you can look at any portion of the organization or even process and determine which are being used and which aren’t.  You can also examine the depth to which they are being used.  Thus you have a gap analysis in how lean you are acting.  Once again, the purpose isn’t to be the uber-lean organization.  The objective is to satisfy customers/stakeholder and thereby profit.  So you look at the performance gaps relative to those requirements as the guiding light.  But when you think how to close that gap, you can examine how lean you’re acting in that area to determine if you can move the ball forward by acting or implementing more lean principals.

The point of all of this is to understand that even though there isn’t a measurement to the statement “we are lean”, there is an evaluation.  And such an evaluation, in concert with an examination of performance gaps, will tell you if there is an opportunity to do better by diving deeper into lean.  And a framework of the principals will tell you where the biggest bang for the buck exists for the marginal investment of time and effort.  So in the end, while there isn’t a measurement, there is a way to determine how lean you are and how much more you should be to improve your organization or process relative to expectations.  And that is what you need to improve which is the ultimate goal.  If you wish to discuss, contact me.

Lean Paves the Road for Six Sigma…especially in Service Organizations

November 27th, 2012 1 comment

It was more than 15 years ago that our firm was first engaged to help a client implement Six Sigma. Along the way, Lean was integrated and the term of art became Lean Six Sigma.  Yet even today, we still begin many conversations with prospective clients who say “we want to do Six Sigma?”   We try to determine what Six Sigma means to them and why they want to do Six Sigma.  Definitions and motivations vary.  None are wrong.  They are individual to the person, the company and the situation.

But to determine the appropriateness of their conclusion, we ask about the nature of their business challenges and the state of their management system.  And at the end of that portion of the conversation we invariably begin to wonder whether the prospective client can benefit greatly by first paving the way with Lean.  And that is really most apparent in Service Organizations where so much of the waste is invisible and Lean’s visual tools brings the waste to light before introducing Six Sigma.

Lean Six Sigma for Services

our latest whitepaper, which discusses how Lean Six Sigma is different in a services environment, as compared to a traditional manufacturing environment.

Lean can be of great benefit before introducing Six Sigma for the following reasons:

  1. Lean makes the implementation of Six Sigma easier by eliminating non-value added activities.  Six Sigma, while robust, like any program that aims to drive change can be a challenge to implement.  You can make Six Sigma’s implementation simpler and more cost effective by first applying Lean.  This is for two reasons. First, you will enhance the effectiveness of the Six sigma tools by enhancing the rate at which information is fed into the Six Sigma problem solving exercises.  Secondly, you may discover after applying Lean, there is insufficient improvement available to merit a Six Sigma project.
  2. Lean develops a culture of improvement which makes implementing Six Sigma easier.  Lean can be implemented more quickly and easily than Six Sigma.  We facilitate workshops that by the end of a week introduce improvements.  People come out energized and feeling they made an impact.  Managers see an ROI on the improvement investment.  The result is a willingness by all levels of the organization to increase their commitment.
  3. Sometimes the problem isn’t going to be solved with Six Sigma tools…or at least not quickly.  When you prioritize problems, you try to separate them into buckets by their fundamental nature so as to gain some economies and structure to any allocation of resources.  Part of the reason is that Six Sigma efforts require more time and effort.  Failing optimize the problem to the applied tools, you may end up trying to apply Six Sigma to problems that can be easily addressed with a Lean exercise.  Even worse, you can work at reducing variation when all you need is to reduce your cycle time to capture the available gain.

We have written a great deal about both Lean and Six Sigma.  We don’t favor one methodology over the other nor do we see them as an “either or” decision.  In the long run, we encourage all our clients to gain proficiency and apply both Lean and Six Sigma.  However, to help our clients succeed in driving ROI and organizational change, we believe that there are advantages to Lean paving the way for Six Sigma, especially in companies just starting out as well as Service Organizations.

Now there is always an exception to a rule such as when prioritized projects clearly require Six Sigma tools.  The business should always “pull” the improvement efforts as outlined in “Let Your Business Define Your Improvement Program”.  But in the case of launching or re-launching a general program, allowing Lean to pave the way for Six Sigma increases the ROI of the continuous improvement effort by using the simplest and most applicable tools first while increasing the effectiveness of subsequent Six Sigma activities.

If you wish to discuss these points, contact me.

Performance Improvement by Alexander the Great

November 16th, 2012 4 comments

Decentralized Continuous Improvement

Your company’s or business unit’s results are ticking up. Many of your processes need improvement to deal with the increased activity layered on a rationalized capability. But your pre-recession centralized group was taken away with the tide or one never existed. And your organization is still holding a lid on any personnel additions as it finally enjoys the fruits of painful decisions and remains concerned about the myriad of external factors threatening a nascent recovery. You are left wondering how to unravel Gordian’s Knot. The Alexandrian solution is to build a self-sustaining model that integrates CI into every day activities.

We propose three elements to a self sustaining model which are as follows:

  • Find True North. What is it that your organization needs the most? Is your organization looking to solve a customer matter? Must your organization continue to find efficiencies to remain competitive? Whatever it is, find it and stay on it by making it visible and clear to everyone. The reason is simple. Organizations often used a centralized CI program to push improvement efforts. If you find True North, you won’t have to push improvement efforts. They will be pulled.
  • Keep it simple. As you look to take on improvement activities, keep the challenges simple. Use basic tools and techniques to knock down the easy barriers and drive a “pay-as-you-go” model that yields traction. Often a centralized improvement group is there to maintain momentum. Our discussion here isn’t against a centralized effort as much as it is against having to wait for one before you can move forward. We’d argue that as successes and improvements yield returns, go back to a funded centralized improvement effort to take on the chronic, cross-functional challenges that require a higher level of expertise, full time devotion, cross functional latitude and can power through momentum killing barriers. But for now, avoid making momentum a challenge.
  • Integrate rewards. If you want it to be broad based, make the rewards broad based and commensurate with the effort. Members of centralized groups are motivated to drive improvement because they have skin in the game. They pursue significant improvement, are measured on achieving it and rewarded if they accomplish their goals. Is it any wonder they are focused on improvement? To get broad efforts to yield results, take a broad view of rewarding success. Now we aren’t saying to weight such reward systems such that everyone becomes an improvement professional. The reward should match the effort and return.

Download lean, six sigma, BPM, VOC content

Every day we talk to people in all functional areas of organizations wrestling with the question of how to move their effectiveness and efficiency forward in the new environment. They see feel the pain and see the potential reward. But they are frustrated that they don’t have a centralized group which to call and ask for help. They feel locked in place unable to move forward.

Our advice is to find a different solution than what you have considered to be “normal” in the past. Let your organization’s mission pull activity. Pursue simple, well targeted improvements that provide their own momentum. Integrate a broad based reward system that recognizes peoples’ accomplishments on a level commensurate with their efforts. Cut the knot!

If you would like to discuss these ideas, feel free to contact me.

The Rising Cost of Higher Education – Operational Excellence to the Rescue?

November 13th, 2012 3 comments

Rising cost of higher educationWith a child approaching college age, I’ve taken a great personal interest in the direction of higher education.  As evidenced by the national debate that has even leaked into presidential politics, it is a tremendous issue on the scale of healthcare and job creation.  The greatest point of debate is the sustainability of the rising cost of education which has grown far faster than inflation and disposable income.  And along with the rising cost comes a discussion of how it is being financed as student loans become the greatest category of consumer loans. A discussion about costs and funding naturally leads to trying to gain an understanding of why the costs rise so quickly and if the quality of education is improving along with the level of investment.

With growing awareness and understanding, I recently had an interesting e-mail exchange with a new blog subscriber.  This person had some very interesting views from the inside of higher education as they are a high ranking official in the administration of a regional mid-sized university.  She shared some of those views with me in the following e-mail.  I found them so topical and in concert with the value our profession attempts to bring to our host organizations that I asked and received permission to share them with you.  So below are excerpts of a high ranking administrator’s views of what is driving the cost of higher education and whether it is resulting in better results.

“I’ve been mulling over a response to your last email.

You commented that higher education is more mission driven than the business world. From the outside, it may appear that higher ed is very mission driven, but in day-to-day operations, expectations from many other sources often intrude.

We do have a calling, but we must also answer to our own faculty, campus committees, boards of regents, state legislatures, the federal government, and our accreditors regarding HOW we should fulfill our mission.  It’s both frustrating and challenging to try to navigate the sometimes conflicting and seldom funded expectations of these varying bodies. So, yes, stakeholder expectations have to be managed before forward movement can be sustained. We are a bit like a loaded freight train leaving the station: forward movement is jerky and sustainable momentum comes slowly.

The main customer in higher ed is the student. In the last decade, institutions tried to respond to wishes of the customer in non-academic areas (e.g., climbing walls, bistro dining, private rooms in residence halls). By the time many of these can be implemented, those students are gone and others with different expectations have matriculated.

Institutions are starting to move back to basics that serve customer needs better (e.g., ways to get students to graduation in less time and at a lower cost). Our governor, along with governors from other states, has been pushing to ensure a fixed and affordable cost for a degree. We are implementing that at our organization as are many other colleges in our state.  

So, we have a balancing act when we respond to the customer that a corn flake producer does not (or maybe does not). I do hope corn flake producers think about nutrition while thinking about taste and texture. Higher ed has to think about what happens after the student graduates. Can the student get and keep a desirable job? Do we produce graduates whom firms want to hire? Our secondary customer is anyone who hires our graduates. Sometimes what students want (less homework, say) conflicts with what the student, and ultimately his/her employer, needs. I’m not sure corn flake makers deal with whatever would translate to being a similar issue.

From my viewpoint on the outside of the commercial world, they look a lot more organized and forward thinking than higher ed often seems. I realize I’ve painted higher ed with very broad strokes, and some institutions have found solutions to the major issues and are rolling forward fairly smoothly. Higher ed has made really good progress, but I still think, as a whole, higher ed lags behind the “real world.”

I have been reading a lot about organizational excellence, Six Sigma, Kaizan, 5 whys, Deming, etc. I look forward to reading your pieces on Voice of the Customer.

Good luck with being a parent of almost-grown children. I admire all of you so much. It has to be especially tough right now.”

There are so many places where our knowledge and skills can assist the transitions that are coming.  Healthcare, Innovation (the engine of job creation) and Higher Education are three strong societal needs where the answers to the problems can be enhanced by our operational excellence practices.  There is definitely the opportunity to do well while doing good.  And there are great potential partners inside of the enterprises and organizations that are in these areas who recognize the need for change and want to be agents of change to fulfill personal missions and also do well while doing good.  These observations that are from the inside out in higher ed are just one example.

Download Education Powerpoint

this short .ppt that talks about the sources of excess costs that might be attacked with operational excellence programs …

If you’d like to discuss any of the above, feel free to contact me directly. And, while the author of the e-mail wished to be anonymous, if you’d like to speak to them, contact me and I’ll try to put you in touch.

Yellow Belts – Worth a Fresh Look?

November 8th, 2012 1 comment

Is Yellow Belt training a good foundation process skillset?I’m going to start this little article off by opining that the need for basic process management and improvement skills in an organization is getting more acute every day.

Why?  Well, I really don’t think the need ever waned, but   there are a lot of new things happening, specifically with technology, that have the potential to put business process management and formal improvement at the top of both business and IT leaders’ priorities.  While beyond the scope of this article, spend a little time looking at the new generation of BPM software (BPMS), the interest and investment in BigData, and software trends like SOA and I bet you’ll come to the same conclusion I have … process skills are becoming more and more critical to the success of enterprise.

Based on what’s happened over the last few years, many companies are finding that those skills are simply not there, or have gone dormant.  So, how do you develop or re-energize the capability?  Now, here is where we have to stay real.

The way companies are willing to build out organizational capability has clearly changed, based on my experience.  Big, top-heavy initiatives that push broad knowledge into the enterprise (the firehose approach) have been largely replaced with agile, practical thinking that says you pull right-fit capability into the organization, at the right-time.  Deliver exactly what’s needed, exactly when it’s needed, and execute in a way that delivers immediate ROI in the form of quantifiable business performance results.  That’s the new reality.

Download lean, six sigma, BPM, VOC content

I whole-heartedly agree with the agile, pull-based approach to organizational learning.  That being said, when building anything, you still have to start with a foundation … a base that you can continue to build upon as needed.  So, what should that foundation business process capability be?

Do you really need a large segment of people to be certified Black Belts, or even Green Belts, that specialize in deep statistical analysis?   Does everyone need to be a Lean Expert?  Does everyone need to have process design and DFSS skills?  I think not.

This caused me to go back and took a hard look at our trusty old Yellow Belt skillset and, you know what … it just might serve as that nice foundation. Yellow Belts, in the not-so-old days, were thought of as supporters of Black Belts and Green Belts. But I think that skillset can stand and deliver on its own.

(As a disclaimer, there is really no standard out there for yellow belt.  I’m talking about our (Qualtec’s) definition of a yellow belt skillset.)

So, what should well-trained Yellow Belts be able to do?

  • Map out and validate as-is processes, from a variety of perspectives
  • Identify waste and excess complexity in the process
  • Understand VOC and how a process delivers (or doesn’t deliver) value from the customers perspective
  • Evaluate and quantify what a problem is really costing, the cost of poor quality (COPQ)
  • Define and scope projects
  • Use a structured, data-driven approach for problem solving
  • Recognize different types of data, plan for collection
  • Analyze a variety of data to get to root causes of problems
  • Support identification of right-fit solutions, and support implementation
  • Put in the proper process control mechanisms to monitor performance and sustain improvements over time
  • Etc, etc

Not bad.  It’s something that’s broadly applicable in the organization, in any process or area, and immediately usable for just about anyone in the enterprise.  It also establishes that nice, solid foundation that advanced capabilities can be built upon when needed.

So, you may want to give Yellow Belt a new look, if you’re looking to establish process capability in your organization.  Contact me if you want more info or would like to discuss in more detail ….

Problem Statements – Five Why’s v. Five How’s

November 6th, 2012 2 comments

Problem statementUp and down the escalator you go through a store when shopping at the mall until you get to the level where your desired merchandise is listed on the map.  Such is the same for choosing a problem statement.

Usually, the first time you state a problem is just the beginning of finding the goal you really want to pursue.  So then, how to get to the right problem statement?  The first thing I’d recommend is to make sure your initial problem statement is neutral.  In other words, if as an example, you wish to improve field personnel billability in a services business, state the problem as the improving the billing of field personnel’s time.  Get rid of any buzzwords.

Then use the Five Why’s tool.  As you ask the Five Why’s, you naturally become broader in the problem statement. The advantage of broadening the question is that you create more options.  The risk when you do this is that you become as abstract as to pursue a problem for which you are resource constrained.  In other words, you simply can’t command the resources needed to solve that problem.  This is the classic case of “boiling the ocean”.

Now here is a twist you should try.  Go back to the original neutral problem statement and ask several How’s.  This has the opposite effect of the Five Why’s.  Instead of getting broader, it makes the problem statement more specific.  When you put together the statements for the Why’s and How’s you construct a hierarchy of possible problem statements.

Download Project Definition Powerpoint

a short Powerpoint on project selection and definition …

Why construct this hierarchy?  Well it gives you a range of alternatives and focuses you to think about the right choice.  You have many levels of specificity from which to choose.  So what is the right choice?  You want to choose a level that is high enough to leave you options which make a measureable impact on the problem area.  Yet, you need to stay low enough where you control, or have the ability to bring to bear, the resources needed to solve the problem.

Now these are just judgments so we recommend that when you apply those judgments, you stretch yourself. Go one level higher than you feel comfortable.  So I guess the recommendation is to get on the escalator and go up and down until you find a comfortable spot – then go up one!  If you wish to speak about this, I encourage you to reach out to me.

Lean Six Sigma in Healthcare Service Delivery

November 1st, 2012 2 comments

Lean Six Sigma in HealthcareWhy should the healthcare industry vigorously pursue the use of Lean Six Sigma? As a business made up of people, products and services, and has a need for financial viability, healthcare faces problems and challenges similar to all organizations.  But along with the normal challenges facing any business, in the case of healthcare, there are mounting societal pressures to lower costs, increase service and increase quality.  It must move forward yet seems intractably caught in itself.

The benefits of Lean Six Sigma are significant and have been demonstrated in many different industries and enterprises around the world.  Lean Six Sigma’s most significant results are the impact to customer satisfaction and the financial returns that result from the optimization of processes and the elimination of defects.  From its application, many notable companies report improved market share and financial results.  But most importantly in relation to healthcare, these companies also report major changes in the underlying corporate cultures. This cultural change towards objective, data-driven decision-making, coupled with a process orientation in problem solving, has changed the way the companies and their employees approach the management of businesses.

It is the cultural transformation that healthcare is in greatest need.  Healthcare service organizations have complex, lengthy processes and thus are particularly prone to fire fighting and living with the resultant inefficiencies.  Managers and employees rush from task to task, not completing one before another interrupts them.  Serious problem-solving efforts degenerate into sub-optimized “patching”. Productivity suffers, and managing becomes a constant juggling act of deciding where to allocate overworked people, or which incipient crisis can be ignored for the moment.  At best, this leads to situations where employees are continually working around the problems consuming time and resources.  At worse, the inefficiency of the organization is poor and chronic fire fighting consumes a sizable portion of the organization’s resources.  It is impossible to improve when in this constant state of fire fighting.

Download Lean Six Sigma in Healthcare

this whitepaper on Operational Excellence in Healthcare

The tools of Lean Six Sigma help by improving overall operating efficiencies.  As a result, reduced defects lead to increased quality and optimizing processes lead to lower cost.  And as a result, employees will benefit through the reduced amounts of rework, crisis and associated anxieties, thereby allowing higher levels of job satisfaction and enrichment.  The application of the Lean Six Sigma begins a cycle of continuous improvement and change.  Cumulatively, the benefit to society as whole will be an improvement in the consistency, predictability and quality to health care itself.

If you wish to discuss, please contact me.