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Productivity – The Coming Golden Age of Continuous Improvement

February 10th, 2013 Comments off

A Drive for Productivity

Last week I wrote a post entitled Value Creation for Private Investors that went largely ignored as it was one of my lowest viewed posts of the new year for a Monday when most of you tune in.  The idea about which I wrote was a revelation to me but it was still nascent at the time and thus very undeveloped and weakly presented. But it gnawed at me and so it kept turning in my head.  And now it pops out again this week hopefully a bit more developed.  The idea is the transition we are making from creating the illusion of wealth with financial engineering to needing to truly drive wealth with productivity gains which will make for a golden age in Operations and Operational Excellence.

As a nation, we will flourish based upon our ability to drive productivity.  You see wealth, as measured by GDP, during the majority of our lifetimes has been driven by population growth.  But as our population growth slows, wealth will only be created by increased productivity.  This transition has been hidden from us for some time by the illusion of wealth creation brought about by high capital liquidity and inappropriately priced risk which eventually lead to the bursting of a financial bubble.  But with risk being more appropriately priced, the illusion is gone and we are now faced with long term slow growth and the only way to stoke it is with increased productivity.

To drive the growth in productivity, I wish to cite a recent blog post by GE’s Jeffrey Immelt a portion of which read as follows;

There are four new drivers of productivity, and success in each depends on the technology and talent we develop. The first is how the sheer volume and increased access to shale gas in regions around the globe is changing the energy debate and the balance of energy power. It would require real infrastructure and pipeline integration between Canada, Mexico and the U.S., but North America could achieve energy independence within 10 years. The second driver for dramatically increased productivity is applying the lessons of social media to the industrial world and building what we call the Industrial Internet. By owning and connecting the analytical layers around industrial products – and using real time data to extract real timeknowledge – we can improve asset performance and drive efficiency. The third driver is speed and simplification because the only way to serve our customers better and compete in a complex world is by working faster and smarter. The last productivity driver, and related to the other three, is the evolution of advanced manufacturing. Manufacturing excellence, forgotten for too long, is once again a competitive advantage.

Drive Value with OpEx

Now when you look at this argument about from where we will get the productivity growth, a problem jumps out.  Namely, we have to generate non-population related productivity gains with a population that isn’t geared to Immelt’s productivity drivers.  Our younger citizens certainly are better aligned and skilled but as population growth slows, they will be the minority.

So guess what — the knowledge of how to improve services, products and processes is really valuable.  Now I’m not talking about how to write a project charter or write up a SIPOC.  I’m talking about revolutionizing energy with process innovation in the extraction of natural gas, the development of the cloud so we can jettison underutilized servers from expensive IT budgets and citizen publishing of information so knowledge flows freely and into every nook and cranny of the population instantaneously.  Imagine – those have all happened in the last five years.  Those are the types of improvements that transform an economy.  But there is plenty of room between a project to save an AP process two days and reinventing the extraction of fossil fuels.  And every time a new industry is targeted, all the operating processes below the top level change will also be looking to improve.

Can you imagine where these big seismic changes will happen next?  How about redesigning education so everyone has access to knowledge inexpensively?  Or health care where we can all see an insanely low level of simple IT tools that if applied would eliminate gobs of waste.  Or all levels of government where we have constantly rising costs with little measureable gains in services.  These trends will continue.  They must continue or we, as a nation, will slowly lose our global relative wealth.  And I just don’t think Americans are ready for that.  But the changes will be disruptive.

In the race to drive wealth through productivity gains, we will see the greatest impact in processes and services simply because they are the largest percentages of the economy.  I’ve already named drilling services, the cloud, newspapers & magazine publishing, health care and education as service companies which either have gone through or are poised to go through significant redesign. What of the process side?

Systematically Driving Value with OpEx

Well I think we are going to see work get reinvented.  My former colleague at Qualtec, Mitch Lawrie, is working on software to focus management on results versus activities and my recent blog on the subject drew significant attention from many of you.  We have worked with several clients in financial services, telecom and transportation which are redesigning long accepted processes to drive greater than 50% reductions in key process cycle times by making them leaner, reducing complexity and capturing information better as well as analyzing it for knowledge.

To return to my original post, my “aha” moment was that I was at a private equity conference where investors of all sizes where lamenting they could no longer make easy money.  That easy money was driven by a combination of capital liquidity, high tolerance for risk and poor quantification of that risk.  It was a recipe for a bubble.  If you bought an asset, held it and sold it before the bubble burst, you made money.  If it was levered, you made a lot of it. The funny thing is that private corporate investors weren’t the only players at the casino. We were all there with real estate and stock portfolios.

But that is gone now.  And as we look into a new environment, we realize we are facing the longer term challenge of slowing population growth and an aging population that isn’t skilled at what is needed to drive the sort of productivity gains needed to maintain historic wealth creation.  To create wealth as a country, we now have to earn it the hard way.  And since there are only so many hours available in the work force, it means we have to work smarter.

And a clearer definition of that “aha” moment brings me to the message in this post.  We figure out ways to work smarter – whether it is a fifth level sub-process or an entire industry.  The result is that we are entering a golden age for people focused and skilled at how to work smarter.   We have the opportunity to make great contributions to our economy.  I urge you all to THINK BIG.  If you’d like to discuss, feel free to contact me.

Let Your Business Define Your Improvement Program

February 7th, 2013 Comments off

Old Six Sigma Training ModelI remember all too well when companies would be told they needed to “be a Six Sigma company” and to do so they had to subscribe to a formula requiring strict percentages of their employee population be trained as Master Black Belts, Black Belts, Green Belts and Yellow Belts.  In addition, the definitions of the knowledge those people required was equally strictly enforced.  Companies were told achieving these goals would make them a Six Sigma company and being a Six Sigma company would make them successful with their customers and shareholders.

Anyone that lived through the last 15 years of evolution in the field of Operational Excellence can recognize the folly of this prescription.  With the benefit of hindsight, it is obvious the program can’t dictate to the business.  And in all honesty, I don’t wish to pick on any singular subject area.  We’ve seen the same sin from many other philosophies and disciplines.  In the excitement generated by a successful new tool or compilation of tools, we tend to pursue the expertise ahead of resolution of our problems.

As we enter a new business cycle, let’s bring all our knowledge together and recalibrate how we choose to apply it by putting the problem or portfolio of problems first.  To avoid having a snazzy tool take over what we do each day, we recommend the following path;

  • Understand where you want to go.
  • Understand where you are…which has two aspects; (i) your level of performance and (ii) your ability to improve performance
  • Let the comparison between where you want to go and where you are currently performing define what you need to accomplish
  • Let the comparison between what you need to accomplish and your ability to improve dictate what new capability you need to acquire.

Download our BPM Overview Presentation

 Our BPM Overview Presentation.

When you are finished outlining the steps above, you will see something quite different than formulaic curriculum and percentages of your population to be trained.  In fact, the solution will not appear simple or fast.  And therefore it will not be as appealing as the aforementioned formula or any other formula from the array of philosophies available in the profession.  The plan that emerges is a function of applying a series of decision rules more than simply measuring the ingredients of a recipe.

But think about the obvious logic of the outcome.  Your business isn’t simple.  If it were, everyone would do it.  If your business isn’t simple, how can a solution to your challenges be simple.  The complexity of the solution will match the complexity of the problem.

Pull-based Capability and TrainingSo how and where do you start?  How do you bring order to the chaos?  The answer lies in the definition of your projects, the identification of their root causes and in grouping them together by root cause so as to build a roadmap forward.  The complexity is in the selection and prioritization of projects. The simplification comes in executing on the projects.

I spoke to an executive at a company yesterday that described the old process as creating angst.   The word itself gives you heartburn.  When I asked him what gave rise to the angst, he responded that the discipline had been forced fit.  What can you say to such powerful words as those?

If those are the feelings the prior model drove, what do we strive for today?  We strive to “PULL” the required knowledge.  We believe anyone pursuing the path above should one day describe it using words such as choice and flexible.  The emotion we hope to see at the end is relief.  That is the new paradigm.

If participants should one day replace the words “Forced Fit” with “Choice” and “Flexibility” and the word “Angst” with “Relief”, what should we see at a business level?  Well, here are some key results that should be witnessed.

  • Faster returns.  While the long path is more complex, the milestones become simpler so measured returns should be faster. The simple formula of ten years ago is monolithic and so the returns can’t be measured for a long time.  In fact, the fallacy of the monolithic argument is partly hidden by the time spectrum as you are asked not to measure for months if not years.   (A key aspect of this is discussed in our recent article “Pay as you Go”).  Armada v. Drake's English fleet.
  • Organizational Traction.  Creating a ladder of success ensures Organizational Traction by producing “wins” and establishing a foundation of knowledge and capability to tackle tougher problems.  So many Performance Improvement strategies talk about resolving the big chronic problems.  But pursuing them right from the beginning is fraught with risk. And pursuing resolution to smaller problems with the tools you need to solve big problems takes too much time and effort which is wasteful for individuals and the organization.
  • Alignment.  If you adopt a Pull strategy, you can’t help but be aligned.  Your business defines your problems which in turn define your program.  As a result, your activities are ensured to be aligned to your business.  Leadership needs to see resources dedicated to the problems they are trying to resolve.  We are all living in an environment where we must do more with less.  There is no room for unaligned activities.  Pursuing a philosophy for its own sake is a luxury no company can afford.

We see this happening every day now.  Listening to the organization and being flexible produces more of the right gains faster than talking to the organization and forcing it to fit a prescription.  Individuals get more involved with something that produces relief instead of creating angst.  Pull is significantly more effective than Push.  Let the business needs and ability define the improvement program.

Contact me if you'd like to discuss this in more detail.

What Can Yellow Belts Do … Really?

January 29th, 2013 Comments off

Yellow Belt TrainingAs a followup to my recent post titled Trained Yellow Belts Think Differently, I thought I would spend a little time talking about what yellow belts can actually DO.

In a traditional six sigma deployment, yellow belts play a critical role in supporting higher level black belt and green belt projects.  They are trained in the foundation of the DMAIC problem solving process and can speak the language of Six Sigma.  They can handle some of the lower level tasks of process mapping, data collection, setting up measurement systems, establishing and maintaining control systems , and may actually be subject matter experts. Basically, they allow the black belts and green belts to focus on the more complex analytical aspects of the project.  If yellow belts are used effectively, they can improve the productivity of black belts and green belts in a BIG way.

BUT, what can they do outside of supporting higher level belts?   What if you don’t even have higher level belts?  What can a yellow belt trained employee do for the organization?

Six Sigma purists might argue that Yellow Belts should not be trained, without Black Belts and Green Belts, and that their role is to support higher level belts.  I don’t agree with this at all.   Again, I have to hedge by saying that I’m talking about the level of capability that yellow belts trained by SSQ have (i.e. 4-5 days of training).   So, what can Mr. Yellow Belt do?

  • Characterize Processes.  Process mapping and characterization is a skill that should not be taken lightly.  All too often,  improvements are made to processes when we don’t know how the current process really operates, the current state.  These so-called improvements, in many cases, add unnecessary complexity and create more problems than they fixed.  We call this tampering and it is a sure-fire recipe for disaster.  A great example of where process characterization is an invaluable skill is with large-scale enterprise software implementations.   It seems common sense that we should understand exactly how a process works before we try to systemize/automate with software, right?  How often is there really a focused effort to characterize and optimize processes?   I would argue not enough of the time and this is readily apparent in the big $’s spent on configuration, customization, tweaks, etc.
  • Establish/validate measurement systems. Yellow belts learn the basics of Six Sigma and its focus on using data to understand problems and get to the root cause.  The learn the basics of what makes a good measurement system, and what does not.    The can certainly help establish measurement and data collection systems that are actionable, and validate (or invalidate) existing ones.
  • Establish Process Control Systems.  This is a key yellow belt skillset and its importance should not be overlooked.  Yellow belts learn how to set up process control systems to assure that processes function as expected by the customer.  Spec limits are establish, as are response plans when an indicator goes out of control
  • Execute small scale improvement projects in their own areas.   Will they have the deep statistical analysis skills that well-trained green belts or black belts have?  No, they will not.  But they will have a solid problem solving foundation around DMAIC and they will have a working knowledge of the basic tools in D-M-A-I-C.  They know what a well scoped project looks like, they know the basic measure and analyze graphical tools, they know how to use a structured approach to select improvements, and they definitely know about process control systems.   Let’s not lose site of the fact that these basic tools will likely be sufficient to address a significant portion of the process problems you’ll face.

Some may think of Yellow Belts as team members, data collectors, or assistants to Black Belts.  I strongly question this view and think, in reality, a Yellow Belt’s role should be much deeper than that.  Yellow Belts practice a Process Management approach (control and manage processes using metrics and data) and can solve real business problems using basic, but proven, quality tools and a systematic approach.

Yellow belt skills are valuable at any level of the organization, from managers to the lowest level process operators, and the processes they improve are usually the ones they work in day in and day out.  Many years back the term daily process management was in vogue.  The term has certainly faded a bit, but it’s hard to argue against the value of actively managing and improving processes on a daily basis.

Contact me if you’d like to talk about how yellow belts might be able to help your organization.  And, if you haven’t already, download our yellow belt training manual to see for yourself the rich skillset a yellow belt acquires.

Economically Delivering the Right Mix of Lean, Six Sigma and Business Process Management

January 17th, 2013 Comments off

The Right Mix

My colleagues and I have written about this subject from several angles I want to start bringing it togetter.  In my post On Demand Performance Improvement  and Lynn Monkelien’s, Senior Director of Enterprise Learning at the Apollo Group and SSQ guest blogger, post entitled Pull Learning in Business Process and Performance Improvement we discussed how to break the paradigm of training inefficiencies.  This was further supported in my white paper entitled On Demand Performance Improvemnt – Traditional Training Meets Social Media which is available on our website’s home page in the “spotlight” section.  Then my colleague, Eric Harris wrote Back to Basics where he introduced the various foundation aspects of Yellow Belt, Lean and Business Process Management.   Since then there have been numerous posts on each of these subjects.

Together we are all describing a new training paradigm that is emerging where with our clients we not only making better use of technology and social media standards but also of a contemporary and robust library of materials and broad capability of personnel to meet the contemporary needs of organizations.  Specifically, with so much pressure on costs and the limited availability of company personnel’s time, it’s not surprising that most companies are looking hard at how and what they delivery to their workforce.  The key is to define what is needed… nothing more and nothing less…in terms of both content and exposure.  And that is done by matching the depth of training to the problems the organization seeks to address and putting the information into the users hands in as many low cost forms as possible as close to the actual application as possible.

And here are some questions to ask when considering how to get the chosen information to the user:

* What sort of time is available from the targeted personnel? Can they spend a day in a classroom or is thier time limited to hours per day or per week? Will targeted candidates be in different locations or at one facility?

* Do you know exactly what thier problems require or will it evolve over time?

* Are they comfortable with technology and social media?

Overview of SIPOC & a 12-step process to build one

Here are some factors to consider when asking what training and coaching is needed:

* Are you addressing manufacturing, engineering or transactional processes?  In factories and laboratories where much of the improvement activity may focus on equipment, techniques such as Gauge R&R, Process Capability, Setup Reduction, Total Productive Maintenance and perhaps even Design of Experiments are invaluable.  But in transactional businesses, they can be substituted with more impactful subjects.

* Are you dealing with high-volume repetitive processes?  Much of the Lean training can be simplified and reduced if you are not.  Value Stream Mapping, for example, can be covered at a more general level.

* What is the objective and the environment?  Are you attempting to remove defects or reduce cycle time?  If you seek to reduce errors in a financial services company, the focus is on process analysis so Pareto Charts, Run Charts and the like, which are quick and easy to teach, become the focus.

The point is that you have choices.  You can follow a fairly standardized prescription for Lean Six Sigma training as described through the classic belt definitions or you can tailor your training to unique needs.  At the same time, you can perform standard instructor lead training or you can use various communication tools that leverage technologies and social media standards.

I have one note of caution –if you cut the content or instructor interaction too far, the price for the mistake doesn’t immediately show itself during the training.  Problems evidence themselves once the training is well underway or completed.  And the problems might be that projects get delayed, more coaching is needed to complete high value projects or certified candidates fail in follow-on projects.  The result is a general loss of confidence emerges for the whole process.  By the time you discover your mistake, the effort is deemed a failure.  We don’t say this to scare you into overbuying or overdesigning.  We believe the answer is to monitor the situation closely and maintain flexibility in both the training and support.  It is in this reaction time that modular content and flexible, technology enabled support tools and methods really make a difference.

If you would like to discuss this emerging model, contact me.

Trained Yellow Belts Think Differently…Ask Blue Eyes

December 30th, 2012 Comments off

Some folks think for themselves from the first day.  Frank Sinatra was one of them.  Others learn to think differently.  Yellow Belts are process owners and team members who have been taught to think differently.  We detail our highly popular Yellow Belt training on our website.  While it has been out for many years and reconstituted in many flavors, people remain genuinely interested in this foundation capability.

The Chairman of the Board

By way of history, we were the first to develop yellow belt training.  Six Sigma Qualtec is the renamed Florida Power & Light’s unregulated subsidiary Qualtec Quality Services.  Qualtec housed materials developed when FPL engineers studied under Deming and documented their work.  Qualtec was spun off and acquired Six Sigma training materials and client lists.  The renamed company developed Yellow Belt from the Deming based materials as a foundation for process owners and members that were part of Six Sigma teams and who were left to manage a process after any improvements were implemented.

Like any classic, the concepts embedded in Yellow Belt  remain the foundation for any process improvement program.   In fact, we have posted how companies remain devoted to the basics of Operational Excellence methodologies.  This devotion to the basics continues to deliver results to a broad base of the organization.

Yellow belt is a distinct and valuable skillset.  But a lot of people don’t have a good feel for exactly what a yellow belt does and how it can benefit the organization.  So, I’m going to provide some thoughts here and on some subsequent posts.

As a disclaimer, since we launched Yellow Belt, just like with Black and Green Belts, there have been many others that followed such that there is really no standard out there for a Yellow Belt.   So this description is addressing  Six Sigma Qualtec’s definition of a Yellow Belt.   Yellow Belts really should think and act differently after training so, let’s first talk about what yellow belts should be thinking about after training:

  • Analyzing real data to drive business decisions, analyzing root cause to drive implementation of the right solutions, and understanding that CI (Lean, Six Sigma, BPM, etc) is all about improving business performance in terms of voice of the customer.
  • Identifying and tracking the right metrics (primary, secondary, etc), really understanding process capability and process performance.
  • How to practically get and use data and a scientific approach to solve a problem?
  • Understanding what a problem is really costing the business, the real cost-of-poor-quality (COPQ)
  • Putting in the proper process control mechanisms to sustain improvements over time
  • The project selection and prioritization process of the company to assure that the right things are being targeted, things that will make an impact.

Download “Yellow Belts Play a Crucial Role”

The Yellow Belt skillset is a foundation set of quality improvement and process control tools.  It is something that can be applied anywhere in the organization and on any process to yield wide-ranging improvements.  It is one approach, and an effective one for many, to building a solid foundation for CI in their organization.

Contact me if you want more info or would like to discuss in more detail ….

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.

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.

Lean, Six Sigma and Formal Process Improvement … Yesterday and Today

October 16th, 2012 3 comments

History of Process ImprovementA confession – I’m a history geek.  I read history books, watch the history channel and am fascinated by arcane entries on Wikipedia.  History provides understanding.  If you ever wonder why something is like it is, find its origins.  Sometimes, what is commonly accepted clearly no longer merits application.  And likewise, the confusing which is about to be discarded suddenly makes so much common sense that it is retained.  And so I think it is worthy to pause and look back on our profession and examine our origins.

Without going back to the Stone Age, I’ll start the discussion by citing Carl Frederick Gauss (1777 – 1855) who introduced the concept of the normal curve.  Aha….if you look hard enough, you realize you don’t always get the same outcome from an action.  And in fact, there are patterns to the distribution.  It was only a matter of time before someone asked “Why?”

Fast forward to the Roaring 1920’s, a decade marked by urbanization and strong industrial growth in the United States.  Phones were offered in every home and cables had to be laid underground in growing cities.  Western Electric, an engine of innovation not unlike today’s Silicon Valley based technology companies, wrestled with the Young Ma Bell’s reliability.  And Walter Shewhart measured performance using the concepts of distribution of results like with a normal curve.  Shewhart postulated that three sigma from the mean was where a process required correction and demonstrated that “tampering” with a process in reaction to non-conformance actually increased variation thus degrading quality.  Gauss’ normal curve is tipped on its side and an SPC control chart is born.

Download Six Sigma History

a short Powerpoint overview of the History of Six Sigma …

It is during World War Two and Post-War Japan’s reconstruction that we see today’s modern thoughts about quality management, later to be framed more broadly as Operational Excellence, take shape.  America’s still primarily agrarian economy is reshaped to supply the war in a very centralized fashion allowing for broad distribution of best practices. Then the ideas are transported to an ailing Japan in what becomes a huge laboratory for their application.

Deming rises to the top of the mountain in this period as he combines Shewhart’s Statistical Process Control with ideas about Transformational Change formed as he saw two economies repositioned.  He forms his System of Profound Knowledge asserting that managers must have (i) an appreciation of a system, (ii) an understanding of variation, (iii) the theory of knowledge and (iv) knowledge of psychology or human nature.  He has linked the numbers with the individuals and the organization and it is all sewn together in his book “Out of Crisis” which could serve as any OpEx leader’s handbook.

It is in the ‘70’s that Motorola, a company at the very leading edge of a seemingly invincible industrial America, recognizes it has a quality problem and begins its search for improvement adopting Deming’s postulate that a focus on quality decreases cost while increasing customer satisfaction while a focus on cost leads to decreased quality and eventually increased costs and decreased customer satisfaction.

As Galvin focuses Motorola, Bill Smith comes forward with his Latent Defect Theory connecting variation to defects and waste.  Eliminate the variation and you’ll increase quality, decrease costs and increase customer satisfaction.  It is at Motorola that the problem solving methodology of M-A-I-C  (later expanded to DMAIC) is assembled to address variation. Six Sigma, or zero defects, becomes the mantra.  When Motorola is bestowed with the Baldridge Award, corporate America takes note and seeks to replicate the success.

It is from the late ‘80’s through the mid-‘90’s that elements of a deployment strategy for Six Sigma form.  At Unisys, the term Black Belt is coined denoting an expert specialist in Six Sigma. At Motorola’s Six Sigma Institute, a part of Motorola’s trend setting corporate university, a knowledge transfer system is developed to broadly disseminate the practice.  At ABB, the terms Champions and Green Belt are added to denote the different levels of knowledge required for different roles and populations.  And at Allied Signal, the efforts pivot to improving processes with specific business goals in mind giving rise to criteria for project selection. The capstone is added at GE when Welch drives the program to new heights demonstrating what a Top Down approach can produce.  And he adds the kicker of immense publicity.

Much has happened since the mid-‘90’s.  Lean has been incorporated to create LSS.  The ideas have spread from manufacturing to services (although one could argue services were always part of Deming’s work as well).  Application has gone around the world.  And the term Operational Excellence has taken shape to emphasize the business goal versus simply the project or process goal.

But wherever we are today, the elements established by Gauss, Shewhart and Deming, brought together by Motorola and popularized by modern companies lead by GE are still the same.   Reading Deming today is as pertinent as fifty years ago.  Putting together the numbers, individuals and the organization to improve processes, products and services to lower costs and improve customer satisfaction remain appropriate goals and the elements that developed to do so remain relevant.

Whatever criticism exists, this history should demonstrate how well founded each of the contributions were at their time and how the conditions that gave rise to them still exist today so as to validate their continued application.  If we understand from where they came, we will do a better job of properly applying them today.    If you would like to discuss any of this, please feel free to contact me.

To Lean or Six Sigma – That is the Question …

October 9th, 2012 7 comments

Lean or Six SigmaWe can’t decide whether to do Lean or Six Sigma …”.  I’m still surprised how many times I hear this, much in the same context of whether to get a Camaro or a Mustang.   There is still this misconception that Lean and Six Sigma are competing methodologies, and that you have to opt for one camp or the other based on some arbitrary preferences.

The CI consulting industry is partly responsible for this, no doubt.  Lean shops push Lean  — Six Sigma shops have all kinds of reasons why Six Sigma is the be-all end-all.   Then the waters were muddied further with the introduction of this thing called Lean Six Sigma, which weaves the lean tools through DMAIC methodology.

So, if you’re a business leader with real problems and real opportunities, how do you make a smart decision, one that has a good chance to deliver a solid ROI and bottom line results?

The simple answer is Let your business tell you what makes sense.   We did a  post that touched on the concept of letting the business pull your CI approach vs. pushing a one size fits all approach, a good example of Lean thinking itself.  We have a very structured assessment model we use when we help our customers design CI programs, but the waters can start to clear with some simple questions …

  1. What kinds of business problems do I need to solve?  Do I have clear quality and defect issues that are hurting the business?  Are they complicated problems, where you really don’t know what’s happening?    Or, am I really trying to increase efficiency, make things run faster, and at a lower cost?   Quality and defect issues may tilt the scales toward Six Sigma.  Efficiency, cycle time, flow almost always point to lean.
  2. When it comes to process maturity and availability of data, where is my organization, really?  Six Sigma is heavily dependent on measurement and analysis of detailed data to get to root cause. What happens if you really don’t have a lot of data, and have a lot of processes that are messy and unstable?  Projects that take a VERY long time to complete, if they ever complete, is a likely scenario.  In this case, then maybe you should look to lean to clean up and stabilize processes, establish some measurement systems, and get some quick results before moving into Six Sigma.
  3. Am I under major budget and time constraints?  Six Sigma can yield some incredible breakthrough results when done correctly, but it takes some upfront investment, in money, resources, and time.   Lean is typically simpler, projects tend to be more incremental, upfront costs are less, and results (albeit in smaller bites) come quicker.
  4. Do I have leadership buyin and active participation?  Getting Six Sigma off the ground really requires some support and infrastructure.  If you have that buyin, there are typically some major gains to be had.   If you don’t, and need to do things more from a grass roots perspective, then lean might be a better answer.
  5. Am I under pressure to show real operational improvements, NOW?  If so, then I’d take a hard look at lean as a starting point.

Download our Lean Quickstart Presentation

our Lean Quickstart .ppt.  There is a short section that provides a high level overview of the differences between Lean and Six Sigma.

Now, before all you purists get mad at me, I know this is overly simplistic.  Did you see all the “may” and “maybes”?   But, you have to admit it is very practical and does provide some realistic guidance, a starting point at least.

Of course, no single one of these questions should be looked at in a vacuum, but I think if you look at all of them in total, you can get some clarity on what might be the best place to start, whether it be Lean, Six Sigma, or a blended Lean Six Sigma approach.  And, remember, different organizations within the company will likely be in different places.  That’s OK.   Remember, be flexible, and let the business pull the CI approach/tools that make sense. Good results will follow ….

As always, I welcome your feedback and thoughts.   Email me if you’d like to discuss in more detail.

The Simple SIPOC – Start Here for Real Process Improvement …

August 6th, 2012 1 comment

SIPOC and Process ImprovementWe often see a client identifying an undesired result and assigning its correction to a process improvement person or a team. That person or team then begins to discuss the many potential causes of the undesired result and the potential resolutions. Some of the resolutions will be chosen as recommendations and submitted for implementation. It is then that the organization discovers the underlying complexity of (i) unseen subprocesses, actions and tasks, (ii) undefined customers and their requirements, (iii) undetected stakeholders to the process and (iv) inputs that were simply taken for granted. The proposed resolutions step into a series of swirling eddies from which they never emerge. Time passes and the company moves to new flash points with the problem unresolved or with just the resolutions that caused the least change implemented irrespective of a change in the undesired results. The cycle

simply repeats itself.

How do we avoid this? Well certainly we have talked in the past about the impact of a properly drafted problem statement and this post isn’t meant to take away from the volumes we have written and discussed about its importance. And we have also written how value stream mapping allows you to drive alignment both cross-functionally and between improvement activities and scorecard metrics so as to identify the most impactful potential improvements which can then be converted to a problem statement. And again, this post isn’t to diminish or undermine all our previous statements about the value of such an exercise to drive real process improvement.

But what about when your organization hasn’t felt the pain of a failed process improvement effort enough to recognize the importance of value stream mapping, problem statements and the many other tools used to frame a problem and its political landscape prior to commencing an improvement effort. Where then do you start? What is the first step you can take to gain the awareness of a failed improvement effort without having to go through all the pain of failing?

I recommend you start your process improvement efforts with a SIPOC. A SIPOC is so simple, and yet so valuable. And its simplicity shouldn’t be used to discredit because it can be as complex as one likes as well. But why a SIPOC?

Don’t Overlook the Simplicity and Power of a SIPOC as a Starting Point for Effective Process Improvement

Quite simply, a SIPOC provides an understanding of a process by easily identifying what activities take place in the process, who has a hand in producing the output, who receives the output and how all the various stakeholders measure success. Simply debating the start and stop points and the people involved avoids so many problems. The cross-functional nature of the processes causing the undesired effects immediately comes to light. All the customers and stakeholders are named. It thus helps to identify all elements of a project, which then goes into refining the project if it’s not well scoped.

Download SIPOC Overview an overview and 12-step process for creating powerful SIPOCs

Collectively, it builds the information to proceed with more detailed mapping & root cause analysis, if warranted and desired. And if you get a green light, the information in the SIPOC can be converted to value stream map.

The value of a SIPOC is the value from simple awareness. It is the value of not having to experience the pain of failure before going back and realizing you really do need to have a well defined problem statement and fundamental value stream maps at which point you can move to some data analysis to form hypothesis about root causes. So much value from this simple tool. If you’d like to discuss how to use a SIPOC to capture all this value, feel free to contact me at jlopezona@ssqi.com .