We Did Lean and Six Sigma, What’s Next?
Organizations are either aggressively improving their businesses, or they are falling behind at an increasingly rapid rate, says Terence T. Burton, President of the Center for Excellence in Operations. In the first of a series of articles, Burton examines how the rules of engagement are changing and what business leaders need to do to catch up.
As organizations emerge from largest recession and slowest recovery since the Great Depression, they are confronted with some of the greatest challenges and opportunities in the history of strategic business improvement. However, many executives are continuing with their short term, survival leadership behaviors from the meltdown and failing to build the capabilities to cash in on these new improvement opportunities. Organizations have placed a freeze on improvement, just when they need it most.
Reactionary and inconsistent leadership behaviors are a major contributor to recent benchmarking data indicating that over 80% of Lean and Six Sigma deployments are unsuccessful, following the same trend of improvement programs over the past three decades.
It’s Leadership’s Fault Again – Not!
Before we place the blame on leadership again and explain away what went wrong (as we have for the past three decades with other improvement initiatives), let’s engage in a bit of historical root cause thinking. There are several major factors that always seem to drive away formal improvement initiatives such as Lean Six Sigma:
New Economy, Obsolete Improvement Models. The economic meltdown and recovery have introduced many new global challenges that require more immediate action. The present approaches to Lean Six Sigma and strategic improvement in general are too slow, too overhead intensive, and ineffective at achieving quicker results. In a recent survey, over 80% of individuals certified as Black Belts are no longer involved in formal improvement initiatives. Training the masses and Belts is the wrong approach in the new economy. Just as the economy has changed, there is a desperate need for organizations to evolve their ability and capacity to improve with better approaches. As the World changes, the process of improvement has remained fixed.
Careful, You Get What You Measure. Short term financial measurements such as stock price, EPS, P&L performance, and executive bonuses have definitely driven destructive short term behaviors such as layoffs and across-the-board freezes on hiring and discretionary spending. One executive commented, "There’s no money in the budget for improvement until 2011-2012." Many organizations have eliminated their internal Lean Six Sigma departments and/or general improvement resources, and postponed formal improvement initiatives in the interest of improving the financial statements. In terms of strategic improvement, performance and reward systems drive organizations into a game of Liar’s Poker with their corporate executive groups. There is a lot of selective reporting on how things are getting better. Many are even rewarded for doing the wrong things. However, true strategic improvement is definitely off-the-tracks as the hidden waste continues to pile up.
Many Improvement Initiatives Become Non Value-Added. The traditional top down, mandated, training-heavy/results-lite approach to Lean Six Sigma deployments have run their course in many organizations, just as it has with other improvement programs of the past three decades. Today, too many organizations are loaded with Belts, symbolic storyboards, boilerplate education, beautification exercises, and other perceived improvement efforts with little to no ongoing results. Executives acted to reduce overhead by eliminating many of their non value-adding Lean and Six Sigma resources and stopping improvement activities.
We Did Lean and Six Sigma, What’s Next? For over three decades, organizations have repeated the same approaches with improvement programs. Strategic improvement has been viewed more as tools and buzzwords, rather than a legitimate core competency to be developed and sustained in organizations. It takes unwavering leadership, permanent commitment, and formal infrastructure to develop this core competency. Best sustainable improvement organizations view improvement every bit as important as sales and marketing, financial management, R&D, engineering, and any other enterprise activity. They view Lean Six Sigma and other initiatives as enablers of improvement, not the end-all and cure-all program du jour. They also have a highly committed organization, formal infrastructure, performance and feedback, and sustainability processes in place. There will always be changes in executives and leadership directions, conflicting priorities, political motivations, and a focus on short term performance. Formal infrastructure keeps strategic improvement in the forefront of these changes because the only true way to get better is to improve the present.
- The Illusive Constancy of Purpose. In the 1980s this was Deming’s first point, and organizations are still looking for it today. Like it or not, history reveals the ugly facts about how strategic improvement is accepted and embraced by organizations. There is a disturbing birth-death cycle of improvement: When things are good, improvement is the first casualty because it is perceived to be no longer necessary. When things are bad, improvement is the first casualty because people do not have the time and resources to improve and do their regular firefighting jobs. Between these two extremes, improvement has been supported by temporary and wavering commitments, token agreements, follow-the-leader fad programs, massive training, and more going through the motions of improvement. Whether it is a lack of attention, poor visible and sustaining results, conflicts with new issues, downsizing and cost cutting, or plain loss of interest – Improvement always fades away as an expected business and cultural behavior. Within 2-3 years, the need for improvement is rediscovered via a different banner as if the concept never existed before. Another box of improvement with a different ribbon and new promises, but the contents of the box remain basically the same. Again, improvement becomes the same people, with the same thinking and same approaches, expecting to get different results.
Not surprisingly, these continued executive behaviors are related more to the leadership, strategy, and infrastructure elements of improvement than they are to the specific Lean Six Sigma tools themselves. This formal infrastructure has been, and is still missing in most organizations. This is exactly why the continuous keeps falling out of continuous improvement, regardless of the label we choose to call our improvement programs.
So how can companies move beyond short term tactics and establish a true continuous improvement program?
In the new economy, the answer is simple: take methods that already exist and learn how to apply them to improve your business. DMAIC (Define-Measure-Analyze-Improve-Control) is a powerful enabler when organizations think, live, and breathe this structured methodology. There is a full spectrum of specific improvement tools within Kaizen, Lean, Six Sigma, and IT that have existed for decades in various forms and labels. Innovative use of these methods can also provide significant benefits to areas such as R&D, Advertising, or New Product Development. There is no need to wait for the next repackaging and remarketing of the next improvement initiative.
But it’s not just about the tools and methodologies. There are several factors about improvement which need to change and become adaptive to the new economy:
Improvement must be focused on strategic opportunities: Organizations have been transforming themselves into a complex global network of interdependent transactional enterprises and technology is enabling this transformation faster than most organizations can assimilate it successfully. The future of improvement is without a doubt in the transactional enterprise and extended enterprise space, and a higher focus on core enterprise and extra-enterprise transactional processes.
Continuous improvement must be built into the organizational infrastructure: The formal infrastructure for making improvement the expected and permanent enabler of success is missing in most organizations. That’s precisely why the word continuous has been dropping out of continuous improvement for the past three decades. Lean Six Sigma has become a commodity of sorts as everyone claims to have an initiative in progress. Some are impressive but the majority is simply token improvement programs with questionable results. The real challenge in the new economy becomes one of who is improving better and faster than everyone else and you need the formal infrastructure in place to achieve this.
The process of improvement must become more nimble:. The traditional practices of how improvement is introduced, deployed, executed, and sustained is obsolete in the new economy. Organizations must develop a new and more nimble process that avoids the traditional top down, mandated, overhead intensive, train-the masses approach. The mandate for Lean Six Sigma and other strategic improvement initiatives in the new economy is a more targeted and scalable approach, rapid deployment, and of course, rapid and sustainable results.
- Technology and improvement initiatives must be more closely aligned: As we mentioned above, technology is enabling the transformation of organizations into transactional enterprises. Unlike manufacturing improvement, transactional improvement is transparent and comprised of key business processes and information flows. In the new economy technology becomes much more important to the success of Lean Six Sigma and strategic improvement in general. Technology is the integrated process architecture and critical enabler of transactional enterprise improvement.
This new mandate for organizations is what we refer to as Improvement ExcellenceTM: The mastery of developing and implementing successful strategic and continuous business improvement initiatives, transforming culture, and enabling organizations to improve how they improve.
Improvement ExcellenceTM requires a continuous and flawless presence of formal infrastructure, and a more urgent "turnaround" improvement process that accelerates the process of improvement and delivers larger and quicker results. This requires more creative and integrated application of improvement methodologies and tools across the evolving network of interconnected transactional enterprises that are present within, and beyond the four walls of organizations.
Figure 1 provides an overview of the Improvement ExcellenceTM framework. The formal infrastructure includes three major elements: Strategic Leadership and Vision, Deployment Planning, and Execution. Within each of these elements are new leadership and infrastructure approaches such as Scalable Lean Six SigmaTM and other proven methodologies to evolve and accelerate the process of improvement.
Improvement ExcellenceTM enables organizations to evolve improvement so that it is readily applicable to current and emerging economic situations and technology, which continues to replace the physical content of traditional improvement with digital organizations and global cyber enterprises. This all seems so logical and straight forward, but Improvement ExcellenceTM is a legitimate core competency that is either missing or keeps disappearing in organizations.
The first need in this journey is the creation of formal infrastructure and the initial actions to begin building this core competency of improving how we improve. This infrastructure includes:
Strategic Leadership and Vision- This Accelerator helps executives rationalize business strategy, understand gaps between current and desired performance, and align targeted improvement initiatives with business strategy. The other aspect of this element is an improved model of improvement that enables organizations to "do more with less," consistent with the demands of the new economy. In our framework this is Scalable Lean Six SigmaTM, a rapid deployment and rapid results improvement process focused on the highest impact strategic opportunities. Finally this element also focuses on behavioral alignment through the right strategic choices about improvement, sustainability through business integration, and the development of best practices leadership behaviors.
Deployment Planning -This group of Accelerators help to identify the "highest impact-critical-few" improvement opportunities required to meet or exceed the business plan. Unlike traditional Lean Six Sigma deployments with massive training and waves of improvement projects with questionable strategic value, the activities of Deployment Planning focus in on the 3-5 critical business issues that keep customers and executives up at night. Then specific improvements are pursued around these limited strategic opportunities like a school of piranhas. Customized education is provided, however, certification and Belts are viewed as a professional development goal after completion of a variety of improvement initiatives, rather than a prerequisite to begin improvement. People directly involved in improvement are not some remote team working on their certification project: It is the people living with the problem every day. They own the process, and they own improvement of the process. The remaining activities of Deployment Planning include communication and awareness, talent development, and leveraged mentoring for quick successes. Finally, Deployment Planning creates the ongoing process of identifying, planning, and prioritizing targeted opportunities followed by this continued rapid-fire improvement process.
- Execution –This group of Accelerators ensure the efficiency and effectiveness of completing specific improvement initiatives, as well as the efficiency, effectiveness, and sustainability of the overall process of strategic improvement. Execution is very focused on the C in DMAIC because this is the sustainability letter. The traditional approach to Lean Six Sigma and other previous improvement programs has tended to be static and well defined, highly procedural, and extremely focused on deploying tools. It has been like going through the motions of DMAIC, and then C is compromised for business as usual. Execution enables organizations to continuously critique their performance and rate of improvement, and evaluate the effectiveness of improvement on operational performance and strategic success. This includes past, present, and future improvement initiatives. Executives are interested in the rate and cumulative improvement and how it will enable business plan success. When things are not working, the executive core team shifts course and/or modifies their process of improvement.
In the Improvement ExcellenceTM framework, strategic improvement is dynamic and evolving to specific market, customer, and enterprise needs. Failure with improvement is not an option: Achieving a desired rate and level of improvement via cost reductions and growth is a major input into achieving a desired level of business and financial performance. Strategic Leadership and Vision, Deployment Planning, and Execution are the formal elements of infrastructure that align strategy, improvement, and sustainable results.
The urgency for strategic improvement is much higher than it was before the recent meltdown. As organizations evolve globally and technologically, their business process complexities and inefficiencies also increase proportionally. Organizations are now struggling with global challenges as we speak, that they never had to deal with in the past.
What is next? In the new economy, organizations have entered a future where we will all need to evolve improvement and solve business problems at warp speed that we do not know about yet. Strategic improvement is not an option in the new economy, and the means of improvement exist for those who recognize this urgent need and make the right choices about improvement. Today, organizations are either aggressively improving their businesses, or they are falling behind at an increasingly rapid rate. It is time for many organizations to get back to work on improvement. Success or failure in the new economy hinges upon an organizations ability to return immediately to the well of improvement, begin to develop this legitimate core competency of Improvement ExcellenceTM, and improve how they improve.
Part 2 of this series, due out next week, will discuss the specific Accelerators of the Improvement ExcellenceTM framework, and explain how IT Architecture will play a much greater role in the future of strategic improvement.
Author’s note: The articles in this series have been created from my newly released book, Accelerating Lean Six Sigma Results: How to Achieve Improvement ExcellenceTM in the New Economy.