Big Six Sigma Challenge: Collaborating with Internal Training Organizations to Assist in the Transfer of Best Practices
The financial crisis will have a major impact on Six Sigma/process improvement initiatives. Further, we can expect to see more collaboration between Six Sigma groups and the internal training function.
It has been long known that Six Sigma must pay its way, but it will do so only if it is targeted at opportunities to improve the organization’s profitability and productivity. If firms grow their revenue base and keep their costs under control, they will improve this. Many firms will see their revenue base shrink within the coming year. This will require major cost reductions. But cost reductions require "surgery," not hasty hatchet work.
There will be greater emphasis on improving productivity than anytime in the past 15 years. One way to improve productivity is to identify internal best practices via measurement, render them explicit and put them into a form that is capable of being learned, taught and practiced.
The Importance of Finding and Transferring Best Practices Within an Organization
In the 1999 summer issue of The Wharton magazine, Laurence Prusak, executive director of the IBM Institute of Knowledge Management, told the following story about how British Petroleum identified and transferred best practices knowledge.
"Some years ago, an executive at British Petroleum—now BP Amoco, a $5 billion oil giant—noticed an unusual fact.
While studying the company’s performance, he discovered significant disparities in the productivity of oil wells in different parts of the world. Intrigued by the discrepancy, John Browne, British Petroleum’s CEO, asked his associates to find out what was going on.
The team that investigated the phenomenon soon found the answer.
It turned out that tiny, seemingly insignificant innovations that the workers practiced—for example, the method they used to remove barnacles from a ship’s hull—cumulatively made a huge difference in results and ultimately oil well productivity.
Enthused by this discovery, British Petroleum set about trying to introduce these high-yield work techniques at all of the company’s oil wells. The initiative should have led to a massive, across-the-board increase in productivity, right? Wrong.
British Petroleum learned, to its dismay, that productivity did not rise at all. The reason was simple. The oil workers, who saw these changes as dictates imposed from above, resisted them.
British Petroleum had to spend large sums educating the oil workers and persuading them of the need for change. This time, the effort paid off. The company slashed drilling costs by $47 million per oil well."
Like most stories, notes Prusak, "This one had a moral: Companies that capture knowledge about best practices and share it across the organization can sharpen their competitive edge."
The Neglected Role of Training in Transferring Best Practices
Whether or not British Petroleum’s corporate training group was involved with this project is not known, but they should have co-ventured with the group that identified the best practices.
As Prusak indicated, the first attempt to transfer best practices to under-performing units failed. Once the best practices were converted into a systematic, well-organized learning program, productivity and profits soared.
The codification process requires the expertise of the internal training organization. But internal training organizations—for the most part—are incapable of identifying internal best practices. That's the function of Six Sigma groups.
Why "Six Sigma" receives all the credit for reducing costs by hundreds of millions of dollars is not clear because both Six Sgma and training are responsible for producing these astonishing economic results in many organizations.
Another illustration of increasing productivity and profits through knowledge management and training is provided by Prusak and Thomas A. Davenport, who co-authored Working Knowledge: How Organizations Manage What They Know.
"At Texas Instruments, sharing best practices became a strong focus after the concept was strongly endorsed by Jerry Junkins, then the firm’s CEO.
He noted in a 1994 address: 'We cannot tolerate having world-class performance right next to mediocre performance simply because we don’t have a method to implement best practices.'
In response to Junkins’ exhortation, the company developed a common set of terms and methods around best practices sharing called the TI Business Excellence Standard (TI-BEST).
Early best practices sharing across the firm’s 13 semiconductor fabrication plants (known as 'fabs') had substantially reduced cycle time and performance variability, leading to capacity improvements equal to building a new fab."
Most internal training groups lack the expertise to systematically identify best internal practices that produce significant performance variations.
It is, therefore, essential to link Six Sigma groups with the internal training organization. For the most part, Six Sigma groups have hired individuals with demonstrated benchmarking and operations management skills.
Neither traditional Six Sigma practices nor any other "breakthroughs in process planning, management and control"—are nearly as important for the future of the Six Sigma function as the need for identifying internal best practices and developing customized learning programs( and continuing learning forums) to successfully transfer these practices.
To do this effectively requires the combined expertise of Six Sigma and training practitioners. Of late, it also requires unleashing the power of social media and other connective technologies.