Lean and Six Sigma in Our Turbulent Economy

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Wave good-bye to the economy we’ve known.

The complexity and global scope of the credit crisis has changed the world of business, and the huge federal restructuring isn’t going to bring us back for a while. Independent of this market mess, executives need to go to work every day and build better, stronger global organizations.

These business issues and challenges are in supply chains, new product development practices, sales, and customer services processes and manufacturing operations, all of which are totally unrelated to bulls and bears and the daily DJIA results.

The choice to improve your own situation is up to you. Many of your operating problems are currently painful and will become more painful when things get better. Either rise to the occasion now, or wait until your competition does and leaves you in the dust.

Using Lean and Six Sigma For Improvement During the Economic Downturn

The best time to deploy the structure, methodologies and improvement tools of Lean and Six Sigma is now; however, improvement resources are one of the first casualties in the belt tightening efforts. In my book (co-authored by John Moran) The Future Focused Organization (Burton & Moran, 1995), we discussed a model we referred to as "The Omni Pattern," where leadership panic behaviors can actually create a death spiral for their organizations.

Executives panic themselves and others around them into paralysis, and their actions become a self-fulfilling prophesy with respect to Lean and Six Sigma. They selectively cut back on the very people who can save the day because there are no funds in the budget for improvement.

Like it or not, these behaviors are also changing business culture to one where people shift into self-survival mode, avoid risk and involvement and run for cover. Then when that doesn’t work, executives cut back on jobs and look at off-shoring to places with lower labor costs. Eventually, hundreds or even thousands of employees might be impacted by this short-sighted decision-making.

Leaders Avoid Disaster with Control and Planning

In a turbulent economy, organizations still must strive to improve their business. But how do we reverse this disaster course?

Here are a few suggestions:

1. First, leadership needs to step up. Executives must not waver from improving the business just because times are tough. They must:

  • Redefine a clear vision of business improvement
  • Communicate! Communicate! Communicate!
  • Set high performance expectations
  • Build shared commitment
  • Deploy a targeted (vs. shotgun) approach to improvement

What is new here is the ability to stick to these actions and create consistency in the improvement message.

2. Next, develop a renewed business excellence strategy and deployment plan. Maybe the organization is not ready to continue with the previous scope of your Lean and Six Sigma efforts; however, it’s time to target the important issues. Areas such as new Product Development, Warranty and Returns, Excess/Obsolete Inventory, Sales and Operations Planning, Supplier Selection and Certification, Unplanned Downtime, Design for Manufacturing and a few other project areas are worth millions to most organizations. The best approach is to focus in on a vital few.

3. The most important aspect of business excellence is execution. Many organizations have their own "show-and-tell" versions of Lean and Six Sigma, but only a few organizations will actually demonstrate the significance of Lean and Six Sigma to the company’s future—particularly by their actions and breakthrough results. These organizations are great when it comes to the following actions:

  • Demanding data and fact-driven analysis
  • Empowering the organization to take action
  • Managing/sharing measurement and feedback visually
  • Holding people accountable for results

Eliminate Waste, Not People, to Reduce Costs

Leading organizations "knuckle down" and use this time to mine for, and eliminate the hidden, non-people wastes in their processes. They take a more aggressive approach with their Lean and Six Sigma deployment because they see it as the key enabler to reduce costs, improve competitiveness or accelerate growth. Regardless of your industry—an effective Lean and Six Sigma deployment requires that executives go on the defense and offence concurrently. You need to deploy the right improvement methodologies (e.g., Kaizen, Lean, Six Sigma, enabling IT) and resources to the highest impact opportunities now.

There is no such thing as "staying the same" in a turbulent economy. Either you lead your organization down the path of business excellence and benefit from your actions, or you become victims of another competitor’s willingness and commitment to improve their business. The risk of unintentionally leading your organization into paralysis is a prescription for failure. Organizations that are willing to strive for business excellence right now in this economy will become the emerging industry and market leaders when things get better.