Three Process Improvement Challenges for 2012
What does the coming year hold in store for Lean Six Sigma and process improvement practitioners? Today, the risks are higher and the pace of change is faster than even a couple of years ago, says Gregory North, Vice President of Corporate Lean Six Sigma at Xerox. Here are three key challenges practitioners must confront.
In this interview, Gregory North, who is a member of PEX Network's Process Improvement Visionary Council, discusses key challenges facing businesses in the current economic environment, the impact of the economy on process improvement programs and the role of Lean Six Sigma tools in helping businesses navigate change and risks.
Gregory North: I think that the year ahead in some respects is no different than the years behind. But in other ways, it’s very different. I know that sounds like a consultant’s answer, but let me try to support both of those positions.
First, I feel very strongly that Lean Six Sigma is not terribly different from what it was 20 years ago or ten years ago and it will ultimately be the same ten years from now. Process Excellence is about taking care of customers in a way that is cost effective and provides the most value. There are methods and tools that can help you do that and you have to engage employees at all levels of your organisation to achieve change. Those are the basic elements, and those aren’t going to change.
However, there are some challenges right now that are happening in the world of business in particular which mean that Lean Six Sigma has to step up to the plate. The Process Excellence "bar" being set higher for all of us across all industries.
The challenge is this: the world is going through a series of very dramatic economic and technological changes, which means that the risk for companies is higher and the pace of change is faster. This means that, ultimately, Process Excellence is more important than ever, because of its ability to facilitate that change. At the same time, there’s more cost pressure on organisations to look at non-line business functions, which means that Process Excellence support functions and Process Excellence training enabling capabilities are under pressure as well. So we have a rising challenge to both deliver more value, but to do it in a way that is as lean as possible in support of our enterprise goals.
PEX Network: You say the world is going through a series of very dramatic economic and technological changes, what do you see as the key economic and general trends that are really driving challenges for the Process Excellence practitioners within a business?
Gregory North: There are at least three trends that I would highlight. The first one is how international business is today. Many companies, for instance, have international teams working 24/7; those may be international operations within the same company or outsource partners. In that kind of world, it’s important for us as Process Excellence practitioners to understand how we're driving value across the entire global business, and that includes our global partners, global supply chain, etc.
The second element is to make sure that we have an ability to adapt to fast changing situations. In the past we may have put together our three or five-year plans; now those plans may have to be changed within the year as circumstances change. In additional to flexibility, that also means that, if you have improvement initiatives that are supporting manual strategy, for instance, they need to be able to demonstrate value within the year. As a result, we need to package our improvements effort in such a way that they produce a lot of value within shortened time frames.
The final element has to do with cost effectiveness. We need to get to the point where we are able to identify the vital few things that have the most benefit for the company and not work on every single project that we dream up. Rather, we need to thoughtfully select our projects in order for us to ensure that we’re getting the best "bang for the buck".
If you combine those three elements: the need to think globally, the importance of doing things well and quickly, and the importance of working on only the most vital programs - it really means that you need to be able to image and manage the entire enterprise effectively from a Process Management standpoint. That means that you must have visibility into all the key aspects of what the enterprise is doing. In the past, in a Six Sigma deployment, for example, it might have been very much about just making sure that you had a certain amount of belt capability in each region. That’s no longer going to be good enough because you have to make sure this is really serving some global whole. For a company like Xerox - which is in so many countries and has so many different potential business opportunities - that’s a very challenging thing to do.
PEX Network: You’ve touched on how continuous improvement activities need to evolve to adapt to this changing environment. Can you give an example?
Gregory North: Part of what we need to do - and what we are doing - is making sure that we think about the global business, not just in terms of what our business does, but to go beyond the four walls of our business to include our partners, our alliances, our customers, and our suppliers. That means being able to vision the entire process, end-to-end, outside of Xerox’s processes, but also upstream and downstream into our supplier and customer worlds. We need to be able to effectively bring those groups together.
That’s a very significant change management challenge because when you go beyond the scope of just what, for example, Xerox is doing, you have to be able to clearly understand the what’s in it for your customer and supplier to be part of your strategic shift. I think that takes Lean Six Sigma and Process Excellence to the next level because it requires us to be able to manage change at a global level, and that’s something that, in the past, is very different than trying to make sure that one particular project, for example, gets done well.
PEX Network: What role do you see Lean Six Sigma tools having in this type of continuous improvement activity?
Gregory North: It's funny you mention that: I was talking to one of our senior leaders not too long ago about global transformation. One of the things that came up was that some of the rigor that we apply in the early stages of a Lean Six Sigma project - such as making sure you have a good charter, for example - are things that sometimes we can miss when we scale these projects up to the program level. At that point you’re going to be talking about tens or even hundreds of millions of dollars where there’s an assumption to some extent that we must do something here in this space. And so there’s an allocation of resources and a strong push for activity. But if we stop for a moment, applying Lean Six Sigma principles, and make sure we really understood, for example, what the problem statement was and what the root causes were we might, in fact, channel and focus those monies and energies in a slightly different direction. So this is an example of where even very basic Lean Six Sigma tools can be critical at the enterprise level.
PEX Network: So you see Lean Six Sigma as having an important role to play in managing a more complex, more unstable economic environment where the pace of change is quite quick?
Gregory North: Absolutely - I would say that Lean Six Sigma is both critical and ever more useful. If you’re trying to look at the value stream of an inter-connective set of business processes that go across suppliers and customers, then where else but Lean Six Sigma can you turn to, in order to be able to quickly pull out where is the constraint? Where is the bottleneck? Where are the key drivers? What are the key data points that, if you make sure are understood, will help you be able to have early process indications of success or failure? Ultimately, these principles have never been more relevant than they are at that level, and more relevant now than ever before.
Editor's note: This is a transcript of a podcast interiew "Lean Six Sigma in 2012 - Interview with Gregory North of Xerox". The transcript has been edited for readability.