Why communicating failure might be critical to your success (Transcript)

If every business ran perfectly there would be no need for process excellence. Lean and Six Sigma are based on the idea that getting to the root cause of problem and incrementing small, daily, improvements will lead to big changes. So why would you pretend your process excellence program gets everything right?

Sanjay Gupta ‎Director of Operational Excellence at SWM, the world’s biggest producer of cigarette paper, says that communicating failure is an important part of managing your process excellence program.

"At the end of the day," he explains. "We're in the business of process improvement and failures are a place where we can improve."

This is a transcript of a recent podcast. It has been edited for readability. To listen to the original podcast, click here.

Failure happens - get over it.

PEX Network: You and I have spoken many times about your operational excellence programme, but for our listeners out there who may not have heard our previous interviews, could you, perhaps, give us the cocktail party snapshot of what you do?

Sanjay Gupta: Absolutely. Our operational excellence programme at SWM includes not only Lean Six Sigma, but other improvement projects, like GE's workout. We also have Five S and safety.

My job is to effectively enable the programme and consists of three parts. One is to drive the programme to support strategy, secondly to ensure that a culture exists or changes to enable the programme to thrive and thirdly, to make sure the right resources - meaning people - incentives and training are in place.

PEX Network: Ensuring that you support business strategy sounds like a big part of your programme, how does that play out in the work that you do?

Sanjay Gupta: When I was hired, there was a need for the organisation to drive down costs to remain competitive. We've done that effectively over the last several years and this year, we're having an outstanding year reducing costs at about 5% of cost of goods sold. There are other needs as well, other strategic needs, and one of them is the need to innovate.

It may sound strange using Lean Six Sigma to enable innovation. However, if you think about Kaizen in the sense of simple Kaizens – i.e. change for the better - these simple Kaizens may take a few minutes to a day and everybody participates with a view to improvement. What you've done is empowered employees and changed the culture where employees are willing to speak their minds and ideas.

Ultimately, the value of a Lean Six Sigma programme is enabling the strategy of the firm. Cost savings will only take you so far. It is important - very important - but the programme needs to drive and assist the strategy of the firm. One has to look at the programme from a 30,000 corporate perspective and what you're really changing is thinking and behaviour.

PEX Network: What would you say are some of the keys to achieving the results you have?

Sanjay Gupta: The key is executive engagement. I think that's fundamental in any deployment. The second thing is the ability to influence at the Gemba: the local factory managers, leader of the functions - they're your stakeholders after all! You also have to make sure that there is good communication around the programme, its goals, objectives, where you're trying to get to, successes, and your failures.

The programme can't run on autopilot for extended periods of time. It needs to be periodically reinvented as business needs change. That doesn't mean that you throw away the basics, like the methodology, but you may need to support different strategic BHAGs (Big Hairy Audacious Goals).

PEX Network: That's a really interesting point about the communication, of course, around programme goals objectives and successes. What I wasn't really expecting, though, is you also communicate your failures. Why is communicating failure important?

Sanjay Gupta: I think you need to have some intellectual honesty within the programme. Let's talk about something that everybody can understand: cost savings. I believe your audience will agree that reporting accurate cost savings is critical and vital. Let's say you report them incorrectly. Is somebody going to believe you after that? So if you're not doing well with cost savings, be honest about it. You have to always approach it with the mindset that it’s about how to get better.

I think burying something in the sand is a recipe for disaster. At the end of the day, we're in the business of process improvement and failures are a place where we can improve.

PEX Network: It's along the lines of what we often talk about in terms of creating high trust organisations or organisations where people aren't afraid of admitting there was a mistake. Rather than trying to cover up problems, it's about admitting that they happen, but let's move on from that, let's figure out how we can avoid them happening again.

Sanjay Gupta: I absolutely agree. For process excellence to work, intellectual integrity must be there. People have to believe and trust in the programme. At the start of a programme, how much belief there in DMAIC or DMADV or in Lean? People aren’t familiar with these tools and you, as the leader of the programme, must come across as completely and absolutely pristine all the time.

PEX Network: A question around engagement of both business stakeholders and executives. I've often heard it said that people have trouble getting them onboard and getting them committed to continuous improvement. What do you find works to engage your business stakeholders and executives?

Sanjay Gupta: As you say, executives and leaders are busy so it's not easy. Sometimes it's like pulling teeth trying to get them on board. But can you create a mandate, so that everybody is Lean Six Sigma green belt certified, goes through sponsor training or, at least, is exposed to the programme and methodology?

In previous deployments, I've managed to convince leaders that they need to be part of the programme and get at least green belt certified, which means completing a project, so they can feel the pain that a green belt goes through in terms of completing work. Of course, they see many projects and certainly learn from that. The ultimate enticement, though, is when you can support leaders in achieving their goals, be it cost savings, quality, innovation, that's what's going to get them on board; you need to support them.

PEX Network: I think that's great advice. I think sometimes in any work that we do, it can be really difficult to see the forest for the trees. Do you have any advice on how to keep that larger perspective in mind - i.e. that you need to enable business strategy, you need to enable your leaders - when you develop your tactics for operational excellence?

Sanjay Gupta:You need to develop diagnostics to show the appropriate indicators around strategy, so diagnostics are important. You also need to make sure that you engage with the executive stakeholders and make sure those metrics are still valid. You must develop methods to discover the unspoken needs. In other words, you should not be giving them a faster horse when what they actually need is a car, that interaction is important. And you need to plan one, two, five years into the future, but also be ready to change tack, as required.

PEX Network: Many industries have been disrupted by new technologies over the past decade, but I would have thought that the paper industry has been left largely untouched until, of course, recently. How are new technologies, like e-cigarettes, for instance, impacting your business? And how is continuous improvement helping you respond?

Sanjay Gupta: As you say, paper companies have seen the markets disrupted. Look at newspapers, books, e-books, and it's really about innovation and leveraging people. As I said, you're changing thinking and behaviour; it's about changing the way one works. Of course, basic blocking and tackling around new product development, using tools, such as DFSS or TRIZ, are also a part of the package of ensuring success. But what you're changing is the ability of the most important asset that you have – i.e. people - to think differently, to innovate, to speak their minds and they will help you.