Like many companies in the Fortune 1000, we are planning 2008. At leadership meetings, around conference room tables and in hallway conversations, we are asking big questions: What will our industry look like? How will external trends affect us? How should our business model change? What capabilities do we need? Do we have them? What level of cost savings will boost our stock price?
These conversations can create organizational angst: senior executives worrying about tenure, middle managers fearing loss of their jobs or attrition of star performers, and analysts feeling the effects of declining morale. Alternatively, they can create optimism: drive to succeed at all levels, commitment to company success and drive for big bonuses. Reality is often somewhere in between – a mix of pessimism, optimism and indifference. We fall into the “somewhere in between” crowd.
Deploying Lean or Six Sigma in an organization with strategic ambiguity is no easy task, especially if the Process Excellence Organization has not cemented leadership advocacy (a key success factor for adoption), demonstrated value, and achieved the cultural stickiness that Lean and Six Sigma enjoy at mature, self-optimizing companies. Self-defeating Six Sigma organizations wait for the next round of strategic priorities to be dictated, so they can update their deployment plans and complete new waves of projects. Self-directing Process Excellence Organizations inform strategic debate and shape their utilization – positioning their sponsors (or executives who will become their sponsors) and companies to achieve payback multiples (benefits of Lean and Six Sigma divided by the costs of deployment) greater than 10:1.
Having worked on transformation initiatives and in a champion role, my views of what differentiates effective from run-of-the-mill Process Excellence Organizations are evolving. Analytical rigor, methodological purity and quantitative exactness differentiate process improvement professionals, but critical thinking about strategy, marketing prowess inside a company and a pipeline to talent will set up Process Excellence Organizations to succeed.
With strategic planning in full force, here is the first part of a series to help Process Excellence Organizations think about improving their value and odds of success. Excellence is a process. Executives might think Lean and Six Sigma professionals manage their own activities as a process-centric enterprise within an enterprise. My own experience suggests that we spend so much time improving company processes that management of our own process – deploying Lean and Six Sigma to improve performance (i.e., quality, efficiency, service innovation, customer satisfaction, shareholder value) – does not achieve the right level of maturity. And so a vicious cycle emerges: we work on the wrong projects; deployment does not produce big bangs; executives lose patience; we redeploy, reorient or disappear; companies embark on new quality journeys after forgetting pains of the past.
The hallmark of mature Process Excellence Organizations is their flexibility. A few years ago, a colleague at a well-known consultancy highlighted how Six Sigma can be inflexible. A client engaged his firm to recommend cost reductions. The engagement team identified redundant computer software. Wanting to achieve a quick win, a procurement executive announced retirement of the software in 45 days, unless business lines could justify the cost of redundant licenses and products. A few users complained, but the executive canceled the licenses. My colleague overheard a skeptical Black Belt comment that the executive made a quick decision and should have completed a DMAIC project to understand the true benefits and ensure canceling the licenses would not disrupt business processes. DMAIC projects at the client took 3-6 months. The analysis to identify the redundant software took 2-3 days. The procurement executive determined in a meeting that canceling the software would not have significant effects (besides whining by people who would have to begin using another, comparable product). The savings from the decision were over $1 million per year. The Black Belt showed a lack of flexibility.
If my comments about flexibility seem insensitive to the rigor of Lean and Six Sigma, ask a personal question: Would you rather save enough money to retire over 10 years or 30? CEOs are motivated by returns, and organizations that can grow the top line, shrink expenses and improve the bottom line the fastest enjoy the most credibility.
Methodological and analytical rigor is a prerequisite for any Lean or Six Sigma effort to succeed. Taking a broader perspective, mature Process Excellence Organizations enjoy or achieve credibility and success by executing a flexible performance-improvement process – attacking the top priorities, employing the best tools, selecting the right projects and leveraging organizational momentum.
Mature process excellence organizations address five things. Over the next several weeks, I will discuss characteristics of mature Process Excellence organizations. They are:
- Understand and inform strategy setting and implementation
- Create relationships and governance through sales and marketing
- Facilitate identification of the right mix of quick wins and big bangs
- Pull people into process excellence and push knowledge to the business
- Manage the process excellence organization like a consulting business
The five-part series will draw on research, case studies, personal experience and opinions to communicate ideas that Lean and Six Sigma practitioners can evaluate, adopt, reject or deride as whimsy. After a long-term absence from iSixSigma, my goal is to encourage the blog community to raise the strategic relevance of Lean and Six Sigma at their companies.