One of the most important skills people learn in Six Sigma training is project chartering. Many Green Belts and Black Belts have learned to write much better goal statements using the SMART guideline (Specific, Measurable, Achievable, Relevant, and Time-bound).
In a previous blog, I talked about how clear operational definitions help create specific and measurable goals. What is more difficult to do is set Achievable goals based on our understanding of Process Capability. In other words, the improvement goal is not simply to show changes in the outcome of a process, such as fewer defectives in a batch or shorter lead time to deliver a product to the customer. A real improvement has to show the change in process capability.
Fundamental in Six Sigma, variation seems to be a foreign concept in many organizations and business practices. It’s not uncommon to see performance targets or improvement goals set without a measure of process capability, but based on things like
A percentage above/below the current level
What the business/customer wants
What people feel is “doable” within the timelines and resources
A goal such as “improve throughput by 20%” or “reduce lead time from 10 days to 5 days” is incomplete or worse, unachievable or irrelevant, because it doesn’t relate to the process capability. The danger of setting goals without understanding the process capability is twofold.
1. If the goal was set beyond the process/system’s capability (or expected range of performance), the only way to achieve the goal is to change the process. However, in many cases, the critical variables in the process are outside the control/scope of the people who are tasked with achieving the goal.
For example, you are getting 25 miles per gallon from your car in the last 3 fill-ups. If you don’t know the capability of 20-30 MPG fuel efficiency, it doesn’t matter if your goal is set at 35MPG (because of your desire or economic need). You might try to change driving habits, keep tires properly inflated, use some additives, or perform more routine maintenance. You might even get rid of some stuff in the car or pick a route with less stop and go traffic. What you will find is that despite great effort, your MPGis still below 30. In some rare occasions, you might achieve 35 MPG or greater because it’s mostly downhill. But you know you would give up the gain when coming back uphill.
The only way to achieve a sustained improvement in this case would be to alter the design of the car or get another one that has a better capability. In most cases in business, the employees (including the Belts) given the task to deliver a performance target or improve a process have no ability, authority or resources to change “the car.” It’s the management who has the resources and responsibility to do it. “Achievable” goals can be meaningfully defined only if 1) the process capability is known and 2) responsibility is assigned properly.
2. If the goal was set within the process capability, there is always a finite probability of achieving it without any effort or change in the process. The goal without an associated probability target is pointless.
To use the above example, if you didn’t know the capability, you might set the improvement goal at 28 MPG. It’s almost guaranteed that you will achieve it on some of the days without even trying. If you did try some techniques on that day, you might think they really made a difference and declare a success. This may sound silly. But the same logic and practices are happening in businesses everyday everywhere. People are rewarded (or punished) for achieving (or failing to achieve) meaningless targets because of inherent process variation.
In some cases, without knowledge of process capability, performance targets are set so low that they are at or below the lower end of the capability so it’s “doable.” Practically, “doable” means that whoever is tasked to achieve the goal has confidence that 80-90% of the time this goal can be achieved. For sure, any process will deliver such a performance without any material change if the goal is set at the lower end of its capability.
Next time you see a performance goal set for an organization or improvement goal for a project, I suggest asking these questions to evaluate if it’s achievable.
How is the target set relative to the process capability?
If the target is beyond the process capability, does the responsible person have the power and resources to change it?
If the target is within the process capability, what is the point? Something is missing.
By the way, none of these concepts was introduced by Six Sigma. W. Edwards Deming taught organizational leaders the concepts of statistical variation and associated management philosophy and practices decades ago. His book Out of the Crisis (1982) is a classic.