Almost two years into its Six Sigma initiative, a Fortune 500 company with over 10,000 employees was at a crossroads. Some initial projects had generated up to $750,000 per project, and incremental operating profit per Black Belt per year had originally been in excess of $500,000. But now the project pipeline was drying up and the fiscal return per project had dropped below $100,000. Project duration had been a problem from the outset: on average, projects had taken 6 months or longer to complete. Most current projects were not related to strategic objectives because individual managers or Black Belts were allowed to select their own projects without a formal process to evaluate the selections against corporate priorities.
Throughout the organization, there was a growing resentment of the special treatment afforded the Black Belts, and growing frustration with the lack of alignment with the rest of the organization. Where once the best and brightest competed for Six Sigma positions, trained Black Belts were now requesting transfers back to their old jobs.
The CEO and executive leadership faced a critical decision: Could they revive the initiative and achieve the significant gains that had convinced them to adopt Six Sigma, or was it time to drop it altogether and invest their time and money in something else?
Given their initial success, the executive team at this company conducted an in-depth diagnostic of what had gone wrong with their initiative. Here’s what they uncovered:
If it seems odd that a chapter on readiness assessment starts out with an example of mid-deployment woes, that’s because this Six Sigma initiative ran into trouble as a consequence of decisions made long before the first Black Belt was trained. The company had gone into Six Sigma without fully understanding what it would take to make it work.
This example explains why the first step when planning a Lean Six Sigma initiative should be an environmental scan or readiness assessment, a gathering of information to uncover all the critical issues that may impact how you design and implement your program. At Bank One, for instance, they’ve learned what will and won’t work in their environment:
Darryl Greene, now a Senior VP at Bank One, spent part of his career at GE. He’s learned that you can’t just copy what some other organization is doing. “The GE environment trains you very well to execute within a robust infrastructure,” says Greene. “But if you go into an environment where you don’t have that infrastructure, and try to use the same approach… it just doesn’t work. At GE, 40 percent of managers’ incentive compensation was tied to Six Sigma, so obviously they’ll run with it as far and as fast as they can! At companies that are new to this, that infrastructure doesn’t exist and people’s familiarity with collecting data, understanding gaps, and closing gaps in a repeatable and consistent manner varies.”
There are many approaches to doing a readiness assessment. Here’s a typical sequence; the steps are described in detail below:
Before reviewing these steps in more depth, here’s one tip: The way you conduct the assessment will set the tone for what people expect out of Lean Six Sigma. By including a wide range of people in the assessment you can create a lot of positive feelings towards the initiative, especially if you go in with an open mind and “listen” more than you “tell.”
The reason for selecting or designating a corporate Lean Six Sigma Champion first is simple: he or she should lead the rest of the work involved in preparing for and rolling out the initiative. Having the Champion involved early on and reporting directly to the CEO is important because:
All of this early work associated with deploying Lean Six Sigma revolves around building alliances and becoming connected with management’s priorities. That’s why an effective Champion needs to have a combination of top-notch people skills coupled with the ability to understand the business—not to mention planning and deployment skills, knowledge of Lean Six Sigma, and so on.
The first step in any plan is knowing what you’re starting with. The Champion, working in conjunction with the executive team, should compile basic information on two fronts: the business status of the company overall and its major subdivisions (much like the competitive assessment described in Chapter 4), and existing knowledge/attitudes towards change in general and Lean Six Sigma in particular.
Though the executive team should be up to speed about the organization’s overall status, it helps to document some basic information up front to make sure that the decision makers are all starting from the same point. Think of it like an annual physical: you just want to compile data on how the organization and its major subdivisions are doing fiscally, where people are currently deployed, and so on. Include any existing information on customer satisfaction.
What also helps here is benchmarking: visiting other companies who are involved in Six Sigma or Lean Six Sigma to see what has worked or not worked for them, see how they adapted the initiative to their work style, culture, business needs, and so on.
Typically, the Champion and/or outside experts will meet the CEO and his/her direct reports in one-on-one interviews. The purpose of these interviews is to identify critical elements of success for the business as a whole (what will it take to increase ROIC? market share?) and for the Lean Six Sigma initiative itself (what do we need to pay attention to make sure Lean Six Sigma is a tool we use to drive corporate strategy? what could stand in the way?).
Since the purpose is to uncover factors that will shape deployment plans, the topics covered typically include:
Why the questions about decisions and communication?
How authority is exercised and how conflict resolved are issues that coalesce around decision making. Exploring how decisions are made can therefore reveal important dynamics that will influence plans and tactics for deployment.
Asking the above questions of all top managers will reveal the extent to which executing strategy is an issue. A skilled interviewer will be able to gain the confidence of interviewees and pick up on inconsistencies in the interpretation of roles and strategy. Because many major Lean Six Sigma opportunities lie in the “white space” between functions or in processes that cross traditional boundaries, you’ll need to know how willingly different parts of the organization will come together and support cross-functional goals that may not directly benefit their organization.
One organization that was embarking on a Lean Six Sigma initiative had a frontline employee who also happened to be a part-time pastor, and who, not incidentally, had presided at the weddings of half the company. He was looked up to by most employees, and his opinions were always sought out. Unfortunately, no one bothered to talk to this employee or involve him in any aspect of the Lean Six Sigma planning or launch. It is widely acknowledged at this company that this oversight was one of the biggest reasons why the initiative encountered major resistance from many parts of the organization.
In any organization, there is a core group of perhaps 5% to 10% of the employees who have a bigger effect on what does and doesn’t get done than do their coworkers. Everybody knows who they are. As shown by the story above, these key influencers can be anywhere in the organization from the board room to the reception desk. Their influence can arise from formal authority or from a number of any other factors (personality, longevity, connections). Anyone with formal P&L responsibility, and often their direct reports, should be included in these lists.
The leverage of key influencers
Key influencers can come from anywhere in the organization. This notion is incredibly powerful. Why? As a Champion at one otherwise successful example of Lean Six Sigma discovered, many of the richest opportunities are cross-functional. But addressing those opportunities was impossible when individual silo leaders or key influencers didn’t appreciate how Lean Six Sigma could help them and their staff. In fact, results in one division of that company are marginal because a key influencer keeps saying, “I don’t need this.” You can avoid this situation by following the engagement guidelines given in the next chapter.
This concentration of influence is fortunate to those of us trying to implement change because it means we can get enormous leverage by focusing our initial efforts on a relatively small percentage of the organization rather than trying to directly engage every single employee. If you get these high-leverage people involved in and excited about the initiative, then deployment, dissemination, and sustainability will come much more smoothly.
The one caveat is that you have to be diligent in finding all the people who fall into this category. If Joe is the “go to” guy in IT, you’d better talk to Joe. If Maria knows the ins-and-outs of accounting better than anyone else in the department, you’d better talk to Maria. The more of the key influencers you include, the greater the chances that the deployment will progress smoothly and receive support.
From a practical standpoint, the contact can occur either one-on-one or in focus groups depending on how the logistics work out for your assessment, but the key point is to have face-to-face contact with as many of these influencers as possible. Though you should let the discussions go in any direction that these people want to cover, it helps if there is at least some overlap with the topics discussed with top management (see list of topics/questions, above)—that way you can compare perceptions at different levels of the organization.
The information from top management and key influencers is usually synthesized into a leadership training course that outlines the critical issues that will impact the Lean Six Sigma strategy and unique challenges faced by the company regarding deployment, training, and infrastructure.
You will likely find patterns that indicate some areas of your company will be more receptive to Lean Six Sigma than others. If the less-receptive areas are involved with value streams that are critical to your business, you won’t have any choice but to include them in the deployment, though you will have to do more communication and education up front to convince people that Lean Six Sigma can help them.
Though every organization is unique, there are some general patterns often seen in service organizations that have predictable effects on how a deployment should be structured. Here are a few of the most common issues:
Service organizations are essentially big “people machines,” where having a high level of turnover is just as deadly as if a manufacturer was constantly asked to change machine parts. The issue is true both for the business as a whole and especially for deployment of Lean Six Sigma: It can be challenging to establish and impossible to maintain momentum if the people you train one week are out the door the next week. This problem is especially critical for the people you put through extensive training: Champions, Black Belts, Master Black Belts. If they leave a few months into your deployment, all the knowledge you just paid for is lost with them, and you’ll need to invest more in training a new wave. These people are most likely to leave because of a lack of management. The same is true for project team members: high turnover can mean less resident knowledge to tap into at a grass roots level.
Organizations that can retain employees, including their Lean Six Sigma resources, will be at an advantage compared to their competitors. Reaching this state requires attention to a lot of the guidelines given in this and the following chapters, such as selecting Black Belt candidates based on their leadership skills, maintaining high visibility of Lean Six Sigma in the organization, demonstrating at every turn that Lean Six Sigma is critical to success, and so on. Using that path means your best people will be “lost” through promotion, not through departure.
Think for a moment about the four organizations profiled in Part I: Most of the ancestor organizations of Lockheed Martin had some experience with improvement, knowledge that is of great benefit to the supporting functions. Similarly, experience with quality improvement is also relatively more common in the healthcare field (such as Stanford Hospital and Clinics), largely because of the long-standing incorporation of quality principles into accreditation. But at both Bank One and the City of Fort Wayne, the general employee populations had little experience with quality improvement.
In organizations with a history of quality improvement, Lean Six Sigma is best viewed as a unifying framework that incorporates everything that has gone before plus adds in some new elements. You’ll be better off subsuming previous initiatives into Lean Six Sigma than positioning it as a replacement. Those with little or no history don’t have to worry about supplanting methods that may be near-and-dear to people’s hearts, but they should expect to do more upfront awareness training so that people understand the goals of Lean Six Sigma and how it can help the organization.
Most service organizations have not used data to make decisions because it didn’t exist. Rather, problems were ascribed to a “cause” based on hunches or intuition. This led to solutions that, if implemented, were doomed for failure.
Though it is a stereotype to some extent, people who have worked with both manufacturing and service organizations consistently find that the former are more technically oriented and the latter are more people oriented. These differences often emerge as recognizable patterns throughout the organizations:
Effective implementation of Lean Six Sigma takes a combination of technical and people skills, so if you observe either of these patterns, it helps to adapt your training plans accordingly. If you find people in your organization are less technically oriented, you’ll need to be more sensitive to avoiding jargon or to using statistically sophisticated techniques where simpler ones might do as well.
In many service functions today, especially those in sectors that have recently gone through downsizing, you’ll find some resistance to Lean Six Sigma based more on the general principle that people are already overworked than any specific objection to Lean Six Sigma itself. These feelings can pop up anywhere, in any type of organization, and you’ll need to overcome the perception that Lean Six Sigma will just be bureaucratic work piled on top of already impossible workloads.
There are several ways to work through resistance arising from this objection. George Sanders, a Director of Sourcing at Lockheed Martin, for example, has found that the “overworked” syndrome can be a powerful motive for change, especially once people realize that much of the 10 or 12 hours in their days is spent on non-value-add work. Using Lean Six Sigma to eliminate waste creates buy-in by giving people back their 8-hour days!
Also, you can establish a sustainable foothold in “overworked” areas if you go out of your way to make sure that Lean Six Sigma is tied in with the real, everyday work and business priorities of managers and staff in this situation. Going for quick, incremental improvements at first that free up even a small portion of someone’s time will give you a lot of leverage for taking the next (bigger) steps.
Bottom line: if you believe that Lean Six Sigma is worthwhile, implementing it in areas that are “overworked” simply becomes a matter of leadership and priorities.
If you owned a chain of hotels, it wouldn’t do you much good to give five-star service in one hotel if every other location fell into a two-star category, just as it doesn’t help your organization if customers get excellent service one day and poor service the next. The axiom that “variation is evil” is never more applicable than when it comes to providing services to internal or external customers. To stay competitive, you need to be able to provide consistently high quality services.
The impact of this reality is that service deployments of Lean Six Sigma have to have a strong component of best practices sharing, establishing common practices at every location, every process, where customers are met face-to-face or phone-to-phone. By standardizing subprocesses across staff, shifts, and locations, a company can dramatically improve cost, quality, and lead time. Lean Six Sigma therefore becomes a potent competitive advantage as customers get more uniform, higher quality service levels regardless of location or shift or operator.
When speaking to a group of American consultants, Dr. Noriaki Kano, one of the premier thinkers and shapers of the Japanese quality movement, once described the biggest barrier to successful implementation of any change strategy this way: “Too many managers act as if they are starting with a blank canvas. They introduce change without understanding what has come before. They have to start recognizing that every canvas in their organization has been painted already… usually several times over.” The purpose of a readiness assessment is to learn what’s on your canvas, so you can make better decisions about how to structure and deploy Lean Six Sigma.
Part I - Using Lean Six Sigma for Strategic Advantage in Service
Part II - Deploying Lean Six Sigma in Service Organizations
Part III - Improving Services