| After the CEO and the top management team have bought into the DFTS initiative (Step 1 in Table 5.1 in Chapter 5), the team must assess its preparedness to launch the initiative. Such an exercise provides an opportunity to take stock of key organizational issues before a formal launch. DFTS can be conceived, mistakenly, merely as a technology to develop robust software. Such a flawed conception must be corrected. Just like Six Sigma, TPS, and TQM, it is essentially a leadership initiative. The principles, tools, and techniques of DFTS were described in earlier chapters. Although they are relatively straightforward, they are certainly not easy to implement. Realizing their full potential may be even more challenging and requires competence as well as leadership commitment, as discussed in Case Studies 20.1 and 20.2. They illustrate that quality initiatives are major long-term commitments and that such appreciation is vital for their successful implementation. It may be worth your while to read these case studies before proceeding. This pause may enable you to take a step back and reflect on where your organization stands and to what extent it is ready to embark on a major initiative that may be may be transformative, even for the best-run organizations. The two case studies reflect just that. Case Study 20.1: Striving for a Perfect Production Process The Toyota Production System (TPS) is widely considered to be the world's most advanced production system. Also known as lean, it has been developed by Toyota Motors Corporation over a period of nine decades and is still a work in progress. It embodies the totality of Japanese quality management practice unlike any other system. What is remarkable about TPS is its steady progression and its zealous custodianship by four generations of Toyota leadership. TPS is based on the following five core principles: Elimination of waste (muda) Just in time (kanban) Continuous improvement (kaizen) Mistake-proofing (poka yoke) Worker involvement
Within Toyota, four key people are credited with developing the system: Sakichi Toyoda, who founded the Toyoda Group in 1902 Kiichiro Toyoda, son of Sakichi Toyoda, who headed the automobile manufacturing operation from 1936 to 1950 Eiji Toyoda, Managing Director from 1950 to 1981 and Chairman from 1981 to 1994 Taiichi Ohno, the father of the Kanban System
Two other men helped shape the Toyota Production System: Shigeo Shingo, a quality consultant hired by Toyota, who helped implement quality initiatives Edwards Deming, who brought Statistical Process Control to Japan
Operationally, TPS is characterized by the 4 Ps: philosophy, planning, production, and people.[1] Philosophy The keystone of Toyota's quality control system is the critical role of the team members in the manufacturing process. The key principles on which TPS is established are as follows: Encouraging employees to play an active role in the quality control process Using employee ideas and opinions in production processes Practicing kaizenstriving for continuous improvement
Toyota team members treat the next person on the production line as their customer and will not pass a defective part on to that customer. If a team member finds a problem with a part of the automobile, that person stops the line and corrects the problem before the vehicle goes any farther down the line. Planning In the planning stages, it is important to note that new-product planning emphasizes a product that is as defect-free as possible. In other words, Toyota designs quality into the automobile. Technical advances such as computer-aided design (CAD) have helped designers create and modify their specifications much faster than before, while improving design quality. CAD allows designers to see their ideas as they take shape on a monitor display, in addition to clay models. Quality is an essential part of the preproduction process. Quality is the driving force in establishing a system that meets the goals of design, cost, and production volume. The planning phase also establishes a plan that outlines all details of the inspection process. Quality control involves close cooperation of many production departments. Production Toyota's quality control during production ensures that the correct materials and parts are used and fitted with precision and accuracy. This effort is combined with thousands of rigorous inspections performed by team members during the production process. Team members on the line are responsible for the parts they use. They are inspectors of their own work and that of their coworkers. When a problem on any vehicle is spotted, any team member can pull a ropecalled an andon cordstrung along the assembly line to halt production. Only when the problem is resolved is the line restarted. This process involves every team member in monitoring and checking the quality of every car produced. After the vehicles are completed, the tests really get tough. At the end of final assembly, the vehicles are started and then driven to functional inspection. Here, every aspect of the vehicle is put through a demanding set of tests and inspections. People Through quality circles and a suggestion system that rewards employees for ideas, team members strive to achieve the Toyota principle of kaizen, or continuous improvement. (A quality circle is a small group of workers, doing similar tasks, who meet voluntarily and regularly during normal working hours under the leadership of their immediate supervisor. They discuss work-related problems with a view toward making recommendations to management.) Toyota strives to institute its best practices throughout its assembly plants worldwide. At its U.S. manufacturing facility in Kentucky, more than 90,000 employee suggestions are adopted each year. Some individuals have contributed more than 1,000 suggestions. Each team member is a quality inspector. At any time during the production process, any team member who spots a problem can stop production by pulling the andon cord. Each year about 60% of the employees achieve perfect attendancebeing present and on time every day. They are rewarded with a gift, a special evening of entertainment, and a chance to win a new automobile. Every year, in a random drawing, 15 Kentucky-built Toyotas are given to team members with perfect attendance. TPS has transformed Toyota beyond recognition. As Eiji Toyoda observed, "When I went to Detroit in 1950, we were producing 40 cars a day. Ford was making 8,000 units, a 200-times difference. The gap was enormous."[2] Some 50 years later, Toyota has overtaken Ford as the world's second-largest auto manufacturer, now within striking distance of being the top auto manufacturer in the world. Both its market capitalization and profitability are higher than that of GM, Ford, and DaimlerChrysler combined. Top management's commitment to quality has been critical in Toyota's remarkable ascent as the leader in automotive quality globally. Although TPS is based on ideas that may appear deceptively simple, its implementation has required four generations of committed leadership that have involved people at all levels. Toyota's "Five Values" form an action guide for its employees to enforce its basic philosophy, as shown in Table 20.1. Table 20.1. Toyota's Five Corporate ValuesValue | Description |
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Globalization | Learning from the best in the world, we aim to become the best in the world. | Customer orientation | We forge partnerships with our customers and strive to exceed their expectations. | Challenge to change | Unbound by convention, we embrace the challenge of creation. | Professional excellence | We develop our strengths and think and act responsibly. | Teamwork | We recognize the human worth of each individual and collaborate to achieve goals. |
Although corporations all over the world have attempted to emulate Toyota, not all have obtained that kind of result. It requires more than just addressing process deficiencies. People across the organization must think, act, and behave differently before attempting to improve the development process. As Toyota's former president Fujio Cho said, "...no mere process can turn a poor performer into a star. Rather, you have to address employees' fundamental way of thinking." Or, if you like, it's the people, stupid! |
Case Study 20.2: Institutionalizing Six Sigma at GE It is amazing how General Electric "came from behind," bought into Six Sigma, and produced breathtaking results across the spectrum of its vast businesses globally. GE's Six Sigma implementation has become the hallmark of organization-wide quality initiatives in the West, just as Toyota's TPS embodies Japanese quality management practices. Above all, it clearly illustrates the critical role CEOs play in a major organizational initiative. Jack Welch has admitted with characteristic candor, "I was very slow to buy into Six Sigma. I thought the quality movement was bull. Larry Bossidy is the one who got me into Six Sigma, after he had been running AlliedSignal for a while. Larry hated quality more than I did. And then one day he said, Jack, this works. I'm getting all kinds of results."[3] What made the GE Six Sigma deployment so robust is that it not only produced transformative results for GE but also unleashed sweeping interest in Six Sigma globally. The following are the critical elements of GE's formidable Six Sigma initiative: CEO-Driven The most important reason for Six Sigma's roaring success at GE is that it was passionately driven by Jack Welch, who called it the most important initiative of his 40-year career at GE. After he was convinced of its inherent value, Welch led it with typical commitment, passion, and zest. The initiative evolved and expanded from its initial deployment in manufacturing operations to subsequently include transactions to service businesses to DFSS to Six Sigma support for customers and suppliers, and lately Lean Six Sigma. It is now a decade-long global initiative. It has been led passionately by two successive CEOs, Jack Welch and Jeff Immelt. They both understand its colossal value in improving bottom-line performance, preparing customer-focused leadership, and being "the centerpiece of our dreams and aspirations for this great company."[4] Early on, Welch clearly saw Six Sigma's potential as a transformative interventioneven for GE, with its highly competitive performance cultureand he conveyed his belief vociferously. He understood that for Six Sigma to succeed, he must bring his total commitment: "To make an initiative successful, you've got to commit yourself to it totally, and stay committed. The last thing you want is to turn these programs into the 'flavor of the month.' You have to be relentlessly persistent. That's why, after a meeting on one of these things, I will send out my notes to all the participants, to make sure we're on the same page. Clearly, it has slowed us down to make sure that each of these initiatives stuck. We'd stay with an initiative two to three years before bringing the next one in, doing them deliberately one after the other, in sequence. Between Six Sigma and e-commerce, for instance, three years passed."[5] Jack Welch understood that Six Sigma is essentially a leadership initiative rather than a set of tools and techniques. He also realized that it requires leaders at all levels to implement and sustain it. He therefore took his senior leaders into his confidence to ensure that they understood its value and were enthusiastic about it. To accomplish that, he invited Larry Bossidy to address GE's 30 top executives who constituted its Corporate Executive Council (CEC). He also selected the very best talents available to drive this initiative: "We put great people on our initiatives. The effort blossoms with great people, with their intellect, their ideas. Then we take the successes, and make these people the role models who talk about it to others."[6] Cultural Compatibility At GE Six Sigma was rapidly adapted to its performance-driven culture. It has been seen as a follow-up to initiatives such as Work-Out that empowered workers closest to work that leads to rapid problem-solving and product, process, and workplace improvements. Six Sigma was also compatible with GE's ethos of an action-driven learning organization: "Our behavior is driven by a fundamental core belief: the desire, and the ability, of an organization to continuously learn from any source, anywhereand to rapidly convert this learning into actionis its ultimate competitive advantage."[7] Although GE did not invent Six Sigma, it embraced and transformed it into a typical GE initiative: "The methodologies of Six Sigma we learned from other companies, but the cultural obsessiveness and passion for it is pure GE."[8] Most notably, the Six Sigma initiative was congruent with larger GE values and leadership principles, which helped GE easily assimilate Six Sigma into its cultural milieu:[9] Create a clear, simple, reality-based, customer-focused vision, and communicate it straightforwardly to all constituents. Understand accountability and commitment and be decisive...set and meet aggressive targets...always with unyielding integrity. Have a passion for excellence... hate bureaucracy and all the nonsense that comes with it. Have the self-confidence to empower others and behave in a boundaryless fashion...believe in and be committed to Work-Out as a means of empowerment...be open to ideas from anywhere. Have, or have the capacity to develop, global brains and global sensitivity, and be comfortable building diverse global teams. Stimulate and relish change...don't be frightened or paralyzed by it. See change as opportunity, not just a threat. Have enormous energy and the ability to energize and invigorate others. Understand speed as a competitive advantage, and see the total organizational benefits that can be derived from a focus on speed.
Strategic Compatibility By mid-1990s, GE with some 15 years of Welch stewardship possessed the strategic clarity of a vast multibusiness global enterprise. The key element of GE's strategy is well-documented and had been executed successfully over the years. This simply meant being "No. 1 or No. 2or fix, sell, or close." Welch had restructured GE businesses over the years based on market leadership. He knew that this gave GE a competitive advantage. Six Sigma was totally supportive of GE's key strategy. Enabling Management Infrastructure Welch's strategy of market leadership was supported by a management system meant to create the agility of a small enterprise. It consisted of the following:[10] Delayering: This was meant to create a nimble enterprise free of stifling bureaucracy. Small-company culture: GE built a culture of small business based on "self-confidence, simplicity, and speed." Work-Out: A system involving people closest to the work. They are empowered to solve a problem or tap an opportunity for improvement, usually on the spot in a town-style meeting involving all those concerned. If a quick solution cannot be reached, those responsible must provide credible reasons and direct further study. Work-Out helps overcome bureaucracy, embrace "boundaryless behavior," and decimate a "Not Invented Here (NIH)" mentality while encouraging teamwork and participation and enhancing speed of problem-solving and execution of decisions. Change Acceleration Program (CAP): This is GE's change management program using a set of specific tools. These tools enable accelerated transition from current state to improved state starting with the change champion leading to creating a shared need to shaping a vision to mobilizing commitment to making change last to monitoring progress. Finally, you have to ensure that supporting systems, structures, and management practices such as staffing, development, rewards, communication, organizational design, and IT systems complement and reinforce change (see Figure 20.1).[11] Figure 20.1. GE's Change Acceleration Program  Operating System: This is a year-round series of intense learning sessions in which the business CEOs, role models, and initiative champions from GE as well as outside companies meet and share the world's intellectual capital: its best ideas.[12] All GE initiatives, such as Six Sigma, globalization, and e-business, go through this yearly learning cycle for several years with a view toward improving, enriching, and implanting them as "a way of life." Stretch: This means striving to be "as good as you can possibly be" in every organizational endeavor.
Supportive Reward System GE supported its Six Sigma initiative by an appraisal and compensation system clearly linked to its success: The reward system has been further reinforced by the fact that Six Sigma was the top item on every agenda in every discussion in every business globally for the first three years of the initial deployment. Furthermore, Six Sigma was among the three big initiatives of the 1990s; the other two were globalization and services. Welch viewed Six Sigma as a leadership-development process and thought that the next GE CEO would most certainly be a black belt or a master black belt. Such emphasis clearly communicated that Six Sigma was indeed a big deal. Investment in Human Capital and a First-Rate Teaching Infrastructure Welch invested heavily in organizatio1n-wide formal learning to help GE employees acquire Six Sigma leadership, technical, and teaching skills. It meant creating teaching skills at an unprecedented scale, even for a large corporation like GE. Some 10,000 black belts and 100,000 green belts were trained and drove more than 20,000 projects during 2000. That helped generate additional financial return of some $2.4 billion.[13] The investment in human resources and management infrastructure has built a massive capability that continues to make a huge contribution to GE's performance, even after Welch's departure in 2001. GE completed some 50,000 projects in 2002, took Six Sigma to customers in 2003, and introduced Lean Six Sigma in 2004. The focus of Six Sigma has expanded to help seek improvements innovatively in previously unexplored areas. For example, GE achieved $2.7 billion of improvements in working capital in 20032004. During 20022004, GE Transportation improved inventory turns from seven to nine, GE Advanced Materials improved accounts receivable by six turns, and GE Commercial Finance expanded its returns through a "Lean Six Sigma"-like focus on margin expansion, risk management, and lower cost.[14] It has taken GE a decade to learn, implement, and assimilate Six Sigma. It is still a work in progress. It has evolved and expanded across every GE business across the world. But the quest for improvement and perfection continues, just like Toyota's quest for perfection in quality improvement and waste elimination (see Case Study 20.1). Beyond measures of improvement, Six Sigma's true and enduring success lies in how it is now an integral part of GE's culture. It defines how GE works. |
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