Integrating Lean 6 Sigma into an Organization
The change required for achieving breakthrough profit performance! By, Dr. Arul Aruleswaran
Businesses exist fundamentally to earn profits. Shareholders, stakeholders, directors and management engage in a business activity to meet these goals – results, revenue, growth and return of invested capital.
Now, can an initiative such as Six Sigma and Lean Thinking or commonly know today as Lean 6 Sigma be incorporated into an organization to achieve the goals stated above.
Can these initiatives that have shown great successes in the world of manufacturing, such as Motorola and Toyota, since the early 1980’s and in the world of finance, service and transactions, such as GE Capital and Xerox, since the mid 1990’s, be made into a success in the world of Information and Communication Technology?
|What is Lean 6 Sigma?
Lean and 6 Sigma, the combination, you could call it the next generation of 6 Sigma and whether some like it or not it was only a matter of time and pure logic before it occurred. The new name derives from two very essential components in business process improvement. “Lean” the business’s internal needs – reduction of waste and “Six Sigma” the calculation of least defects – the customer’s needs.
Both are the voices of two distinct business success characteristics: VOC -The Voice of the Customer – Quality (Six Sigma). VOB – The Voice of the Business – Speed (Lean).
However, to make it work there is a third voice which is hardly recognised: VOE – The Voice of the Employee – Culture (Fusion). And as many of us have found out you can have the best process improvement system on the planet but if the employees who use it, don’t buy into it – then what’s the point?
The fusion of Lean and 6 Sigma is required because:
- Lean can not bring a process under statistical control.
- 6 Sigma alone cannot dramatically improve process speed or reduce invested capital.
Lean 6 Sigma, is hence a methodology driven by the need to change, to continuously improve, to meet the goals of the business and shareholders though a single most important element – Voice of the Employee or simply, Culture.
This instills the culture of consistent and strategic. The framework of Define, Measure, Analyse, Improve and Control (DMAIC) together with information such as data, customers, quality, speed and processes become a norm in the organization.
2. Quick Starts and Hits
“Can we effective and consistently harvest the low hanging fruits – rid ourselves from the daily and routine issues that effect cost, quality and speed?”
It is essential to aim and achieve important results quickly. Targeting what achieves the maximum benefits with the least efforts is vital to eliminate skepticism on continuous improvements initiative. Achieving fast results through Lean 6 Sigma are keys to sustaining and maintaining a cultural change momentum.
3. Organizing for Success
Though Lean 6 Sigma utilizes the DMAIC framework and tools – establishing a continuous improvement culture requires the changing and aligning of people’s mindset to business and customer strategy.
Addressing cultural and technical barriers becomes important if Lean 6 Sigma is to become a natural way of business. Acceleration in the change process can be achieved through organized team and proper team dynamics and engaged leaders.
|A continuous improvement culture
The foundation of any continuous improvement methodology or initiative is the focus on results. When an organization embarks on such initiative, following the paths of successful business leaders such as Jack Welsh and Warren Buffet, integrating into the essence of the organization’s culture, economics and synergies need to be seriously considered. Many organizations, at their own peril, disconnect the business and customer strategy, from the continuous improvement activity.
The key to a successful continuous improvement culture is the management infrastructure that effectively translates strategic agendas into continuous improvement initiatives aimed at maximizing value and results whilst directly linked to profits and loss through effective management and tracking of results.
The Lean 6 Sigma, as an initiative, should not be adopted to replace an existing methodology or management system but the best aspects of both should be integrated to create sustainable culture.
There are five key factors that have the biggest leverage in ensuring that a continuous improvement culture is made sustainable for long term success.
1. Leadership Engagement
Lou Giuliano, CEO of ITT Industries, summarized the importance of engaging leaders this way: “I’ve watched enough change programs and change efforts to know that the key is leadership.
To ensure that initial continuous improvement successes are translated to long-term sustainable gains, management need to instinctively understand that Lean 6 Sigma is vital to achieving corporate goals and strategy, participate in decisions that affect the daily use of Lean 6 Sigma by integrating into the management thinking and practices – leadership engagement.
Anne Mulcahy, CEO and chairman of Xerox Corporation noted: “Lean 6 Sigma is not tools…it’s the infrastructure and discipline in place to make business improvement an imperative. It will be painful, we will select and train our best people, those we can least afford to reassign, our future leaders, to enable a cultural change.”
4. Value Creation
The integral component of Lean 6 Sigma is the rigorous use of a value-based project selection methodology that ensures resources are committed to efforts linking to strategic objectives and creating value.
Having resources committed to activities that are not meeting customer’s need, reducing defects, increasing speed and quality – link to strategic goals, revenue, profit and ROIC are reasons why value creation is the essence to establishing a successful Lean 6 Sigma culture.
5. Continuous Improvement & Performance
“Is all about finding best practices, adapting them, and continually improving them. When you do that right, new product and service ideas, new processes, and opportunities for growth start to pop out everywhere and actually become the norm.” This is exactly what happened at GE under Jack Welch’s leadership.
Companies successfully adopting Lean 6 Sigma would continuously look at ways to keep it living and evolve. New ways, tools and techniques are developed and integrated into the organization
Results are always based on profit performance that would continuously outpace peers and market indices, driven by all these five key factor – most importantly the first factor – leadership engagement! Lean 6 Sigma Leaders aligned to achieving strategic goals will ensure the continuous improvement initiative continuous to survive.