Published on March 3, 2014
Getting Six Sigma into the DNA of your organisation Getting Six Sigma into the DNA of your organization... Paul Docherty, CEO, i-nexus Introduction— not all Six Sigma programs are equal My belief is that whilst it is relatively easy to start Six Sigma, it is much, much harder to make the transition to the point that it becomes embedded into the fabric of your organization. By embedded, I mean that systematic improvement, using Six Sigma methodologies, is not only pervasive throughout your organization, but that it happens without corporate dictates or some deployment leader courageously fighting on a daily basis to make it happen. This white paper is about this challenge of getting Six Sigma into the DNA of your organization. Its aim is to give people who are responsible for driving Six Sigma deployment some insights from our recent research which should help them to improve the sustainability of their Six Sigma programs. It is largely based on a comprehensive survey of over 40 organizations which was carried out in 2002 by i-nexus (a leading provider of software to manage improvement programs) to find out why some companies where succeeding with Six Sigma while many were failing. Figure 1— Macro results from i-nexus survey Whilst the macro results (see figure 1) from the i-nexus survey (which followed the fortunes of 43 companies who had started to deploy Six Sigma in, or before, 1999) showed dramatic differences in relative returns, the detailed interviews with deployment leaders revealed strong similarities in the emphasis and deployment approach of the more successful organizations. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation By piecing together feedback from various organizations, the survey team were able to build a simple causal model which integrated most of the learning from the more successful organizations. Increased Customer Satisfaction Improved Financial Performance Effective Project Execution Skilled & Motivated People Right Process, Infrastructure & Environment Effective Leadership Figure 2—Causal Model behind the SSEM Over time, and though use with various i-nexus customers, this causal model (see figure 2) has evolved into the Six Sigma Excellence Model (see figure 3) – a comprehensive framework for assessing the ‘health’ of any organization's Six Sigma program. effective process execution effective project execution effective project selection effective performance management continuous and sustainable improvement in business results supporting programme, process and knowledge management system effective human resources effective leadership Figure 3– The Six Sigma Excellence Model www.i-nexus.com
Getting Six Sigma into the DNA of your organisation Towards joined-up improvement—the Business Improvement Cycle At the heart of the Six Sigma Excellence model is something that we in i-nexus have christened ‘The Business Improvement Cycle’ an integrated and ‘closed loop’ approach to driving improvement that was observed in one form, or another, in all surveyed organizations that were successful in terms of relative ROI in their deployment of Six Sigma. mission strategy business objectives causal thinking performance management key performance gaps targets product/process capability product/ process improvements feedback customer expectations process execution project execution potential impact project selection high leverage project opportunities Figure 4—The Business Improvement Cycle This Business Improvement Cycle is effectively a macro PDCA (Plan, Do, Check, Act) cycle which ensures, at the overall business level, that the effort we are investing into improvement is focused on business priorities, and the impact of that improvement effort is being continuously validated. The improvement cycle consists of four key sub-processes: • Performance Management. The key inputs to the Performance Management process are the business objectives (what the business is trying to achieve) and the current performance of the business in terms of both operational process capability and customer satisfaction. The core purpose of the process is to evaluate whether the business is on track to deliver the required business results and to identify any ‘performance-capability’ gaps that need to be addressed. • Project Selection. The key inputs to the Project Selection process are identified improvement opportunities which can come from a number of sources. With an effective Performance Management process in place many will come directly from the performance-capability gaps (a more top-down approach) but they could also come from a more bottom-up (improvement ideas employees) or outside-in (improvement ideas from suppliers, partners and customers or competitors) approach. The core purpose of the project selection process is to evaluate these ideas and select the portfolio of projects (existing and planned) which will deliver the maximum business benefit with the minimum risk given the financial constraints of the business. The outputs of this process are clearly defined project opportunities. • Project Execution. The key inputs to the Project Execution process are the project opportunities themselves and the customer expectations on the process that is to be improved. The core purpose of this process is to deliver on-time, and to estimated cost, the expected tangible benefits. This process is complicated by the fact that unlike traditional projects, knowledge about the expected benefits and costs is only gained through the execution of the Six Sigma project. The outputs of the Project Execution process are changes to the business processes executed by the organization. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation • Process Execution. The key inputs to the Process Execution process come from the changes introduced during project execution and from the customer’s on-going feedback on process performance. The core purpose of this process is to manage and improve the operational processes based on measuring process capability and customer satisfaction. The output of this process is an ongoing assessment of process maturity and customer satisfaction with the business performance. The effective implementation of this business improvement cycle means that improvement remains integrated with, and closely aligned to, the achievement of the business objectives. This in turn ensures that management stay engaged as the improvement actions that are being taken are the things that they believe will help them deliver the results they need to satisfy stakeholders. Just saying that it would be good to have such a closed-loop improvement process in place, however, is not enough to make it happen. To build such a management system we need to first lay the right foundations. Considering Initial Scaling Mature Generate Enthusiasm Demonstrate Results Ensure Sustainability Maximise ROI Figure 5—Leadership priorities through the Six Sigma life-cycle Building on firm foundations – The importance of effective leadership Effective Leadership: Do the behaviors and actions of leaders within our organization inspire, support, enable and promote the implementation of Six Sigma ? One clear theme which echoed throughout our research was that it was ultimately the effective leadership of the Six Sigma program that provided the foundation for a successful deployment. To help us discuss the different demands placed on leaders throughout the deployment of Six Sigma and to understand what the key X variables are that led to effective leadership, we constructed a simple four phase Six Sigma life-cycle model. Using this model as the basis of discussion it became clear that not only did the priorities of leaders change during the deployment of Six Sigma, but the demands placed on leaders to ensure the success of the deployment – particularly the executive team – were considerable both in terms of time and effort required (over 10% of leadership time was spent on Six Sigma deployment in more successful organizations – see Figure 6). www.i-nexus.com
www.i-nexus.com Figure 7—The Important Not Urgent trap IMPORTANT Low High 10% 5% • People development ignored • Management burn-out • Competitors move while you stand still + Serious long-term dangers… Low URGENT Not Urgent and Not Important Not Urgent And Important The swamp is not being drained as you fight the alligators… But… 70% 15% High Urgent and Not Important Urgent and Important • Battles get won.. • Boxes get ticked… • Nothing happens unless I’m there… • It’s a rush… It is satisfying to be in the urgent not important box… The Urgent Not Important Trap This trap is illustrated in figure 7. It is essentially the difficulty of being able to free yourself from the day to day urgent activities (the inevitable result of bad processes) enough to be able to focus on removing the cause rather than alleviating the symptom (an important activity). 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a gn n ar n sevn To Sustain It Getting Six Sigma into the DNA of your organisation
Getting Six Sigma into the DNA of your organisation The problem lies in the fact that our work ‘system’ encourages this situation to persist – not only is urgent work fulfilling and satisfying (battles get won, boxes get ticked, I feel that if I wasn’t around things wouldn’t get done) but most organizations tend to reward and recognize those people who are good at it – the people who get things done. This leads to the situation that many managers when faced with the choice of draining the swamp (i.e. investing their effort in Six Sigma which will at some point in the future make life easier) or shooting the alligators (dealing with the day to day issues which will generate sales and cash) will choose a bigger alligator gun. To break out from this trap we need to be able to create a work ‘system’ which ensures that leaders do not just have the motivation to act, but also have the skills needed to act effectively. Much of the feedback from deployment leaders reinforced our belief that a supportive ‘system’ was one in which there was not just appropriate rewards for getting results with Six Sigma but also where the key links between a) leadership behavior and business impact through Six Sigma and b) getting results through the impact of Six Sigma and the rewards available to individual leaders were universally understood (the basis of the motivation model). The key elements identified in our survey to ensure effective leadership are illustrated in figure 8. Perception that Improved performance will lead to the outcome Define what needs to be done sllikS gninnalP • Perception that the effort will deliver improved performance sllikS sisylanA • sllikS gninoisiV • egdelwonK amgiS xiS • Align & motivate people to do it Create a supportive environment sllikS noitacinummoC • sllikS noitageleD • sllikS noitasiliboM • sllikS laruoivaheB • Value of Outcome sllikS lanoitasinagrO • Improved Performance sllikS gniknihT smetsyS • Degree of Effort Perceived value of the outcome The knowledge and skill to act effectively The motivation to act Figure 8— What leaders need to be effective www.i-nexus.com
Getting Six Sigma into the DNA of your organisation Developing the Capacity to Execute – The Importance of Capable People and Systems Effective Human Resources: Do our people have the necessary motivation, competencies, time and alignment needed to successfully implement Six Sigma improvement projects? W hilst effective leadership (the driver) is a critical first step, our finding is that without an effective supporting infrastructure (the car) and capable human resources (the engine) needed to turn good project opportunities (the fuel) into business results (the destination), Six Sigma deployments are unlikely to succeed. In relation to human resources, (and in particular Black/Green Belts), it was quickly clear from our survey that the word ‘effective’ and the word ‘skilled’ were not equivalent (technical skills, were as one deployment leader put it, necessary but not sufficient). To be truly effective, human resources need to be capable (of which technical skills is a subset), motivated (in a similar way to leaders), available (meaning more than just having time available) and aligned (meaning they understand how their work contributes to the achievement of business objectives) (see Figure 9). • Effective = capable * motivated * available * aligned • Capable means… Appropriate competencies (personal characteristics) Appropriate knowledge (understanding of context) Appropriate skills (task specific capabilities) • Motivated means… Truly believe outcome of good performance will be positive and yield something they value Truly believe that they have the capability to perform well • Available means… Having the necessary time to complete the work Having the necessary tools/resources to complete the work Having the necessary space to complete the work • Aligned means… Having a shared contract on what the individual needs to achieve and why Having a clear understanding of how their actions will contribute to the achievement of the larger business goal Figure 9 —The true meaning of effective To better understand the nature of the competencies/skills required to be an effective Black belt, we analyzed the different activities undertaken by Black Belts in a sub-set of the organizations we surveyed. The results of the analysis (see Figure 10) illustrated that the activities demanding the technical/statistical skills (which dominate the traditional Six Sigma syllabus) accounted for only a small percentage of the activities undertaken by Black Belts, with the remaining activities (80%) requiring predominantly softer skills (such as relationship building and team leadership) to be successful. A key conclusion from this feedback was that the real X variables behind capable resources lie in having appropriate acquisition processes, which while testing that Black/Green belt candidates have the necessary intellectual horsepower to understand and implement the more analytical tools, ensure that the focus is on testing for the softer skills which are often inherent in the individuals personality type and much harder to train in. Additionally, feedback from deployment leaders highlighted the importance of ensuring appropriate coaching support is in place as, with any significant body of knowledge, Six Sigma takes time to internalize and, during the initial stages of a project, intervention is required from experienced Six Sigma practioners to ensure it does not go off track. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation Analysing Data (6%) Process Investigation/ Discovery (36%) Planning Work (14%) Coaching/Facilitating Teamwork (26%) Communicating with Stakeholders (31%) Figure 10— What do Black belts actually do? Other key feedback from deployment leaders was the importance of effective succession planning in ensuring the ‘availability’ of Black belts. More than one surveyed program could trace problems with the deployment to Black belts who had not had their existing responsibilities transferred effectively, which in turn was traced to a lack of management understanding of their role and ultimately to weak leadership of the program. In terms of motivation and alignment, the suggestion from our interviews is to ensure that Black/Green and team member education includes clarity on the relationship between effort, business results and individual/team reward and that the rewards are appropriate to the culture in which the individuals participating in the process operate. Effective improvement system Do we have a system in place that enable us to manage the improvement ‘cycle’ effectively as the program scales? W hilst information technology is not the only element of the infrastructure needed to ensure the successful deployment of Six Sigma (other elements include methodologies, tool templates, gate checklists, financial quantification rules etc), feedback from deployment leaders indicates that it becomes increasingly important as the program scales from tens to hundreds if not thousands of projects. In the context of managing the Business Improvement Cycle, it is not difficult to see why in a multi-national organization running many Six Sigma projects such a systems infrastructure is required to ensure benefits are maximized and the program is sustainable. Figure 11 illustrates some of the challenges reported by the organizations surveyed in each subprocess of the improvement cycle when they tried to scale up the program within the organization. Faced with these challenges many organizations we surveyed had implemented different systems (from spreadsheets, through simple databases through to enterprise wide web-based systems) to try to get a grip of the process and ensure that the work being completed was delivering benefits. www.i-nexus.com
.nekat eb ot stcejorp tnemevorpmi evitca dna dennalp lla fo weiv oiloftrop a elbanE • ytilibaliava dna slliks no desab noitacolla ecruoser evitceffe elbanE • airetirc denifed fo desab esitiroirp yllacitamotuA• noiatulave/tnemssessa rof elpoep thgir eht ot saedi etuor yllacitamotuA • snoitseggus/saedi tcejorp lla erutpaC • :ot ytilibapaC www.i-nexus.com Figure 12—System capabilities needed to manage scaling challenges. project execution project selection stcejorp tnemevorpmi ot serusaem draobhsad kniL • sessecorp yek ot serusaem draobhsad kniL • spag noitatcepxe-ytilibapac yfitnedI • emit-laer ni ecnamrofrep tropeR • sdraobhsad gnidacsac enifeD • :ot ytilibapaC sreilppus dna sremotsuc ,srentrap htiw noitaroballoc etomer elbanE • stifeneb laicnanif dna ssergorp tcejorp kcarT • noitnevretni rieht gniriuqer stneve fo sreganam yfiton yllacitamotuA • setalpmet sa spamdaor ygolodohtem gnisu noitamrofni tcejorp erutpaC • :ot ytilibapaC process execution performance management egarevel laitnetop fo saera yfiton yllacitamotuA • oiloftrop tcejorp tnemevorpmi eht yb detareneg stnemevorpmi ytilibapac ssecorp kcarT • scirtem ecnamrofrep ssecorp etareneg yllacitamotua dna sessecorp yek etamotuA • ledom ssecorp esirpretne lacihparg a eganaM • :ot ytilibapaC From their feedback, our conclusion was that the key issue lies in ensuring that the system implemented fits the improvement process being implemented (covering as much of the improvement cycle as possible) and in ensuring that organization wide there is only one system – so that the knowledge gained in execution can be leveraged to multiply the benefits generated. Based on the scaling challenges, the capabilities that organizations should expect in such a system are illustrated in Figure 12. Figure 11 - There are many challenges as the deployment is scaled. secruoser delliks fo noitasilitu gnisimixaM • stcejorp tcapmi hg h gn tce es y tnets snoC • hgiih gniitcelles ylltnetsiisnoC • lleehw eehw eht fo no tnevn -er gn d ovA • eht fo noiitnevnii-er gniidiiovA • …segne ahC gn acS …segnellllahC gniillacS project execution project selection spag noitatcepxe-ytilibapac yek eht no stcejorp tnemevorpmi fo tcapmi eht gnirotinoM • sevitcejbo ssenisub htiw troffe tnemevorpmi fo tnemngila gnirusnE • …segnellahC gnilacS adnega tnemeganam adnega tnemeganam eht no amg S x S gn peeK • eht no amgiiS xiiS gniipeeK • wef at v eht no desucof wef llatiiv eht no desucof no tnetta ev tucexe gn rusnE • noiitnetta eviitucexe gniirusnE • ygo odohtem fo no tac ppa ygollodohtem fo noiitaciillppa tnets snoc gn rusnE • tnetsiisnoc gniirusnE • …segne ahC gn acS …segnellllahC gniillacS process execution sno tu os snoiitullos tce orp fo egareve gn s m xaM • tcejjorp fo egarevell gniisiimiixaM • sessecorp s no tas nagro eht fo sessecorp s’’noiitasiinagro eht fo ’’erutciip gniivom‘‘ eht gniiniiatniiaM • erutc p gn vom eht gn n atn aM • no tamotua metsys tnemerusaem noiitamotua metsys tnemerusaem rof dnamed eht gn ganaM • rof dnamed eht gniiganaM • …segne ahC gn acS …segnellllahC gniillacS performance management Getting Six Sigma into the DNA of your organisation
Getting Six Sigma into the DNA of your organisation Effective Performance Management Do we have a sustainable process in place which translates business objectives, previous performance and future customer expectations into opportunities for improvement ? As a whole, our analysis showed that it was how effectively organizations had implemented the Business Improvement Cycle that was ultimately the key differentiator between those organizations which were getting good results from Six Sigma and those who were getting exceptional results. Particularly important in terms of maximizing the ROI from the program was the effectiveness of what we subsequently have christened the Performance Management sub-process, which essentially ensures that our portfolio of improvement work remains aligned with, and is having an impact on, achievement of business objectives. Whilst there was a number of different approaches taken by the organizations we surveyed, in essence those that were more effective shared three core concepts: • • • the use of causal thinking combined with process yield analysis to identify key operational measures the implementation of a balanced set of metrics with customer driven targets the implementation of a closed-loop measurement system to monitor performance against targets. Many deployment leaders stressed the problem of poor project identification, the cause of which could be traced to ineffective Performance Management caused by leaders not having the necessary causal thinking skills to effectively breakdown the business goals in process drivers and ultimately, through on-going measurement into performance-expectation gaps (see Figure 13). Shareholder Value Capital Employed Cash (Profit) From Operations Working Capital Costs Fixed Assets Overhead Costs dleiy dib esaercnI • yreviled emit-no esaercnI • yreviled emit-no esaercnI • ycneiciffe selas esaercnI • ycneiciffe selas esaercnI • selas ecudeR • ecivres/tcudorp ecudeR • tcelloc ot emit ecudeR • tcelloc ot emit ecudeR • dedda eulav-non ecudeR • noitcudorp esaercnI • eciovni ot emit ecudeR • ycneiciffe ycneiciffe ecaps tessa esaercnI • noitasilitu noitasilitu yticapac evorpmI • Cost of Sales egarots ecudeR • Revenue hsac tnemerucorp ecudeR • emit ot emit esaercnI • ot emit esaercnI • pihs/erutcafunam tiurcer ot emit ecudeR • stcefed sesimorpmoc xim tcudorp esimitpO • xim tcudorp esimitpO • ycarucca tsacerof evorpmI • tekram ot emit ecudeR • slevel ecivres TI evorpmI • ycneiciffe noitcudorp esaercnI • slevel ecivres TI evorpmI • ycneiciffe noitcudorp esaercnI • noitneter ffats esaercnI • gnitekram esaercnI • stcefed esahcrup ecudeR • gnicirp tekram evorpmI • ycneiciffe syaled ssecorp ecudeR • gnitsacerof Figure 13— Applying causal thinking to business objectives. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation In addition to the importance of training leaders and managers in causal thinking, we observed a strong importance placed by the more successful organizations of ensuring that each business unit had dashboards (in many cases using the balanced scorecard model) in place and ensuring that each measure on each dashboard was a) linked via causal thinking to the overall business objectives, b) owned by a process owner with responsibility to change the process in question and c) linked through a closed loop directly to programs and projects that were attempting to move the relevant dial. In terms of ensuring a closed-loop measurement system, a few organizations surveyed had implemented a form of MAAR (Measure, Analyze, Action and Review) chart which ensures for each measure that the process capability of the process in question, and the effectiveness of the actions identified and implemented to address special and common cause variation, are monitored on an on-going basis. Our synthesis of the various practices suggested that a particularly powerful approach to Performance Management would be to use the MAAR chart approach to drive improvement opportunity identification in combination with a ‘balanced’ dashboard which has been developed through strong causal thinking from the business objectives and which features customer targets for each measure which are based on effective VOC (Voice of the Customer) analysis (Figure 14). By implementing a dashboard for each business… Financial And a MAAR chart for each measure… Customer Measure Business Results Measures Customer Satisfaction Measures M A Analyse People Skilled and Motivated People Measures Action A R Review Process Process Execution Measures Figure 14— Using dashboards and MAAR charts to achieve closed-loop management. www.i-nexus.com We can monitor our performance and validate the effectiveness of the actions we are taking.
Getting Six Sigma into the DNA of your organisation Effective project selection Do we have a sustainable process in place which helps us to prioritize and select the improvement opportunities that Six Sigma can help us with ? While effective Performance Management can ensure that the work identified remains aligned with the business objectives, effective project selection is key to ensuring the resource invested in implementing Six Sigma projects is targeted on those opportunities which will yield the greatest business benefits (in terms of both achievement of objectives and top/bottom line benefit). Figure 15 illustrates how effective project selection can drive ROI. emiT elcyC tcejorP tttcejjjorrrP///sgniiivaS ttteN ce o P sgn vaS eN ce o P sgn vaS eN lllufffsseccuS% u sseccuS% u sseccuS% ROI Select projects with appropriate output frequency Select projects with high leverage potential Select projects with have a supportive environment Improve the utilisation of scarce skilled resource (black belts) Minimise false starts and aborted projects s ce o P o ebmuN s ce o P o ebmuN stttcejjjorrrP fffo rrrebmuN tttsoC emmarrrgorrrP soC emma go P soC emma go P Figure 15—How does effective project selection drive ROI? In virtually all of the organizations we surveyed we were able to identify a basic process for funneling project opportunities for evaluation and selection. In the more effective organizations, this opportunity funnel was clearly identified and had a strong information system support to ensure that ideas were collected from the widest population possible (including partners, customers and suppliers) and ensuring that they were evaluated quickly and efficiently. Figure 16 is effectively a synthesis of the best practices used in the different organizations surveyed. Whilst many evaluation and selection criteria were suggested by deployment leaders, a few were given particular emphasis. Virtually all interviews highlighted the importance of output frequency (the number of process outputs that can be measured in a given period) as a key determinant of project feasibility, as in practice few projects can be completed by relying on historical data alone. Other key factors highlighted by deployment leaders, in addition to the mandatory evaluation of potential cash/profit impact, included the leverage potential of the opportunity (the degree to which the successful improvement could be replicated throughout the business) and the degree of sponsorship from an individual who has a majority responsibility for the process being improved. Whilst the individual criteria for evaluation and selection were considered important by virtually all organizations, there was some indication that the more successful organizations had also taken the logical next step of managing the opportunities as a portfolio – focusing on ensuring a balance within that portfolio with respect to, for example, top-line vs. bottom line improvement, customer driven vs. internally driven projects, as well as ensuring that the number of projects implemented was balanced with resource (people and cash) constraints. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation project ideas from employees project ideas from project ideas from capability-expectation customers, partners and suppliers gaps Opportunity Capture Alignment Filter Feasibility Filter Project Qualification Financial Filter Project Allocation Project Scoping Project scoped Project staffed Project Selection Figure 16 — The Project Opportunity Funnel Effective project execution Do we have a sustainable process in place which maximizes the benefits for every pound/euro/ dollar invested in project execution? L ike effective selection, effective execution can have a significant impact on the ROI generated by any organization’s Six Sigma investment. Figure 17 illustrates the impact that improving project execution can have on ROI. emiT elcyC tcejorP tttcejjjorrrP///sgniiivaS ttteN ce o P sgn vaS eN ce o P sgn vaS eN lllufffsseccuS% u sseccuS% u sseccuS% ROI Reduce time spent waiting for roadblocks to be cleared and time wasted in blind alleys Ensure that the targeted benefits are actually realised Kill projects which are unlikely to realise benefits early and refocus those which are going off-track Minimise the time spent in unnecessary progress reviews Minimise the time and effort spent on unnecessary reporting s ce o P o ebmuN s ce o P o ebmuN stttcejjjorrrP fffo rrrebmuN tsoC emmargorP Figure 17— How does effective project execution drive ROI? Effective project execution was one aspect of the improvement cycle where all surveyed organizations could provide significant input. One overall theme that emerged from our discussions with deployment leaders was that effective execution was in many ways tied to the consistent application of the methodology, which in itself was driven by consistent implementation of gate reviews (the main check in the process that the methodology is being applied systematically). One key finding was that many organizations found a key problem in terms of not following the methodology effectively to be not as www.i-nexus.com
Getting Six Sigma into the DNA of your organisation one might expect the lack of skills and experience of the Black Belt, but rather the lack of skills and experience in the project sponsors who would often ‘bend’ the methodology/project to fit their intuition and desired result. A strong theme in the more successful organizations was therefore the training and mentoring of project sponsors to ensure that they understood clearly the dynamics of the Six Sigma process, and in particular whether the stage the team were currently in required a more creative approach/analytic approach and what was the key deliverable at each gate. Figure 18 illustrates the DMAIC process from a sponsor perspective based on a synthesis of gate review approaches used in different organizations. Establish Causal Drivers Prioritise the Drivers Define the Defect(s) Generate Potential X’s Collect the Data Analyse the Process Generate Potential Solutions GR0 GR1 Defect(s) Defined? Pilot the Solution GR2 Problem Identified Select Best Solution Root Causes Understood? S D M A Transfer the Solution Control the Process Realise the Gains GR3 GR3 Solution Workable ? I I Benefits Realised C C Figure 18— Key gate reviews and critical decision points in DMAIC process This diagram (a similar diagram can be constructed for the design variant of the Six Sigma process) shows the opening stages (e.g. whether hypotheses are generated and solutions identified) as well as the closing stages (where analytical processes are used to determine the most likely defects, causes and solutions), within each phase and what the key deliverables of each ‘hard’ gate are. Another key learning from our survey in relation to project execution was the importance of implementing an enterprise-wide benefit reporting and management by exception system as the deployment scales up. This has the benefit of ensuring sponsors stay engaged and drive projects – firstly as they do not need to process large amounts of information to understand where their intervention is required and secondly because it transfers accountability as top management can easily see where there are roadblocks in benefit delivery and who in the management team has the responsibility for managing them. Interviews with deployment leaders also underlined the importance of ‘institutional plagiarism’ – being able to learn from and/or quickly and easily replicate the work of other project teams, and being able to quickly and easily gain access to experts as key factors in accelerating deployment. Effective process execution Do we have sustainable processes in place to ensure that changes introduced as a result of Six Sigma projects are locked into day-to-day process execution and that these processes continue to be managed? One of the most puzzling aspects to the survey results was the difference, in the majority of organizations we surveyed, between the (often substantial) benefits reported and the consequent lack of positive movement in the Profit and Loss or Balance Sheet. Whilst some of this can be explained by other factors – e.g. changes in market demand, our hypothesis (which is yet to be confirmed with hard data) is that the most likely cause of this benefit fall-off is ineffective transfer of responsibility for ongoing process improvement from the project team to the team executing the process. Indeed a number of the deployment leaders reinforced this point, highlighting the fact that the percentage of people who participate in the actual execution of Six Sigma projects (especially in the early phases of www.i-nexus.com
Getting Six Sigma into the DNA of your organisation deployment) is usually a small fraction of the total number of people in the organization and an even smaller fraction of the people who are in the ‘front-line’ i.e. directly interacting with customers (see Figure 19). Customer Customer Interaction Front Line Staff Middle Management Senior Management People impacted by Six Sigma projects on a day to day basis Top Mgmt Figure 19—Why process execution is so important Their conclusion in relation to this point was that until there was an effective ‘system’ in place to engage the vast majority of people who actually execute the processes being changed in process thinking, not only would improvements be short-lived, but customers would perceive little improvement. Talking with deployment leaders it became clear that there are several systemic problems which lead to ineffective transfer of responsibility from the project team to the process team. The first is that the last phase of the DMAIC process is essentially boring. Many deployment leaders reported that Six Sigma project teams saw the critical activities of documenting and training implicit in the Control phase as laborious and often less exciting than the next project challenge (or even their day job). The second is that the process changes inherent in the improvement projects often mean significant personal changes in their work for the people actually executing the process. It is therefore unlikely that they will make the initial effort to adopt these without fully understanding and having a chance to understand the implications. The third is that implicit in the transfer of responsibility for ongoing process improvement is a significant training effort (each member of the team executing the process needs to have an understanding of variation and the ability to interpret a control chart). To overcome these obstacles, several organizations we surveyed had started to implement process management education (to spread out in a targeted way a basic understanding of variation theory, how to implement simple process measurement and how to capture customer feedback on the process). Others had reinforced the importance of the Control phase gate as the final check on responsibility transfer - effectively not allowing project teams to be decommissioned without confirmation from the team running the process that they had been fully enabled. www.i-nexus.com
Getting Six Sigma into the DNA of your organisation Measuring Success – Quantifying the Business Results Business results Is our Six Sigma effort really delivering a continuous and sustainable improvement in our business results ? In most organizations we surveyed, deployment leaders had implemented measurement systems to provide top management with visibility of the success of their Six Sigma program. In the majority of these organizations the key measures taken related to the number of people trained, the number of projects completed and the value of benefits delivered. While interesting in themselves, our conclusion was that these measures (with the exception of training completed) were essentially lagging measures and did not reflect the real causal drivers of Six Sigma results. Figure 20 illustrates an alternative Six Sigma dashboard which reflects the different causal drivers and which could easily be combined with closed loop measurement to drive continuous improvement in the Six Sigma system. By implementing a Six Sigma Dashboard… Financial • Net Programme Benefits (Profit & Capital Employed Impacts) • Net Benefits/Project • Net Benefits as % of Revenue People • Leadership Capability Index • Belt Capability Index • Number of Certified Belts, Sponsors, and Process Owners Customer • Product/Service Capability Improvement Indices • Customer Satisfaction Indices Measure net benefits that impact the P&L and balance sheet only Measure relative improvement in process capability not absolute process capability Measure customer satisfaction to validate process capability improvement Process • Process Success Rates • Project Lead-times • Project Leverage Index • Project Productivity Index Measure the key return on Investment drivers Measure the underlying organisational capability Figure 20— How do you measure the success of a Six Sigma implementation? www.i-nexus.com
Getting Six Sigma into the DNA of your organisation Summary It is my hope that this paper has provided some useful ideas to help you further embed Six Sigma in your organization. A free download of the Six Sigma Excellence Model (SSEM) workbook which details the criteria for each component of the model and provides a guide to scoring the “health” of your deployment is available in the visitor resources section of www.i-nexus.com. If you have questions about this whitepaper, would like to discuss how i-nexus can help you meet you need for an integrated ‘improvement’ management system, or would like see further examples of best practice resources from each of the key elements of the SSEM, please contact myself or any i-nexus team member on +44 (0)845 607 0061. About Paul Docherty Paul is the CEO of i-nexus, the leading provider of software solutions to help manage improvement programs. He was previously the deployment leader for Six Sigma within Marconi and is a firm believer in the application of ‘systems thinking’ to the challenge of deploying Six Sigma in large organizations. He can be contacted on email@example.com or by telephone on +44 (0)7985 117784 (mobile), +44 (0)24 7660 8865 (desk). About i-nexus i-nexus helps organizations to get more from their investment in the critical business programs such as Six Sigma, IT and R&D that drive growth and create value. They provide a range of enterprise software solutions, based on their flagship i-nexus product, that have been designed from the ground up to meet the real needs of Six Sigma VPs, CIOs, CTOs and other business leaders. Combining the latest web technology with powerful ROI driven functionality, these solutions are helping a growing number of global organizations to align their project portfolios with business objectives, accelerate the delivery of tangible benefits and leverage what they learn in project execution. To find out more about how i-nexus can help you to reduce project cycle times, increase project success rates and cut the cost of managing your portfolio: • Email: firstname.lastname@example.org • Call European office: +44 (0)845 607 0063 • Call Americas office: +1 (617) 267 9595 • Call Asia office: +86 (0) 215 836 2701 • Visit: www.i-nexus.com www.i-nexus.com
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