S. Bala  |  06/24/2008

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A Practical Approach to Lean Six Sigma

Begin your Six Sigma odyssey with a tour of your backyard.

In its optimum form, Six Sigma is anything but simple or practical. Given its considerable upfront cost and ongoing complexity, it’s best viewed as a results-driven expedition of Homeric scope, one where the final destination is 3.4 defects per million opportunities. It’s not a journey for the faint-hearted. You must be seriously committed to pursuing it for the long term, or you’ll never recoup your sizable upfront investment, let alone enjoy a net return.

First and foremost, an effective Six Sigma program creates a “high definition” data picture where the subtlest defects literally jump out at you. It’s all about mapping as-is processes, engineering a depth and richness of picture clarity that lets you draw the most accurate map possible. This meticulous defining of an as-is landscape is an inviolate first step for truly optimizing a process. Such a mapping expedition demands that you collect--and put in high-definition focus--a staggering amount of statistical pixels. Without this requisite definition, the measurement, analysis, improvement, and control meant to follow are irrevocably compromised.

If there’s a “practical” Six Sigma truth, it’s this: Organizations lacking the determination, patience, and financial wherewithal to painstakingly define the landscape shouldn’t bother setting out on the trip. Of course, many skittish managers settle on just that sort of “opt out” approach. Quality leaders in smaller enterprises (from a few dozen to a few hundred employees) are particularly quick to surrender Six Sigma ambitions without a protracted fight. Typically, they’ll run the numbers to roughly budget what their initial investments in traditional Six Sigma programming might be. Soon after, they determine that, relative to their more modest organizational scale, the cost is too steep, and the degree of granular insight delivered is more than they need at that time. Simply put, the enterprise hasn’t yet reached a maturation point where the cost/benefit of a full-out Six Sigma effort can be justified.

That smaller enterprises should be reflexively risk-averse to investing in big Six Sigma initiatives is wholly understandable. When devoting money and muscle to deep-defining activities, the smaller your organization, the less time it takes to feel like you’re in over your head. But that’s no reason to give up on Six Sigma entirely. Organizations with less economy of scale and fewer financial resources have a more practical--some might say more svelte--beginner’s option. I’m talking about lean Six Sigma.

Developing a leaner picture

Where Six Sigma is all about depth of field, lean Six Sigma is about breadth. Think of the latter as a new 50-inch TV and the former as the HDTV broadcast service that you might eventually pipe through it, if and when finances allow. The widescreen, lean picture needn’t deliver depth of clarity to yield early and rapid improvement. It merely needs to be wide enough to deliver a panoramic vision you didn’t have before.

Building on this metaphor, a high- definition picture isn’t worth much if the screen on which it’s displayed isn’t wide enough to show all the major process steps. For a smaller enterprise, field of vision is much more important than sharpness of vision, at least to start. Consequently, smaller enterprises that successfully map a low-definition but complete picture on a new and much larger “lean” screen enjoy vastly improved vision at a relatively small expense.

In short, for a smaller company that’s never invested in any kind of wholesale quality initiative, lean is a great place to start. However, such companies must acknowledge that the bulk of their lean gains will come early, and they’ll see diminishing returns without an eventual deeper commitment to Six Sigma and the granular level of information and insight it can produce. That said, whether you’re a smallish regional enterprise or a Global 500 company, it always makes sense to invest in lean--the big screen--before committing to the high definition of Six Sigma.

As a onetime quality leader with GE, I’d venture to say that if the company could turn back the clock, it, too, would adopt a lean approach first, followed by Six Sigma. Think of lean as the proof of concept, which, positioned correctly, engenders wholesale confidence in the broader precepts of Six Sigma. Such confidence, in turn, ensures faster enterprisewide buy-in for the deeper dive into Six Sigma efforts when the time comes.

Surveying the backyard

Although lean Six Sigma process-mapping tools have significant limits, if the organizational landscape under scrutiny is relatively small--and the surface defects to be identified are comparatively large--these limits are actually an advantage. Say that, metaphorically speaking, you want to survey your backyard (or back office) to identify the major obstacles that limit the amount of usable land (or productivity) that you have.

Bringing in a geologist to analyze the composition of the soil and boulders strewn about is not only overkill, it’s also counterproductive. The geologist’s services would be less useful to you than those of a professional surveyor (the “lean” expert). Your own unaided eyes would, in fact, help more than any geologist, provided that they could take in a full, unobstructed view.

Again, the lean goal in redesigning the organizational landscape isn’t to map terrain for optimal land use; it’s to chart a path through the backyard that yields a major improvement in productivity from the status quo. In this case, there’s no need to retain an environmental expert to distinguish swamp from solid ground. A thorough and thoughtful walkthrough of the property will do well enough to pinpoint soft spots from terra firma.

When to go lean

Having the needed focus to recognize large process obstacles that hide in plain sight is all well and good. But from a practical standpoint, such breadth of vision and keenness of observation is only useful to the extent that you can communicate it to others. This brings us to a crucial step in any practical approach to lean Six Sigma: articulating the business problem.

There can be no meaningful improvement unless those materially involved in a problematic process feel a need for change. Ask yourself, “Can I illustrate a need so process stakeholders fully comprehend it and feel motivated to act upon it?” Then ask, “Do I have the data to clearly define the full depth of the problem?” If you answer yes to the first question and no to the second, you lack the high-definition picture to leverage traditional Six Sigma and should instead use a lean approach.

Bear in mind that full-out Six Sigma strives to remove all process variation until it’s rendered “reliably repeatable” without defect, or at least without more than 3.4 defects per million opportunities. Lean, in contrast, seeks only to broadly map value- and nonvalue-adding process steps with the modest goal of enhancing process performance, not fully optimizing it.

To revisit my backyard metaphor, the optimal solution may well be to go in with a backhoe and level the entire lot (i.e., troubled process). But what if there are obstacles lurking beneath the surface that you didn’t know about before starting? Moving ahead with your wholesale reengineering plan without knowing where all the underground gas lines and oil tanks are might lead to costs far exceeding any expected benefit.

On the other hand, if you stick to mapping the surface--and recognizing above-ground performance barriers that don’t readily reveal themselves as obstacles--you can see real and immediate improvement. Good surface mapping will also allow you to identify simple modifications that take advantage of the visible terrain’s natural contours.

Once stakeholder understanding and buy-in is secured for this pragmatic approach, the lean process- improvement facilitator must draw out the previously unvoiced insights of each constituency and then leverage their unique expertise.

A practical approach

Since joining Genpact I’ve seen lean improve transactional processes well outside the manufacturing arena, where Six Sigma got its start. Working with a leading hardware and systems provider to retail banks, for example, we brought various fulfillment-process stakeholders together to identify major “breaks” in how product was ordered.

Because the company’s market included everything from community banks to global powerhouses, customer accounts usually ranged from a few hundred dollars to hundreds of millions. Individual customer orders were equally broad and varied. Therein lay the problem. The complexity of completing a seemingly endless stream of highly detailed order requirements of differing size, geographic scope, and technical requirement--while dealing with myriad internal and external stakeholders--significantly boosted odds of errors.

Competing process goals among stakeholders only made matters worse. Salespeople wanted to satisfy customers’ needs for speed. However, hastily initiating a less-than-complete order made for a lot of back-and-forth alterations later. This protracted process involved, on average, five change orders per final completed sale.

Figuring out how to address routinely complex, frequently incomprehensible (and ever subject to change) order-fulfillment policies created plenty of churn between sales, sales order support, and order administration personnel. To help employees in those three areas appreciate each other’s frustrations and reconcile them with their own, our facilitators led a series of roundtable exercises where members of each constituency were invited to speak candidly and listen to the others.

A technological solution was eventually deployed that allowed mass customization and order reconciliation from any entry point where orders were input or updated. Yet the underlying challenge--getting salespeople to feel as accountable for completing full and accurate orders as for signing business--remained. To address it, regional sales managers were armed with metric dashboards that enabled them to track the completion rate on all orders any sales rep generated. A newly revised sales-order-volume “credit” policy that affected compensation was fine-tuned so that only dollars from completed orders were factored.

The result? Even when salespeople rely heavily on support or administration staff to drive orders to conclusion, they remain highly motivated to quickly clarify related information whenever asked. On the back end of fulfillment, lean mapping identified where the highest concentration of change orders were: 30 percent emanated from a single large customer. From there, facilitators organized nine distinct kaizen , or continuous improvement, events. Through such consciousness-raising, all stakeholders came to understand what had to be done, by whom, and why. They also came to understand how they’ll be measured and held accountable for delivering, or not.

This is but one example of how to spot and motivate others to remove the not-so-obvious obstacles that clearly impede process performance in your organization’s backyard. You don’t need a high-definition TV to see the surface defects, or a backhoe to make the terrain more easily traversable. All you need is widescreen vision that takes in the full breadth of the situation. Assembling a collection of open minds and strong arms doesn’t hurt, either. You want people who, after studying a situation, can recognize those big, hidden-in-plain-sight obstacles, blaze simple shortcuts around them at first, and quickly remove them from the landscape later on.

Remember, with lean you’re not ripping up the backyard overnight but gradually rearranging the major environmental elements over time. You want to recruit process stakeholders who are thoughtful about what’s possible in a perfect world, yet honest about your company’s cultural tolerance and financial appetite for funding process improvement. Revolutionary process change is nice when you can get it (and get it right), but if you’re going to go lean, ultimately you must be ready to adopt a mindset of championing continuous and incremental improvement that’s as practical as your actual approach.


About The Author

S. Bala’s default image

S. Bala

S. Bala is senior vice president of reengineering services at Genpact, an $800-million, India-based spinoff of GE that manages business processes for companies worldwide. As a GE quality leader from 2002 to 2006, Bala guided 20 growth-oriented Six Sigma projects responsible for $2 billion in incremental sales volume and $50 million in net income. The 100-person reengineering team that he currently leads is embedded at client locations on every continent except Antarctica.