by George Lee Sye

I am often asked this question …

“What value will we get in return for training people in lean six sigma?”

Fair question I guess.

Here’s the answer …. NONE!

Let’s cut through the crap and use a little blunt force trauma … training NEVER generates a return!

If a manager thinks that training somebody is going to suddenly impact the bottom line, they’ve missed the point entirely.

The ONLY thing that will generate some return is the utilisation of what it is one learns.

Therein lies the problem I see in many [if not most] improvement and leadership training programs today; people learn something and then return to work and go straight back to their old job and ingrained ways of behaving.  Hmmm, George, don’t open that can of worms.

Let’s instead refine the question and ask this …

What quantifiable value will we get if we implement and effectively utilise an appropriate business improvement strategy (which might include Lean, Kaizen, TOC, Six Sigma or any combination of methodologies)?

Much better question!

Let me attempt to answer it this way.

What do the numbers tell us?

PART 1 – THE FINANCIAL RETURNS CAN POTENTIALLY BE SIGNIFICANT

In the 2nd edition of my book, Process Alchemy, I quoted figures drawn from the publicly available financial reports of some major companies. (refer to page 54 of Process Alchemy – 2nd Edition)

Those figures are a bit old now, particularly if we focus on the $ values. So let’s not do that.

The problem with $ values is they vary so greatly and we can’t really compare conpanies against one another because of the variation in size and situations.

We can instead focus on a metric which is more appropriate across all organisations.

That metric is the $ value of bottom line impact converted into a ‘percentage of revenue’. Now we begin to get a clearer picture which we might use to understand impact on our own companies.

The returns experience by companies who do it properly are reportedly up to about 3 percent of revenues.

• General Electric – 0.35 to 1.79 percent (1996 to 1999)
• Motorola – 0.44 percent (1986 to 2001)
• BHP Billiton – 0.23 to 0.74 percent (2001 to 2003)
• Black and Decker – 1.91 to 2.27 percent (2001 to 2002)
• Honeywell – 2.11 to 2.80 percent (1998 to 2000)
• American Express – 0.84 percent (2002)

How does that relate to your situation? I’ll leave it for you to do the maths.

If you are seeking this type of quantifiable return, my advice is this.

1. Clearly understand the performance of your VALUE STREAMS – a business unit leader or line manager who cannot refer to or analyse a value stream map of their business will never realize the potential of their business

2. Write your BUSINESS PLAN (I mean at the business unit / asset level) around profitability targets and any other appropriate business objectives

3. Identify where you need to make PROCESS PERFORMANCE SHIFTS in order to achieve that plan – your PROJECT PIPELINE will eminate from these focal points

4. If you need to train people to close the PROCESS IMPROVEMENT SKILL gap, do it properly – develop them according to your needs, don’t just copy somebody else or reinvent the wheel to satisfy somebody’s ego

5. If you have trained improvement people (green belts and black belts), get line managers to USE THEM for projects that are going to make process improvements related to achieving business plan objectives

Always remember this … Lean Six Sigma today is a business execution strategy, not speculation about where you might save a few dollars by training people.

PART 2 – FEW ACTUALLY SUCCEED

It would be impossible to get a true picture of company failures and successes with lean six sigma initiatives.

Even so, I have heard it claimed consistely around the traps by consultants and industry experts that the failure rate is in the vicinity of 80 percent.

Only 20 percent succeed? Seriously … that’s ridiculous!

Towards the end of the GFC (the first one I mean), I spoke to representatives of 126 companies around australia and asked them one question – Have you increased, decreased, maintained the same or eliminated your efforts in business improvement in response to the GFC?

Here’s what I learned – 92 companies had either REDUCED the size of the business improvement team (and the financial commitment that went with that) or had ELIMINATED it completely.

I know one guy who was given 30 minutes notice that he was now redundant!

Why?

I have one thought here … if business leaders / executives in those companies believed BI was generating a genuine $ return, they would never decrease their efforts or investment in it.

I’ll leave you to draw your own conclusions.

If you want to kill your BI initiative do this!

Number 1. Just TRAIN PEOPLE (Western Mining Corporation did this when they trained some 15 black belts during 2004 – not one project was completed in the 12 months I observed them and only 1 of those black belts was still at the company 12 months later)

Number 2. Don’t drive your improvement PROJECT PIPELINE from a value stream perspective, do it piecemeal and without any real framework behind it

Number 3. Do not SYSTEMISE BUSINESS IMPROVEMENT nor make it part of the business execution process – let it sit out there on its own as a bolt on and another thing to do

Number 4. Set it up so it only survives and thrives on the back of a HIGHLY MOTIVATED INDIVIDUAL and hope they stay in your company

Number 5. Take on as many projects as you can and create a STATE OF CONTINUOUS CHANGE and initiative overload – don’t worry about that control phase [of DMAIC] where we lock in change and stability

Number 6. And finally … if you do train green belts and black belts, LEAVE THEM IN THEIR OLD JOBS and pray they use their newly learned skills to make business related improvements

It’s depressing to see this so often in businesses in Australia.

Anyway, enough of that, let’s take a quick look at real business improvement benefits.

Benefits you can (and must) decisively set out to achieve.

1. Increase Earnings (cost reduction and / or revenue increases visible on the profit and loss statement)

- Reduce fixed and variable costs (i.e. power, insurance, maintenance, cost per unit produced, rework, life of non capital assets, interest paid)

- Increase revenue (i.e. process yield, unit sales volume, interest earned, unit price)

2. Convert Current Assets Into Cash (move balance sheet $ into the bank as cash)

- Reduce debtors (i.e. payment cycle time, accounts receivable)

- Reduce inventory (i.e. parts, work in progress, stockpiles)

3. Defer or Prevent Capital Outlay

- Increase the useful life of plant and machinery

- Increase plant capacity (i.e. reduce defect production rate, increase production capability)

4. Increase Asset Value

- Increase future growth potential (i.e. customer data base, future production, management capacity, staff capacity, process capacity)

- Reduce business risk (i.e. key person risk, cash flow smoothing, potential liability etc)

Here’s some tips to consider so you don’t waste your money!

TIP 1. If you plan to do some training and have no idea what the return will be, don’t do the training till you do.

TIP 2. Get support in developing the framework that will drive quantifiable financial success with this improvement thing we all talk about.

TIP 3. One size does not fit all … Six Sigma may well be the correct methodology to introduce first in a manufacturing business, Lean is more appropriate in the first instance in an organisation where throughput is the main issue.

TIP 4. One size does not fit all … Lean Six Sigma for manufacturing is not Lean Six Sigma for mining or energy.

TIP 5. If leaders and line managers are not going to take responsibility and drive this, forget it. Invest your money in rental property instead.

TIP 6. The initiative must impact the key variables that in turn positively affect (a) the multiple of valuation (Price Earnings Ratio or PER) and (b) company earnings … only then will you get corporate executive support.

- Note – if you’re not sure what this means, get a copy of How to Create Wealth IN Business – for Kindle or iPad only

TIP 7. Put energy into project pipeline development and management.

- Note – some good learnings can be gleaned from How To Select Great Improvement Projects – available for Kindle and iPad

That’s it!

Until next time, take care

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Soarent Vision is the provider of nationally accredited Lean Six Sigma Training in Australia under the governance of ….. hang on a minute, that is so boring. Let me start again.

Soarent Vision provides the best Lean Six Sigma Training and Support for Mining and Energy companies in the world today. I gotta call it as I see it.

It’s accredited, it’s not delivered by academics but people who use it, it’s not cheap but fair value for money, it’s designed purposefully for the Mining and Energy sector, and it can easily convert into an investment IF you play your part.

For more information about the training, visit here – http://www.soarent.com.au/lean-six-sigma/academy-process-mastery

Soarent Vision’s nationally accredited Lean Six Sigma Green Belt (Diploma in Business Improvement Leadership) training program for Mining and Energy companies is now locked in for public delivery in Brisbane, the sunny capital of Queensland.

On the back of it’s consistent success in generating returns for host companies, the program has grown from strength to strength since it’s first delivery in Queensland during 2002.

The Next Training Cycle

The next cycle of training begins in February 2012 and some places are still available.

GREEN BELT / DIPLOMA

• Module GB1 – Lean Thinking Foundations
• Module GB2 – Six Sigma Fundamentals
• Module GB3 – Diploma Bridging Course

BLACK BELT / ADVANCED DIPLOMA

• Module BB1 – Quantitative Decision Making
• Module BB2 – Quality Function Deployment

Training Schedule and Registration Options

• Online – visit here www.soarent.com.au/courses
• Phone – Call us on 1300 551 294 (Australia only)  or  61-7-3377 0824

NOTE: If you are registering for the full Diploma in BIL or Advanced Diploma in BIL qualifications, call us first to enrol.

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Soarent Vision is the provider of nationally accredited Lean Six Sigma Training for Mining and Energy companies in Australia under the governance of its Academy of Process Mastery and the Australian Qualifications Framework (AQF). For more information about this world-class training visit here -http://www.soarent.com.au/lean-six-sigma/academy-process-mastery

Since it’s first delivery in Perth (Western Australia) in 2010, attendance at Soarent Vision’s nationally accredited Lean Six Sigma Green Belt (Diploma) and Black Belt (Advanced Diploma) program has grown beyond expectations.

It is now a part of the Business Improvement staff development strategy for a number of major companies including Fortescue Metals Group, Anglo American, Woodside Energy, Citic Pacific Mining and Western Power.

The main expectation of industry is to receive content that can be applied immediately after training has been delivered to generate value. The fact that Soarent Vision meets this expectation and these are also AQF accredited Diploma and Advanced Diploma qualifications has been the biggest differentiator.

The Next Cycle of Training

Registrations are now open for the next cycle of training which begins in Perth during February 2012.

GREEN BELT / DIPLOMA

• Module GB1 – Lean Thinking Foundations
• Module GB2 – Six Sigma Fundamentals
• Module GB3 – Diploma Bridging Course

BLACK BELT / ADVANCED DIPLOMA

• Module BB1 – Quantitative Decision Making
• Module BB2 – Quality Function Deployment

Training Schedule and Registration Options

• Online – visit here www.soarent.com.au/courses
• Phone – Call us on 1300 551 294 (Australia only)  or  61-7-3377 0824

NOTE: If you are registering for the full Diploma in BIL or Advanced Diploma in BIL qualifications, call us first to enrol.

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Soarent Vision is the provider of nationally accredited Lean Six Sigma Training for Mining in Australia under the governance of its Academy of Process Mastery and the Australian Qualifications Framework (AQF). For more information about this world-class training visit here - http://www.soarent.com.au/lean-six-sigma/academy-process-mastery

The take up of Soarent Vision’s Business Execution, Change Leadership and Business Improvement Courses has been so positive that the company has been able to establish long-term contracts with venue providers. Savings generated are now being passed on to the customer so Soarent Vision offers even greater savings for its clients.

Savings Passed On

Effective from 1st of January 2012, the NEW SCHEDULE OF COURSE RATES reflects savings as great as $2,500 for some of the most valuable qualifications and education in the business improvement world today.

Greater savings are also available for volume participation.

For a Quotation or to discuss how Soarent Vision can reduce your BI costs and increase returns ….

• Call us on 61 – 7 – 3377 0824, or
• Email us at home@soarent.com.au

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Soarent Vision arguably provides the most advanced and business relevant Lean Six Sigma and Master Black Belt training in the world today. Soarent Vision’s AQF accredited Lean Six Sigma program for Green Belts and Black Belts integrates perfectly with the MBB program and prepares participants to become the most influential and high performance leaders on the planet.

Growing companies respond to the business and social environment earlier and more effectively than those that struggle to grow.

A trend that is re-emerging is the utilisation of external industry professionals to facilitate project work and bring invaluable expertise into the organisation that would otherwise be ignored.

The Move To External Professional Support

Over the past few years a reversing trend that we’ve noticed has really grabbed our attention.

During the late 1990s and early 2000s, companies relied heavily on external expertise to train, coach and mentor employees in the skills of business improvement, particularly those associated with Lean and Six Sigma methodologies.

Consulting firms such as Destra and Accenture moved in from the USA and charged extraordinary amounts of money to deliver services that were basically new to the Australian market.

Mentoring and coaching was the order of the day with Business Improvement Managers being supported by external professionals who were able to guide them through the improvement journey AND facilitate important pieces of work.

Towards the middle of 2000, as internal capability grew, companies seemed to move away from having external support, instead relying on the company infrastructure and employee base to undertake improvement activities. Many organisations we observed unnecessarily re-invented wheels, and in many cases this contributed to the failure of improvement initiatives.

Today we are seeing a move back towards have external professionals provide a range of important services such as project facilitation, coaching, mentoring and training.

Why does a company take this approach?

What are the benefits of having external professionals to support the efforts of an organisation to improve and grow?

TO TAP INTO GREATER CAPABILITY – An external professional, particularly somebody who has been in private enterprise for a few years, is an obvious expert in their field of endeavour, and in many cases the process of business too. The capability they possess is difficult to replicate internally, that’s why they chose to enter private enterprise in the first place.

PERCEIVED CREDIBILITY – An external professional is not so close to people in the organisation that they can be ignored. They experience the benefits of perceived credibility. This credibility is greatly magnified if the external professional is a published author and / or widely recognised for the results they generate.

MAINTAIN FOCUS – An external professional can avoid getting caught up in the day-to-day function of the client organisation. They are able to focus fully on the specific task at hand and get the desired results.

EXPERIENCE FASTER RESULTS – The ability of the external professional to focus on the task completely means results can be realised much faster than would otherwise be possible. Almost every organisation I have ever seen suffers from diluted focus. Its not their fault, it’s a consequence of the way we live our lives today and conduct our business affairs in a technology reliant (or should I say addicted) world.

IT’S NOT A COST, IT’S AN INVESTMENT – Contractual terms with an external professional can and should focus work on specific value adding KPIs for which the professional can be held accountable. When you contract an external professional, there is (or there should be) greater emphasis on inbound AND outbound flow of cash.

Accessing Professional Business Improvement Support

In response to this growing trend and client need, Soarent Vision offers the services of some highly regarded industry professionals who are business leaders in their own right.

Soarent Vision’s Vice President of Global Consulting, Harry Sinko, is a widely recognised expert in the area of business improvement implementation and leadership, process improvement facilitation and Lean Six Sigma training.

His facilitation and mentoring skills are second to none and have been called upon by major companies operating in a variety of countries including South America, South Africa, the United States of America, Papua New Guinea and Korea.

To access the services of Harry and any of his available time, call us on 61-7-3377 0824 or send an email to home@soarent.com.au .

Harry Sinko - Business Improvement Professional

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Soarent Vision arguably provides the most advanced and business relevant Master Black Belt training in the world today.

With a unique focus on influence and persuasion concepts, this program integrates perfectly with Soarent Vision’s AQF accredited Lean Six Sigma program for Green Belts and Black Belts, and prepares Master Black Belts to be the most influential and high performance leaders on the planet.

By George Lee Sye

I walked into the Perth Apple Store last week and as usual the crowds were flocking around the vast display of cool stuff made by Apple … yes, I’m a fan, I admit it.

I did the compulsory browse through the technology before moving on to the accessories. I quickly located a number of items that I needed to finally present my seminars using only iPads before walking to the end of the rapidly lengthening queue of shoppers with credit cards in hand.

As my thoughts drift to how easy it is to browse and select but how difficult it is to pay for your selection, a young man, obviously an Apple Store employee, walks up to me and asks “Are you paying by credit card Sir?”

I tell him I am so he leads me away from the queue to one of the display stands.

He then whips out his iPhone and in a matter of minutes processes my purchase.

He scanned all of the items with the iPhone, he swiped my card through the iPhone, and then he had the audacity to make me realise how inadequate our payments processes are by asking me “should I send the receipt to your email address?” … you know, the one that he showed me on his iPhone screen, the one I hadn’t given him yet … what the!!

Yep … the system recognised my credit card and its link to my iTunes account. It had automatically populated the personal details area.

That’s Lean Thinking at work folks.

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Soarent Vision arguably provides the most advanced and business relevant Master Black Belt training in the world today.

With a unique focus on influence and persuasion concepts, this program integrates perfectly with Soarent Vision’s AQF accredited Lean Six Sigma program for Green Belts and Black Belts, and prepares Master Black Belts to be the most influential and high performance leaders on the planet.

By George Lee Sye

The Question

Recently I posed this question to the members of a group of business improvement professionals called Lean Six Sigma Worldwide – ‘Is online LSS training as effective as face-2-face training in getting genuine results in business?’

The following is a summary of the types of responses provided by members of that group.

Responses

GAGANDEEP S. DATTA (INDIA): To me a classroom session is more enriching and productive from learning perspective. It offers the participants to share their experiences while atopic is being taught.  On many occasions I have seen facilitators also take back new learnings, examples, etc. from the class they are teaching.  Also, at times depending on the complexity of the questions raised, facilitators have to resort to parking-lots, go back to seek an answer and share it back with the class.  So, my decision is in favour of classroom sessions.

SUJIT MUKHERJEE (INDIA): Imagine, a task of creating a training material which will contain answers of every possible question that may arise in participant’s mind. That material should also be a “living one” to be flexible enough to assess the level of understanding of the participant and prepare explanation as per that. Best solution to this situation is… find a trainer with knowledge and experience.

CLAIRE FERRIER – MBA, BEcon, LSS MBB (UNITED STATES): I agree that in-class training is certainly the richest and necessary for anyone wishing to lead others in a Six Sigma capacity. That being said I have seen online training work incredibly well for folks working as “green belts” – ie undertaking projects that are being led or mentored by a BB/MBB. The online training provides those people with an ability to understand the background to the approaches being used and, more importantly, a familiarity with the language and tools. It allows those projects to progress much faster as everyone is on the same page from the start and the BB/MBB doesn’t need to spend as much time educating the team on basics, but instead can get on with identifying and solving for the challenges faced. Additionally online training can be a great instant resource for BB/MBBs and Quality Leaders wishing to refresh themselves on certain tools and techniques they may not have used in a while. Therefore I would highly recommend online training as a component of a more comprehensive quality training program.

ANUPAM ROHATGI (INDIA): Are you Joking: On-line Training is same as On-line swimming school.  USP Learn swimming without having to step into Pool.

KOLOS KOMAROMI (HUNGARY): We had on-line Yellow Belt course for all employees and new joiners (mandatory!). It took only one week and keys (a list with correct answers) appeared and after that almost everybody took on-line course and test in 10 minutes by typing anwers from the key-list.  A new employee told me once that after she joined the company she asked her colleague about Yellow Belt course and answer was this: ‘That is just bullshit, here is the list with the answers, use this.’  Those who went through the material by reading all sessions and answering questions by themselves complained that they don’t understand how they could use those tools and methods in their daily routines.

When I took BB position I made a survey about LSS communication within I asked if they found Yellow Belt on-line training usefull and the answers correlated to NO significantly.  After that survey we changed and started live trainings with the same structure but with samples from our company. Though it took half a day to complete the course this way but helped more to involve people to LSS activity and feedbacks were very good.  So my conclusion is on-line training for such complex theme is totally wast of time.

FAIZAN LALLJEE (UNITED KINGDOM): I feel online programme effectiveness depends on the level of interactiveness the programme has. A simple rule I have witnessed…If the concept is complex, then the first preference will be a trainer, face-to face. The next level would be a highly interactive programme equivalent to a trainer..but the cost of development will be very high and the price will not justify it.  Online programmes are very effective if its information sharing.

Conclusion

Based entirely on the feedback provided by group members, it seems that online training is limited in its success in the more complex aspects of Lean Six Sigma education. It’s great as a platform for raising awareness and refreshing, but probably not the most effective way to develop Lean Six Sigma professionals.

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Soarent Vision arguably provides the most advanced and business relevant Master Black Belt training in the world today.

With a unique focus on influence and persuasion concepts, this program integrates perfectly with Soarent Vision’s AQF accredited Lean Six Sigma program for Green Belts and Black Belts, and prepares Master Black Belts to be the most influential and high performance leaders on the planet.

The following is an extract from an interview of Rohit Khanna, Chief Operations Officer of GE Capital Global Banking Group, by the Process Excellence Network.

Note that while the GE refers to Six Sigma, it also includes Lean methodology.

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QUESTION

Could you please explain how the deployment of Six Sigma can keep you ahead of the competition?

Rohit Khanna: As global markets become more tightly integrated, competition in business will continue to intensify. With information available at the click of a button, customer expectations are going up too: they want their products and services faster, cheaper and better. This is where Lean Six Sigma helps us – it provides a structured approach to drive customer satisfaction and bottom-line results by reducing variation and waste.

In fact, the focus in Six Sigma on variation – and not averages – enables us to understand and optimize every customer touch point. Experience shows that this makes value creation an enterprise-wide process – increasing speed to market, improving the quality of products and services, and significantly reducing cost – and becomes a competitive advantage.

At another level, Six Sigma also builds consistency in business processes that deliver quality that is world-class as also in line with customer expectations. Such a ‘repeatable and reliable’ performance is critical to success in the modern age with advances in social media and its increased customer power. I believe that, leveraged well, this also presents a clear branding and customer acquisition opportunity for companies with better promise-to-delivery records, beyond customer stickiness.

Another noteworthy competitive advantage of deploying Six Sigma is its capacity to develop leadership. Quality-focused organizations inculcate a disciplined approach to problem-solving in employees, along with a focus on enhancing change acceptance. This creates a culture that is ideal for a pipeline of great thinking leaders.

QUESTION

Creating a corporate culture to motivate employees comes from the top, but how can you get effective buy-in on the benefits of six sigma from employees?

Rohit Khanna: I think it is important to recognize that to begin with, like any change, employees will be resistant to Six Sigma, until they understand its usage and associated benefits. They may see it as the ‘flavor of the month’ and try to stay under the radar, expecting it to blow away soon. Hence right at its inception, the company’s leadership must be committed to the adoption of Six Sigma and provide it strong sponsorship.

In my experience, managements’ buy in and a strong top down approach has had significant success and over time, the case becomes stronger with execution of successive improvements.

For example, in the early days at GE there was very strong communication around how the company could tap huge market share opportunities and significantly save costs by getting rid of a ship-and-fix mentality. “Six Sigma is all that matters” was a message that one could just not miss, intensely reinforced by senior leaders walking the talk by embracing Six Sigma themselves, championing projects, visibly celebrating early successes etc.

Over time, Six Sigma must become part of the culture too. This means all employees need to get trained, involved and passionate about Six Sigma, not restricted to an initiative involving some people running projects in some remote corner of the organization. Instead, Six Sigma must become a way of life and ingrained into how the company works.

QUESTION

What are some of the yet to be explored untapped opportunities in Six Sigma that have yet to be explored?

Rohit Khanna: Six Sigma can be a great program for all parts of the organization that have repetitive internal processes at one end; and complex new product development on the other. We have seen it being actively deployed in varied functions and industries over the last 15 years. In fact, though it originally started in Manufacturing, the Services industry has benefited immensely from its application in banking, hotels, healthcare and other related industries.

The potential for Six Sigma to drive customer satisfaction and income is immense as we speak. Some areas where I believe companies can do more: firstly share the Six Sigma experience with smaller customers who may not have the wherewithal or commitment to afford a standalone implementation – very similar to At the Customer, For the Customer initiatives GE has successfully run. An extension of the idea could be in Supply Chains where again Six Sigma can be used to optimize performance.

We also need a better understanding of the balance between process excellence and innovation. An indiscriminate Six Sigma deployment can damage the creativity levels in a company in the long-term, resulting instead in bureaucracy and tendency to over analyze. Done well, I see significant opportunity in a more proactive approach with focus on designing for Six Sigma vs merely using it for incremental improvements.

QUESTION

Going forward how do you see Six Sigma evolving over the next decade?

Rohit Khanna: Six Sigma has been around for over two decades now with varying achievement levels in deployment across companies. Some organizations have reported huge success, while many have not been as successful. At some pioneering companies, the program has continuously evolved: initial deployments have the statistical tools focused to reduce cost, followed by delivering customer delight by killing variation.

In the last 5 years the combination of lean and six sigma has seen increased use, mostly to improve speed to market at a lower cost. Naturally different organizations are at different levels of the deployment cycle.

Over the next few years, I believe companies will continue to utilize the rigor and discipline of Six Sigma to deliver customer impact but the tools used are likely to evolve.

We may see companies trying to find the right tool for the problem as against trying to fit Six Sigma, or more specifically its statistical tools, to every problem.

One area I would want Six Sigma to be successfully utilized is in growth and innovation where traditionally limited success can be countered with more forward-looking tool selection. Some change may also get driven by advances in information availability and bridging of the digital divide in terms of how data is collected, organized and interpreted.

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Soarent Vision supports companies in their Lean Six Sigma implementation with on site coaching and mentoring, planning and design support, and training and education. For more information about Lean Six Sigma implementation, visit the website here - http://www.soarent.com.au/lean-six-sigma/lean-six-sigma-implementation

By George Lee Sye

Lean Six Sigma is really a business improvement strategy.  And let’s face it; most companies are doing business improvement in one form or another.  Where they often fall short is in one of the most important aspects of success – business improvement project identification.

What I’ve found is that the vast majority of companies have similar approaches to business improvement. To understand what I mean take a look at this example.

The following is a list of business improvement projects for a medium sized clothing business.

IMPROVEMENT PROJECT LIST

• Expand the warehouse and implement a bar coding system
• Renegotiate ‘per unit’ supply rates from the suppliers of blank shirts
• Implement a ‘cascading’ based system of performance management
• Negotiate a new freight contract
• Introduce the PASS safety system across all warehouses
• Replace key access with proximity card system
• Distribute a quarterly company newsletter
• Individually cling wrap dress shirts
• Negotiate a corporate alliance with the Zenith Hotel chain

What do you make of that list?

Notice it’s simply a list of solutions. Each idea is a way of solving some perceived problem. For example renegotiation of unit supply rates is a solution for the problem of increasing costs to produce a unit of whatever it is they manufacture.

In the absence of an improvement strategy like Lean Six Sigma, this tends to be the way business improvement is approached.

Ideas for making the business better, in solution form, are identified and undertaken as improvement projects. Managers genuinely believe they are doing business improvement and have no idea why you would want to add a Lean Six Sigma methodology to it.

I’ve even seen a situation like this where one manager believed the company was already doing Lean Six Sigma.

So What’s Missing?

The major shortfall with this approach is many opportunities for genuine performance improvement are missed because SOLUTIONS ARE NOT KNOWN. This approach produces a list of improvement ideas that answer one question:

‘What can we DO to improve our business?’

The business improvement approach is significantly broadened when improvement ideas are captured for which SOLUTIONS ARE NOT KNOWN. A new question should be asked:

‘WHERE can we improve that would add value to the business?’

In the case of our clothing manufacturer, this question might generate ideas like these.

• The number of incidents of incorrect order processing
• The cycle time for turning around an order
• The proportion of on-time creditor payments

All are worthwhile projects because they positively impact customers as well as the business. Yet none of them are solutions, only focal points for business improvement.

A broadened approach to Business Improvement looks like this:

The Role of Lean Six Sigma

Where methodologies like Lean Six Sigma come into play is in identifying solutions for improving the performance of PROCESSES.

Because of the orientation of these methodologies towards the use of data, the more appropriate processes for Lean Six Sigma focus are those that are HIGHLY CYCLIC and have REPETITIVE or STANDARDISED process steps.

For example, reducing order errors in an order filling process, or reducing cycle time for order processing in an order filling process are both perfect as Lean Six Sigma projects. Solutions are NOT KNOWN, the process is highly cyclic and steps are repetitive.

Non Six Sigma Fit

Not all improvement ideas without solutions will be Lean Six Sigma projects.

For example reducing the number of late creditor payments may be solved by using some of the process mapping and cause effect analysis tools from the Lean Six Sigma suite. However, if the team identified ‘compliance with terms of payment’ as the main issue, the project is obviously not a perfect fit for the Lean or Six Sigma methodologies.

Opportunities such as ‘improve employee morale’ or ‘improve staff awareness of company performance’ or ‘increase the quality of induction training for new employees’ are also poor fits with Lean and Six Sigma in their pure form. However, work on those problems will benefit from the use of Lean Six Sigma tools in finding solutions.

What’s My Point?

Business improvement with Lean Six Sigma is still just business improvement. However, it establishes a framework where the company can work on:

(a) projects where solutions are known as well as projects where solutions have yet to be identified, and

(b) both process improvement and non-process oriented projects.

Business Improvement with Lean Six Sigma looks like this:

Notice the existing business improvement system is not eliminated. No … it’s ENHANCED by the INCLUSION of Lean Six Sigma.

So what about business improvement project identification?

If you’re going to undertake a formal business improvement initiative, then use a project selection approach that has GENERIC application in that it’s suitable for companies utilising a range of business improvement methodologies such as:

• Six Sigma,
• Lean Manufacturing,
• Design for Six Sigma,
• QFD
• Theory of Constraints …..etc

The step of IDENTIFYING business improvement project ideas is a critical one in the sequence as it sets the initiative up for either success or failure.

More Than One Way to Skin a Cat

We don’t want to take an approach quite so unsophisticated as just asking ‘What do we need to do to improve our business?’ Let’s inject some science and strategy in the way we tackle the question of where and how to improve our businesses.

Some of the more robust scientific ways are these:

• Problem or performance gap identification
• Problem or performance gap creation
• Business driver analysis
• Analysis of processes for constraints
• Analysis of performance against customer expectations or any other key business measures

Opportunities can and should be identified by taking a look at the business from a variety of angles.

Why There Isn’t The ONE Way

Firstly, let’s acknowledge that all businesses differ; no two are exactly the same. The way in which a business identifies opportunities for growth in value will be driven by many factors including maturity, market forces, operating methods and culture.

Secondly, business and operating thinking patterns vary so greatly that no single approach is best.

To find out more about all of these approaches you should download my latest ebook – HOW TO SELECT GREAT IMPROVEMENT PROJECTS.

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Soarent Vision arguably provides the most advanced and business relevant Master Black Belt training in the world today.

With a unique focus on influence and persuasion concepts, this program integrates perfectly with Soarent Vision’s AQF accredited Lean Six Sigma program for Green Belts and Black Belts, and prepares Master Black Belts to be the most influential and high performance leaders on the planet.

Standards for recognising genuine business improvement leadership capability are becoming more and more important in the market today.; not just for companies with improvement initiatives in place, but for practitioners as well. Two leaders of business improvement are setting those new standards in Sydney and Perth.

Soarent Vision wishes to congratulate two of the most capable business improvement leaders in Australia today on leading the way and obtaining Lean Six Sigma qualifications equivalent to two thirds of a Bachelor Degree …..

ADVANCED DIPLOMA IN BUSINESS IMPROVEMENT LEADERSHIP

MORGAN JONES (General Manager of Lean Six Sigma for BOC) and ANDREW WALDEN (Head of Business Improvement for Citic Pacific) recently completed the Diploma and Advanced Diploma certification process. They demonstrated extraordinary capability in the utilisation of Lean and Six Sigma methodologies to generate significant returns for the companies they work for.

Andrew Walden Receives Advanced Diploma Award

Uncompromising with its standards, Soarent Vision’s LEAN AND SIX SIGMA TRAINING PROGRAM is leading the way in developing genuine business improvement capability.

More information about certification can be obtained here - http://www.soarent.com.au/lean-six-sigma/certification

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Advanced Diploma in Business Improvement Leadership and Diploma in Business Improvement Leadership are trademarks of Soarent Vision Pty Ltd.