I recently received an email from one of my blog followers wanting to know why I never write about my second book, The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints. This book was published in 2009 and was one of the first, if not the first books to demonstrate the power of integrating this trilogy. So in response to this reader’s request, over the next several postings, I’m going to post excerpts from this book.
For-profit organizations exist ostensibly for two purposes: to make money now and to make money in the future. Making money now requires organizations to relentlessly remove needless sources of waste and variation so that their products and services are not only profitable, but also consistently delivered on time and at the right price. But to sustain these profits (that is, to make money in the future), organizations must continually reinvent themselves. What worked yesterday and today probably will not work tomorrow or next year, so change is necessary. The good news is that it is much easier to manage change than it is to react to it. Because products or services have such short half-lives these days, change must not only be expected, but also be passionately pursued and embraced. But what is it that you should be changing? That is the question this book attempts to answer.
Knowing what to change, what to change to, and how to implement change are the determining factors for how successful an organization will be in the future. In fact, in an effort to reinvent themselves, many organizations have attempted improvement initiatives like Lean manufacturing and Six Sigma, but they have failed to achieve the positive results they expected or at least hoped for. These companies then become disillusioned and either abandon the initiative altogether (backsliding to their old, more comfortable way of doing business) or use bits and pieces of the improvement strategy.
The Lean Enterprise Institute (LEI) conducts annual surveys12 on the subject of how well Lean implementations are going. Considering the last three surveys (2004, 2005, and 2006), the results do not paint a rosy picture. In fact, the LEI reported in 2004 that 36 percent of companies attempting to implement Lean were backsliding to their old ways of working. In 2005, the percentage of companies reporting backsliding had risen to almost 48 percent, while in 2006, the percentage was at 47 percent. With nearly 50 percent of companies reporting backsliding, we are not looking at a very healthy trend, especially when you consider the amount of money invested in the initiative. Add to this what Jason Premo of the Institute of Industrial Engineers reports: “A recent survey provided some shocking results, stating that over 40 percent of Lean Manufacturing initiatives have hit a plateau and are even backsliding, while only 5 percent of manufacturers have truly achieved the results expected.
In the case of Six Sigma initiatives, the results have been more impressive, but not as impressive as they could or should be. Celerant Consulting carried out a Six Sigma survey in 2004, generating responses from managers across all business sectors, and although the results of the survey were more positive than negative, there were several problems that did surface:
- The survey suggests that most businesses new to Six Sigma often find that running effective projects has been a significant challenge, with Six Sigma projects often quoted as taking four to six months or even longer to complete.
- Poor project selection is a key area where many businesses still continue to struggle. Industry experience suggests that about 60 percent of businesses are currently not identifying the projects that would most benefit their business.
- There is a shortage of good Master Black Belts. Across the survey, the ratio of Master Black Belts to Black Belts is 1 to 18. This creates pressure on the leadership of the most challenging projects and the capacity to train and develop others.
Based on my experiences in a variety of organizations and industries, the disappointing results coming from Lean, and sometimes from Six Sigma, are directly linked to failing to adequately answer the question “What to change?” or worse yet, failing to ask that question at all. Deciding what to change cannot be done in a happenstance or chance manner. It must be addressed logically at the strategic, tactical, and operational levels after careful deliberation and analysis. The roots of this disillusionment are manifested in ill-advised efforts wasted on local improvements that fail to achieve global (or system-wide) improvement.
But even if an organization successfully considers and visualizes what to change, many times that same organization will fail to rightfully answer the question of what to change to. It is one thing to change your way of doing business, but you had better make sure that what you are changing to makes sense strategically. So how do you know what to change to? In today’s world there seems to be so many choices regarding improvement initiatives, so surely one of these will work, right? Not so fast.
Even if an organization is successful in determining what to change and what to change to, there is still the question of how to make the change happen. No matter how well conceived an improvement initiative is, how the change is executed plays a tremendous role in the success or failure of the change. Establishing and implementing a unstainable improvement initiative requires selecting the right area to focus on, what the content of the improvement initiative should look like, carefully planning and developing a step-by-step execution plan, total support and buy-in from the leadership, and sincere collaboration with and involvement from the employees that make the product or deliver the service.
In my next posting, I’ll continue on this subject and talk a bit about why Lean and Six Sigma initiatives fail at such an alarming rate.