Focus and Leverage: Focus and Leverage Part 309

Continuing my series on excerpts from The Ultimate Improvement Cycle in this posting I will continue our discussion on why so many Lean and Six Sigma initiatives have failed to live up to their advanced billings and promises.

The question of why these stand-alone or integrated improvement initiatives have not lived up to their advanced billing is not always simple to answer. It could be that the projects or processes selected to focus on were ill-conceived, or it could be that their vision of the future was flawed. It could be that implementation plans were not well planned and executed or, worse yet, never developed. But let me be clear: The reason for failure is not the initiative itself. The failure is not because Lean, Six Sigma, Lean–Six Sigma, and TOC are not good improvement initiatives. It is really a question of planning, execution, focus, and leverage. In fact, after having witnessed the remnants of failed initiatives, it is pretty clear to me that many of these initiatives fail for two primary reasons. First, the scope or size of the initiative is well beyond the capability of the available resources. The second reason is that companies generally fail to recognize their leverage point.

Failing to Focus

Instead of developing a strategically focused and manageable plan, many companies try to solve world hunger instead of focusing on the areas of greatest payback. Many companies attempt to use these improvement initiatives across the board and end up making very few sustainable improvements. Many Lean initiatives attempt to drive waste out of the entire value chain, but management is disappointed that the predicted waste reduction does not impact their bottom line to the extent that they had hoped. Many Six Sigma zealots attempt to drive all forms of variation to lower and lower levels and, again, are disappointed that the variation reduction alone does not result in significant bottomline improvement.

Part of the problem with failed Lean and Six Sigma initiatives is that many companies simply have too many ongoing projects that drain valuable resources needed for the day-to-day issues facing many companies. Knowing what to do next can also be confusing to managers who have reached the saturation point and are not able to distinguish which projects are vital or important, and which ones are not. The economic reality that supersedes and overrides everything else is that companies have always wanted the most improvement for the least amount of investment. Attacking all the processes and problems simultaneously, as part of an enterprise-wide Lean–Six Sigma initiative, quite simply overloads the organization and does not deliver an acceptable return on investment in many cases. In addition, some companies cherry-pick which Lean and Six Sigma tools to use instead of thinking of them as part of the overall improvement strategy.

Failing to Recognize a Leverage Point

Although the implementation problems I have discussed thus far certainly impede progress, in my opinion, there are other reasons initiatives have failed in many companies. So again, I ask, why are many Lean and Six Sigma initiatives failing to deliver their promise of significant profit increases to many companies?

Take a look at the Lean improvement cycle in the figure below. You begin by defining what value is, and then identify the entire value stream. You then make value flow without interruptions and let customers pull value from the producer. Finally, you relentlessly pursue perfection, making your processes less and less wasteful. A true Lean implementation will definitely produce a better process as long as it is done correctly, but this is sometimes a big if.

The Six Sigma improvement process in the figure below shows that step 1 is about defining problems and requirements and set goals. In step 2, you measure the key steps and inputs and validate and refine the problems you identified in step 1. In step 3, you analyze pertinent data to develop or validate your causal hypotheses. In step 4, you improve the process by testing solutions and removing root causes. Finally, in step 5, you control your processes by establishing standard measures. Like Lean, if done correctly, Six Sigma creates a much better process with much less variation, but again, this is sometimes a big if.