Directly related to business performance is the ability to change the business processes for greater efficiency and productivity while terms like specialisation, standardisation comes to mind followed by measurement, data analysis, statistical analysis, root cause analysis and finally process control and quality control.
Remember the saying by Peter Drucker: “What gets measured, gets improved”…
Improvement initiatives bring change.
A brief history of organisational change
Change management has evolved from Organisational Development OD – focused on helping people to manage change and to stay alive post the world war in the 1940S. That lead to Change Management thinking in the 70s and 80s and in parallel project management as another management process, was developed. These processes saw change as linear and hence can it be managed tightly. It starts with a burning platform and a vision to resolve the problem followed by the change journey of solving problems and overcoming obstacles. In the late 80s Appreciative Inquiry emerged changing the focus of change to “best that can be” and driving “what should be” rather than “what is wrong” and driving the “fix it”. The 1990s and 2000s brought more collaborative models and tools to manage change and solve problems and performance coaching got commonly accepted and used.
The drive to improve business performance gave life to various methodologies and frameworks for example:
- Toyota Production System (TPS), the origins of Lean Thinking, included the prominent problem solving tools through the “five why’s”, continuous improvement, “Just in Time” production and the elimination of waste.
- Business Process Re-engineering (BPR) which encouraged the outsourcing and off-shoring of work deemed to be non essential or too costly to perform.
- Balance Scorecard which aims to provide a well-balanced view of the health of an organization through key performance metrics representing the financial, operational, human and environmental aspects of the business performance.
- Project Management methodologies and frameworks: PMI, Prince2, Agile SCRUM, LEAN, KANBAN
- Quality Control frameworks, methodologies and standards: ISO9001, Six Sigma
- Information Technology Service Management (ITSM) frameworks: ITIL
Six Sigma is a quality improvement approach that seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in the delivery processes. This is done through a set of quality tools management tools and statistics.
Another definition – the ability of processes to deliver a very high percentage of the output within a defined specification derived from customer specifications. A key KPI is the defect % and the process to reduce that to be within specification of tolerance – where a defect is defined as any process output that does deliver to customer requirements.
Running a process at Six Sigma quality is defined as defect levels below 3.4 defects per 1M cycles of the process!
Six Sigma principles:
- Continuous efforts to achieve stable and predictable process outputs are vital for business success.
- Operational business processes can be measured, analysed, improved and controlled.
- Achieving sustained quality improvement requires commitment from the entire organization, particularly from the top management.
Each Six Sigma project has a five step sequence (DMAIC):
Problem solving approach:
D – Defining
M – Measuring
A – Analysing
I – Improving
C – Controlling
- Defining the problem, and setting a project goal.
- Measuring current process performance and collecting relevant data potential root causes.
- Analysing the data to investigate and verify cause-and-effect relationships. Determine what the relationships are attempt to ensure that all factors have been considered. The analysis should reveal a root cause of the defect under investigation.
- Improving and optimizing the current process by introducing changes that reduce or solve the impact of the identified root cause.
- Controlling/Monitoring the newly changed process to ensure no deviation from the expected results occur and that the new process is stable.
You are lean when all you resources are used to deliver value to the end customer – nothing else. This value has to flow through the value chain without any interruptions. All activities not directly supporting in the creation and delivery of this value is considered as waste and therefore reviewed for potential elimination.
Another definition: Lean is focused on getting the rights things to the right place at the right time in the right quantity while achieving a perfect workflow that is dictated by the customers demand to deliver the goods just in time.
LEAN – Five Principles:
- Specify value from the customer’s point of view. Start by recognizing that only a small percentage of overall time, effort and resources in a organization actually adds value to the customer.
- Identify and map the value chain. This is the te entire set of activities across all part of the organization involved in delivering a product or service to the customer. Where possible eliminate the steps that do not create value
- Create flow – your product and service should flow to the customer without any interruptions, detours or waiting – delivering customer value.
- Respond to customer demand (also referred to as pull). Understand the demand and optimize the process to deliver to this demand – ensuring you deliver only what the customer wants and when they want it – just in time production.
- Pursue perfection – all the steps link together as waste is identified – in layers as one waste rectification can expose another – and eliminated by changing / optimizing the process to ensure all assets add value to the customer.
- Five S (5S): A process of keeping the workplace ready for use exercising a discipline of 5 workplace practices beginning with S.
- Set in order
5S optimally prepare the workplace to perform optimum tasks in the future including the idea of visual management.
- Seven Wastes: Waste is any activity that consumes resources but do not not creates value for the customer. The purpose of seven wastes is to identify and eliminate waste in processes hence delivery greater customer value. 7 Catagories of Waste: Defects, Overproduction, Unnecessary transportation, Waiting, Inventory, Unnecessary Motion, Over-processing
- Takt Time: The average rate at which a deliverable item is required to meet the customer demand. It is used to create the balance in the process between supply and demand and to help calculate the resources required to efficiently process a process just in time.
- Value-Stream Mapping
Underlining the success of Lean is a culture of respect of people – at all levels. As Lean is a whole-system management methodology that requires a overall culture change to be successful – starting at the top.
Lean Six Sigma
General Electric (GE) adopted Six Sigma in the 1980’s – combining that with the principals adopted by the Toyota Production System (TPS), the origins of Lean Thinking provide the methodology of LEAN SIX SIGMA.
It is a complementary combination between the best of both worlds – Lean Thinking, which is focused on process flow and waste elimination and Six Sigma, which is focused on process variation and defects – driving business operational excellence.
Other relevant posts: Executive Overview of Agile #1 and #2
Let’s Talk – Are you looking to achieve your goals faster? Create better business value? Build strategies to improve growth? We can help – make contact!