Evolving Lean Six Sigma to Larger-Scale End-to-End Processes

Xerox Lean Six Sigma:Evolving Lean Six Sigma to Larger-Scale End-to-End Processes

George MaszleWCBF Global SummitOrlando, FLA Oct 2008

Xerox’s Profile Today

• $17B (U.S.) in Revenue (YE 2007)

• ~58,000 employees worldwide• Broadest technology and services

portfolio in documentmanagement and production

Our Mission: help organizationsachieve their business goals throughSmarter Document ManagementSM

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Profitability

GrowthGrowth

2002 - 2005

2005 - 2008

2000 - 2002TurnaroundTurnaround

Growth and GreatnessGrowth and GreatnessXerox’s Recent Journey

Stronger, Different, BetterStronger, Different, Better

Profitability2000 - 2002

Expanding Customer Relationships Leadership Offerings Flexible and Sustainable Business

Model

Investing for Growth Earnings Expansion Balance Sheet

Restructuring

Liquidity Stabilization Cost Base

Restructuring

Lean Six SigmaLean Six Sigma

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Current Worldwide Deployment Status

• >2,000 executives and managersleadership trained

• ~ 7,000 Green Belts trained• ~40,000 Yellow Belt trained and on

many other on-line courses• Design for Lean Six Sigma in product

design / development

• ~ 40 full-time deployment managers• >4,000 projects, many with customers,

underway or completed contributing toXerox profitability

• Corporate financial targets met orexceeded in each year to date

• ~1,000 Black Belts trained; ~400currently leading projects

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Meeting our Challenges Through Lean Six SigmaMeeting our Challenges Through Lean Six Sigma

• Understand what customers trulyvalue and need

• Strengthen and transform our culture

• Position us for growth

• Improve processes through fact-• Improve processes through fact-based, disciplined decision-makingand measurable outcomes

It’s transforming“the way we work”

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Our Commitment Starts at the TopOur Commitment Starts at the Top

“I’m convinced that Xerox LeanSix Sigma is a way to rebuildvalue in our company becauseit is about substance, not form;it’s about discipline andinfrastructure so projects caninfrastructure so projects canproduce business results.”

— Anne MulcahyChairman and CEO

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Business Results

Leadership Development

• Profitability

• Growth

• New opportunities

• Future leaders

• Shared business discipline

Lean Six Sigma: Xerox’s Primary ObjectivesLean Six Sigma: Xerox’s Primary Objectives

Culture Change

• Continuous learning

• “Customer In” vs. “Company Out”market view

• Facts/data driven decisions

• Busting bureaucracy

• Collaborative, enhanced teamwork

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• Goal — Reduce waste and

LeanSpeed + Low Cost

• Goal — Improve

Six SigmaCulture + Quality

Six Sigma QUALITYEnables Lean Speed

(fewer defects meansless time spent on rework)

Lean SPEED EnablesSix Sigma Quality

(faster cycles ofexperimentation / learning)

Combining Two Powerful ApproachesCombining Two Powerful Approaches

• Goal — Reduce waste andincrease process speed

• Focus — Identify non-value add steps andcauses of delay

• Method — Value StreamTools, Kaizen events

• Goal — Improveperformance on customerCTQs (Critical to Quality)

• Focus — Use DMAICprocess with various tools toeliminate variation

• Method — 1%to 2%dedicated as DeploymentManagers and Black Belts

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Sales andMarketing

Administration

Facilities

CustomerCommunications

Finance

HumanResources

EnterpriseEnterprise--wide Deploymentwide Deployment

Xerox

InformationTechnologies

Communications

Operations

ManufacturingEngineering

Our view: Not just a tool for operational efficiency, but anenterprise-wide business strategy for creating real value

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Lean Six SigmaStrategic

New Opportunities

Results

Strategic Linkage and ExecutionStrategic Linkage and Execution

$

StrategicPlan

AnnualPlan

StrategicLinkage

andExecution

ProjectsGenerated

1%ofWorkforce

Priorities,Definition,

Scope

Effort

BenefitLeadership

Master BB

Black Belts

Green Belts

D M

AI

C

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Nov 02 Jan 03 Feb 03 Jun 03 Nov 03 Dec 04

Executive LaunchLeadership Training

Sponsor Training

Dec 07

SeedingLean Six Sigma

DeploymentDesign and Launch

Phased Xerox Deployment PlanPhased Xerox Deployment Plan

BB Training

GB Training

MBB TrainingDFLSS

DeploymentExecution andSustainability

Manage the Effort

DFLSS Launch

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Growth Curves: Evolving Business ImprovementGrowth Curves: Evolving Business Improvement

WW Operations - Standard

External and InternalMethodology and Tools,

Robust DfLSSDeployment: Creating

Real Value forOur Customers

time

Total QualityManagement

Internal ManufacturingQuality Methodology

and Tools - 1998

WW Operations - StandardMethodology and Tools

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1970’s

LSS Maturity or GrowthCurve is a series of

Cust

omer

Valu

e&

Busi

ness

Impa

ct

DfLSSSoftware

CurriculumRedesign &

EnhanceRevenue

DfLSSMarketing

StrategicInnovation

Xerox Lean Six Sigma Growth Curve

ChangeLeadership

ACFC Curve is a series ofinitiatives to buildoperationaleffectiveness across theenterprise.

Cust

omer

Valu

e&

Busi

ness

Impa

ct

time

Launch LSS BB

LSSDMEDI

LSSLeadership

TrainingGBLSS

DfLSSE/M

Marketing

2002 2004 2006 2008 2010

ACFC

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Key factors differentiating “A”curve from “F” curve

Business Integration andAbility to Show Impact

Project Selection Link toBusiness Strategies andCustomer Value

Ability to Change Culture &

Annual

$

0

SustainedCommitment

F As many as 50%end up here

Long Term GoalLong Term Goal –– Sustained Business ResultsSustained Business Results

$

Ability to Change Culture &Leadership Behavior

Full Value-Chain Engagement

Ability to Evolve to higherLevels of Maturity andBusiness Relevance (ACFC,DfLSS, Innovation)

* Chart adapted from Strategic Six Sigma: Best Practices from theExecutive Suite by Dick Smith and Jerry Blakeslee

1 2 . . . . . nYearInitial Leadership

Commitment

0

*

What is next on the horizon ?

• Re-strengthening End-to-EndBusiness Process Management

• Lean Six Sigma has establishedthe sound foundation requiredto make “Real” progress in thisto make “Real” progress in thisarea

• To achieve higher level gainswill require new and differentways of looking at businessprocesses

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What is the History of Business Process Management (BPM)?In

tere

st

or

Hyp

e

ProcessReengineering

movement

BusinessProcess

PEMM Article(Hammer 2007)

BPMSpanyi

Reengineeringthe Corporation(Hammer, 1993)

1985 1995 2000 2005

Time

Inte

rest

or

Hyp

e

SixSigma

TQM

‘Don’t AutomateObliterate’

(Hammer, 1990)

ProcessManagementmovement

BPM Third Wave(Smith and Fingar,

2002)

2010

BPM(Jeston/Nelis2006, 2008)

1990

Spanyi2003

Rummler-Brache

2003

Source: Adapted from BPM Third Wave ,Howard Smith and Peter Fingar

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What is End-to-End Business Process Management?Business Process Management: The design and execution ofend-to-end business processes that create value for the customerand the business.End-to-End Business Process: An organized group of relatedactivities that work together across the enterprise to create aresult of value for customers. End-to-End means the processstarts with the customer and ends with the customer.starts with the customer and ends with the customer.

Key Themes or Concepts:• End-to-End Group of Activities

• Aligned to Serve Customer Needs

• Cross Functional – Spans Enterprise

• Outcome Focused

• Process, not Organization Focused

• Process Ownership and Accountability

• Intentionally Designed

• Repeatability and Reliability

• Collaboration across organizations

• People Focused on Results

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Typical Functionally Managed Organization

Sales Finance Engineering

Lean Six Sigma has strengthened processes within the walls, but has done less tobreak-down the walls across the enterprise

End-to-End goals not aligned, miscommunication happens, errors occur

People are empowered to fix things only inside their castle - No one is empowered tofix anything across the entire organization

Service Distribution Production

Source: Adapted from Michael Hammer

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Michael Hammer’sMichael Hammer’s Thinking has EvolvedThinking has Evolved

“Process management is the culmination of the movement totransform business operations. It provides a unifying theme forinitiatives directed at improving organizational performance. “

(Michael Hammer - 2002)

“Sadly, however, casualties litter the road. Since 2000, I havepersonally observed hundreds of companies try to rejuvenatepersonally observed hundreds of companies try to rejuvenatethemselves by creating or redesigning business processes. . . . . . .In most of the companies I studied, executives werefloundering. They realized that they needed to change manythings to harness the power of processes, but they were unsureabout what exactly needed to be changed, by how much, andwhen.”

(Michael Hammer - 2007)

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Michael Hammer’s Thinking onRequired Enablers

• BPM Concepts have Evolved• Redefined the required system (HBR –

April, 2007)• Added emphasis on “Enterprise

Capabilities”Process Enablers:

Performer Skills,Knowledge &

Motivation

ComprehensiveProcess Design

Process OwnerResponsible for

Results

Infrastructure toSupport the

Process

Metrics toTrack ProcessPerformance

Enterprise Capabilities:

Culture of Customer-Focus, Accountability,Teamwork & Change

Leadership thatSupports the Creation

of Processes

Enterprise Skillsand Methodology

for Process Redesign

Governance Mechanismsto Manage Complex Projects

and Change Initiatives

Source: Adapted from Michael Hammer

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Business Process Management (BPM) ExpertsView of Six Sigma Evolution“As companies move along the six-sigma learning curve, they willencounter the same challenges they confronted with previousinitiatives: project proliferation, limited payback, competition withother efforts, and inapplicability to solve larger problems. Afterpicking the low hanging fruit, they will find themselves in need ofa broader and more robust approach.”

- Michael Hammer

“Lean Six Sigma is limited in how far it can take an enterprisewithout a strong and complimentary Business ProcessManagement approach…Six Sigma is not a subset of BPM . . . . . It is a useful adjunct”

- John Jeston and Johan Nelis.

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Lean Six Sigma & BPM: Stronger Together

Lean Six Sigma Business ProcessManagement

Improvementtools and LSSmethods, withskilled resources

End-to-endProcessMgmt.focus

• Skilled Belts

• DMAIC, DMEDI, IDOV

• Project Selection

• Structured Approachto Improvement

• Process Owners

• Process Architecture

• End-to-end Focus

• Cross-functional

• Collaboration

• CustomerFocus

• BusinessResults

• Functional leadersidentify Projects

• Six Sigma Tools

• Lean Tools

• DfLSS

• MBBs, BBs, GBs

• Collaboration

• Process Infrastructure

• GovernanceMechanisms

• Process Owner decidesimprovement projects

• Enhanced tools

• End-to-end ProcessExperts

Results

• Metrics &Measures

• Performancescorecards

• CultureChange

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Growth Curves: Evolving Business ImprovementGrowth Curves: Evolving Business Improvement

Lean SixSigma

Next Growth Curve

End-to-EndProcess

Management

time

Total QualityManagement

Next Growth Curve

LSS is a foundation for BPMand needs to bestrengthened and sustainedfor BPM to succeed

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Why is Business Process Management Important toXerox? Why Now?

Why Important• Enables realization of LSS Vision• Operationalizes VOC/customer value through process vs. project focus• Leverages investment in LSS infrastructure for greater results• Will delivers systemic productivity beyond traditional Lean Six Sigma:

overcomes functional boundaries and organizational non-value add

Why Now• Builds on the business improvement momentum created by LSS• Must strike while the iron is still hot• Leaders are recognizing the need and expecting it

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Senior Leaders were recently asked, “Where should SixSigma Champions spend their time?” Activities included:

90%

100%

•• Identifying CrossIdentifying Cross--OrganizationOrganization ProjectsProjects

%V

ery

Imp

ort

an

t+

Imp

ort

an

t

•• CollaboratingCollaborating on Endon End--toto--End Enterprise Wide ProcessEnd Enterprise Wide Process

•• LeadingLeading Change and BusinessChange and Business TransformationTransformation

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

%V

ery

Imp

ort

an

t+

Imp

ort

an

t

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Many Challenges to Implementing BPM:Leadership – Understanding, Systems Thinking Mindset, Functional background

Process Owners – New Position, Role / Accountability, Alignment, Clout

Customer-In – Culture, Mindset, Incentives, Metrics based on “Eyes of the customer”

Organizational History – Strong functional history, How People Succeeded, Bureaucracy

Lack of Resources – Unclear Accountability, Impacts momentum

Support Infrastructure – Takes time to Build, Not as Clear as Six Sigma

Deployment Recipe – Less clear, not as codified as Lean Six Sigma, more customizedDeployment Recipe – Less clear, not as codified as Lean Six Sigma, more customized

Metrics and Reward Systems – Customer and Process focused, Common Across Process

Job Definitions and Titles – Changing Roles, Different/New training

IT Systems – Process Aligned, Control by Process Owner, Investment Strategy

Budgeting & Planning Processes – Process Focused, Process Owner vs. Functional Role

Resistance – Fear/Mistrust, Balancing Central vs. Decentralization, Uncertainty of Payback

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John Jeston & Johan Nelis View of Business ProcessManagement

• Various enablers required for success

• BPM doesn’t replace everything else and is not a panacea.

• It must augment and align with strategy, HR, Financial Systems, IM andother management disciplines

• Business Process Management is a system; the transformation must bemanaged as a project

BPM Transformation ProjectManagementManagement

ChangeManagement

BenefitsRealization

ProcessAnalysis

ResourcePlanning

MultipleStakeholderManagement

ResourceMeasurements

Roles/jobDescriptions

LeadershipOrganizational

Maturity

RiskManagement

BusinessStrategy

Root CauseAnalysis

PerformanceMeasures

ProcessGoals

OrganizationalStructure

ProcessMeasures

ManagementReporting

ProcessSimulation

Commitment

ContinuousImprovement

Involvement

QuickWins

Source: Adapted from Business Process Management, John Jeston & Johan Nelis

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Next Steps – To Be Continued . . . . .

• Forward thinking, disciplined companies are embracingBusiness Process Management, building on their Six Sigmaand Lean Six Sigma foundations

• For Xerox: natural follow-on and builds on LSS deployment

• Xerox will continue building LSS foundation as sound basefor End-to-End Business Process evolution

• “Under-the-Radar” projects are piloting key elements of• “Under-the-Radar” projects are piloting key elements ofBPM, enhancing our learning and building leadershipcredibility

• Xerox is not ready to fully deploy BPM thinking but…. . . making good progress in targeted process areas ofthe business to enable higher customer value andbusiness impact

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Thank You!