Leveraging Six Sigma to Drive Better Execution: The Challenge of Change Management

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Debbie Neuscheler-Fritsch

May 11, 2006

Leveraging Six Sigma to Drive Better Execution:

The Challenge of Change Management

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What We Will Discuss …

What is change management? Why is it a critical success factor in ensuring successful execution of any organizational initiative – and especially an organization’s Six Sigma efforts?

Why is “culture” such an important variable in applying Six Sigma in the financial services arena?

What are some key change management tools to add to your Six Sigma “toolkit” to help you succeed?

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Change Management

Change management is the process of aligning an organization’s people and culture with changes in business strategy, organizational structure and systems.

Change management helps an organization accept, adapt to and integrate changes that must be made to improve performance.

Successful change management builds:

– Ownership and commitment to change

– An organization designed to make changes “last”

– Enhanced capability

A major cause of “failure” in many Six Sigma programs is the failure to apply basic change management principles.

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Six Sigma and Change Management

At its most basic level, Six Sigma improvement efforts involve radical, rapid and unanticipated changes to business processes and infrastructure (organizational and technical)

Understanding the impact of Six Sigma and managing its transformational effects will ensure that changes are sustained over time.

Six Sigma efforts are always operating in a broader “change” context. What are those other drivers of change? And how does this landscape impact the financial services environment?

– External Drivers

– Internal Drivers

– Resulting Dynamics

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External Drivers

Competition

Consolidation

Technology

Globalization

Customer Demand

Legal or political pressures

Social or cultural views

Geopolitical events

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Internal Drivers

Reorganizations

Strategy changes and decisions

Inadequate technology

Internal political conflict

Hierarchies and levels limit flexibility

Short-term cost containment focus

New initiatives - Six Sigma/Lean Sarbanes Oxley, others

Resulting Dynamics: Fear, Defensiveness, “Turf”

Morgan Stanley CEO Surrenders: Embattled chief Philip Purcell says he'll step down before the firm's next annual meeting.

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Top 10 Barriers Top 10 Success Factors

Competing resources 48%

Functional boundaries 44%

Change skills 43%

Middle management 38%

Long IT lead times 35%

Communication 35%

Employee opposition 33%

HR (people/training) issues 33%

Initiative fatigue 32%

Unrealistic timetables 31%

% of 500 companies % of 500 companies

Ensuring top sponsorship 82%

Treating people fairly 82%

Involving employees 75%

Giving quality communications 70%

Providing sufficient training 68%

Using clear performance measures 65%

Building teams after change 62%

Focusing on culture/skill changes 62%

Rewarding success 60%

Using internal champions 60%

Source: PwC Mori Survey 1997

Research indicates that up to 75% of major change initiatives fail to achieve their goals

Why is Change Management Important?

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Why Does Change Fail?

Not tied to strategy

Seen as a fad or quick fix

Lack of leadership support

Political realities undermine change

Grandiose expectations vs. simple success

Inflexible change design

Lack of measurable and tangible results

Fear of the unknown

Unable to mobilize commitment

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Building Change Management into Six Sigma

Key change management tools need to be integrated into every step of the Six Sigma process

Never underestimate the power of “Voice of the Customer’

Training and ongoing coaching must reinforce the message that the methodology alone will not ensure success

While project leaders must execute the change strategy, alignment and engagement of champions and sponsors is critical

Consistent and frequent communication -- Never too much!

Change Management does not just apply at the Six Sigma “Program” Level – Every Six Sigma project in Financial Services must address the “culture” equation!

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Roadmap to Successful Change

Charter: Business Case

(need for change) Preliminary Problem

Statement Project Scope Roles/Team

Members

Elevator Speech Stakeholder Analysis In Scope/Out-of-Scope

Define Measure Analyze Improve Control

Creating a Creating a Shared NeedShared Need

Mobilizing Mobilizing CommitmentCommitment

Sustaining Sustaining ChangeChange

Voice of the Customer

VA/NVA Process Analysis

Root Cause Analysis

More of… Less of..

“ABC”

Antecedents/ Behaviors/Consequences

Force Field Analysis

Piloting

Response Plan

Stakeholder Analysis

Communication Communication PlanPlan

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• Evaluation measures (Response Plan)•Continuous feedback loops•Systems & structures to support behavior change

2. CommunicationStrategy

3. Feedback

• Audience-focused• Clear objectives• Channels & timing• Roles & responsibilities• Multi-channel• Ongoing and & periodic

• Context & culture• Issues & questions• Resistance or barriers• Message refinement

MessageManagement

DefinedProcess &

Accountabilities

RealignmentAs Needed

1. Stakeholder Analysis

Managing the Cycle

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Opponents Neutral/Followers Enthusiasts

Reaction to Change

Imp

act

of

Ch

ang

e

High

Medium

Low

By mapping key stakeholders, you can prepare a Stakeholder Analysis that will ensure that those who are strong supporters are leveraged, while those who are opponents are given specialized attention.

Stakeholders are any individuals or groups who, through their interest or reaction to the change, can influence its successful implementation. Their interests may change over time. This is not a “one-time” tool.

Stakeholder Map

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Stakeholder Analysis Example

StakeholderO

rgan

iza

tio

n

Infl

uen

ce

(H,

M,

L)

Op

po

nen

t

Neu

tral

En

thu

sias

t

Reasons for Resistance/ Support

As

sess

men

tD

ate Action Plan to Overcome Resistance

or Leverage Support

Jones CIO H XGives better

insight into budget 6/5/2003 Ask Jones to gain support from peers

Smith IT H XDoes not see impact to IT divisions 6/5/2003

Breakout IT organization into branchesor divisions that are impacted by FS Processes.

Williams Customer M X Funding concerns3/27/2003 6/05/2003

Changed from Opponent to neutral because of various communications with customer organization. Elevate to process owner and possibly CIO to determine & remaining resistance.

White Unit level M XSupporter of IT Transformation effort 6/5/2003

Believe the units are supporting the Transformation effort. There may be a resource issue and support may be stronger at some centers verses others.

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Audience Message(s) Media / Vehicle Frequency Timing Responsibility Feedback Mechanism

Finance

IT Managers

Warehouse Personnel

Board

• High return• Provides better response

times• Quick wins

• Demands high IT support• Your role

• Some automation will make life easier

• Job redeployment• Who will be affected

• Business case• Need• Rate

• Newsletter

• Presentation• Workshop

(kick-off)

• Team briefingcascade

• 1 to 1 meeting

Quarterly

Monthly

One-off

2Q

2Q

2Q

Financerepresentativeand projectmanager

IT representativewith line manager

Warehouse manager and direct reports

6 monthly survey

By informalinterview

Verbal following 1 to 1

Based on stakeholder analysis, communication plans are:

• Highly-detailed “executables” that segment each audience, identify and map specific communication channels, and design tailored messages for each

• Aligned with consistent messages at every level of the organization

• Linked to deployment plans and hold team members and sponsors responsible for both creating and executing each message

Planning and Executing CommunicationsGood Communication Requires Planning

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Summary

• Six Sigma transformation involves changes to behaviors, as well as changes to skills, tools, and jobs. This is particularly true in financial services/transactional environments.

• Managed change can significantly reduce negative impacts or unintended consequences within an organization. As change agents, Black Belts should be “armed” with a few key tools to actively manage the change process.

• Stakeholders must be identified and brought on board. Their support may change over time. Developing appropriate strategies is critical.

• Communications are critical to success—multiple approaches and vehicles will be necessary. Develop a plan to make them clear, concise, and meaningful.