Roger hoerl icqi keynote address 2013

Making Holistic Improvement a Reality

Institute for Continuous Quality ImprovementMay 6-8, 2013

Roger W. HoerlUnion College

With Significant Input From Ron Snee

Outline

• The success of Lean Six Sigma & previous initiatives

• Limitations of Lean Six Sigma (& others)– Limitations of Lean Six Sigma (operational view)– Limitations of continuous improvement initiatives more

broadly (tactical view)– Strategy deployment (strategic view)

• A more holistic improvement system • Making holistic improvement a reality• Summary

The Impact of Lean Six Sigma

• Billions of dollars delivered to bottom lines at GE, Bank of America, and many others around the globe

• Enhanced products/services to customers– Unmeasured positive societal impact

• Significant enhancements to theory and body of knowledge of continuous improvement

• Best integration to date of multiple statistical methods into an overall approach to scientific inquiry – “statistical engineering”

Clearly The Most Successful Improvement Initiative in History

Why Has Six Sigma Been So Successful?Some Important Attributes

• Zealous leadership from the top.• Focuses on improving the process (addresses root cause

versus symptoms).• Quantitative approach utilizing metrics.• Forces understanding of variation.• Provides practitioners an overall road map, versus a

miscellaneous collection of tools.• Uses a proven set of tools in the road map.• Is being applied to all processes, not just operations.• Provides a supporting infrastructure (defined roles, project

selection, reviews, included in budgets, reporting of results, etc.)

A More Holistic Improvement System Must Maintain These Attributes

The Limitations of Lean Six Sigma

• I have frequently been asked to help on LSS projects that were not, in fact, LSS projects– Installing an Oracle data base

• I discovered “the hard way” that no one methodology was best for all types of problems

• “Competitors” to LSS were not always best either• In the fierce competition between improvement

methodologies, we may have forgotten about the problems we were trying to solve!

No Improvement Methodology Can be All Things to All People

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Specific Limitations of Lean Six Sigma

• Requires extensive investment (e.g., training)• Project “sweet spot” is narrow (4-6 months) -Doesn’t address routine problem solving• Not a comprehensive quality management system -Project oriented, not day-to-day management oriented -Control plans provide “one-off” controls, but not an integrated system (e.g., equipment calibration) -Doesn’t replace ISO 9000 or country-specific quality systems (e.g., Baldrige Award in the US)

It works very well for what it was designed to do.Six Sigma is Excellent at What it Was Designed to Do

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A Broader (Tactical) View

Have we developed a true continuous improvement culture?

– Improvement too often not seen as a strategic business imperative or function

– Improvement too often is focused in operations and less so in other functions

– Improvement methodology is not made part of daily work

– Improvement opportunities are not being fully realized

How Can We Move From Methods to Culture?

Limitations of Our Success in Continuous Improvement(Money We Have “Left on the Table”)

Are improvement efforts integrated or disjoint?– Lean Six Sigma projects often managed separately

• Not part of other improvement initiatives– People continue to think of Lean and Six Sigma as

separate improvement approaches– Innovation is seen as something different from

improvement• A competitor (e.g., Hindo 2007)

– Process and quality management seen as separate from Lean Six Sigma

Can We “Connect the Dots” Between Improvement Efforts?

A Broader (Tactical) View

Limitations of Our Success in Continuous Improvement(Money We Have “Left on the Table”)

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Has anyone yet “mastered” improvement?• Persistent assumption that there is one best method for

improvement - Constant search for latest fad/bandwagon

• Few books or articles on improvement, per se. Many on improvement techniques

• Improvement initiatives and process improvements frequently aren’t sustained

• Pre-determined solutions often “force fit” onto problems for which they are not appropriate - “If all you have is a hammer, every problem looks like

nail.”Can We Improve Improvement?

Limitations of Our Success in Continuous Improvement(Money We Have “Left on the Table”)

A Broader (Tactical) View

Strategic View

Conjecture: Improvement initiatives work best when they are part of strategy deployment

Strategy should come first, not the initiative

Once our strategy is determined, what initiatives would best guide deployment?

Should the improvement initiative only have one methodology?

Is a More Strategic and Holistic Improvement Approach Necessary?

Toyota

One could argue that Lean has been Toyota’s primary business strategy since the 1930’s

Toyota Has Never Stopped Working on Lean

Amazon

To our shareowners:

Random forests, naïve Bayesian estimators, RESTful services, gossip protocols, eventual consistency, data sharding, anti-entropy, Byzantine quorum, erasure coding, vector clocks … walk into certain Amazon meetings, and you may momentarily think you’ve stumbled into a computer science lecture.

Look inside a current textbook on software architecture, and you’ll find few patterns that we don’t apply at Amazon. We use high-performance transactions systems, complex rendering and object caching, workflow and queuing systems, business intelligence and data analytics, machine learning and pattern recognition, neural networks and probabilistic decision making, and a wide variety of other techniques.

Letter to Shareholders from CEO Jeffrey Bezos, 2010

General Electric

“Six Sigma will be the biggest initiative that GE has ever launched. It will be my personal number one priority for the next five years.”

CEO Jack Welch, 1995

Triangulation

• How can we triangulate on these three perspectives, to determine the best direction to take for the next generation of improvement approaches?

• We need to consider the strategic, tactical, and operational levels

1. The improvement system must be based on business strategy

2. Improvement efforts must be integrated, and create an improvement culture

3. A holistic approach, more comprehensive than Lean Six Sigma or any other single method, is needed

What Would Such a Holistic Improvement System Look Like?

Holistic View of Improving the Business

• A view of improvement as a system that:−Works in all areas of the business −Works in all cultures - common language and tool set −Can address any measure of performance−Addresses each aspect of process management:

• Process design, improvement and control−Can address various types of improvement −Provides management processes for improvement:

• Plans, goals, budgets, and reviews−Focuses on developing an improvement culture

• Uses improvement as a leadership development tool

A Truly Strategic View of Improvement

Holistic Improvement System DefinitionAn improvement system that can successfully create and sustain

significant improvements of any type, in any culture, for any business– Create and Sustain

• Infrastructure – management systems and resources• Continuous improvement culture

– Significant improvements • Quality, cost, delivery, customer satisfaction, bottom line

– Any type• Flow, variation, optimization• Design, improvement, control

– Any culture – Function, country, ……– Any business – Manufacturing, service, non-profit, health care,

government

The Ultimate Vision For Improvement

What Would Holistic Improvement Look Like?

Strategic Level– Senior management involvement; led by Chief Improvement Officer– Improvement Council (IC) is permanent part of the business

Managerial Level– Rigorous, defined system for planning and implementing

improvements – There is a defined organizational structure to support improvement

Operational Level– Dynamic “core set” of proven improvement methodologies

• Lean, Six Sigma, TRIZ, Work-Out…• Dedicated experts in core methodologies• All employees are trained at a basic level in all core methodologies• Additional “non-core” methodologies may also be utilized

Flows From Strategic Level to Managerial and Operational Levels

ProcessPerformance

Data

Reports &Information toManagement

FeedbackFeedback

ProcessImprovements

ImprovementProjects

ProjectImprovement

System

ProcessControl

PeriodicAnalysis and

Reviews

Customers

The Process

ProcessDesign/Redesign

Whe

n N

eede

d

Holistic Improvement System Projects

Process Design, Improvement, and Control Integrated

Making Holistic Improvement a Reality

• Deming pointed out that solving special cause problems was inherently different than improving stable systems (common cause)

• If this distinction valid, would it help identify the best approach to address a given problem?

• What about complexity levels?– Do we need a Lean Six Sigma project to move the

water cooler?• Some problems also have known solutions, e.g., we

need to eliminate an inventory step in the process.– Ron Snee and I have noted this in the Lean vs. Six

Sigma debate

The Next Step in May Be to Provide More Specific Guidance

SolutionUnknown

SolutionKnown

LowComplexity

HighComplexity

Putting It All Together; Holistic Improvement

Lean Six SigmaTaguchi Methods

TRIZ

Lean (Kaizen) EventReengineering

Team Problem Solving*

Kepner-Tregoe

Work OutNike Projects

*Structured team problem solving, using the “Magnificent 7” Tools, for example

(Problem Solving –Special Cause)

(Process Improvement –Common Cause)

What is the solution?How should we

Implement solution?

Clue

Key questions to be answered noted in each quadrant

Why did it happen?Who will address it?

By when?

1 2

3 4

Some Examples of Methodology Options

Elaboration of Matrix

• Solution known – does not mean “easy”– Means we know the source of the problem, and likely

solution– Example; brain surgery– Most Lean and reengineering projects begin with a

known solution – no problem to solve• Solution unknown – we either don’t know why we have this

problem, or what to do about it– We need to determine a solution, and possibly find root

causes first

Knowledge of Solution Guides Best Improvement Approach

Elaboration of Matrix

• Low complexity – isolated problem– Typically involves a special cause; what went

wrong?– Find root cause, fix it, and return to normal

• High complexity – involves entire system– Typically involves working on common cause

variation – no special cause to “fix”– Must be careful not to disrupt the system

The Profession Has Not Talked Enough About Complexity

Use of Holistic Improvement Matrix

• A guide; not a prescriptive, rule-based system• Not exhaustive; many other methods could be mapped into

matrix • Knowledge of likely solution and complexity level are the

jugular issues to select most appropriate method– Special/common cause distinction provides a clue

• Use of a matrix is an example of statistical engineering applied to process improvement– How can we improve improvement?

Simply a Tool To Help Determine Best Improvement Approach

How Do We Get Started?Start Small – Think Big ….. Evolution vs. Revolution

– Migrate a Lean Six Sigma initiative towards Holistic Improvement– Where a Six Sigma Leader and Quality Council exist, work to

broaden their scope to improvement in general– Integrate potentially competing improvement groups, such as

ISO Certification, Lean, Six Sigma, and Business Process Improvement

– Migrate all improvement projects to a common project portfolio. • All projects compete for the same pool of resources. • Use tools like the methodology matrix to select best methodology

based on the problem at hand• Project selection decisions made from a common prioritized list are

most effective

Start With Where You Are – Add With a Goal in Mind

Summary

• Lean Six Sigma has been tremendously effective for 25 years, but has perhaps “left money on the table”

• Lack of understanding of improvement per se has reduced the effectiveness of continuous improvement methodologies

• Holistic Improvement System uses a variety of approaches including:– A focus on improvement of the entire business– Careful project selection identifying the right projects and the

right improvement strategy for each project– A robust improvement methodology that can handle the wide

variety of problems an organization experiences• Begin with the end in mind

– Systematically evolve to holistic improvement

Holistic Improvement Can Avoid “Hammers in Search of Nails”