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Contemporary Organizations and the Future Six Sigma / Innovation Facet Salil Deshmukh John Gastreich Justin Frey Prem Anand Mathiyalagan
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Six Sigma Presentation

Nov 21, 2014

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Salil Deshmukh

A research project on Future of Six Sigma and how it aligns with the innovative strategies at a company
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Page 1: Six Sigma   Presentation

Contemporary Organizations and the Future Six Sigma / Innovation Facet

Salil DeshmukhJohn GastreichJustin FreyPrem Anand Mathiyalagan

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Agenda

Problem statement

Recommendations

Innovative companies

Links between Six Sigma and innovation

Integrated Enterprise Excellence

Weighted criteria matrix

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Problem Statement

Growthversus

Performance

Futureof

Six Sigma

How to find a balance between efforts to grow the business and the diligence needed to maintain high performance operations?

Which Six Sigma approach or evolution is most appropriate for meeting future business challenges over the next decade?

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ScopeWithin Scope

• Research next-generation Six Sigma and continuous improvement practices.

• Compare and contrast how industry front-runners apply six sigma in terms of innovation and growth.

• Identify qualitative metrics for performance assessment and for rewarding/incentivizing.

Out of Scope• Perform analysis of as-is RMS Six

Sigma methodologies.• Perform primary research of

direct competitors to RMS.• Provide recommendations for a

roadmap to move from as-is RMS methodologies to to-be RMS methodologies.

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Research Methodology

• Primary research: interviews with SMEs Dr. Pamela Slaten – Operations Dr. Kenneth Smith – Innovation Dr. Sudha Ram – Business Intelligence Larry Dyer – Six Sigma Thomas Pyzdek – Six Sigma

• Secondary research Trade magazines Scholarly articles Books Others (company websites, industry data)

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Recommendations

• Do NOT use Six Sigma for innovation activities directly

• Identify processes/methodologies used to support innovation and other activities; use Six Sigma to improve such processes Innovation Maturity Model Next generation organizational behaviors

• Instead of applying Six Sigma in silos, use it for the processes of the entire organization

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INNOVATIVE COMPANIESJustin

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Innovative Company Rankings

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Most Innovative Companies

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Six Sigma in Innovation

• Of the most innovative companies, only GE couples Six Sigma with Innovation

• Reasons Stifles creativity Lowers employee morale Only used for process improvement

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Qualities of Innovative Companies

Attitudes• Willingness to cannibalize assets • Future focus • Tolerance for risk Practices• Empowerment of product champions• Incentives for enterprise• Internal markets

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Recommendations

Do not use Six Sigma for Innovation Activities directly

• Identify processes/methodologies used to support innovation and other activities; use Six Sigma to improve such processes. Innovation Maturity Model Next generation organizational behaviors

• Instead of applying Six Sigma in silos, use it for the processes of the entire organization

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METHODOLOGIES AND TOOLSPrem Anand

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Is there an indirect connection between Six Sigma & Innovation?

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Yes

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Indirect Benefits

• Organization are undergoing significant changes

• Emphasis on innovation

• Proposed methodology

Use standard framework to manage innovation

Identify processes

Use Six Sigma to improve processes

Hence Six Sigma can be used indirectly

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Frameworks and Models

• Innovation Network Framework

Framework used to manage innovation within a large organization

• Innovation Maturity Model

Model to assess the maturity level of the innovation process within an organization

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Innovation Network Framework• Network with internal and external groups to generate ideas

• Identify objectives and define metrics

• Objectives and metrics Business objectives Structural objectives

• Activity metrics• Behavioral metrics• Innovation Network Metrics• Customer innovation metrics

• Case Study – P&G

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Case Study

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General Innovation Management• Choose appropriate innovation strategy

First-mover strategy Fast-follower strategy Conservative slow-follower strategy Alternative innovation strategy

• Focus innovation on a business imperative

• Define an innovation process model

• Organize to accomplish innovation

• Innovation Maturity Model

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Innovation Maturity Model

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BehaviorsHighly Collaborative Environment

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Next Generation Behaviors• 3 Factors leading to the revolution

Web 2.0 Net generation Need for uniquely qualified minds

• Characteristics of the Net-Gen High technology adoption Creativity Social connectivity Diversity

• Ideagoras Marketplace for ideas, innovation and uniquely-qualified minds

• Wiki Workforce (Highly collaborative)• Collaborative Economy

Business – Web

• More the collaboration better the results

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BOEING 787

…Boeing executives concluded that mass collaboration was the only way to create the kind of cheaper, more fuel-efficient jetliner that airlines want…

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Sentiment Analysis

• Also known as Opinion Mining

• Determines opinion polarity on a topic

• Quantifies the qualitative (sentiment)

• First used for movie reviews

• Used heavily in marketing analysis

• Can be used to quantify opinion surveys

• Commercially available sentiment analysis software

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Recommendations Don’t use Six Sigma for Innovation Activities directly; it

stifles creativity.

Identify processes/methodologies used to support innovation and other activities; Use six sigma to improve such processes. Innovation Maturity Model Next generation organizational behaviors

• Instead of applying Six Sigma in silos, use it for the processes of the entire organization

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INTEGRATED ENTERPRISE EXCELLENCESalil

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Integrated Enterprise Excellence

• Developed by Forrest W. Breyfogle III, the President and CEO of Smarter Solutions, Inc

• Uses the familiar Six Sigma DMAIC road map not only at the project level, but at the enterprise level as well.

IEE E - DMAIC P - DMAIC

Enterprise Level Roadmap Project Level Roadmap

* DMAIC = define, measure, analyze, improve, control

Integrated Enterprise Excellence

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The Need

Where Lean Sigma Falls Short

• Just another Problem Solving System

• Steering committee aims at process improvement and providing certifications

• Low hanging fruit gets selected as a goal

• Most process improvement techniques often occur in silos

• Benefits are not propagated to executive level

• In a financial crisis, Lean Six Sigma programs are often downsized

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Integrated Enterprise Excellence (IEE)

• An enterprise system that provides structure for integrating innovation with analytics

Integrated Enterprise Excellence

Six Sigma

Lean

Balanced Score Cards

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How it Works

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How it Works

• Step 1: Describe a vision and a mission

• Step 2: Describe the value chain

• Step 3: Analyze the enterprise

• Step 4: Establish goals for satellite-level metrics

Define

Measure

Analyze

Analyze

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How it Works

• Step 5: Create strategies

• Step 6: Identify high-potential improvement areas

• Step 7: Identify and execute projects

• Step 8: Assess the project’s final impact on enterprise goals

• Step 9 : Maintain the gain

Analyze

Analyze

Improve

Improve

Control

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How it Works

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Recommendations

Do not use Six Sigma for Innovation Activities directly

Identify processes/methodologies used to support innovation and other activities; Use six sigma to improve such processes Innovation Maturity Model Next generation organizational behaviors

Instead of applying Six Sigma in silos, use it for the processes of the entire organization

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WEIGHTED CRITERIA ANALYSISJohn

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Options for RecommendationsPassed

• Keep Six Sigma - Continue using Six Sigma, improve the image of the Six Sigma unit, 1% of all RMS employees

• Increase Collaboration, Innovation Network Model, Crowd sourcing - Increase collaboration inside and outside the company

• Do not Integrate Six Sigma and Innovation – Keep separate

• Implement Integrated Enterprise Excellence (IEE) - Or other forward thinking Six Sigma derived methodology

• Integrate 'Bike Shop' – i.e. Skunk Works, into the mainstream activities of RMS

• Hire Consultants - Specializing in Six Sigma and technology, e.g. Thomas Pyzdek, Bain Performance Improvement

Failed• End of Management - Pyzdek,

eliminated because RMS is not facing a crisis

• Outsource Six Sigma - Only core competencies should be kept in house

• Guidance and Collaboration with other Raytheon Six Sigma Groups - RMS is not the only division of Raytheon with Six Sigma teams

• Further Six Sigma Education - Improper education is said to be one of the leading causes of 6S failures

• Race the Red Queen - Implement adaptive approach, i.e. keep your finger on the pulse of 6S to adapt quickly and take advantage of change

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Criteria Selection ProcessRaytheon’s Vision, Strategy, Goals, and

Values• Admiration• Respectability• Knowledge (leveraging)• Broadening focus• Customer focus• International growth• Revenue growth• Improved cash flow• Predictability• Productivity• World class employees• Performance

Conversations with Daniel Kuz and Dr. Jennie Campos

• Feasibility• Cost• Innovativeness• Long-Term Revenue Growth• Short-Term Revenue Growth• Brand Image of Six Sigma /

Raytheon• Employee Satisfaction

Values & Behaviors Next Gen Six Sigma Organization

• Speculative

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CriteriaFeasibility

Can this option be implemented?

CostCost to implement; cost/benefit ratio

InnovativenessContribution to Raytheon’s innovativeness

Long-Term Revenue GrowthBasic need to keep investors happy

Short-Term Revenue GrowthBasic need to keep investors happy

Brand Image of Six Sigma / RaytheonPer company Vision & 6S unit’s needs

Employee SatisfactionPer company goals, mission, values & 6S unit image

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Weighted Criteria Matrix Criterion Criterion 1 Criterion 2 Criterion 3 Criterion 4 Criterion 5 Criterion 6 Criterion 7

Total Score

Feasibility Cost:

Inexpensive to Implement

Innovative-ness

Long-Term Revenue Growth

Short-Term Revenue Growth

Brand Image of Six Sigma /

Raytheon

Employee Satisfaction

Weight (1 - 4) 4 2 3 4 1 4 3

ALTERNATIVE Raw

Score Wtd

Score Raw

Score Wtd

Score Raw

Score Wtd

Score Raw

Score Wtd

Score Raw

Score Wtd

Score Raw

Score Wtd

Score Raw

Score Wtd

Score

1 Increase collaboration, Innovation Network Model, crowd sourcing 2.3 9 3.0 6 3.8 11 3.5 14 2.3 2 2.8 11 3.8 11 65

2 Do NOT integrate 6S & innovation 4.0 16 4.0 8 1.8 5 2.5 10 3.0 3 2.0 8 2.8 8 59

3 Implement Integrated Enterprise Excellence (IEE) 2.5 10 2.0 4 2.8 8 3.3 13 2.8 3 2.5 10 2.8 8 56

4 Keep 6S, improve 6S dept. image, 6S w/ 1% of employees

3.3 13 2.5 5 1.5 5 2.0 8 2.0 2 3.5 14 2.0 6 53

5 Integrate 'Bike Shop' into mainstream 1.3 5 1.0 2 4.0 12 3.0 12 1.3 1 2.5 10 2.3 7 49

6 Use consultants (e.g. Pyzdek, large consulting firms)

2.0 8 1.3 3 2.0 6 2.3 9 1.8 2 2.0 8 1.8 5 41

Criterion Weight (1 - 4)

Raw Score (0 - 4) Feasibility Cost:

Inexpensive to Implement

Innovative-ness

Long-Term Revenue Growth

Short-Term Revenue Growth

Brand Image of Six Sigma /

Raytheon

Employee Satisfaction

0 Low 0 Expensive 0 Low 0 Low 0 Low 0 Low 0 Low 4 High 4 Inexpensive 4 High 4 High 4 High 4 High 4 High

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Recommendations

• Increase collaboration, innovation network model, crowd sourcing

• Do NOT integrate Six Sigma with innovation• Implement Integrated Enterprise Excellence

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Next Steps

• Whatever path is decided: Get support from the top Arrange sufficient funding Incentivize employees to encourage change

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Questions

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APPENDIX

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Collaborators

• University of Arizona MIS Master’s Project Team Justin Frey Prem Mathiyalagan Salil Deshmukh John Gastreich

• MIS Faculty Dr. David Pingry

• RMS Reps Daniel Kuz Dr. Jennie Campos

• RMS Special Guest Tom Birdsall

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Example MetricsInnovation Network Metrics•Network partner idea flows (counts and trends)

• Number of ideas proposed by partner network vs. internal

• Percent of network ideas accepted for further development

• Percent of network ideas relevant to the innovation focus

• Percent of network ideas selected for funding and development

• Trends•Balance of idea portfolio from partners

• Percent of incremental-change vs. game-changer ideas• Percent of process vs. product or service ideas

•Sources/effectiveness of ideas (for each partner)• Percent of total ideas (all partners)• Percent of effectiveness of ideas, calculated as the ratio

of ideas relevant to priorities• to the total number of ideas• Cost by partner/total cost of network• Percent of incremental change vs. game changers• Cost of network innovation vs. internal innovation• Trends

Behavioral Metrics•Participants' overall rating of the BEHAVIOR CYCLE•Percent of team members contributing in all behaviors•Percent of teams participating in metrics usage•Percent of ideas improved through the behavior cycle•Percent of ideas rejected in the challenge phase

Idea success metrics•Percent of ideas surviving the challenge stage•Percent of ideas selected•Transition time from selection phase to cooperation phase•Percent of ideas discontinued after selection•Time to cooperation stage for ideas (by type or size)

Activity Metrics•Idea Flow

• No. of Ideas evaluated• No. of ideas proposed

•Balance of idea Portfolio•Sources of Ideas

• Percent Business-initiated• Percent Internal

Customer Innovation Metrics•Lead customer effectiveness•Idea flow and value•Interaction among customers

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Other Sources• Myths

Myth No. 1: Innovation just happens. Myth No. 2: Innovation only happens in R&D. Myth No. 3: The best innovation comes from inside. Myth No. 4: The more innovative ideas we generate, the better. Myth No. 5: We have lots of smart people, so innovating will be no problem.

• Innovation Culture Establishing and benchmarking organizational culture

• Sources Five Myths of Innovation.pdf the_innovation_culture_defin_156182.pdf