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Although often the domain of COOs, have any CFOs been successfully involved in a Six Sigma/Lean effort? What made it successful?

If it was a mixed result, please note what you would have done differently?

Answers

brian Norton
Title: Director
Company: Dynamic Business Innovations
(Director, Dynamic Business Innovations) |

I was involved in a large Theory of Constraints project in South Africa. It was highly successful because of the complete buy in of the CEO and the executive team. Right from the beginning it was made clear that many of the existing measurements in use at an operating level were reinforcing bad behaviours. The measurements changed and related performance incentives and this together with training resulted in substantial increases in sales and profits. For example cost per ton was widely used. But this drove local optimisation of each departments / divisions numbers rather than looking at the whole which resulted in poor profitability,

It takes time to introduce major change and the transition takes a great deal of facilitation and learning. The biggest resistance to change was not from the shop floor but from senior and middle management. If a project of this nature is not treated as an enterprise wide initiative and the goals are not clear in terms of bottom line results within a defined time frame it is unlikely to deliver results.

Kirk Conole
Title: Partner
Company: DCI Solutions
(Partner, DCI Solutions) |

Brian, Good input!
What, if anything could have been done to have made it even more successful?

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Kirk,
I have been involved in Six Sigma from many "angles". My insight to you:

In addition to CEO and leadership sponsorship and further dovetailing on Brian's feedback, you should define what it means to your organization; process redesign, new process introduction, process improvement. Each of these variations may apply depending on the specific objectives.
It is a "culture change" for those companies to want to introduce continuous improvement as a way of doing business. Train the staff on the tools, process and "vocabulary" associated (especially "voice of the customer" and "internal customers" for support functions) with this effort
Have senior / executive management showcase early successes (perhaps with Lean projects or Greenbelts projects).

Just a few to mention. Hope this helps.

Glenn Robertson
Title: SVP-Internal Audit
Company: Wyndham Worldwide
(SVP-Internal Audit, Wyndham Worldwide) |

Kirk,

My company is currently broadening an already-successful-at-one-division Six Sigma program across Corporate and the remaining divisions. Because I have SS 'in my blood' from a prior experience, I am one of the advocates of such an expansion -- so much so that I have hired two certified Green Belts as part of my Internal Audit staff for projects where we are asked to help redesign a process (rather than perform an audit, etc.).

Three key points to consider to make your efforts a success:

1. Enroll all key execs in Executive Black Belt training. Meaning all the dept and/or division leaders that will see their staff go off to long process mapping meetings and "Kaizen" events as they redesign their targeted processes. Such EBB training (typically 3 separate 2-day training sessions - yep, a big commitment for leaders who may already poo poo the SS idea and have such busy schedules for such a task) will serve to (a) educate them on the aspects of SS... the approach and mindset... and the results... and my next point. Also, tone at the top is essential for SS success, so I say SS is doomed for failure if the execs don't go through EBB.

2. Set expectations -- across the execs and the staff -- for the "work bubble". Yes, a SS approach must be applied to a 'running' process. Thus, the staff needs to continue their day jobs (i.e., performing the broken process) as they work separately in SS mtgs to fix that broken process. Such a bubble could be as much as making an 8 hour today turn into several 10-12 hour days to do both.

3. You need Master Black Belts to truly redesign a process. Meaning, folks can't simply read the Lean SS book and go off and run it. Thus, your company should either have MBBs on staff... hire them... or grab MBB consultants from the outside. Also... MBBs do not do the work! MBBs run the approach using the SS tools, i.e., they need a Project Leader (typically the dept expert who owns the broken process) who has the knowledge of the process details and who can fill the proper cross-functional team (gotta consider SIPOC!) to perform the redesign. Then the MBBs serve to employ the tools and facilitate the redesign (they don't leave mtgs with action items... the team members do).

Feel free to contact me for any more info!

Best,
Glenn

Kirk Conole
Title: Partner
Company: DCI Solutions
(Partner, DCI Solutions) |

3 steps for Six Sigma Success (per Glenn)

1) Every Executive a Black Belt
2) Everyone's hours surge.
3) A Master Black Belt facilitates.

One thing I haven't seen yet, "What could have made it better" - Is there anything you regretted not doing that you think you should have done or done better?

Glenn Robertson
Title: SVP-Internal Audit
Company: Wyndham Worldwide
(SVP-Internal Audit, Wyndham Worldwide) |

Kirk: to adjust your interpretation of my "1", EBB training does not make "Every Executive a Black Belt".

Rather, EBB training is the cliff notes version of the Six Sigma process... given to execs so that they become well versed in the approach and terminology so that they can be supportive rather than dismissive.

Tone at the top.

Raffy Ohannesian
Title: Managing Partner
Company: Group Phoenix Advisors
LinkedIn Profile
(Managing Partner, Group Phoenix Advisors) |

I have been a part of organizations at the CFO and other levels that were Six Sigma shops. The broader answer to success lies in the 'WHY': Why are you looking to business process improvement methodologies, why does Six Sigma seem to answer the questions you are posing about process inefficiencies, why does it require the significant bandwidth and capital investment to wring out those inefficiencies from your business?

Six Sigma, TQM, etc. all address one common 'evil' in business processes and operations: the lack of a procedural blueprint that effectively and efficiently produces your good or service. Many private businesses, small and large, have indigenous processes that have evolved (or rather metastisized) over time, and without operational and financial oversight and investigation, the idea of cutting wasteful processes and practices out of the business is just that: an idea.

There are very good implementation firms out there who get the business process improvement science and can deliver tangible and repeatable results because they break down the entire business to its most basic components. From there, a process (or processes) is designed to tighten up your business' value chain and create manageable metrics and measurement tools to make sure your implementation isn't something that becomes too onerous or confusing to manage.

The value chain is ultimately what your customer pays for, recalling the adage I am very fond of: Don't do something your customers aren't willing to pay you for. Feature sets, solutions, functionality, reliability and performance measures, anything that may sound 'whiz-bang' in marketing meetings or from external product development consultants has to be viewed through the unforgiving prism of customer value: Will my customer pay me for it? If so, design a high-efficiency, executable process that is repeatable at every plant, location, etc. and train your personnel to manage and measure that process and continue to wring out inefficiencies.

Success with Six Sigma means you know what the customer wants and is willing to pay top-dollar for (moving your product or service further into the realm of price inelasticity). It also means you have the right implementation perspective and consultants that understand your customer's value preferences, your company's shortfalls (operational, financial, BI, etc.) and can work with your most intellectually flexible and operationally nimble personnel to redesign your product/service delivery chain for optimal cost and time performance.

I agree that at the Executive level (project Sponsor or project Lead), the individual really needs to understand the Six Sigma philosophy, in a way that applies not only to the business, but the business' position within the market served. It's no silver bullet, but if we're talking about a legacy of inefficiency, private/family-owned/lifestyle businesses with low management turnover (and subsequently poor introductions of new concepts/approaches into the business), Six Sigma is a proven and effective 'blueprinting' that can be applied to a business to ensure that only the best and most cost-efficient/profit enhancing processes and practices are adopted and deployed. Change management then becomes weeding out those who 'get it' and live and breathe continual process improvement and those who pine for the old days when perhaps their charter was a bit less demanding and a bit more straightforward.

The jewel of Six Sigma for a business is that it generally allows for your most passionate and engaged employees to rise to the top, and provides ownership/executives with a model of skill sets and attributes to hire against going forward.

All the best,
Raffy J Ohannesian

Kirk Conole
Title: Partner
Company: DCI Solutions
(Partner, DCI Solutions) |

Raffy is a genius. - "The jewel of Six Sigma for a business is that it generally allows for your most passionate and engaged employees to rise to the top, and provides ownership/executives with a model of skill sets and attributes to hire against going forward."

Still, I am looking for someone who will fill in the blank:, "I wish we had done this in our last TQM/6 Sigma Project -:____________________________."

brian Norton
Title: Director
Company: Dynamic Business Innovations
(Director, Dynamic Business Innovations) |

I will refer back to my earlier comment about the TOC project I was involved in. There are two issues that I would manage differently.

1 Procastination. Often things are tested in a pilot setting but despite good results no one wants to make a decision and they want more and more data. In the one case a pilot doubled sales over six weeks but the decision to move to a larger scale kept being put off because it was a very different way of operating until the entire executive team was together and the question asked 'what are you waiting for'. At that point they made the decision to change. But several months of lost profits were lost becausr of procratination.

2 Computer systems. Prevent them from becoming over elaberate by testing the whole trime against measurable business objectives.

Just a comment on Six Sigma and LEAN and TOC. TOC is a focussing tool and tells you where to focus change and therefore where to focus initiatives such as six sigma and Lean.

Raffy is absolutely right that you need to focus on the value chain and the value to the customer. For example the real problem of having too much stock is that it reduces flexibility to service changing customer needs. Thus the less stock in the value chain that meets current customer needs the more flexible the system is to changes in demand for individual products. The more stock in the system the more the risk of obsolescence (a cost problem) or of stock outs of certain line items (lost sales). The latter problem being the real killer.

Six Sima reduces variation (and thereby cost) and LEAN takes out cost.

Studies have shown that by combining Six Sigma and LEAN with TOC (theory of Constrainst) the results far outway the results of using six sigma or lean on their own.

If I was involved in another Six Sigma project I would use TOC to ensure that the team remained totally focussed and were achieving the desired bottom line results. Often improvement projects result in major change (which can be painful) but have they resulted in major bottom line improvement. My experience in monitoring projects has been that many major change projects have not resulted in major increases to the bottom line results.

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