Author: Jamie Liddell
As companies continue to cast their nets for ways to improve efficiencies across the board, the appeal of process improvement methodologies - and in particular that arcane-sounding discipline Six Sigma - continues to grow. Developed at Motorola, and since implemented to a greater or lesser extent by a majority of Global 2000 firms, Six Sigma seeks to identify and excise the causes of defects within processes - as such, it's easy to see why an increasing proportion of process-facing business areas such as shared services are turning to Six Sigma in the hope of further refining their processes and keeping errors and queries to a minimum.
For those contemplating implementing Six Sigma in whatever form, SSON reached out to the experts for their advice on what makes the difference between success and failure, Six Sigma-style. The result? SSON's Top Ten Tips for Implementing Six Sigma. Are you sitting comfortably? Then let's begin…
1. Engage senior leadership
As with so much in this life, a successful adoption of Six Sigma simply isn't going to happen without getting the requisite buy-in from the top. A clear mandate from above will be an indispensable aid in pushing through what for many people might seem a particularly exotic - even downright incomprehensible - methodological transformation. Getting this mandate, however, might involve overcoming similar befuddlement at a senior level, so be prepared to present your proposals with a minimum of Six Sigma-specific jargon and paying particular attention to the bottom line.
"There is a big difference between executive commitment and engagement," says Scott McAllister of Breakthrough Management Group International (BMGI). "The key here is real engagement meaning key executives play an active role participating in regular planning, implementation and review sessions. This means making Performance Excellence an organizational priority, not just assigning budgets and delegating accountability to lower levels in the organization. To engage senior leaders, you must speak in the language of leadership which means developing clear links to strategic objectives and measurable ROI."
2. Go Six Sigma, go Lean (all the way)
The marriage of Six Sigma with lean manufacturing to create Lean Six Sigma involved a combination of two of the most successful improvement methodologies in business. While Lean Six Sigma is not without its detractors, its evangelists are adamant that - properly implemented - the lean manufacturing philosophy should now be an absolutely indispensable component of Six Sigma implementation.
"In a Shared Services setting, the real power of Six Sigma is released when a Lean approach is taken right at the front of the process (Lean Six Sigma: LSS)," explains Davide Laghi, founder and leader at Y6Sigma . "For Lean to be successfully introduced, Teams need to be engaged in the activity analysis and value stream mapping of their own processes. In a traditional structured organizational situation, with all its managerial layers and typical direction and control style, which to this day still represents the norm, a Lean approach that requires team members to analyze and measure what they do on a daily basis at a granular level is the main reason behind why a vast majority of the cases get rejected, creating a big deal of resistance to change. This 'Big Brother Effect' is ultimately what causes the initiative to fail and is the main reason behind why an upfront and substantial Change Leadership investment is such a fundamental critical success factor."
3. Don't expect training alone to fix your problem
Having a well-trained, correctly-focused team is of course an absolute must for any firm looking to operate along Six Sigma lines. But training alone isn't a panacea and, indeed, will almost certainly lead to serious problems if it's not accompanied by the organization paying proper attention to the other requirements of the methodology.
"Far too many organizations look at Lean Six Sigma as predominantly a training exercise without establishing the proper framework for execution," warns BMGI's McAllister. "At a bare minimum, companies must address project selection, competency development and project coaching to ensure the effective application of the methodology to deliver results. Too many consultants have focused on selling training without setting up a system for execution and this leads to frustrated executives and often times more frustrated change agents (Belts). While it might be a significant part of the overall deployment plan, training should be a means to an end and the focus should be on solving business problems that matter to the executives."
4. Develop a suitable infrastructure
Six Sigma - like pretty much every other improvement methodology, understandably - is far from a cosmetic practice: indeed, it's pretty much the opposite, going deep into the cogs and springs of a business to get the very best out of the areas of operation it touches. As a result, it needs to be supported by a suitable organizational infrastructure catering for the specific requirements of the new methodology. Think of what's required as a somewhat holistic approach reaching throughout your business - it might sound like a big task, but in order to make the most of Six Sigma you need to go well beyond the implementation team.
"Develop an infrastructure to accelerate and sustain results," urges McAllister. "If you expect to deliver sustainable results from the implementation of Six Sigma or Performance Excellence, you must create a system or basic infrastructure that enables your success. This involves developing policies, procedures and guidelines in key areas of Finance, Human Resources, Communications, Project Management, etc. Examples include establishing financial validation policies to ensure that operational improvements can be translated into financial terms in a consistent way. Without this, you are likely to create a lot of PowerPoint benefits that do not track to the bottom line. In Human Resources, this involves addressing selection of change agents, competency models, reporting and compensation policies, retention strategies, re-integration guidelines, etc. For communication, it involves establishing a strategy with tactical plans that time messaging with real results.
In project management, this involves defining project deliverables, tollgate review structures, reporting requirements, tracking mechanisms as well as standardizing tools and templates. The reality is that you will need to address each of these issues in the first year anyway so it's recommended to do it early in the deployment process, understanding it can be run in parallel with the other deployment activities."
5. Don't forget the change leadership
As already noted, fully comprehending what Six Sigma entails can prove a rather formidable prospect for many. Such a radical departure from traditional operating practices will almost certainly be accompanied by numerous traumas all along the chain of command if the correct message isn't communicated consistently and thoroughly. Always remember that this is a significant change project and, as such, needs to be reinforced by the requisite high degree of change leadership.
"Six Sigma is a process improvement technique that tends to struggle in delivering sustainable results, particularly in a non-manufacturing setting such as Shared Services, for lack of consideration towards the human dimension of change and with little or no concern for upfront change leadership interventions," warns Y6Sigma's Laghi.
McAllister adds: "Don't underserve change leadership principles: share a compelling vision; establish a shared sense of urgency; create a strong guiding coalition; communicate consistent messages; recognize, reward and celebrate success."
6. Get your measurement systems right
Metrics are of course the very life-stuff of Six Sigma - how can you improve if you don't know what to improve or by how much? " so it's crucial to develop accurate, consistent and sustainable measurement systems. Once in place, these can be leveraged in a number of ways - including in the development of service-level agreements, either entirely new (if Six Sigma is being introduced right at the beginning of a shared services or outsourcing journey) or renegotiated.
-Lean measurements do not need to be onerous manual exercises, which once completed are hardly ever repeated and therefore fail again to make the improvement initiative a sustainable effort,- says Laghi. "Easy-to-use desktop Lean applications are nowadays available on the market to make activity analysis a practical and sustainable exercise. Measuring rework and areas of non-value-add is not the end of the game however, as the root-causes behind these waste silos still need to be understood in order to identify the real continuous improvement opportunities. This is where the Six Sigma integration of Performance Measurement systems with ERP transactional platforms come into play, where identifying and measuring defect transactional types are the key to success (80/20 rule). The developed Lean Six Sigma Performance Measurement Systems should become the backbone of the shared services SLAs or SPAs (Six Sigma-based Service Partnership Agreements)
if a true collaborative culture with the shared services customers and stakeholders is successfully introduced upfront by the adequate change leadership intervention."
7. Leverage the technology
It should be no surprise to learn that Six Sigma is another area of business which is supremely enhanced by (if not utterly dependent on) the judicious application of IT. The full potential of Six Sigma will only be accessed by organizations which can truly leverage the appropriate technology, in order to allow the methodology to bloom at both micro and macro levels: using IT to shine the Six Sigma spotlight into the smallest and murkiest of nooks and crannies will eventually, through the correction (or even avoidance) of defects, have a substantial and delightful impact upon the company's bottom line.
"Six Sigma solutions do not normally represent sustainable improvements if they are not leveraged by information technology (in shared services this would generally happen by leveraging ERP systems)," cautions Laghi. "A true Six Sigma solution is an automatic preventative process control driven by a system functionality that prevents a defect from being generated. In many instances, these functionalities cannot be found within the vanilla capabilities of the ERP products generally in use. But no worries: the time of the ERP bespokes has come to an end as today we have the technology available to evolve the standard functionality of our systems without customizing."
8. Understand the wider environment
Six Sigma can do great things - but that doesn't mean it's automatically and always the right time to put it in place, either on a small or large scale. Just as discretion is the better part of valour, so timing is the better part of transformation: you don't want to take steps which will through your organization - even a small part of it - off balance at a critical time. Yes, Six Sigma can prove an important tool in cutting costs and improving efficiencies - but it might be that - for whatever reason - now simply isn't the time…
"No matter how small the project you're proposing, you must never fail to consider broad-scale factors such as the prevailing economic climate and the challenges facing your organization generally," advises independent F&A specialist Graeme Ludlow. "Always ask yourself: is this the right time to be making the changes you're suggesting? And what are the ramifications of introducing those changes? It might be that the steps you're taking - or proposing - will lead to radical transformation within the organization. That's fine if the business environment is such that such transformation can be accommodated fairly freely - not so fine if existing operating pressures and restrictions mean that any such change might be too destabilizing at a time when all hands are already at the pumps.-
9. Establish a robust project selection process
Making a project work is, in part, a matter of choosing the right project in the first place, and it's no different in the Six Sigma space. In order to make the most of Six Sigma it's important to engage in a well-thought-out, consistent and intelligent project selection and prioritization process with significant attention paid to how each potential project impacts upon the business as a whole. This is especially important once initial projects have been implemented and have proven successful; the advances and savings made by a successful Six Sigma approach can very quickly prove exhilarating for those at your organization's heady heights; it's imperative that you can point to a smart project selection methodology to explain why your firm can't just go off and do the same thing to every other area of the business all at once.
"The DMAIC [Define, Measure, Analyze, Improve, Control: one of the two major project methodologies within Six Sigma] methodology has proven to work in hundreds of organizations across almost every industry imaginable when it is applied correctly. They key to successful project execution is effective project definition, prioritization and scoping. Projects must have a clear link to the strategic objectives of the business, a business case that justifies allocating scarce resources, a manageable scope and a clear definition of success. Many companies mistakenly view project selection as an event when it needs to be seen as a process, with an owner and a schedule for periodic review and approval. It is also important to note that project selection is a learned skill that usually takes at least one round of application to fully understand," says McAllister.
10. Deliver quick wins
Everyone knows walking the walk matters more than talking the talk - and nothing's going to make the boys and girls at the top more likely to endorse subsequent - perhaps larger scale - projects than a quick and successful turnaround on initial Six sigma ventures. Sure, bear in mind the dangers of rushing things through - it'd be a particularly bitter irony if an over-hurried process improvement methodology implementation were to lead to a decline in process quality - but if you can show quick wins initially you'll have the ear of those who matter when it comes to getting cracking on more ambitious, lengthier and costlier projects.
"In today's challenging economic climate, it's imperative to deliver results in days or weeks, not months or years," points out McAllister. "Gone are the days when you have 12-24 months to prove value to the organization. For this reason, many companies have integrated more lean principles into a traditional Six Sigma approach and the concept of Kaizen events or rapid improvement events has become increasingly popular. The best way to generate momentum and gain support is to demonstrate an immediate impact by delivering project results fast. Determine where the 'low hanging fruit' and 'just-do-it' opportunities are in the business and make sure to execute them early in the implementation process. It's also important to note that the ability to deliver quick wins is often a result of a robust project selection process."
i: Y6Sigma is a registered trademark of Y6Sigma Solutions Ltd. For more information see www.y6sigma.com
This article was first published on the Shared Services & Outsourcing Network (SSON) - Read it here:
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About the Author
Jamie Liddell has worked in journalism since he was a 17-year-old cub reporter for The Tico Times, Costa Rica's highly regarded English-language weekly newspaper. Holding an MA in English from Clare College, Cambridge University, Jamie came to the Shared Services ? Outsourcing Network from the world of overseas property publishing where he worked on the industry's best-selling publications for the UK and Ireland, and gave seminars at consumer and b2b exhibitions and conferences internationally.