Strategic Approach to Organisational Excellence and Improvement Alan Skinner

School of Management, University of Technology Sydney Director, Lean Six Sigma Business Excellence Institute Total Operational Excellence 23-24 August 2012 Melbourne THINK.CHANGE.DO

Agenda

• • The Excellence / Improvement or Lean Six Sigma Frameworks: A Paradigm fading? – Driving sustainable high performance through Lean Six Sigma in the context of Organisational Excellence – Creating a value stream fit to market – Highlighting the importance of deploying 5 leadership practices to drive excellence and improvement Highlighting the recent research results on Lean Six Sigma practices

Excellence Frameworks

Influence of Edwards Deming

Systems view of an organisation

Sustainable high performance comes from …

..predictable.. dependability..

Six Sigma idea

..low cost..

Lean idea

..quality / price suited to the market

Customer Focus

STRATEGIC Implications of Deming’s Ideas Design the Value Stream to Fit the Market Execute to the Design

Role of Improvement capability BUT…

Many factors influence success – good quality being delivered

Role of Improvement capability

Always changing, adapting, improving Gap between ideal and practice So need Continuous Improvement Lean Six Sigma is a way of closing the Gaps that delivers results

Reframing Lean Six Sigma – Improvement

Lean Six Sigma is a way of closing the Gaps that delivers results So Lean Six Sigma can be seen as “bringing about change that is a measurable improvement and can be sustained”

History of Improvement Methodologies Long before Lean and Six Sigma became BUZZ words they were part of the original teaching of Deming He never separated the ideas !!

History of Improvement Methodologies

• • • • • • Influence of Deming and Business Excellence Frameworks Six Sigma - Motorola - Bill Smith mid 1980s – Lean - Toyota Popularised in many companies Family of approaches develop : – Core Model is DMAIC Move to Lean Six Sigma

History of Improvement Methodologies

Influence of Deming and Business Excellence Frameworks

Organisational Excellence Models Strategic Thinking, Management and Execution Leadership Creating Environment for Excellence Gathering and Deploying Customer and Market Intelligence Enabling People to Work on the Organisation Balanced Sustained High Performance that Delivers Value to all Stakeholders Sustaining Operational Excellence Integrated System of Measures consistent with Strategy and Design

Key Supporting Models Practices and Tools Customer Experience Design Value Stream (LBI) Design Leadership for Business Improvement Leadership Creating Environment for Excellence Strategy Maps Strategic Thinking, Management and Execution Gathering and Deploying Customer and Market Intelligence System or Family of Measures Customer Experience (TCE) Research Stability and Capability Analyses Interlinking Critical Measures Enabling People to Work on the Organisation Sustaining Operational Excellence Balanced Scorecards Balanced Sustained High Performance that Delivers Value to all Stakeholders Organisational Excellence Assessments Integrated System of Measures consistent with Strategy and Design Business Process Management (BPM) Lean Six Sigma / Organisational Improvement Methods

5 Activities for Leaders to Focus the Organisation on Improvement

1

Purpose

•Purpose •Mission •Vision •Governance 3

System for Obtaining Info

4

Planning for Improvement

•Strategic objectives •Improvement efforts •Resources 2

Systems View of the Organization Family of Measures/ Scorecards Financial Customer Black Belts Green Belts Managing Individual & Team Improvement Efforts Improvement Plans Operations Employee

Model is based on Content from “Quality as a Business Strategy” (API, 1998) 5

Enablers

Training…Recognition… Communication

Myths about Lean Six Sigma

• • • • •

Recent Management Fad Very tactical or operational Focused internally Suited only to manufacturing No room for Creativity

Research and Literature

Projects Submitted Journal Literature

Highlighting Research from Projects Submitted

• • • 150 + projects over years Sample 30 taken Quick review of patterns emerging

Breakdown of Projects by Industry

Technology 9% Financials 24% Industrial Consumer services 5% Health Care 19% Consumer Goods 19% 24%

Breakdown of Projects by Process

Sales Process 21% Inventory Mgt 5% Manufacturing 16% Service 26% Packaging 5% Admin 27%

Breakdown of Projects by Problem

Forecast Inaccurate 7% Not delivered in full 5% Reduced sales 5% Wasted movement 2% Wasted space 2% High Inventory 7% Long cycle time 10% Rework 10% Unnecessary Work 2% Customer Impact 17% High Costs 12% Product/Service Admin Errors 5% 7% Wasted Labour Over Production 4% Time 5% Defects

Frequently Cited Causes

No Process Control / process errors Inaccurate Data Interpretation Tool related & Interface between tools Criteria Goals Targets Unclear Unknown Lack of Preparation Planning Scheduling Process Complexity/Flexibility Poor understanding of Demand Lack of Skills / Knowledge Lack of Management of Information Poor communication beyond org Poor Equipment Lack of Resources Role Understanding Poor Design 0 10

% Reported

20 30

Frequently Cited Solutions

Training and assessment Task redesign/simplify/reduce Tool redesign/creative use/automation Use/provision/access of… Visual Management Error proofing Monitoring Testing Tracking Evaluation Planning Preparation Procedure / Troubleshooting… Role carification/ownership Accurate targets/goaling… Communication engagement with… Recognition aligned to gaols Layout of process/machines Change Design of Product/service New equipment 0 2 4 6 % 8 10 12 14 16

Level of Impact of Projects – from Baseline

More 100 90 80 70 60 50 40 30 20 10 0 5 10 15 20

Frequency

25 30 35

2 1 0 8 7 6 5 4 3

Range of ROI Cited

120,00% 100,00% 80,00% 60,00% 40,00% 20,00% 0,00% ROI S

Research and Literature

Projects Submitted Journal Literature

Reviews of Research and Literature

• Conceptual Discussion, Opinions, Research – Reviews and Studies over 4 decades 1970s -2012 – 500+ articles – Different Industries – Different Countries

Overview of Research Coverage

• • • • • • • Conceptual Discussion and History reviews – Theory and Model Building Critical Success Factors Link to Results Measurement, Analysis, Tools, Models Innovation and Design of Experiments Action Research, PDSAs, Learning and Change Application settings for Lean/Six Sigma Organisational Excellence – broader area

Critical Success Factors – Research Literature

1. Management Commitment 2. Reward Recognition 3. Competency of Belts 4. Investment 5. Assessment of Results 6. Project Selection 7. Stories 8. Dashboard 9. Culture

Critical Success Factors – Research Literature

1. Management Commitment 2. Reward Recognition 3. Competency of Belts 4. Investment 5. Assessment of Results 6. Link to Strategy & Project Selection 7. Stories 8. Dashboard 9. Culture

Critical Success Factors – Research Literature

Other Factors

Understanding Customers Understanding Business Infrastructure and Resources Tools and Methods Skills and Training Application Beyond Core Communication

Success Factors Themes from Project Reports

Measurement, Use of data, Variation, ROI Concepts / Holding to Methodology Skilled Use of Tools and Techniques Effective Change Management Practices Senior Management Support Solution Development, ideas, testing Effective Facilitation Teamwork/engagement & ownership Use of Learning Cycles Business & Process Understanding Control practices to sustain effects Customer engagement and analysis Effective Analyse Phase 0 5 10

% of Responses

15 20

Thank You Questions Interested in Research Participation Please contact me

Frequently Cited Causes