Lean Six Sigma

Creating Process Excellence in Government

 When we talk about Lean and Six Sigma, it takes a certain amount of expertise to implement it. How do you visualize taking Lean and/or Six Sigma through the government? I mean, it’s in pockets right now, but do you just grow from them pockets? Or how do you visualize that getting expanded in government? – jd

Excerpt from a past podcast:

Hundley M. Elliotte :  I think it depends on the government organization and where they are, what they have going on, what’s the leadership bias, what’s on their plate right now, what kind of challenges and issues are they facing, because it’s not a cookie?cutter approach. It doesn’t work well if it’s a cookie-cutter approach.

If it’s really critical to transform processes and really improve on speed and accuracy from an organization standpoint, and you have a very, very strong leader that wants to use that as a transformation catalyst, then I think that’s great. You start with a top?down approach.

But in a lot of other situations, it’s better just to start in different areas of the business, attacking specific issues. So, for instance, “Hey, let’s just go focus on claims processing or issuing passports,” or those kind of things, specific issues where we want to improve speed, and then demonstrate and then show other folks in the organization and get them interested and kind of grow organically from the bottom.

The important thing out of all of that is, no matter where you start, whether you start small?scale or big, top-down, is to really focus on specific issues from day one.

Again, pick something very tangible, like, “We’re processing these claims, and if we do them 30 percent faster, that’s going to create X value and X more satisfaction from our clients. Let’s go do that.”

To be very specific like that is very powerful because, number one, it gets you focused, gets you the results; number two, people in the organization see it and they can actually relate to it; and number three, it just kind of generates that enthusiasm and momentum to try it elsewhere in the business.

Related Podcast and Transcription: Process Excellence in Government

Hundley M. Elliotte is the global lead for the Process Performance group within the Accenture Process & Innovation Performance service line. He has more than 15 years of consulting experience, focusing on managing business value, setting strategy, identifying customer needs, and identifying and implementing improvement opportunities in diverse business sectors.

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Losing 1M a Day, Improve Your Process

Joe: I don’t think a lot of people realize the trouble that Caterpillar was in the early 1980s. I would think that time period is correct. They were losing a million dollars a day or something?

Craig Bouchard: A million dollars a day for three years and in that third year which was 1984 where they lost a $150 million. That was the year that Schaefer said, “We’re turning the place around. We’re turning to start, in fact, to compete with the Japanese, Komatsu, etc.” They entered the first of the six big decisions which was the plant for the future. Schaefer committed $1.8 billion dollars to upgrade 37 of their main plants and make them the most modern plants in the world. They did that after losing a million dollars a day. Imagine that decision at that time, which is staggering – nobody could believe it – Wall St, the New York Times, everybody called it their last stab at avoiding bankruptcy to make such a big change. It was a survival decision by the estimate of most people at that time. As it turned out, it set the stage for successful Six Sigma, Lean set of programs for the company over the coming years.

Joe: I think there’s a lot to be said about that. There’s a whole chapter on Lean and Six Sigma in the book and, of course, my listeners are familiar with this. So is that an important part of the Caterpillar story?

Craig: It’s a huge part. It’s one of the six major decisions, and it’s probably the biggest one in its definite scope. So in the year 2000, Glen Barton had taken over as Chief Executive Officer and him on the board, and he called and described in the book – fascinating interviews backing all these material and some consulting with – so he called all the senior executives around the world into the auditorium in Peoria. They did some planning all day long; they had all kinds of things going on. Barton was scheduled to appear at the end of the day, late in the day. Everybody’s going, “Where the heck is Barton?” At that time, everybody at Caterpillar wore suits – they were sitting there in ties and the suits whole day – imagine that being said. Towards the end of the afternoon, everybody started to check their cellphones for text and messages – back in 2000 that was a new innovation basically – and a gong sounds in the auditorium and they all jumped up.

Here comes Barton in a black-belt karate uniform with four people behind him and people were astounded. Barton basically said, “Look, we’re here today for a very important reason. We’re going to change the company, and you’re all going to help with it.” He then explained that something that was true, there is$20 billion dollar revenue sphering that exists out there, so it’s like a legendary elephant graveyard of a library. A lot of companies have hit that level of revenue, people that have successfully reached $20 billion; it’s very hard to scale and grow beyond that because you’re doing big that you start to screw up a lot of things. Barton had realized that there’s one key cost that’s rising dramatically in the equipment out in the field, and that was a big red flag for him and he was smart enough to get it. He said, “We’ve have a quality problem and secondly, we stagnated. Our revenue has been consistent about $20 billion dollars for three-year, we’ve hit the ceiling and we got to fix that. I’m here today to give you your objectives as a company.” He got a lot of attention because of this, of course. He said, “We’re going to grow $20 billion of revenue to $30 billion of revenue in the next five years.” That caught everybody’s attention. And then he said, “While you’re doing it, we’re going take a billion dollars of expense out of our cost phase. So we are going to grow at that amount, and we’re going to take a 10% of a billion dollars out of our operating expense. And finally, you’re going to be accretive – the cost of this program that you’re going to enter into, which is Six Sigma, we’re going to pay in revenue-enhancement in cost reduction” and everybody is wondering “What the hell is accretive”. He said, “Here’s what it means; we’re going to revenue increase this year and cost reduction this year; we’re going to pay for this program. We’re paying for it ourselves in the first year.”

Barton set out that very aggressive schedule, he’s walking around the room with hundreds of people in the auditorium going up to the ceiling, and he could see faces going “Ngggnh, I have heard about this Six Sigma, I heard about this; G.E. and 3M did it recently. Sounds good, those other guys can do it.” You could see it in their faces. And so Barton said, “I can see it. The train is leaving the station; you’re all going to be on this train, or you’re going elsewhere. And right now we’re going to start and have every person in this room walk down the stage, look him in the eye, shake my hand and promise him to fully support the Six Sigma program. Every single person and that’s how they started. They took 750 of the top employees of the company out of their jobs in the next 30 days and put them in black-belt training and if that wasn’t enough, think about that investment – 750 of your best people out of their jobs, in their black-belt training full-time. Then they took 3,500 people and put them into green-belt training to support these 750 guys. In the next two years, then they did what they called ‘The Tsunami Change’ inside CAT. G.E and 3M are two great examples of big companies who’re successful in Six Sigma. They rolled it out division by division across the globe – it took them years investing in Six Sigma. And he said, “We’re all going to do this year.” Nobody believed that. And he had his 750 people right away, and he had 3,500 to support them. By the time, the program was two years in, he had 30,000 employees involved in Six Sigma program. Never before and never again has anyone committed that many resources in that period of time.

They made their $10 billion in revenue one year early, four years later. They got their billion dollar cost reduction and they shattered the $20 billion dollar ivory elephant graveyard ceiling, went on to $40 billion, went on to $50 billion, and they went on to $60 billion in recent years, and in the next couple of years it’ll go over $70 billion. Glen Barton gets a lot of credit, and that’s the commitment it took the tsunami of change that made it all happened otherwise people may have lost interest and that all happened in that first year.

Craig Bouchard, author of the book, The Caterpillar Way: Lessons in Leadership, Growth, and Shareholder Value, discussed how CAT got it right in a Business901 podcast

Related Podcast and Transcription: How Cat Got it Right

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Are Lean and Agile Equal Partners?

An industry thought leader in Lean, Kanban, Product Portfolio Management, Scrum and Agile Design, Alan Salloway helps companies transition to Lean and Agile methods enterprise-wide as well teaches courses in these areas. He is the founder and CEO of Net Objectives

In a past podcast (Related Podcast and Transcription: Shalloway on Agile), I asked Alan about the relationship between Lean and Agile.

Joe:  You always talk about Lean – Agile, how does Lean and Agile play? Is one the umbrella over the other or are they equal partners in your mind?

Alan:  Well, OK. You caught me, Joe. I think part of this is marketing. I actually think Lean is the big mantra. I think Lean is about respecting people, having a systems approach, working at how it became a business, improve the structure, folks for delivery and improving the team organization. So I would say yeah, Lean is actually the umbrella for it all and we put Lean-Agile into it, because Agile has some other things that I think are actually implied in Lean but aren’t necessarily as explicit in Lean as they are in Agile, which is this cross-functional team notion. Steve Denning talks about, in his Radical Management book with how will you endorse, about cross-functional teams being able to create or delight customers.

Steve Denning management is about creating teams that can delight customers. So Radical Management is really saying it’s radical because you’re saying, well, we’re going to have teams self-organized. We’re going to direct them from a management point of view. But to manage by directing, I mean we’re going to play in the right direction but then how they get there is up to them.

I think this is the thing that’s often missing in the Agile community. You can create, I mean there’s no question, Scrum is a great process, it really is and the timing works out for us. Scrum is a great framework for creating a cross-functional team, or excuse me if you have a cross-functional team; Scrum is a great framework for getting that team to work together well.

I’ve actually never denied that. I’ve always said it. That objective probably has trained us much or more than anybody, but maybe one or two other companies out there and we’re still very active in the Scum training world. But what we suggest is Scrum is fabulous if you have a cross-functional team to use it to self-organizing and to deliver value to the customer. But what’s missing is how you really manage multiple teams across each other, what that means is how do you do product portfolio management, how do you decide really where the value is across all the teams.

The way Scrum is set up is if you have a value of the effort to return where a person getting lots of value in the first few releases and then it stars failing up. If all you’re doing, the worst thing to the customer, that customer is going to keep saying, “Give me more, give me more, give me more,” because to him, that tailing value, even though you’re not getting as much a return every time is very valuable. it’s valuable like him. To another customer, there might be something of much greater value that can actually be detected by business drivers.

You need the business driver to know where to point the guns, so to speak, and then you need the team, the self-organizing, cross-functional teams to do the job well, and that’s where radical management play.

You have these different pieces of, how do I create great teams to delight customers, how do I create a business to make sure the teams are working on the right thing, how do I get management so the teams can coordinate and work together well. In my mind, so I’m just good at one of those and not good at the others, and my company is really about transforming. We’re all working all sized organizations; we work for companies really small, on up to the thousands, but we know how to actually work with companies in the hundreds of thousands. That ends up being where we spend a lot of our time.

That’s where you need something bigger than just the Agile team?based approach, and that’s why again we call Lean-Agile to kind of present the idea of this overreaching bigger view.

I’ve heard some people say, “Agile is what you do in teams, and Lean is what you do at the enterprise,” and that’s wrong. You’re talking about a whole systemic approach, and when you work with systems, you cannot decompose them.

In other words, even though I’m talking about business and management and team, you don’t really have different parts of systems. If you decompose the system, it’s a teaser, those teasers are not the system, it’s like when they are put together. They’d be like say taking an airplane, let’s take a 747, break it down into pieces and then see how each of the individual pieces fly. Well, none of them fly on their own, but you put them together, and it works.

You can’t just say, “Well, this does this, and this piece does that and that piece does that.”

It’s the way they interact with each other is what makes it work.

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Challenging the Traditional Pillars of Lean?

Today’s businesses are increasingly complex — and traditional pillars of management are obsolete, says Yves Morieux. He says, it falls to individual employees to navigate the rabbit’s warren of interdependencies. In this energetic talk, Morieux offers six rules for “smart simplicity.” (Rule One: Understand what your colleagues actually do.). His book, Six Simple Rules: How to Manage Complexity without Getting Complicated is a great follow up if you like this video.

In the video, I think Yves challenges a few of the tenets of the pillars of Lean; Continuous Improvement and Respect for People.

What do you think? Does he reinforce them or oppose them?

The Differences between Standard Work and TWI

In last weeks podcast with Alain Patchong, the founder of the TheOneDayExpert and author of a series of books on Standard Work, I discussed with him the differences and the similarities of TWI and Standard Work. Below is an excerpt from the conversation. The related transcription and podcast can be found here: Making Standard Work Simple.

Standard Work

Joe:  I’ve been discussing training Within Industry a fair amount and Standard Work seems very close to the Job Instruction Program of TWI, especially with the key points that you’ve mentioned in doing that. Are they similar and maybe what are the differences?

Alain: Joe, this is an excellent question. You remember I said when I started, my approach to implementing Standardized Work was to do it with a set of tools. You capture the current situation using Standardized Work documents or the documents we all know and then from there, you can improve by using those documents and after improving, you’re going to go back to do some updating of your initial documents and from that, you have to train people and audit. So training is the key. Training is a part of — a big component of sustaining Standardized Work. And when we talk about training, I don’t know a better method to train than TWI. This is the best method to train from what I know.

The fourth book I’m currently writing is about sustaining. So we would be talking about training and auditing, and the part which is decimated to training would be a lot about TWI. My goal is not to make the reader an expert of TWI but just to give some key aspects that should be use to apply the Four Step Method, which is described in the TWI. Now when you look at TWI, there is a document which is called the Job Breakdown Sheet. This Job breakdown document is used to do the training and in this document, you have key points. Now these key points are not exactly the key points that you would find at Standardized Work. Those key points are quite let’s say, free to you from the trainer to define. He has to — you don’t need to define or to train somebody to something which is quite obvious. Therefore, your key point definition is completely your decision to say, “Okay, this is key, this is key, this is key. Let’s do it.” So you have the same work in the documents and also in the job breakdown sheet but they’re not corresponding to the same thing. So again just for me, to summarize, TWI is important for the training step in the deployment of Standardized Work as a system, so it’s one of the tools. At least this is how I use it today and in the Job Breakdown Sheet, the five key points which are used to train people efficiently.

Joe: Which comes first, putting Standard Work in place come before TWI and Job Instruction or does Job Instruction develop the Standard Work?

Alain: Based on my experience and the way I deploy Standardized Work before you train somebody, you should know what you’re training about. So knowing what you’re training about means that you should be able to define the Standard Work. So you have to start first by defining what the operator should be doing. And what the operator should be doing is then there to supply your TWI part of the Standardized Work. Also go back to the point, to one of my previous arguments, my previous points, you do not have to go down the shop floor and start training people. You also need at the beginning to say, okay guys, okay let’s — fix first of all we said that before on the problems that you have around, so what are you doing? Okay, you describe together with people on the shopfloor the way things should be done, and then you improve, and when you improve, it’s something new, and this is an opportunity to train. Because if it’s new and you’re not training people, then okay, you are not sure that it will apply to the shop floor. So the way I do it, the way I apply it, the way I understand it is that training will come after the definition, after describing how work should be done.

Old Style Thinking of Plan – Do

One of my favorite authors (even though he has turned me down several times for a podcast) is Jim Highsmith. Jim has authored, several books with my favorite being Agile Project Management: Creating Innovative Products (2nd Edition) which comes as no surprise to most readers of this blog.

One of the items that Jim challenges in the book is the project management thinking of Plan-Do. In the book, he states that when considering plan-do it assumes that we already have the acquired knowledge to get the job done. He believes it should speculating not planning and exploring versus doing. In the process world and most specifically in the area of Lean, we think of PDCA and the planning portion of it as a hypothesis and the do as the experiment. Which I feel lies somewhere in between Jim’s explanation of the two. If I use the three components of how I visualize my Lean thoughts, Standard (SDCA), Incremental (PDCA), and Exploration (EDCA), I believe I can safely say that my thinking does align itself with Jim’s.

Lean Thinking

In the before mentioned book, Highsmith discussed the “Story” aspect of iteration planning. He says in the book,

I was slow to embrace the term “Story” for iteration planning. What finally convinced me was this need to change people’s perception of planning. The traditional terms we used were “requirement” and “requirements document”— words that conjure up fixed, unvarying, cast-in-concrete outcomes. “Story” conjures up a different scenario, one that emphasizes talking over writing and evolution over a fixed specification. Using the term “speculating” rather than “planning” has a similar effect. When we speculate, we are not prescribing the future, but rather hypothesizing about it. And, to those who practice the scientific method, we hypothesize and then run experiments to test that hypothesis— exactly what happens in agile iterations. Speculating also conjures up a vision of a group musing about the future instead of one rushing to document.

In the past several months, I have really started to embrace this “Story” type of thinking. I have started to create more narratives in the planning phases and even in my proposals.

  • In project scoping there are fewer tasks being assign in the earlier phases but it also seems to drive more conversation in beginning of the project or an iteration such as SDCA, PDCA, and EDCA. I think it is a good thing.
  • On the proposal side, I have found many people uncomfortable with this process. They are looking for what you are going to do. I equate that to starting with the answers. Which I typically think in the sales and marketing world is a disaster waiting to happen.

What are your thoughts, is more narrative/speculation a good thing or a bad thing?

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Solutions – Simple Enough for Everyone to Master

Alain Patchong is the founder of the TheOneDayExpert and author of a series of books on Standard Work. TheOneDayExpert is built around the simple idea that in today’s highly competitive environment, industry, which has already harvest low-hanging fruits, cannot rely anymore on single-minded or one-size-fits-all tools. TheOneDayExpert leverages 20+ years of industry Alain Patchongexperience to offer creative training for academy and industry. It also partners with companies to develop smart technology and deliver manufacturing excellence.

 

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