This article explores the risks of following the latest fad, like Six Sigma or Lean, and how simple choices like the name of a company's improvement process can influence the endurance of its improvement culture.
We can all remember TQM, TPM, BPR and Quality Circles. In their days, pundits hailed them as the solutions to all our management ills. In the long term, however, they all flamed out and joined the ranks of trendy, but largely ineffective management fads. History has a fond habit of repeating itself, Six Sigma --although it may take a few years -- will eventually find its place on the rust pile of management fads.
Despite that evidence, do not let Six Sigma's demise as a fad detract from its substance as a management idea. Like its predecessors, Six Sigma thinking can boost the effectiveness of business, but only after transforming those ideas into effective business practices. The majority of implementations will fail to achieve what they set out to do, and most of the blame for that will rest on the shoulders of leadership teams.
Organizations need to take a simple first step in breaking out of the "flavor of the month" syndrome. That step will come when leaders understand that the magic bullet doesn't exist, and that trying to copy what works for today's successful companies will not be the "cure all" that gurus promote. Here are a few key considerations for any business that wants to optimize performance without wasting resources by chasing a fad:
- Validate that the improvement process matches your unique business needs.
- Create a name for your improvement process that gives it life for the long term.
- Get your leadership team to embrace the change wholeheartedly.
- Stay focused on results.
Validate that the improvement process matches your unique business needs.
A solid business theory can be inflated to fad-sized proportions by gurus who insist that the theory applies to any business process. For Six Sigma, overzealous disciples seeking publicity for their success stories in non-traditional improvement areas compound this effect. Strip away the media hype, and at the core of Six Sigma there remains a process for reducing variability, which is very beneficial when applied to areas like defect reduction. If, like GE, your organization would benefit financially from a defect reduction tool, then Six Sigma would be a great match. If you were a company like 3M whose core strength is innovation, however, would Six Sigma be a good fit? We don't have to guess the answer: 3M applied Six Sigma to its innovation process and their new idea generation rate plummeted as a result. In retrospect, the mistake is obvious: a structured business process that values "sameness" cannot effectively improve a process like innovation that requires us to think differently.
Create a name for your improvement process that gives it life for the long term.
What are you going to call your improvement program? If today you are "doing" Lean or "doing" Six Sigma, within the next 10 years the majority of companies will have moved on and will be "doing" something else, with yet another catchy brand name. The concepts of Lean and Six Sigma will still be beneficial, but they will lose popularity and eventually obtain the same perception of Quality Circles -- another management fad that has run its course.
Companies benefit much more from calling improvement programs by a name that is unique, timeless, and all encompassing. Toyota did not call their improvement system "Lean," the consulting world applied that label. Toyota called it the Toyota Production System, which qualifies for two out-of-the three criteria; it is unique and timeless, but maybe not all encompassing. A better name would have been the Toyota Performance System. That is unique to Toyota, timeless, and isn't limited to production (manufacturing).
This simple action yields many benefits. For one, the organization will avoid the mindset that the new improvement system was taken directly from the recipe book of today's high performing organizations. Instead, a unique and timeless name will represent a customized improvement system capable of drawing from the latest management thinking of the time. Today most organizations still practice the concepts of Quality Circles; however, it doesn't form the heart of their improvement process.
For companies that have already taken the step of branding their improvement programs with the latest management "business speak," re-branding will eventually have to occur or else the system -- regardless of its functionalit -- will seem stale. Therefore, branding your initiative right at the start will be the most effective for the long run.
Get your leadership team to embrace the change wholeheartedly.
Every leadership team expresses a fundamental human trait: no one will truly support a new change program without understanding how it will help them. All too often people rely on statistics from other companies to prove why it is a good thing. Although it is powerful to hear Jack Welch say that Six Sigma helped drive operating margins from 15% to 19%, it is not as powerful as seeing what it can do in your own organization. Piloting the change program in a small part of your own business, so that your own people can stand up and explain how it helped them, will produce a far more compelling story.
Too many implementations don't follow this path, but instead try to rapidly blanket the organization with the latest set of Japanese expressions in the hope that somehow this will seed the change. If you can create "pull" amongst your leadership team, the journey will not only be smoother, but in the end you will cover more ground at a quicker pace.
When picking your pilot area, be sure to pick an area with a great leadership team that the rest of the organization respects. The team you select will be the initial spokespeople during those crucial early days.
When a large consumer goods company reviewed their choices of plants to pilot the change program in they looked at both ends of the spectrum. One choice was a plant that was consistently at the top of the performance list, the plant manager was a seasoned veteran, who although skeptical of change, was well respected amongst his peer group. A successful pilot in this plant would mean that not only could they take the best plant and make it better (which would prove the tool had legs), but they would also have a well-respected internal champion.
The second option was to choose the plant at the bottom of the stack-ranking. This plant warranted consideration because it was causing the most amount of pain for the organization, therefore some leaders assumed that improving this plant would create the most value for the organization. A successful pilot here, however, would not carry the same weight in building internal confidence about the improvement process. The likely reaction would be "anyone could have improved that facility" and very little credibility would have been built for the new way of thinking.
This real example shows how a business can significantly reduce the barriers to implementing change by selecting a pilot group with credibility and respect that will go on to promote the improvement process.
Stay Focused on Results
A quick read of the annual reports of many organizations that are pursuing Six Sigma will show that there is an extensive focus on activities. For example, a quick glance at 3M's 2003 Annual Report highlights the issue:
"Since introducing Six Sigma company-wide in early 2001, we have trained more than 20,000 employees in its methodology worldwide, and we aim to have our entire salaried workforce trained by the end of 2004. We have more than 130 customer projects today, and we expect that number to triple over the next few years. I am confident that "Six Sigma with Our Customers" will make a significant impact on our growth all around the world."
Throughout the annual report, little narrative directly links this monumental training activity to actual bottom line results. Since 2003, shares in 3M have seen a fraction of the growth that the broader S&P 500 has seen, and unsurprisingly George Buckley has been quietly dialing back on many of his predecessor's initiatives.
As you embark upon your improvement effort, you will need to remind yourself that the peripheral activity is a means to an end, not the end itself.
The Next Fad
Where will the next fad come from? It will likely revolve around innovation. Organizations will recognize that neither Lean nor Six Sigma can help innovate, and while competing on cost will always be a tough battleground against low wage countries, innovation is something on which companies from developed nations can compete.
Eventually, someone will look inside the companies that are driving success through innovation (Apple, Google, Virgin, or 3M) and try to understand on general terms what makes them successful in this area. They will package the innovation process into some simple to follow steps, call it a fancy name like "sigmavation" and the next fad will be born. Of course, this glossy-covered book will not be able to replicate the culture that makes these companies successful users of a straightforward process, and in the end, this fad will join the others on the rust pile.
Charlie Garrard is Managing Partner for Stroud, an operations & management consulting firm. Garrard serves as a member of Stroud's Global Leadership Team, responsible for executing business strategy and ensuring operational excellence company-wide. His email address is [email protected] www.stroudconsulting.com