Sunday, January 19, 2014

Lean and 6-Sigma: Still Not the Same

Although they have been in practice for many years and are very distinct approaches, many people continue to think of lean and 6-sigma as one in the same.  There are even some people claiming to be experts who don't understand the difference.  And the use of terms like "lean sigma," only serves to further confuse business leaders who need to understand.

To do my part to continue to educate people on the differences between lean and 6-sigma, I have listed some of the areas where the two approaches contradict one another.

Transformation:  Lean is a systems approach to business that runs so counter to traditional thinking that it virtually always requires some level of transformation.  In fact, attempting to deploy lean without transformation will result in a lot of effort with little or no improvement.  6-sigma, on the other is based on individual improvement projects and does not require major shifts in thinking or changes to the company's culture, systems, and approach to leadership.

Source of Improvement:  6-sigma uses "experts" (or black belts) to lead projects that attack problems.  In some cases, leaders do not need to be involved in addressing problems in their areas.  Lean gets everybody involved in addressing problems.  The leader of an area is the expert who is tasked with coaching and developing team members in the way to identify and attack problems.  Someone not involved in the area affected by the problem may be called in as a coach, but won't be directly involved in the effort.  [See Solutions below for more on the idea of solving problems ]

Size of Problems:  6-sigma uses a set of criteria to focus attention on the big problems.  Pareto charts are commonly used to separate the critical problems that require attention.  Lean attacks any problem  that interferes with meeting a target condition, regardless of size.  Although Pareto is used occasionally in a lean environment, people do not wait for data to be collected to prove an issue is big enough to warrant attention and are encouraged to attack problems as they occur.

Solutions:  6-sigma uses the DMAIC process (Define-Measure-Analyze-Improve-Control) to "solve" problems, while lean applies PDSA cycle (Plan-Do-Study-Act) cycle to develop countermeasures with the idea that, under a continuous improvement mindset, no problem is ever solved.  Some consider this as merely semantics, but it is an important part of establishing a lean mindset.  Thinking of a problem as "solved" can lead to complacency and a level of satisfaction that can kill the drive to further improve.

Learning:  6-sigma relies heavily on classroom training and certification to drive learning.  Lean involves a "just do it" attitude and places more emphasis on coaching than training.  Also, within a lean environment, the continual developing and testing of hypotheses, rather than classroom training, drives learning.  An important responsibility of leadership within a lean environment is to develop those on his or her team to think and practice PDSA thinking, where 6-sigma tends to use trainers who are outside of the operation to develop problem-solving skills.

Since lean is transformational - requiring significant shifts in systems, policies, learning, and leadership - it unlocks what W. Edwards Deming referred to as the big gains. Deming surmised that using the tools without transformation can result in no more than 3% improvement for a company.  The other 97% is locked in the company's systems, including leadership, planning, strategy, etc.

I believe that the key difference between the two practices is that 6-sigma attacks the 3%, while lean aims at the 97% (along with the 3%).  It naturally follows, however, lean is much more difficult for an organization to understand and practice.  Lean also aims at many of the traditional western business practices of which leaders can be reluctant to let go.

Whether embarking on the deployment of 6-sigma or lean, it is important to be clear on expectations.  If you're not ready to question the organization's systems and leadership, stay with 6-sigma and be happy with the 3% - which admittedly, can be quite large in financial terms. If you want the big gains, though, lean - not 6-sigma - is the way to get there.  In other words, don't expect 97% results by using a 3% solution.

Saturday, January 4, 2014

2013 Annual Management Improvement Carnival: The Drucker Exchange

For my second post in the 2013 Management Improvement Carnival hosted by Curious Cat Management Improvement blog, I decided to review The Drucker Exchange. The exchange is a daily blog hosted by the Drucker Institute at Claremont Graduate University in Claremont, California. The mission of the institute is "strengthening organizations to strengthen society."
I'm a huge fan of Peter Drucker, and don't believe that many people really understand his contributions to the development of lean and continuous improvement. Many point to the negative effect Management by Objectives (MBO) had on business as an argument to dismiss Drucker's philosophy altogether.
For the record, Drucker was not happy with the way business implemented MBO. He once wrote, "Management by Objectives works if you know the objectives. Ninety percent of the time you don't." And in W. Edwards Deming's well-publicized criticism of MBO, I don't believe he was attacking the process as much as he was attacking the way people applied it.
Among many other practices, Peter Drucker was instrumental in the development of hoshin kanri. And much of what Drucker wrote about - including the importance of social responsibility and development of people - are well aligned with lean leadership values.
The Drucker Exchange
For anyone who wants to learn or stay current on the teachings of Peter Drucker, it is logical to go directly to the place he lived and worked. He spent 30 years as a professor in Claremont - at one time actually teaching Japanese art at Pomona College. The Drucker Exchange blog is maintained by the institute that he helped create.
I subscribe to the weekly digest and, although the messages tend to build up in my inbox, I do read them and access the blog on a fairly regular basis. The posts are generally short enough to read within a few minutes, although many of them require a good deal of reflection and thought to make the connections to everyday situations and facilitate learning.
I don't necessarily agree with everything that is published on the site (as shown below), but I still enjoy reading the posts. Probably because of the brevity of many of the articles, though, I find myself preparing to forward them to others only to change my mind by the time I get to the end.  I'm sure this is a personal thing - as I prefer fewer but longer posts that cover an idea in depth, than a lot of short, brief articles.
As it is with any visionary, Drucker's teachings would have continued to change over the years and, being administered by some of the people who worked with him, the blog attempts to stay current and write from the perspective of what he would be teaching today.
Examples of some of the posts on the site - and my thoughts about them - include the following
Process is a Prison: The article presents the argument that process standardization can go too far and actually interfere with success. The author discusses how a sales process can become ineffective by establishing controls that are too tight and beyond a reasonable level. Although I agree that it is possible to over-standardize a process, I found the example to be a bit of a stretch. In my experience, I find that a lack of standardization is much more of a problem than over-standardizing. The detail of a procedure or instruction should be to the extent necessary to assure effectiveness. In manufacturing, for example,where more of the environment can be controlled, standard work can be much tighter than in a sales situation. With that said, however, I believe that a sales process can also benefit from some level of standardization.  In fact, the consequences of a lack of standardization in sales can be just as destructive for the company as overstandardizing. Failing to standardize the sales process puts the focus entirely on results - ignoring the impact of process - and can result in breaking down teamwork, as well as negatively impacting customer service.
Generally, I felt that the post provides ammunition for people to shoot down the need for standardization - which I'm hoping is not the intention of the author.
It's also important to note that standardized work defines how a process should operate - not necessarily how it always operates. In this case, it helps identify circumstances where the standard breaks down - either not possible to follow or causes problems - to drive improvement activity. As with most business processes, the key to determining the need and extent of standardization - whether producing a product or selling insurance - has to begin with the customer.
Jeff Bezos, Risk-Averse Rebel: An insightful post that demonstrates a real world example of tying innovation to a culture of improvement. The post discusses how Amazon did not originally have a company-focused effort on the kindle. It was the culture of innovation that led to the product's development and success. By creating an environment that emphasizes innovative thinking, Amazon always has several new ideas working at all times and some will work out and some will not - The premise is, the higher the number of innovative ideas being worked at a company, the lower the risk associated with each one becomes. Through this type of thinking, the process of analyzing and bringing ideas to market also improves over time; something that is not likely to happen if the company focused on each new product as an isolated effort.
Although we don't necessarily see it referenced directly in articles and blog posts, Amazon has a lot of characteristics of a lean thinking organization.  Like Amazon's focus on innovation, a lean environment emphasizes PDCA thinking, which creates a workforce that is always looking for problems and thinking of ways to improve. The business result is not as important as the effort because the more people become involved in and are recognized for pursuing kaizen, the more positive business results will occur.
The Business of Building Great People: Covers the story of Barry-Wehmiller, a St. Louis-based company that focuses on developing and respecting people. In line with a lean mindset, the company demonstrates the idea that, although results are obviously important, long-term success can only be achieved by looking at the things that cause the results - continual improvement of processes and people. B-W understands this link and strongly emphasizes and actively practices the development of its people.
Why “Pay For Performance” Is a Sham: An excellent commentary on the importance of process when understanding results. The post highlights skyrocketing CEO pay and how boards are justifying it by tying salary/bonuses to results, which leads to short-term thinking and long-term damage to the organization. If process is not considered (e.g., people hiring and development, capital investments, business planning processes, management of innovation), we end up spending more time justifying compensation than making the company successful.
This is just a small sample of the type of posts that make up The Drucker Exchange. It is a great way to stay current with the type of thinking that drove the works of Peter Drucker.
More on the 2013 Management Blog Review can be found in the Curious Cat Management blog at