Lean and 6-Sigma: Still Not the Same

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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.

2013 Annual Management Improvement Carnival: The Drucker Exchange

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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 http://curiouscat.com/management/carnival/2013.

2013 Annual Management Improvement Carnival: Gemba Panta Rei

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It's time again for my contribution to John Hunter's Curious Cat Annual Management Improvement Carnival.  Each December, John asks fellow bloggers to participate in an annual review of management blogs to help highlight the authors and posts that made a difference in improvement management effectiveness throughout the year.

My first review covers Gemba Panta Rei, one of the mainstays in the world of lean blogging. The blog's main contributor is Jon Miller, CEO of the Kaizen Institute and someone who has obviously been immersed in lean thinking for many years. Besides being born and raised in Japan, Jon was fortunate enough to learn directly from students of Taiichi Ohno. I believe this important because the further away organizations get from the teachings of Ohno and W. Edwards Deming, for example, the more they fall prey to the influence of traditional management thinking. And when this happens, they lose sight of what made them successful and become like every other organization - focused on short-term profits and share price.

Being part of the Kaizen Institute, Gemba Panta Rei has the benefit of a close connection to Masaaki Imai, one of the pioneers of kaizen, and author of the book, Kaizen: The Key to Japan's Competitive Success.

Because of these connections, Gemba Panta Rei provides some very interesting and different posts related to lean thinking. Where else, for example, can you hear a speech by Taiichi Ohno talking about kaizen (I think . . . since it's in Japanese)? I sometimes find the posts to be too general and overly simplified, but I have to remind myself that lean is simple . . . it's just not easy.

Some of the recent posts I found interesting include the following:

What Does 'Right First Time' Mean in an R & D Environment? This post addresses an issue that has been largely ignored in books and articles - how to apply a lean mindset to product development and project management.

Why the Only Way to Think it Long Term. A good discussion of the age-old debate of long-term vs short-term thinking in business, and that long-term focus as an absolute necessity to have any chance of sustaining a lean mindset.

How to Engage People. A review of a recent survey from Gallup showing that 70% of American workers are not actively engaged in their work. The post provides a lean focus to the results - including a criticism of the Gallup CEO for misinterpreting the results and suggesting fixes from a traditional management point of view. The post has a clear connection to Deming's Theory of Profound Knowledge and shows that western management still doesn't understand people or business.

I have to say that I'm not a fan of the Kaizen Songs section of the blog, but I can skip those and get some excellent thought-provoking material on lean thinking and transformation. There is a good variety of depth on the posts, which can appeal to lean practitioners at all levels. I plan to continue to access the blog every couple of weeks to see any new posts and continue to learn, have fun, and make a difference in the world of business.

More information on the 2013 Management Improvement Blog Carnival can be found on Curious Cat Management Improvement blog at http://management.curiouscatblog.net/category/carnival.

Lean & Project Management

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I regularly run into people from the project world who feel that lean does not apply to the work they do.  While some people are just not open to change, I find that a larger part of this belief stems from the misconception that lean is only applicable to manufacturing or operations environments.  This is unfortunate because project management is a field that can benefit greatly from lean thinking.  Like any successful application, however, benefiting from lean requires looking beyond the tools to gain a fundamental understanding of how lean leads to the benefits it does.  While the philosophy will be the same, the application will differ from traditional manufacturing because of differences in the pace of work and amount of repetition.  Attempting to copy the way lean is applied in a manufacturing operation will only serve to cement the idea that project management is different and cannot benefit from lean thinking.

Super Managers

Studies have shown that more than half of all large projects fail to deliver desired results.  Of those that are successful, I have found that they tend to be led by super managers.  In fact, the poorer the company's systems and processes are, the more talented and experienced its project team needs to be to make up for the gaps. And although hiring a highly experienced project manager does not guarantee success, it is the only chance a company with weak systems and variable processes has to succeed with its projects. Unfortunately, relying on super managers also leads to high salaries, high turnover, and increased burnout for the manager and project team members.

Through the application of lean, project success will depend less on a super manager and more on the strength of the company's processes, systems, and standards, and the ability to improve them when problems arise.

It's important to note, however, that with our without lean, the knowledge and skills of the project manager is critical to the project's success.  Lean thinking can make the job of the project manager easier, though, by enabling him or her to focus less on detailed work and more on high-level objectives and team member development.  Rather than continually relying on super managers, lean creates super teams through standardized processes, effective kaizen, and a focus on developing the abilities of team members.

Getting Started

Some of the basic steps to begin the process of applying lean thinking to large projects include:

Know the Objectives  I am continually amazed at how often project objectives aren't absolutely clear to everyone on the team.  Having a clear understanding of who the customers are and what they want can go a long way toward assuring the success of a project.  Translating the objectives into safety, quality, schedule, and cost targets will also enable people to connect individual work to project success.  Without continually highlighting all four of these dimensions, people can become so focused on the schedule that they ignore the others - and it is often the safety, quality, and cost issues that lead to schedule problems.

Measure Progress  Creating dashboards that are highly visible to the team helps everyone  know how the project is progressing and where the problems lie.  Emailing an electronic project schedule, reports with a large amount of text, or S-curves does not tend to be as effective as dashboards with leading and lagging indicators of the four dimensions listed above.  Besides the fact that people do not generally open email and read reports (especially when overloaded with work because of poor processes), a visual chart that is in front of people everyday - especially where meetings are held - enables everyone to see hotspots that can or may interfere with success.

Focused Meeting Rhythm  One of the most critical, but often ignored elements of lean is a meeting rhythm focused on quick identification and correction of problems.  A project team needs to meet regularly to identify hotspots that are - or have the potential of - interfering with progress.  The rhythm should be set at a pace where problems can be seen quickly enough to act before success is jeopardized.  Selecting the rhythm is one area where traditional thinking needs to be challenged.  Although the work associated with large projects tends to progress at a fairly slow pace, the team should look at whether breaking the reporting into smaller pieces will increase sensitivity and reduce response time to problems.

It also helps if the meetings are held in an obeya, or war room, where the dashboards are located, so the discussion can relate directly to the information on the dashboards.

Another important aspect of meetings is that they be focused only on hotspots needing the team's attention.  Too often, time is wasted in meetings communicating general information or things that have been completed on-time.  This information can be posted on dashboards and read by those who are interested.  The meeting discussion should be limited to problem-solving and discussion of critical elements.  This can be done by focusing the agenda on the gaps between the work that should have happened since the last meeting versus what actually happened.

Swarm Problems Although meeting rhythm should be focused on highlighting hotspots, nobody should wait until a meeting to identify or act on a problem.  The team needs to establish a way to pull the andon when a problem occurs so people can swarm the issue and develop countermeasures quickly that will get the project back on track.

The true benefits from lean will become evident when the mindset of the team changes and people begin to approach work differently.  And counter to what many would like to believe, appealing to common sense will not drive the change in behavior needed for success.  Change will not happen until without a significant amount of teaching, coaching, and close involvement with the team to demonstrate how lean will improve the project, and practice where team members apply the process.  As with any change initiative, consistency, determination, and a willingness to learn by everyone - including the person driving lean - are the keys to success.

Making Problems Visible Is More Difficult Than It Sounds

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One of the many elements of lean that is conceptually very simple but difficult to put into practice is the need to make problems visible.  Although highlighting problems so they can be addressed makes sense, there is often a reluctance resulting from fear that doing so can damage one's career.  In organizations with highly competitive cultures, for example, openly discussing problems can make a person appear incompetent and ineffective. Even without open competition, organizations that tend to promote those who hide problems by putting a positive spin on poor performance are unconsciously cementing a behavior that it is not okay to openly discuss problems.

It is perfectly normal for people to want to show that processes are running smoothly and things are under control.  Because of this, it is up to the company's leaders to instill the idea that highlighting problems is not only acceptable but expected within the organization.  This means that there should never be negative consequences for making a problem visible.  On the contrary, it should be made clear to everyone that hiding problems or failing to take action to address them is an unacceptable behavior.

Two areas where it is important to make problems visible are dashboards and meetings.

Dashboards

The objective of a dashboard for an area or process is to clearly and objectively show the gaps between expected performance and actual results.  Hiding the gaps or continually putting a positive spin on how things are going misses the opportunity to align team members on what's important so the problems can be addressed.

Posting charts that track what's critical for an area keep people focused on how a process is expected to perform and, the more sensitive the chart, the more quickly action can be taken when a gap occurs.

It is important to note that dashboards become ineffective when too much data is displayed. Think how difficult driving would be if your dashboard contained 10 or 12 gages.  The same applies to a dashboard for a work area.  Make it simple and clearly connected to company or system targets.

It is also critical to keep dashboards simple and easy to maintain. Fight the urge to multi-color, three-dimensional graphs that show too much data.  To purpose of a chart is to highlight performance, not prove how adept someone is at creating graphs.

Meetings

Many companies waste a lot of time in meetings talking about what is going well.  Performance is reviewed and discussed - sometimes in excruciating depth - even when processes are on-target.  People learn to dread meetings and use the time to catch up on email or the latest headlines on their smart phones.

The more the daily and weekly meetings are focused on the gaps - existing and potential - the more engaged people will be.  The dashboards should drive the meetings and, the better the dashboards, the quicker people can zero in on the gaps and talk about the actions to address them.

When we do this well, we begin to take advantage of the collective knowledge of the team by focusing on improving performance.  If we dance around the real issues by ignoring the gaps and attempting to put a positive spin on how things are going, we miss an opportunity to build teamwork and fail to address the real problems.

The Problems Are There - Why Not Look At Them

Every organization has problems, and a key determinant of success is how well the problems are addressed.  Openly showing the problems is the first step at resolving them.  Getting to this point, however, often requires shifting behavior to make it okay - even expected - to look for the gaps.

What is Lean?

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I run into people on a fairly regular basis who want to know the definition of lean and what makes it different from the "normal" way businesses operate.  Because lean can be fairly complex and easy to misunderstand, I generally avoid any attempts to simplify it by describing it in a sentence or two.  There is such a common misconception about what lean is, though, that I finally felt compelled to come up with something.

Wikipedia defines lean as, "a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination."  Although I generally agree with this definition, there is not much in it that differentiates it from a traditional approach to business.  I've worked with some very non-lean thinking people over the years who would argue that they focus on their customers and continually work to eliminate waste from the company.  The difference here is in how they define waste and the steps they take to eliminate it (e.g., reducing costs by cutting rather than improving).  The point is that these leaders could argue that lean is not much different than what they already do.

The Definition

After a lot of thought and discussions on the subject, I've come to the conclusion that lean can be defined as:

A continual experiment to eliminate uncertainty from a business and achieve absolute perfection by leaving nothing to chance.

I believe this definition of lean incorporates the PDSA element that is absolutely necessary for learning and improvement.  By performing a process in a specific way (standardized work), we are predicting that a desired outcome will occur.  When it doesn't, the process needs to be adjusted (through kaizen).  We don't stop kaizen until the process is perfect because every problem identifies a weakness somewhere in our system that needs to be addressed.

A key difference between this definition and traditional thinking is the idea that the only acceptable result  is perfection.  The traditional approach to business does not usually consider perfection the goal.  People generally consider it impossible to achieve perfection and lower the bar by striving to be the best, among the best, or simply to meet a target.  While an organization with a lean mindset does strive to meet targets that take into account a given level of errors, defects, and variation, the people do not consider these things acceptable and will continue to drive improvement until things are perfect.

Although related to the drive for perfection, this definition also differs from traditional thinking by looking at all work as an experiment.  If you truly believe in continual improvement, you are always looking for problems.  You will standardize your processes  with the best knowledge you have at the time, but as soon as a problem occurs, you analyze the cause(s) of the problem and work to eliminate or reduce it.  And the changed process becomes the new standard.

Help or More Confusion?

I'm not sure that defining lean does much more than provide a starting point to the conversation about how a business can improve.  Although people generally want quick, easy-to-understand descriptions that will help them understand new methods, a definition that can be read in under 30 seconds will never provide enough understanding to intelligently accept or reject the concept. Improving understanding requires thought, discussion, and application to real situations - but if a one sentence definition starts someone thinking, than developing it was worth the effort.

The Lean Formula

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As I've said many times, lean is simple but not easy.  The concepts are fairly easy to understand, but making it happen requires such a deep level of reprogramming of the way people think and act that few are able to carry it through.

There are many ways to begin a lean journey and one is not necessarily more correct than another.  I adjust my approach depending on a variety of organizational factors, but I generally like to start with a basic formula that keeps people focused on the results the organization is trying to achieve, the results they are actually getting, and how to close the gap between the two.

The basic formula to follow a targets-results-gap approach is: 

CLEAR BUSINESS PLAN  x  VISUAL DASHBOARDS  x  EFFECTIVE MEETING RHYTHM  x  CONTINUAL IMPROVEMENT

This basis of this formula is that all elements must be present in order to achieve success.  For example, having a business plan that clearly identifies the organization's desired performance levels and a plan to get there won't do much without dashboards that provide a consistent and discernible picture of results.  Although more common than one might think, this type of situation makes managing the business extremely difficult by leaving too much to chance.

The components of the formula are as follows:

CLEAR BUSINESS PLAN:  There must be a plan that provides very clear direction and targets for the organization.  The plan should break the company's long-term strategy into specific results to be achieved in the coming 1-2 years.  Included in the plan is information or results that drive daily work (i.e., help people understand the level of performance that must be maintained to meet objectives) and breakthroughs, or the big steps that must be taken to move the organization forward (i.e., the areas where business as usual is not acceptable).

VISUAL DASHBOARDS:  The dashboards is the scoreboard to identify the gaps between current performance and the targets or objectives listed in the business plan.  At the highest level, this is the actual safety, quality, production, and cost targets.  As you move deeper into the organization, though, the measures on the dashboard will become more focused on the processes in a particular area.  Also, the information on dashboards must be clear, easy to understand, and include leading, as well as lagging indicators.

EFFECTIVE MEETING RHYTHM: The organization must implement a meeting cadence that is focused on actual performance versus targets.  The meetings should be short and focused on hotspots - i.e., the problems that are, or have the potential of, interfering with performance.  These meetings are not a forum for people to tell everyone how much work they did since the last meeting - the dashboards will do this.  The meetings should used to highlight the problems and ask for help.  The meeting schedule should be set at as closely as possible to the pace of work so the problems can be identified and addressed quickly.

CONTINUAL IMPROVEMENT:  Knowing the gaps between targets and current performance is futile if people do not know how to address problems.  Having an effective kaizen or continual improvement process will enable the organization to close the gaps and react quickly to existing and potential problems.

Although the basic formula appears simple, there are a lot of elements necessary to make it effective.  Without effective leadership or a culture that supports, rather than hinders, teamwork and the ability to question the status quo, success will be elusive.  Using the formula as a starting point for a lean transformation, though, will tend to make the organization's weaknesses visible, which is the first step in making the change.