Going Beyond Lean Six Sigma and the Balanced Scorecard

How do Lean management/Six Sigma differ from Total Quality Management (TQM)/Continuous Quality Improvement (CQI), Performance Management and other such management initiatives/programs?

The methodologies of Lean, Six Sigma, Lean Six Sigma, TQM, and CQI are problem solving systems. We note that Lean Six Sigma and Lean are to have an underlying management system for determining which problems are the most important to work on next.

However, with these deployments the effectiveness of determining which problems to work on next, which affect the business as a whole, can often be challenged. This is especially true after a Lean or Lean Six Sigma deployment has been in existence for some time in an organization; e.g., at first the projects most important to work on are obvious – later this is often not the case.

A business system that goes beyond Lean Six Sigma and the Balanced Scorecard is described in the article “Corporate Performance Management: The Integrated Enterprise Excellence System”

Much effort and resources has been invested in process improvement. This process improvement can take the forms of TQM (total quality management), Six Sigma (Lean Six Sigma), and ISO 9000. However, it is clear that process improvement efforts have failed far more often than we might think.

The suboptimization principle asserts that optimizing each subsystem independently is not a good way to lead to an increased optimization for the overall system. The act of subsystem improvement can frequently cause exact opposite of the intended outcome.

Not all processes are appropriate targets for process improvement. Because the cost of the improvement may be more expensive than the increased productivity they generate. Process improvement efforts often trigger increased internal competition for scarcer operating resources, which in turn may act as a catalyst for unexpected personal, business unit, and cultural conflict. Business executives and senior managers can continue to pursue the “heroic” approach to process improvement.

The question is what should be done. Business executives and senior managers have felt that something needs to be done; hence, they strove to improve their metrics, even if that led to suboptimizations. Business executives and senior managers have not had a system for orchestrating the enterprise as a whole and moving the organization toward achieving the three Rs of business; i.e., everybody doing the Right things and doing them Right at the right time.

However, things have changed. The Integrated Enterprise Excellence (IEE) system today provides an enhancement to the application of Lean Six Sigma. IEE provides at the enterprise level the framework and roadmap so that organizations avoid process-improvement suboptimizations. IEE provides a structured approach for moving toward achieving the three Rs of business through the wise blending of measurements, analytics, innovation, process improvement, and control at all levels of an organization.

The IEE system is described in “C-Suite: The Need to Re-think our Business System’s Strategic Planning, Scorecard Creation, and Process Improvement Efforts”

The roadmap to achieve IEE implementation at the enterprise level is described in the book-volume, Integrated Enterprise Excellence, Volume II Business Deployment: A Leaders’ Guide for Going Beyond Lean Six sigma and the Balanced Scorecard, copyright 2008, which is available, for example, from Amazon.com.

OVERVIEW: A two-step process for 30,000-foot-level metric assessment is described in a 2008 4 book-volume series on the Integrated Enterprise Excellence system:
1. Is the process predictable; i.e., the process has a recent region of stability?
2. If predictable, what do you predict; i.e., make a process capability statement

Predictability is assessed through an individuals control chart is used to assess predictability. If a process is predictable, then a probability plot can be used to determine prediction estimate. To create this assessment using a probability plot, one would input into Minitab the specification limits.

QUESTION: The following problem is not addressed in literature.

Product Spec: 0.9 +/-0.01
Mean 0.9 units
Variation +/-0.01 units

Though an individuals chart, the process is determined to be stable. Measurements lie within upper control limit (UCL) and lower control limit (LCL). The process has a mean 1.02 units and UCL of 1.04 units and LCL of 1.00 units. Voice of the process is 1.02 +/- 0.02

First Approach: First change mean from 1.02 to 0.90 and the reduce variation from +/-0.02 to +/-0.01.

Second Approach: First reduce variation from +/-0.02 to +/-0.01 and then change mean from 1.02 to 0.90.

Which is the correct/better approach, Approach 1 or Approach 2?

What is the reason?

SOLUTION: An approach that uses simulation is as follows, given that the data are normally distributed:
1. For a predictable process, a probability plot creation of all the data and at the same time have Minitab statistical software, for example, determine a best estimate for the percentage of non-conformance.
2. Generate a large random number of samples, for example 1000, for the Approach 1 situation described above from a normal distribution with the shifted mean and baseline standard deviation value.
3. Randomly generate a large number of samples for Approach 2 situation described above from a normal distribution with the reduced standard deviation and baseline mean.
4. For each of the generated random data sets, create a probability plot with the specification limits.
5. Compare non-conformance percentage for the two situations. The lower non-conformance percentage would be the best initial approach. The lowest percentage could also be compared to the existing base-line percentage to quantify the benefit from the expected improvement shift for the initial step.

QUESTION: What type of business process improvement courses is appropriate in an Executive MBA program?

RESPONSE: In my mind, a course should not be restricted to process improvement. Process improvement needs to be integrated in an MBA course with predictive scorecards and strategic planning.

A system for accomplishing this is described in the article “Corporate Performance Management: The Integrated Enterprise Excellence System”

This article references books that can be used to teach the concepts of this business improvement system as it is integrated with scorecards and strategic planning.

QUESTION: I am interested in pursuing a career in Quality. I have a BSME and MBA. I am very interested in Lean Six Sigma. Please advice me whether carrying a Lean Six Sigma Black Belt or Green Belt certification will really help me better my career? My motivation behind acquiring Lean Six Sigma Green Belt or Black Belt certification is for quick resume building.

RESPONSE: Suggest going beyond striving for a common-place certification stamp on you forehead, which are quite common now and can reflect much difference in skill sets that people have achieved. I suggest considering what you can do to help an organization improve their business system in your certification process.

As part of your decision making process to determine what Belt offering is best for you, I suggest that you first determine which of the five reasons best describe your motivation, as noted in
“Lean Six Sigma Black Belt and Green Belt Training Objectives”

If you are looking to only do resume building and you are somewhat familiar with the tools and can describe a couple projects you have done over the years, you could simply take the ASQ multiple choice Black Belt test, which requires no statistical software or courses. In order to prepare for the test you could study the Indiana Quality Council’s study guide, CD example questions, and books (e.g., they sell my book Implementing Six Sigma) that they sell to help pass the test (it is open book).

However, consider you got a job because of this “certification” could you really have the skill set to execute real-important-business-as-a-whole-benefit projects using a Define-Measure-Analyze-Improve-Control (DMAIC) roadmap? Will you know how to select projects so that the business as a whole benefits? Will you really know how to select and track measurements over time so you can tell when a real change has been made to the process? Will you know how to make predictive-tracking assessment and statements?

What I think that would be valuable to the company is that you offer them what was listed as option five in the previous-linked article. This is a differentiator that adds direct value to the organization as a whole, and helps individuals avoid being downsized out of the organization when times get tough.

In my opinion, Black Belts can improve their value to organizations when they undertake their effort toward helping the business as a whole. A system for accomplishing this is described in the article “C-Suite: The Need to Re-think our Business System’s Strategic Planning, Scorecard Creation, and Process Improvement Efforts”