Going Beyond Lean Six Sigma and the Balanced Scorecard

Jim Collins wrote the popular book “Good to Great.”  In his newer book, “How the Mighty Fall”, Jim Collins describes the five stages through which a proud and thriving company passes on its way to becoming a basket-case. First comes hubris born of success; second, the undisciplined pursuit of more; third, denial of risk and peril; fourth, grasping for salvation; and last, capitulation to irrelevance or death.

Akio Toyoda, president of Toyota Motor Corporation since June 2009 and grandson of the firm’s founder stated in October 2009 that the book described his own company’s position. Toyota, he reckoned, had already passed through the first three stages of corporate decline and had reached the critical fourth. According to Mr. Collins, fourth-stage companies that react frantically to their plight in the belief that salvation lies in revolutionary change usually only hasten their demise. Instead they need calmness, focus and deliberate action.

It seems to me that the same five-step Collins model can sometimes be applied to both individuals and countries.  Tiger Woods and Mel Gibson along with many CEOs (e.g., Tony Hayward from BP) and politicians (e.g., Charles Rangel on 13 violations of congressional ethics standards) have made decisions that had a denial of risk and peril (phase three), which was the beginning of their downfall.  The same can be said of countries, in my mind, since no country has remained on the top forever; e.g., Roman Empire. I am concern that the U.S. could have gone through stage three of the Jim Collins’ stages and must do something significantly different relative to policy creation to address the issue. Continue reading →

Kaizen events are common place within Lean deployments for process improvements through the reduction of waste. Six Sigma is known for defect reduction techniques. Within Lean Six Sigma deployments, kaizen events can also be used in the improve phase of the project execution roadmap; i.e., Define-Measure-Analyze-Improve-Control (DMAIC) roadmap.  This can be done as part of an overall an enhanced business management system, Integrated Enterprise Excellence (IEE), which goes beyond Lean Six Sigma and the Balanced Scorecard.

The follow describes generic kaizen event steps, where appropriate step modifications when conducted as part of an IEE system.

1. Prepare and train the team
2. Analyze present methods
3. Brainstorm, test, and evaluate ideas
4. Implement and evaluate improvements
5. Present results and follow-up

Consider the following in each of these steps:

1. When preparing for the event, identify problem areas and select the area that will be given focus. Within IEE, this work should have been done in the early stages of the IEE project execution roadmap. Select and create the team, conducting  training, if necessary, on muda (waste), standardized work, and continuous flow.
2. During and after the training, the team creates a video and analyzes the problem area (cell) in action examining material flow, lead time, cell layout, process waste and other vital measurements.  During this time they can generate a standardized work and work combination table.  The team needs to record the current number of operations over time and defect rates. Photographs should be used to document the kaizen event.
3. Smaller groups of the overall team can then discuss ways to improve the cell with the aid of the compiled analysis statistics from the work cell. These groups can then test potential improvement work-cell tactics on the work cells.  Results from tested ideas can then be shared with other group team members. This helps the avoidance of mistakes made by other groups, providing new idea inspiration. This reiterative cycle of brainstorming, testing, and evaluating may be performed many times before desired results are achieved; i.e., similar to a Deming cycle of Plan-Do-Check-Act (PDCA).
4. After there has been a development plan created by the team for achieving the kaizen event results, a maintenance request is generated, when needed, where modifications are fully described so that management can authorize the changes. Improvements are then made to the work cell and its processes. The new process is trained to all personnel by the kaizen event team members. The improvements are monitored and the process is re-videotaped and re-standardized, where results are measured.  Additional-time-identified items are placed on a 30 day list, where the items are formed to ensure their completion.
5. Team members document all improvement items. Monetary savings, improved space utilization, and time reductions are to be compiled. Team members are then to present to top management, making commitment to complete outstanding items. Team recognition is given by management, making suggestions for the future. The 30-day action items are implemented by the team. Final results are compiled, where the process may be restarted.

The above is a modified excerpt from the book-volume, Integrated Enterprise Excellence Volume III – Improvement Project Execution: A Management and Black Belt Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard, Bridgeway Books, 2008

A U.S. federal grand jury in New York subpoenaed Toyota to submit documents related to problems with steering-relay rods in its vehicles.

The question is how a company that has had such a great past track record can have issues like this.  Toyota and its Toyota Production System (TPS) did not keep the company from having issues.

A business management system for crisis and problem avoidance is described in the article “Corporate Performance Management: The Integrated Enterprise Excellence System”

References in the article describe the no-nonsense business improvement, scorecards, and strategic planning integration.

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• U.S. court subpoenas Toyota documents: report (marketwatch.com)
• Toyota Subpoenaed by Federal Grand Jury (abcnews.go.com)
• U.S. grand jury subpoenas Toyota on steering rods (reuters.com)

The environment in the mobile phone business has seen rapid change. Nokia had a 40% stock drop . Now there are efforts to replace the current chief executive, Olli-Pekka Kallasvuo. OPK, his nickname, is being blamed for the traction struggle that the company is experiencing in the fast-changing market for high-end smart phones.

It is interesting to me how companies, not just Nokia, often look to replace their CEO when things turn in an undesirable direction.  A hiring/selection process for CEO replacement often becomes a hunt for a superman or superwoman.

Continue reading →

Did you miss the webinar series, Using Lean Six Sigma Black Belt Skills Outside of LSS Projects, that started on July 21? Guess what? You are not too late! Please join us for the remaining seven webinars starting August 11. The first session which covered Strategic Planning was recorded, and will be made available to all who register for the series.

A note from our Master Black Belt, Rick Haynes:

When I attended the ASQ world conference, I noticed a lot of attendance for the presentations of our standard Lean Six Sigma tools outside of projects. There was a big draw for a topic of innovations in lean six sigma. It appears that there is a need to find out how to use our skills outside of projects.

After these insights, I worked with our company to develop a series of webinars that will focus on the LSS project tool usage outside of projects. We will explore both common and uncommon usages. Within the topics, we will discuss how you might get involved in the efforts, not just how to use the tools.

Many of you already work outside of projects, using your tool set. Therefore, some of these topics may seem trivial, but we will try to keep a theme through all of these webinars (eight) that makes them beneficial to all.

The topics are:
Strategic Planning
Reporting Business Performance
Scorecard Development (and dashboards)
Corrective Action Efforts and Root Cause Analysis
Implementation Projects
Development Projects
Quality Assurance/Quality Control
Risk Mitigation

If you are interested, please go to our website and register. There is a nominal fee for the webinar series.