What needs to change in Lean Six Sigma
Read this article about Lean Six Sigma for the twenty-first century. Review the “What needs to change in Lean Six Sigma” column in Tables 1 through 5. Do you agree with the authors’ suggested changes? Discuss why or why not.
Many organizations that have embraced the principles and techniques of Lean and/or Six Sigma are beginning to find their efforts complicated by important changes in the business landscape. These changes include full scale globalization, as well as increases in the prevalence of knowledge workers, the rate of technological change, worldwide regulatory oversight, and volatility in general. The effects of these trends on Lean Six Sigma is discussed and modifications that will need to take place in the application of Lean Six Sigma, which appear to be evolutionary rather than revolutionary, are envisioned.
INTRODUCTION
Constant, rapid change is the overarching theme for the challenges that business and management face in the new century. Business leaders have been anticipating, speaking, and writing about the demands that the new millennium would bring for several decades. While words and phrases vary, the underlying ideas are remarkably similar. There is general agreement that the winning companies will be those that convert these challenges into opportunities. In a number of works surveying the overall change landscape, business thinkers identified challenges facing 21
st century managers and organizations. The need for management to adapt to
change and to find new strategies, the “New Information Revolution,” the importance of knowledge worker productivity, and facing the personal challenges found in the complexities of a longer work life were identified by business guru Peter Drucker (1999) as crucial issues facing millennial business leaders. Others pointed to a volatile business environment (Hamel, 2009, Prahalad, 1998); frequently indeterminate industry and organizational boundaries (Prahalad,
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1998; Hitt, 2007; Senge, 1999); global competition (Prahalad, 1998; Hitt, 2007; Nadler and Tushman, 1999); changing regulatory environments (Prahalad, 1998; Nadler and Tushman, 1999; Laurie, 2006); the opening of markets (Hitt, 2007; Nadler and Tushman, 1999); and sustainability (Prahalad, 1998). Hamel (2009) maintained that we are in an age of revolution that demands radical innovation and the harnessing of the imagination and creativity of every worker.
THE CHANGES
In this section, the main trends expected to affect the practice of business management are categorized. The authors wish to thank Linda Knaack for her helpful assistance in the development of this section.
Sustainable Business Development
An organization’s ability to be sustainable will be a key factor in determining its success in the new century (Rainey, 2006). Industrial growth is facing increasing social and environmental limitations. Peter Senge is one of the major proponents of a new environmentalism driven by innovation rather than regulation and views sustainability as an opportunity for businesses to develop new technologies, products, processes, and business models as they transition from mere compliance to full sustainability (Senge et al, 2001; Senge, 2006; Senge, 2008; Nidomolu et al, 2009). In high demand will be leaders who can effectively spearhead efforts to create firms that are sustainable (Rainey, 2006; O’Toole and Bennis, 2009).
The Global Marketplace
In a volatile world, successful companies will pay attention to agility while continuing to focus on quality, cost, and efficiency. Doz, Santos, Williamson, & Berrebi (2004) argued that converting Europe’s relatively small geographic area and its diversity from obstacles to advantages demands new ways of thinking about how companies innovate. Their meta-national innovation processes (sensing, mobilizing, leveraging) should be applicable to countries around the world.
Global Operations
A highly volatile nation, India is a good model for operating in an environment of “shifting regulations, spurts of growth, capital shortages, and challenging supply base” (Prahalad, 2009). Many corporations are realizing that the knowledge they need to innovate is often found far afield, and globalizing innovation is becoming a cost effective option. Companies like Airbus and STMicroelectronics have demonstrated that increased innovation at lower costs gives them a competitive edge. Globalization demands an entirely new mind-set, not simply a change in processes (Santos et al, 2004).
Rapidly Evolving Technologies
Thomas W. Malone, the Patrick J. McGovern Professor of Information Systems at MIT’s Sloan School (2009), when he announced the research and educational initiative Inventing the
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Organizations of the 21st Century maintained that “We are now at the threshold of a new era, driven this time not by the technologies of production and transportation, but by the technologies of information, communication, and coordination. These technologies…hold the potential to completely transform the nature of work throughout the world.” Specific technological advances like e-commerce, virtual teams, and artificial intelligence will make the manager’s job more complex and consequently more difficult. The increasing rate of this technological change will result in smaller product life cycles with little time to recoup research and development costs. Also, while technology facilitates gathering knowledge, it also greatly increases the volume acquired. The development and acquisition of knowledge is an important piece of competitive advantage (Hitt, 2007; Hill, 2004).
Changing Regulatory Environments
Both deregulation, which lowers geographical and other entry barriers to many industries, and increased regulations, in the area of sustainability, exert significant pressures on any firm operating in a global economy (Prahalad, 1998,Senge, 2008; Nidomulo et al, 2009).
Rise of the Knowledge Worker
Knowledge workers use information or develop knowledge in the course of their jobs. They represent an ever increasing segment of the work force, and managing them effectively is crucial to any organization wishing to compete successfully in the new millennium. The knowledge worker exhibits an attitude towards work that is different from traditional workers and companies wishing to increase productivity must motivate rather than control them (Drucker, 1999; Kanter, 2009).
Managing in a Volatile Environment
“Over the years managers have developed tools and techniques to overcome challenges ranging from inconsistent quality to stagnant productivity (e.g., Six Sigma, Total Quality Management, and just-in-time supply chains). Now what they need is a system for addressing volatility. Prahalad (2009) asks “How does a chemical company, for example, cope with oil prices that bounce from $50 a barrel to $150 and back in 18 months?” This is a challenge to organizations of the new century that many business thinkers and business leaders are working hard to address (Hamel, 2009; Prahalad, 1998; Prahalad; 2009; Hamel, 2000).
EFFECTS ON LEAN SIX SIGMA
The American Society for Quality (ASQ) Six Sigma body of knowledge was used as a basis for documenting the effects that the changes categorized above will have on the implementation of a process improvement program, such as Lean Six Sigma. This structure is justified because the ASQ body of knowledge contains Lean methods and principles, and because many organizations that operate successful process improvement programs use a variety of names for the program and emphasize different aspects of Lean and/or Six Sigma (Maleyeff, 2007).
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The ASQ body of knowledge includes a number of main sections. Using a series of tables, details are provided regarding: (a) how the current elements of Lean Six Sigma mesh with the upcoming changes, and (b) what needs to change in the application of Lean Six Sigma in order to remain relevant. Tables 1-5 (respectively) concern Enterprise-Wide Deployment; Organizational Process, Management, and Measures; Team Management; Define-Measure-Analyze-Improve- Control (i.e., DMAIC, which is the main project organization model used within Six Sigma); and Design for Six Sigma.
Table 1
Enterprise-Wide Deployment
How Lean Six Sigma Elements Mesh What Needs to Change in Lean Six Sigma
Sustainable Business Development
Change management skills and knowledge of Lean Six Sigma principles will continue to be crucial in meeting the goal of sustainability.
A better and systematic way to define the value of long term sustainability will be necessary, including cap and trade issues.
The Global Marketplace
The strong focus on understanding customer needs will be important as the diversity in customer types increases.
Defining value in various economic and cultural systems will complicate project selection, including effects of tariffs.
Global Operations
Leadership and knowledge in the areas of Lean and Kaizen will remain important skills for global operations managers.
Motivation for change will vary across economic and cultural systems, and this will complicate implementation of new processes.
Rapidly Evolving Technologies
The ability to understand how to integrate technology within business processes will take on increased importance.
The integration of technology across physical and cultural boundaries will be critical, and success may depend on learning from others.
Changing Regulatory Environment
Change management skills and solid leadership are critical when the regulatory environment is volatile.
Improvement project implementation may be complicated by limitations based on governmental laws and regulations.
Rise of Knowledge Workers
The ability to understand why and how Lean Six Sigma works will facilitate better understanding of its implementation.
Improvement efforts may move from process improvement to creation of effective working environments, including the virtual workplace.
Managing in a Volatile Environment
Change management skills are critical when business conditions and supply chains are unstable and volatile.
Project durations will need to be short but thorough, with many interconnected projects undertaken simultaneously.
Table 2
Organizational Process, Management, and Measures
How Lean Six Sigma Elements Mesh What Needs to Change in Lean Six Sigma
Sustainable Business Development
Although measurements are important, many traditional business performance and financial measures do not address sustainability.
Financial measures will need to change to create an emphasis on how improvements impact societal and environmental goals.
The Global Marketplace
Emphasis on critical-to-quality and related measurements will assist with the integration of performance metrics.
Decisions must take into account different market perspectives and how services are managed in diverse cultures.
Global Operations
Lean Six Sigma is applied and will impact all operations, including domestic and overseas facilities.
Terminology of performance measures may not be similar and how they motivate action across counties will vary.
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Rapidly Evolving Technologies
Rapidly evolving technologies might require new critical-to-quality and other performance measures.
Financial measures need to focus more directly on the impact of technology and management must adapt fast to changes.
Changing Regulatory Environment
Current efforts to implement Lean Six Sigma include critical stakeholders, so adding another stakeholder should be easy.
More key stakeholders (government, regulators) will exist and intellectual property issues will increase in complexity.
Rise of Knowledge Workers
Business measures and metrics are important tools for knowledge workers, but emphasis must be placed on worker satisfaction.
Improvements are needed in how performance of knowledge workers is measured and used to develop allegiance.
Managing in a Volatile Environment
Balancing the need for longer-term financial measures with a rapidly changing business environment will be challenging.
Cause-and-effect will be more difficult to determine and certain risks (political, legal, etc.) will increase.
Table 3
Team Management
How Lean Six Sigma Elements Mesh What Needs to Change in Lean Six Sigma
Sustainable Business Development
Teams might require retraining to focus their efforts on long-term issues and projects that contribute to sustainability.
Requires involvement of a green-certified member and more stakeholders (e.g., energy providers, community, or government).
The Global Marketplace
Team management approaches using diverse, international team members can enable a company to stay in tune with market.
Need to include members on teams that understand cross-region markets and mores, perhaps using localized sub-teams.
Global Operations
Team skill sets required and developed in black belt system would allow people to work well on “virtual teams” across the globe.
Challenges need to be overcome with multi- functional teams in disperse locations, having different languages and cultures.
Rapidly Evolving Technologies
Traditional team process will likely work well, because it capitalizes on the knowledge power of the group versus individual.
Need to expand team member scope with those that understand potential and limitations of technology solutions.
Changing Regulatory Environment
Teams must be agile and able to quickly communicate any changes in foreign and domestic government regulations.
New team members from regulatory bodies will be needed with team-wide awareness of regulatory effects across the globe.
Rise of Knowledge Workers
Concept of rewarding teams rather than individuals will become more difficult as good workers become harder to retain.
Need to convince workers that real benefits will come to them personally since they will not be motivated by slogans or money.
Managing in a Volatile Environment
Traditional team management approaches might be too slow and cumbersome, lacking the agility necessary to adapt.
Many members of the team will be new to the company or to the job and therefore teams need to be amorphous.
Table 4
The DMAIC Process
How Lean Six Sigma Elements Mesh What Needs to Change in Lean Six Sigma
Sustainable Business Development
DMAIC can be applied to any process – therefore it could be used as part of a broad intangible framework like sustainability.
Need to find better ways to measure future and indirect effects, and would need to sacrifice short-term profits for sustainability.
The Global Marketplace
This logical and thorough “scientific method” can be well suited for competing within the global marketplace.
Need to be proactive in identifying opportunities for improvement as market preferences change and evolve.
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Global Operations
DMAIC is useful for all operations, whether domestic or overseas; the universality of the mathematical approaches is appealing.
Differences in education practices could complicate training of the tools; challenges in central vs. local control need to be overcome.
Rapidly Evolving Technologies
DMAIC may be too slow and ponderous when technology is moving at breakneck speed with projects taking months to complete.
More risk taking in choosing projects and potential for “user” of project results being unable to understand their implementation.
Changing Regulatory Environment
The DMAIC process can provide a structured way for companies to assess changes within the regulatory environment.
Changes in regulations will often motivate improvement projects but recommendations may require law changes to implement.
Rise of Knowledge Workers
DMAIC helps workers gain in-depth insight into the details of the process – not just superficial “managerial” knowledge.
Tools will evolve to downplay manufacturing by including those specific to knowledge jobs, and this would impact training regimens.
Managing in a Volatile Environment
DMAIC may be too slow and ponderous when technology is moving at breakneck speed with projects taking months to complete.
Need to modify DMAIC to move quickly (Kaizen approach would help) and controls will be emphasized to identify new problems.
Table 5
Design for Six Sigma
How Lean Six Sigma Elements Mesh What Needs to Change in Lean Six Sigma
Sustainable Business Development
The tools and concepts of DFSS will take on increased importance, as the criteria for effective designs are broadened.
Norms, guidelines, and paradigms for sustainable design need to be part of DFSS projects to account for total life cycle costs.
The Global Marketplace
The tools and concepts of DFSS will take on increased importance, as the diversity of customer types increases.
Designs must be cognizant of various user emphases with decisions regarding design flexibility becoming important.
