When the world economy is in the pits, most people think about hunkering down, laying off their expensive (and often most talented) workers, cutting costs to the bone (including customer service and innovation)—and just trying to survive. Then, wait for the next recovery, when and if it ever comes. And unfortunately, banks usually aren’t much help during difficult economic times as they tighten their belts and only offer lending to those that really don’t need it.

Sounds pretty much like what we are all witnessing today: hunker down and wait and hope for the best.

What most of us forget is that the economy has always performed in cycles. When the economy is rosy, business practices slip, waste is tolerated, innovation may not seem necessary and customers may sometimes be taken for granted. These poor practices don’t seem to matter though, as the money just keeps rolling in!

Wise business people, especially those who have experienced the variability of past business cycles and their effects, realize that each economic downturn is followed by a rebound—often sooner than the naysayers predict. Positioning your company to prosper in an economic recovery takes foresight, vision and guts!

Here’s an example of someone I know who saw tremendous opportunity during the recession of the early 1990s and had the foresight, vision and guts to capitalize on this opportunity—our most successful local optometrist.

Let’s call him Dr. Jones.  In the early 1990s, Dr. Jones, a young, ambitious optometrist, decided to set up his own practice. Having studied for a while in the USA, he knew about some of the new technology developed for ophthalmologists and optometrists to provide Retinopathy Screening for patients. Employing digital photography, Retinopathy Screening can monitor changes at the back of the eye and is essential for tracking progression of eye disease in diabetics. Back in 1990, this technology wasn’t yet available in our area—but was sorely needed.

Dr. Jones required money to set up his high tech practice, and lots of it. Banks were unwilling to lend to him, so he went to other sources—family, friends, friends of friends—and he secured the funding to set up the most technologically advanced optometric practice in the area. Some people thought he was unwise to invest so much money in a new and unproven venture, especially in the depths of the recession. However, Dr. Jones knew better. Having both outstanding professional and business skills, he set up not only the most sophisticated practice of its kind, but one which focused on outstanding patient service, efficient operations and low overhead. Without knowing the term “lean”, Dr. Jones employed LEAN principals with PERFECTION—and won!

THE RESULT: Clients flocked to Dr. Jones’ practice, including the local National Health Service (NHS) Primary Care Trust. Today, he is the most successful optometrist in the area. His technology is superior, but Dr. Jones’ success is based primarily on his devotion to superb patient care and employing LEAN business practices to eliminate waste.

CONCLUSION: If you have foresight, vision and guts, anyone can prosper at any point in the business cycle. Employing LEAN principals and tools will help you achieve PERFECTION and will greatly reduce your risk, especially during economic recessions when it is needed the most.

About the Author

David Willour, Chairman & Director, Sagitta, Inc.

Mr. David Wilour is a seasoned Financial Executive with proven experience in increasing profitability while streamlining operational expenses during financial downturns. Over thirty years of management experience facing all market conditions. He Pioneered and launched Mellon’s (now BNY Mellon) Master Trust/Master Custody program nurturing it to become one of the fastest growing and profitable fee producing products offered by Mellon within 4 years of its inception.

Most people want to work out and be healthy, many go to the gym, only a select few look like sculptures. Do you run or do you RUN? Do you lift weights or do you LIFT WEIGHTS? While your business may be working hard, are you truly focused on being successful? Busy or productive?

Data suggests most are simply very busy. The rules of engagement have clearly changed! Moving forward as we emerge from very difficult times, strategy, focus, communication and crisp execution will separate and clearly define the winners from the losers. The focused and productive companies that are currently growing market share and increasing EBITDA, free cash flow, working capital, and profit per employee are likely utilizing methodologies and concepts that are consistent with HOSHIN KANRI.

Hoshin Kanri is a strategic planning and management methodology that focuses on a shared goal, communicates that goal to all corporate or organizational leaders, involves all those leaders in planning to achieve the goal, and finally holds all team members ACCOUNTABLE for achieving their part of the plan. The current market conditions have clearly demonstrated that companies cannot save their way to success. You need to change HOW you do business and adopting the HOSHIN KANRI way is a great comprehensive approach to fundamentally change the way you do business and increase control of your company’s performance.

Hoshin Kanri can help you improve your productivity and increase your bottom line.

About The Author

Michael Giuliano, Managing Partner, certifiedlean® Michael is a Lean Subject Matter Expert, business owner, educator, and author. He is an active Board Member for several firms across the United States. Michael’s key areas of focus include hoshin kanri, lean organizational strategy, lean for unions, product life-cycle programs, concept to launch / rapid prototyping, collaboration, learning, and curriculum development.

First let’s explore the origin of Six Sigma and describe the method. Introduced within the Motorola organization by Bill Smith, a process engineer during the 1980’s Six Sigma became a system wide practice by 1989.  At this time, it was determined that the traditional quality level – measuring defects in thousands of different opportunities – did not provide enough “granularity” (breaking down into smaller, more manageable parts), so “defects per million opportunities” was created.  This allowed a deeper examination into the root-cause or contributing factors of defects and errors.

A new quality standard was adopted and the methodology of Six Sigma was developed as the corrective process known as DMAIC.  This acronym broken out is a five step process; Define, Measure, Analyze, Improve, and Control is designed to improve any process through the stabilization and prediction of results, thus leading to the elimination of defects.  Defects are characterized as anything that could lead to customer dissatisfaction.  Six Sigma is a smarter way to manage a business or a department.  Six Sigma puts the customer first and uses facts and data to drive better solutions.^[1]

These steps are very effective at improving the process and creating customer value, the caveat is the DMAIC process must be applied correctly, using the right resources, with strong leadership and communication.  Improvements usually represent dramatic cost savings to businesses, as well as opportunities to retain customers, capture new markets, and build a reputation for top performing products and services. The real message of Six Sigma goes beyond statistics.  Six Sigma is a total management commitment and philosophy of excellence, customer focus, process improvement, and the rule of measurement rather than gut feel.^[2] With this in mind let’s explore critical characteristics that make up a successful Six Sigma candidate.

Following this mindset that the real message of Six Sigma goes beyond statistics, one must look to other factors of success.  Six Sigma is a process that needs the human element to exercise.  To bridge the gap between mediocrity and excellence there are four (4) critical characteristics to look for in  potential candidates who will take the process and execute to a level of performance that will drive dramatic, sustainable results. They are Learning Ability, Leadership, Desire, and Determination.  Let’s break each of these characteristics down and provide some factors to consider.

LEARNING ABILITY –

This particular characteristic has been the primary focus, and at times the only one considered for many organizations choosing their six sigma candidates.  To compound this issue, the focus is generally geared to only those having prior experience with statistics.   While this quality is important it is not the determining factor.   A candidate must be able to understand instructions and underlying principles with the ability to reason and make sound decisions possessing an analytical mindset.  The ability to gather, analyze, and summarize data in order to draw rational, fact based conclusions is needed.  A candidate will be placed in a learning environment where mathematical science is discussed and instructed.  Statistical reasoning is needed for proper understanding and execution of the Six Sigma DMAIC method.

LEADERSHIP –

A candidate must have demonstrated leadership in a team environment with the ability to mentor team members to achieve a level of knowledge that fosters cultural growth and individual project success.  The candidate usually knows what must be done, how to get it done, but genuinely involves others, listening to their concerns and ideas and is willing to change course as a result in order to achieve greater results.  This person can convince others to follow his/her lead despite skepticism, and is generally able to win the hearts and minds of others to achieve breakthrough objectives.   The candidate works collaboratively with fellow employees at all levels of the organization, and is able to maintain a blameless environment by focusing on issues and facts rather than seeking who is at fault.  This quality to lead and inspire others to achieve a common goal is paramount for six sigma success.

DESIRE –

Strong intention or aim for excellence is another characteristic to be considered.  A candidate must possess the trait of motivation which has been demonstrated in past performance.  The ability to be proactive with foresight to undertake strategic actions aligned with organizational goals is important.  The ability to plan and execute work that is accurate, complete, timely, and reliable while never compromising integrity shows that a candidate takes pride in all that they do.  This personal desire for excellence is a good indicator that a candidate will apply the same for anything he or she undertakes.    As a company, searching for the right six sigma candidate it is necessary to communicate the positive education in this continual improvement methodology and the personal growth experience that the candidate will receive.  This understanding will help to stimulate the already existing desire and help facilitate the continuing aim for excellence.

DETERMINATION –

Once a candidate has been selected and embarking on this six sigma journey it is crucial that they are devoting full strength and concentrated attention to achieving results in the short and long term.   This focused results orientation will keep the candidate moving toward breakthrough objectives while potentially undergoing immense pressure from outside influences to forego the six sigma process and fall back into the traditional methods of operation.  The ability to adapt effectively in an environment of change, uncertainty, and ambiguity is required.   The candidate will implement creative solutions that fall outside of the current paradigm, thus challenging the current standard.  This will prompt a strong reaction within the status quo and steadfast determination from the six sigma candidate is needed to ensure successful implementation and sustainable results.

Each of these characteristics discussed are crucial for choosing a candidate that will be successful in completing the rigorous training and certification process.  The more important aspect is the continued return that a company receives from this individual as a change agent within their continual improvement journey.  To ensure that this takes place the candidate must possess all four described characteristics.   Six Sigma is a commitment to a management philosophy that drives for total customer value creation.  This commitment is not guaranteed by focusing only on the attribute of possessing an analytical mind. The combined characteristics of Learning Ability, Leadership, Desire, and Determination are paramount for selecting a successful Six Sigma candidate.

Sources

[1],[2]  Pete Pande and Larry Holpp (2002);  What is Six Sigma?, New York: McGraw-Hill

Frontline leaders are those in positions at gemba that lead, coach, and manage the manufacturing or service  process.  Some of these leaders are Hospital nursing staff supervisors, manufacturing foremen, banking operation leaders, and restaurant lead servers.  These are just a few examples, but the point is that within every business there is a ‘frontline’ that needs to be led and managed effectively.

Let me explain why I see the frontline as the crucial area for success. From my experience when a company decides it wants to initiate a change in their business model the executive leadership had already done  their homework, discussed implementation among themselves and agreed to support the plan.  Now granted this doesn’t mean that there are not some executive leaders that nod their head in agreement and then passively resist the process of change.  It just means that at least there is someone typically the CEO or COO that has mandated the need for Lean Six Sigma and the executive force get’s in line to board the bus for change.

There is one big problem…the place where change actually takes place ‘gemba’, also known as the frontline never really understood that the tide of change was occurring.  Oh Sure, there was a general announcement made but the frontline leaders who were busy fighting fires didn’t hear the message.   This lack of effective communication can be identified as the “root-cause” of many transformation failures.  A state of ambiguity is created when those who are accountable for frontline change management do not understand  the game plan. This ambiguity generates  unfulfilled expectations and unmet needs resulting in frustration.  Change is unsettling to everyone and adding   frustration can lead to a total organizational meltdown. This catastrophe can be avoided.

A lean six sigma tool that can help facilitate effective communication throughout the business enterprise is “catchball”.   Catchball is a communication process (named after a child’s game of throwing a ball back and forth) ^[1] in which parties engage in a series of information exchanges about the means for achieving a particular objective. The purpose for the exchange is to build consensus around the best approach for achieving an objective.  Catchball is based on the belief that the best approach will evolve from the back and forth exchange of information between the person who is responsible for achieving the objective and the persons who will be most influential in achieving it.  The secondary benefit from using catchball is a higher degree of commitment to achieve the objective. ^[2]

Thus managers and their teams pass around suggestions and possibilities to agree how to align plans, taking into account those things they expected to do anyway. ^[3] This process of alignment takes place early in the life cycle of a lean six sigma transformation, primarily as part of Hoshin Kanri (aka Policy Deployment) .  Research has pointed to a strong need to work to short timescales to complete catchball activity, to compel people and teams to reach conclusions ^[4] and begin the activity of leading.   There comes a point in catchball when the emphasis shifts from discussion of managerial objectives and how to develop them in terms of means, to a more prescriptive form of activity, that is primarily about how to detail responsibilities and action plans. ^[5] An organization can benefit greatly from the catchball method and the result will be unification of leadership, message, and means.  An effective communication plan is not the silver bullet to successful LSS transformations. It can help to develop buy-in so that those who lead the change management process do so with passion and understanding of the desired result.  The result is to deliver a lean six sigma business transformation which will create  a  world class business enterprise that fosters flawless safety, service, quality, and delivery.  It all begins with communication.

“The single biggest problem in communication is the illusion that it has taken place.”  G. B. Shaw

Sources

[1],[3],[4],[5] Barry Witcher; School of Management, University of East Anglia, Rosemary Butterworth; University of Durham, “What Is Hoshin Kanri-A Review”, The Economic & Social Research Council, 1999

[2] Jay Deragon; The Relationship Economy…, “Should Your Company Play Catchball?”, 05/16/2008

To begin looking for commonalities between these two methods, history provides some interesting learning points.  Throughout  time man has searched for ways to excel and constantly improve any process created.  For this article we will identify a point in time where the explosion of lean and six sigma took place.

LEAN

Lean Manufacturing is a term developed by Professor James P. Womack in a book he authored in 1989 called “Lean Thinking”, to explain the phenomenon he saw taking place in the automotive industry.  He noticed the revolution of the Japanese vehicle and wanted to understand the dynamics taking place.  He learned the Japanese were using a methodology of identifying seven wastes of manufacturing and then using different improvement techniques to eliminate these wastes.

The method can be summed up in five steps:

1. Identify the sequence of activities called the “value stream”

2. Identify which features create value

3. Make the activities flow by eliminating waste

4. Create pull

5. Perfect the process

These steps are quite effective at improving the process and creating value for the customer.

SIX SIGMA

During the time that lean manufacturing was becoming known, Six Sigma was being introduced within the Motorola organization by Bill Smith, a process engineer during the 1980’s and then became a system wide practice by 1989.  At this time, it was determined that the traditional quality level – measuring defects in thousands of different opportunities – did not provide enough “granularity” (breaking down into smaller, more manageable parts), so “defects per million opportunities” was created.  This allowed a deeper examination into the root-cause or contributing factors of defects and errors.  A new quality standard was adopted and the methodology of six sigma was developed as the corrective process.

Six Sigma is a five step statistical method designed to improve any process through the stabilization and prediction of results, thus leading to the elimination of defects.  Defects are characterized as anything that could lead to customer dissatisfaction.

The five steps are:

1. Define process improvement goals consistent with customer expectations

2. Measure key aspects of the process and collect relevant data

3. Analyze the data to establish critical process input to process output relationships

4. Improve the process based on the obtained data driven knowledge

5. Control the process so that deviations from the process are corrected before they appear as defects

These steps, as noted with the lean steps, are very effective at improving the process and creating customer value.

THE END RESULT

As I continued to work with both of these wonderful improvement processes, I became very adept at applying them concurrently while driving for quick and powerful results.  Over time, it became evident that both methods were driving for the same result…relentless continuous improvement!  So, if you practice Lean, Six Sigma or both, remember that they are not diametrically opposed but rather aligned to deliver excellence in any business process.

The A3 refers to a certain ISO 216 defined paper size which is 11×17 (B Size) to report significant continual improvement activity.  The A3 was originally used by Toyota Motor Corporation to document a step by step reporting process which is managed through fact based knowledge.   These reports typically covered problem solving, project reporting, or policy changes. The A3 report visually presents information in a very concise storyboard method, which is easy to follow and understand at a glance. The MTF A3™ follows a simple but highly effective eight step procedure to ensure rapid resolution.

Step 1 – Define the Problem or Opportunity

This is accomplished by completing the key task of defining the ‘who’, ‘when’, and ‘what’ will be accomplished by formulating a SMART statement identifying the problem or opportunity at hand.  The SMART acronym is used to guide the author of the document through a series of thought provoking questions to help maintain statement integrity. The acronym broken out is  Specific – Measurable – Achievable – Relevant – Time Based. This step is designed to help formulate the team makeup and determine the cross functional support system.

Step 2 – Analyze Historical Results

The objective is to clarify the problem / opportunity statement by charting past and present performance of the metric that defines ‘what’ will be accomplished.  The key tasks associated with this step are collecting historical and current performance data, identifying performance gaps to target and benchmark, evaluating trends, and determining the improvement focus.

Step 3 – Identify and Prioritize Waste

This step is used to explain the performance gap by prioritizing the contributing categories directly affecting the metric. A metric (Key Performance Indicator) is a quantifiable measurement of business health that is developed during Hoshin Kanri for observation, tracking, and reaction.  Key tasks include breaking down the gaps through pareto analysis, identifying waste, and collecting additional data if needed.

Step 4 – Evaluate Root-Cause and Identify Improvement Needs

The target of this step is to identify the underlying causes of the problem and/or improvement needs through the use of tools such as 5Y, Ishikawa Diagram, Brainstorming, Nominal Group Technique, Impact/Feasibility Matrix, and Forced Ranking to name just a few.  This process narrows down the error conditions and allows the author of the report to lead the team through appropriate decision making.

Step 5 – Capture Activities and Document Countermeasures

Documenting activities will aid the team in keeping a chronological list of tasks that will be used to match with corresponding data points during (Step 6) the process of reviewing current results. These activities which have a bearing on the results may become identified as countermeasures once they have been validated as creating a positive result upon the metric gap the MTF A3™ is addressing.

Step 6 – Review Current Results

The primary objective is to determine the direct impact of activities on the error condition, and/or the improvement needs identified earlier in the process.  A key task for this step is updating the current metrics and visual charting as the MTF A3™ progresses. Another key task is to document when proposed countermeasures were implemented and verify that they do result in the anticipated improvement.

Step 7 – Control and Standardize

This step in the MTF A3™ process ensures that improvements are properly controlled and sustained over time. As with any continual improvement tool, the power of positive change must be controlled and managed for long term success.  Implementing these improvement changes and ‘walking away’ before it can become part of the DNA fabric will result in reoccurrence. Not following this step will adversely affect the A3 results and place the operating system in chaos.  The team must list steps taken to control each individual countermeasure, document new methods, equipment, or processes in the quality management system, effectively communicate the changes throughout the value chain, publicize and spread the improvement to other processes in the business stream.

Step 8 – Celebrate Success

To establish a culture of team based activity recognition for a job well done is necessary.  Companies are finally realizing that their greatest asset is, first, their people, then their product or service. ^[1] The key task for this step is to communicate the MTF A3™ results and performance gains to a wide audience.

To establish and maintain a strong problem solving foundation, standardization must be in place.  Standardization is a consensus-driven activity, carried out by – and for – the interested parties themselves. It is based on openness and transparency within independent organizations, and aims to establish the voluntary adoption of and compliance with standards.^[2] The establishment of standards is the greatest key to creating consistent performance. These documented processes are then used to manage ‘abnormalities’ to the standard.  This abnormality management process allows a team member or team leader (frontline

supervisor) to focus on the vital few process factors and identify any issues for immediate problem solving and correction.  As with any process normal variability occurs so the intent is to focus on the ‘red flags’ making   the process of identifying error conditions and problem solving much easier.  This ease of use by the team makes for an achievable method during a very busy day at gemba (gemba = shop floor or point of operation).   When the abnormality is identified the MTF A3™ method can be put into action immediately and utilized by the team to eliminate the errors  within the process that are creating undesired results.  This immediate action and solid root-cause identification method will be one of the most important tools for any business seeking to establish a Lean Six Sigma operating excellence environment.

So the next time you find yourself in the middle of a fire fight, remember to stop, drop, and root-cause.  This action will put out the ‘source’ of the fire and allow employees to focus on the value added portions of the business stream.

Sources

1.  Dawn M. Baskerville; Black Enterprise, Vol. 23, Why Business Loves Workteams,  April 1993 (6/4/2009)

2.  Bart Brusse, Rigo Wenning   W3C/IST Standardization Guideline Created; 7/31/05 modified 9/1/2007 (6/4/2009)