Strategic Approach to Organisational
Excellence and Improvement
Alan Skinner
School of Management, University of Technology Sydney
Director, Lean Six Sigma Business Excellence Institute
Total Operational Excellence
23-24 August 2012 Melbourne
THINK.CHANGE.DO
Agenda
• The Excellence / Improvement or Lean Six
Sigma Frameworks: A Paradigm fading?
– Driving sustainable high performance through
Lean Six Sigma in the context of Organisational
Excellence
– Creating a value stream fit to market
– Highlighting the importance of deploying 5
leadership practices to drive excellence and
improvement
• Highlighting the recent research results on
Lean Six Sigma practices
Excellence Frameworks
Influence of Edwards Deming
Systems view of an organisation
Sustainable high performance comes from …
..quality /
price suited
to the
market
..predictable..
dependability..
Six Sigma idea
..low cost..
Lean idea
Customer
Focus
STRATEGIC Implications of Deming’s Ideas
Design the Value Stream to Fit
the Market
Execute to the Design
Role of Improvement capability
BUT…
Many factors
influence
success –
good quality
being
delivered
Role of Improvement capability
Gap between ideal and practice
So need Continuous Improvement
Always changing,
adapting,
improving
Lean Six Sigma is a way of closing the Gaps that delivers
results
Reframing Lean Six Sigma – Improvement
Lean Six Sigma is a way of closing the Gaps that
delivers results
So
Lean Six Sigma can be seen as “bringing about
change that is a measurable improvement and can
be sustained”
History of Improvement Methodologies
Long before Lean and Six
Sigma became BUZZ words
they were part of the original
teaching of Deming
He never separated the ideas !!
History of Improvement Methodologies
• Influence of Deming and Business
Excellence Frameworks
• Six Sigma - Motorola - Bill Smith –
mid 1980s
• Lean - Toyota
• Popularised in many companies
• Family of approaches develop :
– Core Model is DMAIC
• Move to Lean Six Sigma
History of Improvement Methodologies
Influence of
Deming and
Business
Excellence
Frameworks
Organisational Excellence Models
Leadership
Creating
Environment
for Excellence
Strategic
Thinking,
Management
and Execution
Enabling
People to Work
on the
Organisation
Gathering and
Deploying Customer
and Market
Intelligence
Sustaining
Operational
Excellence
Balanced Sustained
High Performance that
Delivers Value to all
Stakeholders
Integrated System of Measures consistent with Strategy and Design
Key Supporting Models Practices and Tools
Customer
Experience Design
Value Stream
Design
Leadership for
Business
Improvement
(LBI)
Leadership
Creating
Environment
for Excellence
Strategy
Maps
Strategic Thinking,
Management and
Execution
Gathering and
Deploying Customer
and Market
Intelligence
Interlinking
Critical Measures
Balanced
Scorecards
Enabling People to
Work on the
Organisation
Balanced Sustained
High Performance
that
Delivers Value to all
Stakeholders
Sustaining Operational
Excellence
Integrated System of Measures consistent with Strategy and Design
System or Family of Measures
Customer Experience (TCE) Research
Stability and Capability Analyses
Business Process
Management (BPM)
Organisational
Excellence
Assessments
Lean Six Sigma /
Organisational
Improvement
Methods
5 Activities for Leaders to Focus the Organisation on Improvement
1
Purpose
•Purpose
•Mission
•Vision
•Governance
2
Planning for
Improvement
4
3
System for
Obtaining Info
•Strategic objectives
•Improvement efforts
•Resources
Managing Individual & Team
Improvement Efforts
Systems View of the Organization
Black Belts
Green Belts
Improvement Plans
Family of
Measures/
Scorecards
Financial
Customer
5
Enablers
Operations
Employee
Training…Recognition…
Communication
Model is based on Content from “Quality as a Business Strategy” (API, 1998)
Myths about Lean Six Sigma
•
•
•
•
•
Recent Management Fad
Very tactical or operational
Focused internally
Suited only to manufacturing
No room for Creativity
Research and Literature
Projects Submitted
Journal Literature
Highlighting Research from Projects Submitted
• 150 + projects over years
• Sample 30 taken
• Quick review of patterns emerging
Breakdown of Projects by Industry
Technology
9%
Financials
24%
Industrial
24%
Consumer
services
5%
Health Care
19%
Consumer
Goods
19%
Breakdown of Projects by Process
Inventory Mgt
5%
Manufacturing
16%
Sales Process
21%
Packaging
5%
Service
26%
Admin
27%
Breakdown of Projects by Problem
Forecast
Inaccurate
7%
High Inventory
7%
Not delivered in
full
5%
Unnecessary
Work
2%
Customer Impact
17%
Reduced sales
5%
Wasted
movement
2%
Wasted space
2%
Product/Service
Defects
7%
Admin Errors
5%
Long cycle
time
10%
Rework
10%
High Costs
12%
Wasted Labour
Time
5%
Over Production
4%
Frequently Cited Causes
No Process Control / process errors
Inaccurate Data Interpretation
Tool related & Interface between tools
Criteria Goals Targets Unclear Unknown
Lack of Preparation Planning Scheduling
Process Complexity/Flexibility
Poor understanding of Demand
Lack of Skills / Knowledge
Lack of Management of Information
Poor communication beyond org
Poor Equipment
Lack of Resources
Role Understanding
Poor Design
0
10
20
% Reported
30
Frequently Cited Solutions
Training and assessment
Task redesign/simplify/reduce
Tool redesign/creative use/automation
Use/provision/access of…
Visual Management Error proofing
Monitoring Testing Tracking Evaluation
Planning Preparation
Procedure / Troubleshooting…
Role carification/ownership
Accurate targets/goaling…
Communication engagement with…
Recognition aligned to gaols
Layout of process/machines
Change Design of Product/service
New equipment
0
2
4
6
8
%
10
12
14
16
% Improvement
Level of Impact of Projects – from Baseline
More
100
90
80
70
60
50
40
30
20
10
0
5
10
15
20
Frequency
25
30
35
Range of ROI Cited
8
120.00%
7
100.00%
Frequency
6
80.00%
5
4
60.00%
3
40.00%
2
20.00%
1
0
0.00%
ROI S
Research and Literature
Projects Submitted
Journal Literature
Reviews of Research and Literature
• Conceptual Discussion, Opinions,
Research
– Reviews and Studies over 4 decades
1970s -2012
– 500+ articles
– Different Industries
– Different Countries
Overview of Research Coverage
• Conceptual Discussion and History reviews
– Theory and Model Building
•
•
•
•
•
•
Critical Success Factors Link to Results
Measurement, Analysis, Tools, Models
Innovation and Design of Experiments
Action Research, PDSAs, Learning and Change
Application settings for Lean/Six Sigma
Organisational Excellence – broader area
Critical Success Factors – Research Literature
1. Management Commitment
6. Project Selection
2. Reward Recognition
7. Stories
3. Competency of Belts
8. Dashboard
4. Investment
9. Culture
5. Assessment of Results
Critical Success Factors – Research Literature
1. Management Commitment
2. Reward Recognition
6. Link to Strategy
& Project
Selection
3. Competency of Belts
7. Stories
4. Investment
8. Dashboard
5. Assessment of Results
9. Culture
Critical Success Factors – Research Literature
Other Factors
Understanding Customers
Understanding Business
Infrastructure and Resources
Tools and Methods
Skills and Training
Application Beyond Core
Communication
Success Factors Themes from Project Reports
Measurement, Use of data, Variation, ROI
Concepts / Holding to Methodology
Skilled Use of Tools and Techniques
Effective Change Management Practices
Senior Management Support
Solution Development, ideas, testing
Effective Facilitation
Teamwork/engagement & ownership
Use of Learning Cycles
Business & Process Understanding
Control practices to sustain effects
Customer engagement and analysis
Effective Analyse Phase
0
5
10
15
% of Responses
20
Thank You
Questions
Interested in Research
Participation
Please contact me
Frequently Cited Causes
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