Ph.d exam rev2

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Developing the execution model for Lean Six- sigma strategy by linking two critical
forces; ROFO and Knowledge Competency. A study on knowledge workers in
manufacturing organizations.
By
Ah Bee Goh
Proposal exam
ID # 532152010
30 May 2011.
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CONTENTS
1. TITLE
2. ABSTRACT
3. PRINCIPLES , THEORY, RATIONALE, AND/OR
HYPOTHESIS
4. LITERATURE RESEARCH
5. PURPOSE OF STUDY
6. EDUCATIONAL / APPLICATION ADVANTAGES
7. RESEARCH DESIGNS , SCOPE AND METHODS.
8. LOCATION AND COVERAGE OF INDUSTRIES
9. EXPECTED DURATION AND PLAN
10. CONCLUSION
11. REFERENCES
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1. TITLE
Developing the execution model for Lean Six- sigma strategy by linking two critical
forces; ROFO and Knowledge Competency. A study on knowledge workers in
manufacturing organizations.
2. ABSTRACT
In to- day’s competitive and changing world , it would be hard to believe that
organizations do not have a strategy. A strategy is like a plan or a ploy to outmaneuver the competitors. Lean concepts was first developed by Toyota and has
now spread throughout the world. Six- sigma was invented by Motorola and
American companies which had implemented successfully had reported huge
tangible gains. Toyota uses Lean concepts to achieve the number one position in the
automobile world. Motorola, GE and Allied Signal implemented Six- sigma
successfully. It would indeed be a powerful strategy if any company is able to
combine Lean concepts and Six-sigma. To have a great strategy is only one aspect
but the other important aspect is to be able to execute it. Many companies fail to
execute their strategies ( including Lean Six-sigma). This is indeed a gap many
CEOs fail to recognize. Academia and Business Schools have not provided
sufficient research to enlighten us why the gap exists in industries. From the
author’s experience, this gap can only be addressed when two fundamental forces
are present; one is the willingness ( total ownership of the process, ROFO) and the
other is relevant knowledge. This two forces are inseparable as the missing of one
will result in Lean Six – sigma strategy not executed successfully. The research will
focus on 5 categories of knowledge workers and 7 levels of knowledge competency as
it is important to understand which category of knowledge workers will require
which level of knowledge competency. The ROFO model will apply to transform the
willingness of workers into total ownership of the process.
Key words: ROFO, Knowledge Management, gaps, Knowledge competency, Total
ownership. Execution, Lean Six- sigma, wastes.
3. PRINCIPLES , THEORY, RATIONALE, AND/OR HYPOTHESIS
3.1 Lean Six- sigma strategy
Toyota started Lean concepts in the 1950s, whereas Six sigma was initiated by
Motorola in 1987. Any company which could combine Lean concepts and Six sigma
as a strategy would indeed be ahead of the pack in the industries. To be able to do
both is indeed a great challenge for any company. The basic question confronts us
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to- day is , “ if Lean Six- sigma is a powerful strategy , why is it companies in the
world are not pursuing with great intensity?”. From the author’s experience , many
companies had pursued but not successful. The issue lies in execution. Lean Six –
sigma is like any other strategy a company is adopting . In order to understand why
Laen Six- sigma is not successfully implemented , we need to understand why
companies cannot execute strategies in general. It doesn’t matter which strategy a
company chooses such as marketing, least cost , logistic, innovation and etc , the
same implementation challenge applies to all.
3.2 Some insights on failure to execute strategy
Companies in their quest to survive spent enormous time and money developing
strategies . The strategies are broken down into plans and tactical actions. Very
often , when a company fails to compete or survive, the Board of Directors or
shareholders would blame that the strategy is not right.
Fortune Magazine on 21 June 1999 published an article by Ram Charan and
Geoffrey Calvin on “ Why CEOs fail”. It offered the following arguments;
i) CEOs are three times likelier to get booted than a generation ago.
ii) Those CEOs are not dumb or evil. In fact they tend to be highly
intelligent, articulate, dedicated and accomplished.
iii) It is bad execution- not getting things done, being indecisive, not
delivering on commitment. See fig. 3.2-1.
Fortune Magazine on 21 June 1999 published an article by Ram Charan and Geoffrey Calvin
on “ Why CEOs failed”. It offered 3 reasons;

CEOs are 3 times likelier to get booted than a generation ago.

Those CEOs are not dumb or evil. In fact they tend to be highly intelligent, articulate,
dedicated and accomplished.

It is bad execution- not getting things done, being indecisive, not delivering on
commitment.
Fig.3.2- 1
4
At the time when this article appeared , there was news that Swissair , the icon of
Switzerland was on the brink of bankruptcy and again they blamed it on
Mckinsey’s bad strategy ( to- day the airline was taken over by Lufthansa and
named it Swiss airlines International).For an organization to move forward , it has
to execute actions whether they are strategic or daily operational issues. Most
companies blame the top management for not committing enough. There is no
doubt that top leaders are the best scapegoats to pick on. It is the author’s opinion
that academic research focuses on developing strategies and list lofty tools and
techniques for managers to work on. Researchers and management writers suggest
strategic plans for action but far too few focus on ,’ how to execute the plan’. There
is no lacking on management models , tools and techniques like ;
1.
2.
3.
4.
5.
6.
7.
8.
Total Quality Management.
Six sigma by Motorola.
Balanced Scorecard by Kaplan.
Mckinsey 7S model.
Business Process Reengineering by Michael Hammer
5 force strategy by Michael Porter.
SWOT analysis
etc.
To realize any plan of actions , it has to be the work of human beings. Only
human beings can make things happen and not machines. Why is it so difficult
to get human beings to execute tasks ? Douglas Macgregor came up with two
theories namely ;
1. Theory X
 Most people dislike work and they will avoid it if they can.
 Most people must be forced and threatened with punishment before they
will work. They require close direction.
 Most people prefer to be directed. They avoid responsibility and have
little ambition. They are interested only in security.
2. Theory Y
 Work is a natural activity like play or rest.
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


People are capable of self- direction and self- control if they are
committed to objectives.
The average person can learn to both accept and seek responsibility.
Many people in the general population have imagination, ingenuity and
creativity.
Douglas’s Theories are two extremes , one is positive and the other is negative on
assumptions of human behavior. Again it offers little help in terms of what to- day’s
managers need so badly , “ how can we get workers to execute tasks on- time and
successfully?”.
It is commonplace that these tasks are not tackled successfully as
many CEOs have lamented. This is confirmed in Larry ‘s book that
the Compaq Board fired the CEO and the same applied to the
Lucent’s board . He added that the common explanation is wrong
strategy but Larry firmly stated that the real issue is execution. Larry
said that it is the GAP nobody knows.The author agrees fully as many
if not all are not aware that the real issue is to inculcate a company to
have culture of execution.
3.3 Practical examples from industries on execution.
1. Dell computer – Fig. 3.3 – 1.
Steven Holzner , author of the book,” How Dell Does IT” devotes one whole chapter
entitled “ Always Adapt , Always Execute”, ( Chapter 6 - pages 107 to 128). On 7 of
March 2005 , Fortune magazine named Dell Inc. as the most admired company in
the United States. “ And you don’t get there unless you know what the heck you are
doing”, stated Steven Holzer. Some examples of Dell’s execution are;
 Dell’s commodities work better when they are delivered.
 When Dell’s commodities don’t work , they are fixed or replaced faster.
 Dell keeps less inventory on hand to build its commodities.
 Dell needs less of a sales force because a large portion of its orders come
directly from the Internet.
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Flawless execution of well- known “Dell Model”.
Fig. 3.3 -1 Page
109
2. IBM
Louis V. Gerstner, Jr, former CEO of IBM who was credited to turn around the
company . He authored the book, “ Who Says Elephants Can’t dance?”. He also
devoted a chapter ( chapter 24, pages 229 to 234) entitled , “ Execution – Strategy
Goes Only So Far. He offered the following advice;
 It is extremely to develop an unique strategy to differentiate yoiurself from
others. If you have one , it will incur high risk. At the end of the day , most
competitors fight using the same strategy.
 To win, one must execute faster than the competitors.
 In his own words, “ all the great companies in the world out- execute their
competitors day in and day out in the marketplace, in their manufacturing
plants, in their logistics, in their inventory- in just about everything they do.
Rarely do great companies have a proprietary position that insulates them
from the constant hand- to hand combat of competition”.
3. GE
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Jack Welch- the legendary CEO of GE , authored a book called , “ Winning”
and in chapter 6 , titled , “ Hiring- what winners are made of, (pages 81 to 96) “
says he looks for 4Es as ;
 The first E is positive energy.
 The second E is ability to energize others.
 The third E is edge- the courage to make tough yes or no decisions.
 The fourth E is – execute – the ability to get the job done.
The author after working for 40 years in various industries fully agree with the
CEOs of GE , IBM , Allied Signal ( Larry Bossidy was the former CEO) and many
others that implementation and execution is the most vital issue facing the
organizations to – day. What is disturbing is that many still do not realize the
importance of execution. Managers are not focusing enough on removing barriers to
execution as well as on what should be done to enhance the execution culture of the
organization. The author added further that far too many strategy sessions are held
on developing strategies and latest technologies as they are fun and exciting to talk
about. It is interesting to note that Dr. Lawrence G. Hrebiniak , a professor in
Wharton School of Management at university of Pennsylnia has been researching
on strategy execution and organizational design and he is just one of a few in the
academic circles who truly understands the vital importance of execution. He wrote
an entire book titled “ Making Strategy Work – Leading effective execution and
change” and he ahs great advice for us;
 Execution is a key to success.
 Obviously developing a competitive strategy is not easy but the massive
challenges confronting the organization makes it clear to him that, “ making
strategy work is more difficult than the task of strategy making”.
More will be said about his work in the literature research section.
3.4 Four possible outcomes of Lean Six- sigma execution
From the above discussion , it is clear that Lean Six- sigma faces the same challenge
as any other strategy a company is adopting. Therefore it is the aim of the author’s
research to develop a model for Lean Six- sigma execution.
Fig. 3.4 –1 illustrates the possible outcomes of executing Lean Six- sigma.
Basically , thee are 4 possible outcomes;
A- Remained not executed but activities started half- way.
B- Seems to be able to be executed but requires more or twice longer time.
C- On-time and successfully executed.
D- Remained untouched.
The 4 possibilities will be dealt in depth in the author’s thesis.
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A= remained not
executed but
activities started
half way.
Implemnet Lean
concepts
Execution of
Lean Sixsigma
Implement sixsigma
B=Seems to be
able to be executed
but need much
longer time
C=on –time and
successfully
executed
D= remained
untouched
Fig. 3.4-1
4. LITERATURE RESEARCH
4.1 Related to Lean Six- sigma
a) Lean Production
Lean Production was originated byTaiichi Ohno, Toyota Executive in the 1950s.
Toyota was so successful with this concept that its quality and productivity
9
surpassed that of its competitors, GM, Ford, Chrysler and etc. In Toyota , it is called
Toyota Production Systems ( TPS). In 1990, James P. Womack published the book,
“The machine that changed the world”, and it soon attracted world wide attention
about TPS. Taiichi Ohno ssaid there are 7 wastes in the manufacturing organization
as shown in fig. 4.1-1.
7 Wastes In Manufacturing
Over
Production
Unnecessary
Over
motion
Processing
S e v e n W a s te s
Rejects
and
Inefficient
Transportation
Defects
Waiting
Excess
Times
inventory
Fig. 4.1-1.
According to Ohno, over production is the worst as it hides all the other wastes like
inventory and quality defects. Inventory is analogous to the water level in a sea, the
higher the water level , the better is for the boat to sail through without noticing any
obstacles underneath as shown in fig. 4.1-2
What is important is to remove the excess inventory so that water level will be low
and the boat will not be able to sail through as all the obstacles are surfaced. The
objective is to clear all the obstacles on a timely manner. This is shown in fig. 4.1-3.
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High inveinnventory hides the
obstacles problem
High water level
conceals the
rocks
LONG
SET
UPS
UNSTABLE
DEMAND
100
meters
GENERATING
DEFECTIVE
PRODUCTS
REWOR
K
POOR
HIGH MANPOWER
HOUSEKEEPING REQUIREMENTS
MACHINE
BREAKDOW
NS
DELAY IN
DELIVERIE
S
MIXED MATERIALS
Fig. 4.1-2 – Inventory hides wastes
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Low water el reveals the
rocks
UNSTABLE
DEMAND
LONG
SET
UPS
GENERATING
DEFECTIVE
PRODUCTS
50
meters
REWOR
K
POOR
HIGH MANPOWER
HOUSEKEEPING REQUIREMENTS
MACHINE
BREAKDOW
NS
DELAY IN
DELIVERIE
S
MIXED MATERIALS
Fig. 4.1-3. Low inventory exposes wastes.
Basically there are 5 principles of TPS ;
1. Specify value from the stand point of the customers.
2. Identify value stream for each product family.
3. Remove wastes in the value stream so that products can flow smoothly.
4. Enable your customer to pull what they need ( pull system).
5. Continuous improvement to perfection.
b) Six- sigma.
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It was developed by Motorola in the 1980s and has now spread throughout the
world. Mathematically , it means if a company achieves 6 sigma , it will attain a
quality level no more than 3.4 defects per million (ppm). It starts from +/- 6 sigma
with mean centred as shown in fig. 4.1-4.
Fig. 4.1-4
Notation;
USL- upper specification limit
T- target value which coincides with the mean.
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Fig. 4.1-5
With 6 sigma from the mean indicated by “T”, it reveals that at this point , it is two
defects per billion with 50% design margin. In order to cater to design shift , the
margin is reduced by 1.5 sigma. This is shown in fig. 4.1-5. At this point it shows
3.4 defects per million.
To implement six- sigma , it usually uses the following steps;
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1. DEFINE- the problem and scope of the work.
2. MEASURE- the current processor performance. Identify what data is
available and develop a plan to gather it.
3. ANALYZE- the current performance to isolate the problem. Through
analysis , both statistical and qualitative, begin to formulate test hypothesis
as well as determining the root cause.
4. IMPROVE- by solving the problem. Brainstorm on potential solutions.
Prioritise and implement.
5. CONTROL- the improved process or product performance to ensure the
targets are met. Once the solution is effective, the improvement must be
sustained and standardized.
4.2 Related to Knowledge management .
Knowledge is needed in every action of the organization. Organization must
continue to develop the right knowledge in its people so that they can do their jobs
well. Knowledge can be explicit or tacit ( Nonaka , Michael Polanyi ) and Nonaka
shows a model of knowledge transfer as in fig. 4.2 -1.
4.2a Nonaka model
Tacit
Tacit
Socialization
Externalization
Linking
Explicit
Knowledge
Internalization
i)
Combination
Learning by
Doing
Fig4.2 -1
Explicit
Tacit
Field
Building
Explicit
Explicit
Tacit
Dialogue
Explicit
Tacit to tacit - Socialization
Tacit knowledge occurs when individuals share knowledge and
experiences in the form of mental models without using languages. It is
through observations that one learn to acquire tacit knowledge.
ii)Tacit to Explicit-Externalisation
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It is a process of articulating tacit knowledge into explicit concepts.
Nonaka believes an effective way is to use tacit knowledge in the form of
metaphors and analogies.The externalization mode of knowledge
conversion is exemplified by using dialogue or collective reflection.
iii)Explicit to explicit- Combination
This mode of conversion involves combining different bodies of explicit
knowledge. Individuals come together to exchange ideas . This is
normally achieved through media ,, documentations, meetings or
telephone conversations etc. By combining and sorting of explicit
knowledge , new knowledge can occur.
iv) Explicit to tacit- Internalization
It is the process of embodying explicit knowledge into tacit knowledge. It
is strongly related to “ learning by doing”. One way for tacit knowledge
to happen is to ensure that knowledge is verbalized or stored in the form
of documents which a easily understood by others. It can also in the form
of oral stories
4.2b -Single loop and double loop learning- by Chris Argyris.
Chris Argyris lists two models of learning ( Fig. 4.2-2).
i). Model I- theory in – use.
It deals with defensive reasoning and routines. If we asked people the
rules they use to govern their actions, they will tell you as what Chris
Aryris calls “ esposed theory “ of action. But this espoused theory of
action has very little to do with their day to day action. He coins a term
calls theory – in use which is different from the espoused theory. Why?
People consistently act inconsistently, unaware of the contradictions
between their espoused theory and their theory in use. He names this
theory in – use as model I and it rests on a set of governing variables.
ii)
Model II.
Model I deals with deeply entrenched with defensive routines but model
II intends to correct it , It will motivate people to move away from model
I to model II. Model II fosters double loop learning.
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Single and double loop
Governing
variables
match
actions
consequences
mismatch
Single loop
Double loop
Fig. 4.2- 2
4.2c) Learning in action by David A. Garvin.
Three critical issues must be addressed first before a company can become a
learning organization. They are;
 Meaning of learning organization.
He defines a learning organization is an organization skilled at creating,
acquiring, and transferring knowledge, and at modifying its behaviuor to reflect
new knowledge and insights.
 Management.
Management need to set clear guidelines for practice, filled with operational
advice rather than high sounding aspirations.

Measurement.
We need better tools to measure learning. This is to ensure
benefits have been obtained from learning. He encourages the use of Balanced Score
Card (BSC) by Kaplan and Norton.
He listed are five main activities for learning organizations such as ;
1. Systematic problem solving.
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
It uses the philosophy and methods of the Total Quality Movements e.g
PDCA, fishbone charts etc.
2. Experimentation.
 This activity is concerned with systematic searching of new ideas and
knowledge. It uses scientific method and it bears similarity as the problem
solving technique but it is more concerned with expanding the knowledge
horizon rather than reacting on the problem just detected.
3. Learning from past experience.
The objective is learn from past mistakes and make sure they are not
repeated in the future. Boeing, Xerox use such techniques.
4. Learning from others.
Not all learning occurs inside organization. Outside knowledge is equally
important.
5. Transferring of knowledge.
For learning to happen , it has to be spread quickly throughout the
organization. Organization gains a lot if knowledge is broadly shared rather
than shared among a few individuals.
4.2 d) The Balanced Scorecard (BSC) by Kaplan and Norton.
In 1992, Professor Kaplan and Norton came up with the concept of Balanced
Scorecard (BSC). They stress that what you measure is what you get. The BSC is a
measurement system which includes not only financial measures but also an
integrated set of measurements that link to strategy of the company, customer,
internal process and employee performance and system performance (fig. 4.2-3)
Kaplan and Norton advocate that if you can’t measure it , you can’t manage it.
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Financial
Customer
Vision
Mission
Strategy
Learning
and growth
Internal
Business
process
Fig. 4.2- 3
4.3). Related to willingness ( ROFO model)
4.3.1 The ROFO Model by Ah Bee Goh
ROFO stands for ;
R- responsibility.
O- ownership.
F- focus.
O- on- time corrective action.
Goh has worked in industries for a few decades and he has
encountered many situations that problems that are obvious and can
be solved promptly remain unsolved for days or sometimes even
weeks and months. In his search for answer, he realizes that people
are generally responsible for what they do. The disturbing point is
that if people are responsible , why is it that problems are not
corrected on- time?. He realizes that there is a fine difference between
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responsibility and ownership. The difference is best explained by
using the coffee powder example.

The coffee powder example.
Imagine a Swiss customer is visiting an organization, let’s say AB
company Ltd . at 9 am. A cup of coffee has to be served. Before a cup
of coffee can happen, the following events must occur;
1. Coffee powder to be bought yesterday.
2. Sugar and creamer must be bought and be ready yesterday.
3. Water to be boiled early this morning.
Suppose the secretary discovers that at 8.00 am that there is no coffee
powder available (event 1 has not occurred). The person who is
responsible for replenishing the coffee powder is the purchasing clerk
and not the secretary Obviously the purchasing clerk has missed her
duties. What would the secretary do?. She has two options;
Option 1:
Does nothing and informs her superior that no coffee
can be served as the office clerk had failed to purchase the coffee
powder.
Option 2:
Immediately on her own initiative, goes out to purchase
the coffee powder and prepare the cup of coffee.
Later, she informs the office clerk that she has missed purchasing the
coffee powder and would appreciate she takes appropriate action the
next time.
If the secretary takes option 1, two unfavourables will occur;
Option 1 Outcome
Unfavorable 1 -The office clerk gets blamed for not doing her job
well.
Unfavorable 2-The Swiss customer will not be satisfied as he is not
being treated as a guest. He has traveled 10,000 miles to come to AB
company and it will be a horrendous experience for him if AB
company cannot organize a cup of coffee on- time. How would the
customer think ? What impression will he harbour ? Certainly he will
not believe that AB company will deliver the goods on- time.
If the secretary takes option 2, she behaves in a ROFO manner and
this is exactly what the management wants her to act. By taking
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

option2, the customer is oblivious of what is happening but the
important point is that the cup of coffee is being served on- time. The
secretary takes full ownership of the entire process and ensures that
the final objective is fulfilled. In accordance to ROFO model , even
though the secretary has served the cup of coffee , her action is still
incomplete as what she does is only reactive i.e on-time correcting the
problem and this is only the first part . The other part of the duty is to
make sure that the same mistake will not be repeated and it refers
specifically to “prevention”. She has to inform the purchasing clerk
politely that she has corrected the problem and trust her ( purchasing
clerk) that she will not miss replenishing the coffee powder.
If the secretary were to take option 1, she will not be penalized as it is
not her duty to replenish the coffee powder and if we examine
further, it reveals that she is also behaving in a responsible manner
as ;
she discovers the problem and she informs her superior on- time.
It is not her duty to replenish the coffee powder.
The irony is that the cup of coffee remains not served even though she
has behaved responsibly. Therefore she has to expand her
responsibility so that she will own the entire process. Fig. 4.3.1a
illustrates the entire process.
Action
1
Ownership
Focu
s
Responsi
bility
Ownership
she goes out to
buy coffee
powder herself
generate
on-time
correctiv
e action
Action
2
she politely
informs the
office clerk about
the missed
purchase
©AB Goh 1991
Fig. 4.3.1a
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Another strength of the ROFO model is that when individuals
practicing it , an environment is created for team learning as in the
above coffee powder example ; the secretary learns to take ownership
and the purchasing clerk learns not to repeat the mistake in a friendly
and co- operative spirit.
In accordance to GOH’s thinking, people tend to behave in
accordance to the job description he has been given when he first
enters the factory door. In short, people believe that they are only
responsible for what is written in the job description. It is always
GOH’ s assertion that being responsible is not good enough. He
argues that too many unsuccessful events have happened not because
people are not behaving in a responsible manner but because people
are not keen to take full ownership of the entire process.
GOH states that if organization is able to cascade ROFO throughout
the entire company , it will use much less resources than their
competitors . For example , ROFO was applied so successful in one
company ( Leica Intruments Singapore Pte. Ltd) that its entire
quality department ( about 40 staff including quality manager ,
engineers and inspectors) was disbanded as the control of quality is in
the hands of the workers. Production workers own it.
The main advantages of ROFO are;
a) Teaches people to take full ownership of the entire process
b) On – time reacting to the problem.
c) Take preventive actions so that problems will not recur.
d) Team learning.
e) Create a co- operative spirit throughout the company.
f) Do away with politicking in company.
g) Resources are appropriately allocated and as a consequence use less
resources than necessary.
Fig. 4.3.1b shows the team learning concept. From this figure , if a
staff is confronted with a problem/ task that requires typical knowledge ( indicated
in blue arrow) , he will search for the appropriate staff with the right knowledge to
assist him in solving the problem/task . This is indicated in blue arrow. The ROFO
cycle continues until the whole task is successfully executed.
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1
Requires more than
one action
Team learning
Team learning
Staff with
Right knowledge
1
Team learning
R
Team learning
Tasks completed
successfully
and on – time.
O
Gaps still unclosed
O
Fig. 4.3-1b – The ROFO model
F
Team learning
4.4 Related to the execution literature.
Two books are relevant , one is written by a CEO and the other is by a Professor in
University of Pennsylvania.
4.4.1. Review on the the book , “ EXECUTION” by Larry Bossidy and Ram
Charan.
Larry Bossidy , Chairman and former CEO of Honeywell International (Fortune
100 company), says that most companies fail because they are not able to execute
well. He studied leaders in organizations and he said that they placed too much
emphasis on what some call high level strategy, on intellectualizing and
philosophizing , and not enough on execution. Execution is not only the issue facing
business to- day , it is also something nobody explains well. He said that many talked
about strategy which could be easily developed by anyone by just employing the
right consultants. This is the gap many victims have fallen to. To him, execution is
simply not something that gets or do not get done. Execution is a specific set of
behaviours and techniques that companies need to master in order to have
competitive advantage.
Many CEOs lost their jobs because they do not understand the true meaning of
execution. In the year 2000, forty CEOs of the top 200 companies in Fortune 500 list
were either fired or made to resign. This trend keeps continuing. When companies
fail to deliver on their promises, the most apparent explanation is the CEO’s
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strategy is wrong or not appropriate. In Larry Bossidy’s thinking strategies fail
because of poor execution. He has many examples to illustrate such as ;
1. When the Compaq board fired the CEO, the board chairman and founder
Ben Rosen painfully explained that the strategy was fine and the change as
said by him was “ in execution…….Our plans are to speed up decision
making and make the company more efficient”.
2. When Lucent’s board dismissed CEO Richard McGinn in October 2000, his
replacement, Henry Schacht, explained ; “ Our issues are ones of execution
and focus”.
If execution is so important, why is it people don’t get it? To be sure most are not
oblivious to it but what most do aware is its absence. This is what he terms a GAP
nobody knows.
To understand execution, he lists 3 points;
1. Execution is a discipline and integral to strategy.
2. Execution is the major job of the business leader.
3. Execution must be a core element of an organisation’s culture.
Larry Bossidy recommends 3 building blocks to help organizations to execute
better;
1. Building block one- The leader’s 7 essential’s behaviuor.
a. Know your people and your business- Leaders have to live their
businesses.
b. Insist on realism- Realism is the heart of the matter. To begin with, a
leader must be realistic himself. He must not hide problems and
pretend nothing is wrong
c. Set clear goals and priorities- Efficient leaders focus only a few
priorities that his staff can grasp
d. Follow through- Leaders must follow through the process on all the
priorities set. There is no point is setting objectives if leaders are not
taking them seriously. Larry indicated that many meetings are held
but many left without knowing what are the firm conclusions and the
next concrete steps to take. There are no accountabilities assigned.
e. Reward the doers- If you want people to produce the results, you must
reward them accordingly.
f. Expand people’s capabilities through coaching- Normally , a leader
possess a wealth of knowledge and it is important such knowledge is
passed to his people.
g. Know Yourself- Everyone requires strength of character. Larry calls
it emotional fortitude. One must be honest and dare to remove poor
performers.
2. Building block two- Creating the framework for cultural change.
a. Larry refers software as the culture of the company. The hardware of
the computer is useless without the software. Most efforts at cultural
change fail because they are not linked to improving the business’s
outcomes. You must create a culture of execution.
24
3. Building block three- The job no leader should delegate – getting the right
people in the right place.
Larry emphasizes that three core processes are vital for execution. They are ;
1. The people process- making the link with strategy and process. The
people process is more important than either the strategy or operation
process. Eventually it is the people who make things happen. If the
people process is not right , nothing good will happen in the company.
2. The strategy process- making the link with people and operations.
They must know the “ hows” to execute.
3. The operations process- making the link with strategy and people.
4.4.2. Review on the research work which is compiled into a book entitled ” Making
Strategy Work- leading effective execution and change” by Lawrence G. Hrebiniak
Basically , it deals with the following execution model;
1. Developing a model to guide execution decisions or actions.
2. Understanding how the creation of strategy affects the execution of strategy.
3. Managing change effectively , including culture change.
4. Understanding power or influence and using it for executice success.
5. Developing organizational structures that foster information shring, coordination, and clear accountability.
6. Developing effective controls and feedback mechanism.
7. Knowing how to create an execution- supportive culture.
8. Exercising execution- biased leadership.
Professor Lawrence is a firm believer that “ execution” is key to any strategy
success as in the above model , he stresses the term , “ execution” appears in 6 out of
his 8 items listed above as a model. Like Larry Bosssidy , he streses the importance
of developing a culture of execution as depicted in fig. 4.3- 1.
25
culture
behavior
Organisational
performance
Feedback and change
Fig. 4.3 - 1
There should be clear clarification of everybody’s role , responsibility and
accountability.Performance measures are used as the basis of responsibility and
accountability as shown infig. 4.3-2.
Measurable objectives
Accountability for
Performance against
objectives
Execution success
Fig. 4.3-2
4.4.3 Review of the research by Nithin Nohria , William Joyce and Bruce Roberson
on the topic, “ what really works” .
It was a groundbreaking research carried out over a 5 year period over 160
companies on what really makes companies successful. They found four primary
practices which are;
1. Strategy- Devise and maintain a clearly stated strategy. No matter whay
strategy you adopt, whether it is low cost through lean manufacturing or
26
great customer satisfaction, key is to be clear about the strategy and
consistently communicated through the employees and other stakeholders.
2. Execution- Develop and maintain flawless operational execution. How you
execute is more important than what you execute. They found no relationship
by just embracing one strategic item like outsourcing with another e.g
financial performance .And neither did success depend on ERP systems ,
CRM or the tools and technologies. The real essence is disciplined attention
to operations.
3. Culture- Develop and maintain a performance – oriented culture. Create a
culture of high performance and incorporate it with fun as well. Reward high
achievers directly. They studied 90% of the winning companies strictly
linked pay to performance while only 15% of the losers did the same.
4. Structure- build and maintain a fast, flexible, flat organization. There is
nothing wrong with bureaucracy , procedures and red- tapes but too- much
of them can impede progress. What is important is to have a structure that is
simple and link to employees ,vendors and customers. There is no particular
structure separates the winners.
4.4.4. Review on an article by Warren G. Bennis and James O’ Toole.- “ How
Business Schools Lost Their way”.
Both stated business schools are on the wrong track. Here are some highlights;
1. There are a lot criticisms that business schools are not teaching the stuff will
help the industries.
2. The graduates are ill- prepared to grapple with the complexity and real life
issues that are challenging the industries.
3. These criticisms come not only from employers, students and employees but
also from distinguished professors ( from prestigious universities) like Dipak
Jain ( Kellog School of management), Henry Mintzbeg from Mac Gill
university as well as Deans of other universities.
4. Many professors of management who taught business curriculum had never
set foot inside a real business.
5. They engaged too much of “ scientific rigour” that is not relevant to the day
to day managing of the business.
6. Employers are frustrated that their freshly minted MBAs even those from
the best schools lack skills their organizations need.
4.5 Further discussion on the overall literature research
From the above literature review , it can be separated into two classes; one is about
knowledge management (KM) and the other is about execution. We have no
shortage on researches on knowledge management (KM). KM theories are
abundant and many academic models have emerged through research and
practices. Knowledge organizations or learning organizations (Dave Bennet and
Alex Bennet, 2003, Peter Drucker, 2002, Peter Senge, 1990, I. Nonaka, 1991, Arie
De Geus 1997, Johan Roos and Leif Edvinson , 1997 etc) will play a key role in the
27
success or failure of a business. Some even elaborated knowledge frameworks and
activities such as capture, retain, exploit and transfer etc ( Alavi, 1997, Arthur
Anderson and APOC, 1996, Holsapple and Whinston, 1987, Leonard- Barton 1995,
I . Nonaka 1991, Szulanski, 1996, Van Der Spek and Spijkervet, 1997, Wiig, 1993
and etc). Included in KM are technologies that help to assimilate knowledge ( Daniel
E. O’ Leary, 2003, Susan Conway of Microsoft, 2003, Geoffrey P. Malafsky, 2003,
Paul Gray and Sean Tehrani, 2003 etc). It is undeniable that KM researchers had
indeed raised the awareness of the importance of knowledge as a competitive asset
in organizations. Many models have sprung up , some are useful ( Nonaka, 1991,
Chris Argyris, 1999, David Garvin , 2000, Kaplan and Norton, 2001 ) whereas
others are still very academic in nature. Nonaka model helps the industry
practitioners to propagate knowledge. There is no doubt that we need knowledge to
execute tasks or a company strategy but the basic question remains; “ Is knowledge
alone or to what extent , help to execute a strategy successfully?. There are many
companies that have great deal of knowledge and yet they fail in business e. g
General Motors went bankrupt in 2009 and IBM was in deep trouble in the early
1990s and Swiss Air was taken over by Lufthansa in 2000. The basic question is , “
is KM alone sufficient to execute a strategy, if not what is it?”.
If we turn our discussion to the topic of execution , we will soon realize that not
many researchers research on it . One point is clear , highly successful companies
such as GE, Dell, Walmart , Toyota etc will tell you that the key lies in executing the
strategies successfully. Toyota was able to implement its TPS strategy successfully
and by far is the number one company leading the world in this field. GE, Motorola
and Allied Signal implemented Six- sigma successfully and reaped huge benefits.
Jack Welch (GE), Larry Bossidy( Honeywell) , Louis Gerstner( IBM) who were
CEOs of global companies all agreed that “execution” is key to success and not by
having a brilliant strategy. Larry Bossidy even went further to say that it is a “ gap”
nobody knows. They wrote books based on their experiences and therefore cannot
be generalized as it is not based on scientific research.
Nithin Nohria and his colleagues completed a ground breaking research that
successful companies are able to maintain a flawless operational execution. His
research falls short of answering us ;
1. What needs to happen first before a flawless operational execution can
happen?
2. Are successful companies effective in implementing KM theories?
3. How do CEO, top and middle managers as well as rank and file workers play
a role in maintaining a flawless operational execution? Are there any unique
roles they play which separate them from other less successful companies?.
In another groundbreaking research by Lawrence G. Hrebriniak , he states that
execution is key to any strategy. He offers some highlights such as
developing a behavioral culture for organizational performance and having clear
accountability and roles established. His research has no doubt heightens the
awareness of execution culture but falls short of revealing to us what motivates staff
28
to fulfill totally the defined roles and responsibilities. The author has encountered
countless situations in his working experience that staff failed to deliver despite
clear responsibilities have been assigned.
In another paper by Jeffrey Pfeffer and Robert I. Sutton , it states that in today’s
modern world of business , there is no shortage of knowhow and yet people still
cannot complete tasks successfully. There is too much talk and too little action. They
coined the term, “knowing –doing gap” which means knowing a lot but doing little.
Most people use smart talk to substitute action. If tasks which are consider not
difficult cannot be done , how could one expect strategy to be executed successfully.
As the author’s title suggests , Lean Six- sigma strategy consists of two sub strategies
; Lean Production and Six- sigma and how could companies implement them
successfully if simple tasks in organizations are not done timely. Whether we call it “
inability to execute or knowing- doing gap , it doesn’t matter as it boils down to the
calling that universities and Business Schools need to do more research on this area.
Universities have not been helping much for practitioners in industries and no
wonder a recent title by Warren Bennis and James O’ Toole , “ How Business
Schools lost their way” is really fitting.
Therefore it is the author’s objective that by researching on the forces that drive
the execution of Lean Six- sigma strategy successfully , it will heighten the
awareness that academic researchers and Business Schools need to do more in the
subject of executing strategy.
5. PURPOSE OF STUDY
The purpose of the study is to develop an operations model for executing Lean Sixsigma strategy in organizations. As the title suggests, the failure of on execution of
strategy could be attributed to the twin forces (fig.5.0-1);
1. Lack of relevant knowledge (F1).
2. Lack of willingness (F2).
The research will explore whether these the twin forces as mentioned are indeed the
main factors . This research is covered at practitioners’ level. The research hope to
explore also in the absence of one of the twin forces , what will be the impact in
executing the tasks ; will it still be successful or not?.
29
F1 AND F2
FULFILLED
F1-LACK OF
KNOWLEDGE
GA
P
GAP
CLOSED
F2- WILLINGNESS
FIG. 5.0-1
In the research paradigm, F1 becomes the knowledge competency and F2 becomes
ROFO. This is shown in fig. 5.0-2
Knowledge
competency
Willingness
(ROFO)
Leads to
Execution of
Lean 6- sigma
Fig. 5.0-2.
6. EDUCATIONAL/ APPLICATION ADVANTAGES
30
The following are the educational and application advantages;
1. Industry leaders will have a better understanding that “ knowledge” is key to
future competitive advantage.
2. Industry leaders will understand that the GAP that Lean Six-sigma or other
strategies are not executed successfully will lead the company to a spiral of
downfall performance. They will also realize that the vital GAP has been
ignored by industry leaders for a long time.
3. Many would agree that knowledge is vital but few have a firm grasp of how
to capture and how to transfer. This research will expose the traditional ways
of thinking about knowledge as inefficient.
4. In the academic arenas, it will show that implementation is very important
for industry success and more research will be encouraged in the culture. For
example in strategy development , consultants help to come up with an
excellent strategy , but when it comes to implementation , it offers little help
other than the detail plan of activities . The “ hows” and “whys” are missing.
5. Most would assume that when a clear plan is developed, people will behave
responsibly and make it happen. This is far from being so as this research is
intended to study whether being just responsible is enough to make things
happen.
6. It exposes to the researchers that research on “why execution is not
successful “ will be more meaningful to practitioners.
7. The Lean Six- sigma if successfully implemented will give rise to;
a. Big savings in cost of good ( can be between 10% and 30%)
b. Low inventory.
c. On- time delivery to customers improved
d. Quality in Parts per million (PPM) . Companies which have
successfully implemented Lean Six- sigma have reported quality at
less than 5 PPM.
e. Uses less manpower and factory space.
8. Industry leaders will have a better understanding that “ knowledge” is key to
future competitive advantage. c. To implement Lean concepts and Six- sigma
, it requires that knowledge on Lean and Six-sigma should be developed
differently for each category of workers. For example, one would not expect
supervisors and front- line workers to grasp hypothesis testing concepts and
ANOVA. To implement them , it needs learning systems formally set up in
the organization as well as understanding of learning behaviour.
9. Lean Six- sigma will enable the organization to have competitive advantage
particularly in the areas of cost , quality and delivery. Inventory level will be
low and quality will be in the parts per million. Typically productivity
improvements for Lean cells are in the region between 10% and 20% or even
higher as some had reported 30% to 50% gain. Quality improvements can be
significant as some had reported yield improvements of more than 30%.
10. The number of workers employed are much lower after implementation of
Lean Six- sigma. It can be between 10 % and 30% lower without
jeopardizing the output.
31
11. Finally,if the research proves that the twin forces will close the GAP , it will
pave the way for future competition among the industries.
7. RESEARCH DESIGNS , SCOPE AND METHODS.
The structure of the study is shown in fig. 7.0-1
Structure of the study
Observations
Interviews
Experiments
Quantitative
Survey questions
Qualitative
Descriptive
Observe
emerging
patterns
Normative
Random sample plus
control groups will be
applied. ANOVA and
interaction effects will
be studied
Structure interview with
two persons per
category of knowledge
workers
In agreement with
experiments and
interviews
Correlative
Impact
Both methods will be
compared to deduce the
results
Fig 7.0-1
7.1 The research will cover a number of manufacturing factories
1. There will be a classification of knowledge workers in each factory as
follows;
32
Category 1- Managers- Managing Directors and those top managers
reporting to him directly. They are normally , HR manger, R&D manger,
sourcing manager, Quality manager, Financial controller, Production
manager etc Included also are middle managers who report directlyto the
top managers.
Category 2- The Professionals- They are the accountants., engineers,
sourcing specialists, planners, tooling specialists , designers and HR
executives etc. They report normally to either the top or middle managers.
Category 3- The Supervisors- They are the ones who have the expertise at the
shop floor level and they supervise the production workers to ensure that
they produce efficiently .
Category 4- The technicians- They are the repairers and maintenance of
machines. They also assist the engineers to carry testing of products and
recording of data.
Category 5- The Front line workers- They are the workers who assemble
the parts into a final product ready to deliver to customers.
33
7.2 Next is the classification of knowledge competencies in the organizations as
shown in table 7.2a;
Levels
Skills/ competency/ knowhow
0
Don’t have any idea
1
Basic concepts. Very fundamental knowhow of the job. E.g
Ability to assemble in accordance to simple instructions like
tightening screws in sequence.
Being aware of Lean Concepts.
Six- sigma knowledge= no knowledge at all
2
Procedures knowhow. Understand the procedures as specified
by the company . E.g assemble the choke into the housing
without scratching or breaking the wire. Perform an
electrical function and able to read whether test is passed
within tolerance or failed to fulfill the tolerance.
Basic understanding of lean concepts
Six- sigma knowledge= basic such as awareness
Problem solving skills and knowhow. This is first level and
requires only basic simple tools to solve the problems like
PDCA, Pareto chart, 5 why analysis etc. Also at this level , the
problems presented are assumed not complex.
Reasonable understanding of lean concepts and its
applications.
Six – sigma knowledge = good grasp of the underlying
principles . Ability to apply onto manufacturing processes and
use six- sigma analytical skills. Strong foundation of statistical
reasoning and principles.
3
4
Research / experimental experience in problem solving and
presenting solutions. This is the second level of problem
solving skills . Some detail analysis is required using advance
statistical methods ;ike ANOVA and hypothesis testing. Co-
34
ordinating and project management skills are required.
In – depth understanding of Lean concepts and can lead and
implement the lean project successfully.
Six- sigma knowledge= In- depth understanding of six-sigma
principles . Ability to use six – sigma problem solving methods
and apply across a variety of problems / issues. Very
analytical based on scientific reasoning.
5
Creativity and innovation skills/ knowhow etc in problem
solving and executing the tasks. This is the advance level of
problem solving skills . Problems confronted are complex and
may require the search of external knowhow. Co- ordinating
and project management skills are required.
Besides level 4 Lean concept knowledge, it now includes the
ability to continue the Lean concepts to perfection.
Six- sigma knowledge = the same as level 4.
6
General management skills/ knowhow. It is a combination of
all the levels of the skills ( Levels 1 to 5). Important skill is the
ability to allocate resources and make relevant and right
decisions when confronted with simple to complex problems. Coordinating , leading , coaching , managing skills are
required at this level.
Fig. 7.2a
7.3 It is important to note which levels of knowledge competencies should an
organization wish to endeavour for its staff . It cannot be that every category of staff
will possess the 6 competency levels . A detail analysis will be required to equip
which category of knowledge workers with the required levels of knowledge
35
competency. This will be done through interview , author’s personal experience and
observations.
7.4 Definition of Knowledge Competency. It is defined as shown in fig. 7.4-1.
Six- sigma
Lean concepts
experience
knowledge
Knowledge
competency
analytical
On – the job
skills
Problem- solving
managerial
Fig.7.4-1
There are basically 4 skills and each is basically defined as follows;
1. Analytical- it refers to the ability to analyse , deduce from the data and
problems presented and make useful conclusions.
36
2. On- the job – basically refers to front line , production and technical
workers such as , soldering and welding skills, assembly skills and etc.
3. Problem solving- Good knowledge and understanding of using
scientific tools such as fish- bone diagram, Pareto analysis, Statistical
Process Control tools, PDCA, 5 WHY analysis and etc in solving
problems.
4. Managerial – Ability to mobilize workers to perform the required
tasks as well as in executing the Lean Six- sigma strategy. It deals with
daily making of decisions and allocation of resources efficiently.
7.5 .Scope – the research scope will be expanded by revising fig . 3.4-1 . The revised
model of the scope is shown in fig. 7.5 -1.
7 levels of
knowledge
competency
5 categories of
knowledge workers
F1=knowledge
Execution
Of Lean Sixsigma
A= remained
unsolved
B=Solved but not
on- time
F2=willingness
C=on -time
Internalization of
ROFO
D= remained
untouched
Fig. 7.5- 1. revised research model
7.6 Research methods/ data
This is obtained through;
1. Secondary data.
2 Interview.
3. Observations.
37
4 Survey questions
5. Experiments.
7.7 Testing of hypothesis.
Using the model of fig.7.5-1 , the following hypothesis will be set up;
1.



F1 influence
H0: F1 has no influence on “A”
H1: F1 has influence on “A”
The same hypothesis set up for all other factors ; B , C, & D.
2.



F2 Influence
H0 : F2 has no influence on “A”
H1 : F2 has influence on “A”.
The same hypothesis set up for all others factors : B, C, &D.
3.



F1 & F2 influences
H0: F1 &F2 have no influence on “A”.
H1: F1&F2 have influence on “A”.
The same hypothesis set up for all other factors : B, C, & D.
7.8 Basically the testing of hypothesis will answer the following 6 questions ( refer
fig. 7.8-1;
1. Does high ROFO spirit with low knowledge competency lead to
successfully execution of Lean Six – sigma? ( Pos 1)
2. Does high ROFO spirit with high knowledge competency lead to
successful execution of Lean Six- sigma strategy? (Pos2)
3. Does high knowledge competency with low ROFO spirit lead to
successful execution of Lean Sigma strategy ? ( Pos 3)
4. Does low knowledge competency with low ROFO spirit lead to
successful execution of Lean Six- sigma strategy? (Pos 4).
5. Does ROFO spirit alone lead to successful execution of Lean Sixsigma strategy?
6. Does knowledge competency alone lead to successful execution of Lean
Six- sigma strategy?
38
H
Pos 1
Pos 2
ROFO
Pos 4
H = high
Pos 3
L= low
L
L
Knowledge competency
H
Fig. 7.8-1
8. LOCATION AND COVERAGE OF INDUSTRIES
It will be carried out on manufacturing industries as follows:
1.
2.
3.
4.
2 companies in Lamphun , Thailand.
3 companies in Singapore.
1 company in Hungary.
Possibly 1 company in Germany.
39
9. EXPECTED DURATION AND PLAN
The plan is shown in table. 9.0 -1a. Since fig. 9.0-1a is not revealing the overall view ,
an alternative and complete view is shown is shown in fig. 9.0 -1 b.
1
2
3
4
5
YR1/ MTHS
6 7 8 9
10
11
12
1
2
3
4
5
YR2/MTHS
6 7 8 9
RESEARCH PROGRAM
1.Literature review
2. Initial research topic
3.Review with supervisor
4.Framing of research questions
5.Verify with supervisor
6.Decision of topic 1st yr project/review
7 Work on 1st yr project
8.Refine research topic
9.Write up proposal
10.Final framing of research questions
11.Conduct interviews
12Send out survey questions
13.Data analysis
14.Re-intereview and confirmation
15. Verify with supervisor
16.Treatmentof data;survey vs interview
17. Review with superviisor
18.Write out detail report
19.Publish paper
20 Final presentation of thesis
Fig. 9.0 -1a. Partial view.
40
10
1
1 2 3 4
5
YR1/ MTHS
YR2/MTHS
YR3/MTHS
6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
RESEARCH PROGRAM
1.Literature review
2. Initial research topic
3.Review with supervisor
4.Framing of research questions
5.Verify with supervisor
6.Decision of topic 1st yr project/review
7 Work on 1st yr project
8.Refine research topic
9.Write up proposal
10.Final framing of research questions
11.Conduct interviews
12Send out survey questions
13.Data analysis
14.Re-intereview and confirmation
15. Verify with supervisor
16.Treatmentof data;survey vs interview
17. Review with superviisor
18.Write out detail report
19.Publish paper
20 Final presentation of thesis
Fig. 9.0-1b Overall view
10. CONCLUSION
It has been well debated that a company which can execute the strategy effectively
will be the winner.This is a gap which CEOs in organizations do not realize as well
as researchers in the academia have not addressed adequately. Lean Six- sigma is a
powerful strategy and it is the desire of many companies to implement it .The
author has proposed two vital forces ; ROFO and Knowledge Competency are vital
in implementing the Lean Six- sigma. It is the author’s interest to develop a model
that will guide organizations to execute Lean Six- sigma strategy successfully.
41
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