Does a Good Lean System Need Six Sigma

With a good Lean system in place, do we still need Six Sigma? (the broken link was removed)

There is no Lean Team, but everyone in the organization thinks Lean. Employee satisfaction surveys show steady growth in satisfaction; profitability is increasing; cost are decreasing; less work pressure... The one problem still exist is ensuring JIT delivery from the suppliers network.

Can Six Sigma help the organization to accelerate or further improve this situation?

Good six sigma efforts (even 15 years ago) and lean share many of the same tools and principles that come from earlier TQM and such like efforts. There are some tools that are primarily associated with six sigma (like design of experiments). But those tools far precede "six sigma" even in their application in business. And those tools could certainly be useful in most lean organizations. There is no reason they couldn't just adopt those management tools.

Given that just in time was developed and made popular by Toyota and Deming long before the term six sigma was coined it certainly can be done expertly without six sigma tools. Six sigma tools can certainly help in my opinion, though.

I wouldn't weigh the benefit of any tools or methods or principles based on what category people places them in but instead I would build a management system based on the need of the organization. My preference is for Deming methods which form the foundation of lean and I also am a big fan of design of experiments (which most Deming and lean efforts do not use).

My father taught me design of experiments and Deming methods as a child and both have always made a great deal of sense to me. He wrote with George Box and Stu Hunter, what is seen by many as the premier design of experiments textbook, Statistics for Experimenters and he taught management improvement based on Deming's ideas, statistics, successful evidence based management principles... for decades.

These tools and methods all can be used together. A blog post of mine from 2005 on lean, six sigma, Deming, operational excellence and other management ideas.

Speaking Up and Taking the Risk

Not speaking the truth to power (the broken link was removed)

For the future. Be very, very, very, very, very cautious about sharing honest opinions with a boss unless you have a good relationship and the boss has proven that he or she actually wants the truth and handles it well. In my experience some bosses want it, some never want it, and some want it in some areas but not others. When in doubt, mumble."

I give my honest opinion almost all the time. It does definitely get you in trouble. It also can help you and help the organization a great deal. I have become more willing to not bother wasting my time with "power" that has no interest in actually improving things.

I am not interested in working in a place where we are not pushing toward evidence based management and seeking real situational awareness not avoidance and burying heads in the sand.

Related: The Lazy Unreasonable Man - The Importance of Management Improvement - Performance without Appraisal

One way I have always looked at it is you will be targeted if you speak up. So if you want to avoid that just be like most others and don't speak up. But if you can make things better by speaking up you will gain allies. This isn't perfect though and it counts on people being smart enough to notice that you are helping them even if occasionally you force them to look at things they would rather avoid.

At one time I could tell after a while that a boss of mine didn't really want to know how they could improve. So they asked me, I told them they didn't really want to know. They said, yes they did. So I told them. They then moved into a new job and told the new boss watch out for this John Hunter, he will be far too critical and not accept how things have to be done, he is a troublemaker.

The new boss called me in and talked to me about the kinds of problems that she saw and some reports of what I had been saying should be done. She asked me some more questions about what could be done to improve things. Then see decided to have me report directly to her 2 days a week to work on getting the organization to change. The organization obviously was failing and they needed change and the huge resistance to change was something she thought required people that were not going to just go along with what had been done and attempt to resist all change.

I took several lessons from this. One my judgement was right, trust what you see in the actions of a boss, not just their words. If you are mostly worried about protecting your job just say what you can tell your boss wants to hear. If however, you are willing to stand up for your beliefs and think you can provide good value you can take the risk and try and improve the organization.

Even if your boss tries to sabotage you it may not work. This is very risky - it was pretty unlikely the new boss would have been so open to new ideas. But she was brought in from the outside specifically because of the continued poor performance fostered by the culture of pretending everything is basically good and blaming employees for failures instead of improving the system... I have always felt free to take risks and if the boss didn't like it then I could look elsewhere. This isn't the best strategy if you are most concerned with keeping your job - it can easily create problems.

Google's Fight to Keep Talent

Google and Pay Raises: Turns Out, She's a Lot Like You.... (the broken link was removed)

Google attempted to do what your company either 1) has done, or 2) would do if you had the means:

1. You would try and buy your way out of a retention problem by giving everyone an across the board raise. Turnover is hard to figure out and stop. Sometimes you just have to throw money at everyone and hope that the turnover stops. It rarely does.

Google is managing people, just like every other organization, so you would expect lots of stuff would be the same. I don't actually recall other companies giving everybody a 10% raise (Google probably has more money than your company). I agree, that this is not likely to do much to turnover.

The possible impact in Google's favor is forcing others to pay so much that they can't afford to do so, and shrink or even go bankrupt. Especially small organizations. Yes they will use options, but salary is also part of the requirement.

I think also, anyone taking away that Google's other moves don't matter is making a huge mistake. Google's moves to create a great culture, let people work with other great people is helping Google. The draws of leaving for so many great people are high. If Google were to be less proactive in other areas the problems retaining people would be much harder. Some people seem to take the idea that people are leaving Google as a condemnation of their tactics. I think that is the wrong thing to take away.

Related: Google's Answer to Filling Jobs Is an Algorithm - Google's Innovative Use of Economics

Country Boundaries are Becoming Less Important

Knowledge workers are the new capitalists by Peter F. Drucker

knowledge workers are highly mobile within their specialism. They think nothing of moving from one university, one company or one country to another, as long as they stay within the same field of knowledge.
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Money is as important to knowledge workers as to anybody else, but they do not accept it as the ultimate yardstick, nor do they consider money as a substitute for professional performance and achievement. In sharp contrast to yesterday's workers, to whom a job was first of all a living, most knowledge workers see their job as a life.

I agree with Drucker. Singapore, Shanghi, Rio De Janeiro, Stockholm, Hong Kong, Berlin, Tokyo, Paris... and many more are going to be destinations for those that grow up in the USA. The numbers of people moving out of the USA in the next 30 years for jobs in the top 10% of the income bracke,t will be many multiples of what it was in teh last 30 in my opinion.

The USA has great advantages. China and Inida do too. But so do many other locations. The USA probably has more ability to absorb mistakes and I still feel it is the best situated, but the gap is much much smaller than it was 30 years ago.

Related: USA Losing Brain Drain Benefits - Long Term Economic Growth - Technology Centers of Excellent and Economic Growth - Keeping Out Technology Workers is not a Good Economic Strategy

Lean Thinking for a Scary Economy

The Role of Lean in the "New Normal" World (the broken link was removed)

The "New Normal" often means we are hanging on, and feel our best days are behind us. For the first time in the USA, many feel their children's future will be filled with less opportunity than they experienced.
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We need to embrace the "New Normal" as a both a challenge and an opportunity. [North Carolina University] IES is working to help organizations move toward making "circumstances" that will generate true job growth in this "Flat World".

The improvement aspects of lean manufacturing are very beneficial. And the quick response to the market (reduce inventories, pull...) are very beneficial. Both help in any economic climate and are useful today.

I actually think some even more beneficial traits exist in lean thinking for the current economic climate. Lean, the way Toyota practices it, is not about optimistic hopes (focusing on great potential gains) but instead on minimizing risk. I can't find it now, but I believe Taiichi Ohno was clear that he was very focused on making Toyota safe for the long term. Not chasing after quarterly or yearly profit targets.

While many focus on Toyota's quick changeover, pull systems..., and rightly so the importance of long term thinking is huge. When you are focused on long term benefits - you don't take huge risks. You don't over leverage your company. Long term thinking along with respect for people means you focus greatly on avoiding a situation where your company into a position where you have to have layoffs. If that means you leave some potential profits on the table in rabid markets - fine.

I own stock in Toyota and am very happy I do.

The economic future is still bright. But it is also more demanding. The huge amounts of relative wealth the USA enjoyed from 1950-2000 is becoming a thing of the past. Riding on the success that came automatically from that wealth will not work. Improvement is needed to succeed.

Related: Bad Management Results in Layoffs - Managing Our Way to Economic Success (1986) - CEOs Want Health-Care Reform

Work on System Improvements for Best Results Not Problems with Individuals

The Deification of Deming

When people discuss how best to change an organization, Lean proponents will invariably cite Deming and argue that since he has shown that 94% of the potential for improvement is in the system there is little point in working with organizational culture.
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If lean is ever going to become more mainstream people must start treating it less as a religion with its own gods and more as a collection of insights that have to be carefully tailored to the context you are working in.

Also "94% of the potential for improvement is in the system there is little point in working with organizational culture" is about the opposite of the point he was making. His point would better be stated that there is little point in working on "problems with individuals."

Working on "culture" can mean many things. And often it is just a big waste of time. But the reason for that is not due to systemic/common cause versus special causes.

What Dr. Deming was suggesting is you need to look for systems improvements (which could be cultural - a culture that operates with data based decision making, an understanding of variation...). I think the red bead experiment illustrates the point he was making - any focus on fixing the employees on that system is futile if you don't change the system.

Related: Blame the Road, Not the Driver - Common cause variation - Deming on Management

SPC - Charting and Improving Results

Everett Clinic Video, Redux – The Need for SPC Thinking

Looking at 5.x% and comparing it against an arbitrary goal does little to tell us about the health of the work system. Is 5.x% the typical average performance? Is that much higher than usual?

This is a great opportunity to use the methods of Statistical Process Control. The main management decision is to decide "react" or "not react" to that daily data point. SPC helps us with this (again, Wheeler’s brilliant little book explains this far better than I can in a blog post).

If we choose “not react” because 5.x% is lower than the goal, we might be missing an opportunity for process improvement. Generally, it’s better to present more than one data point – even if you don’t do full-blown SPC, you should present a run chart.

Well put. A simple run chart can be very helpful. One of the uses is to identify special causes. And then to use special cause thinking in those cases. What is important about special cause thinking? That you want to identify what is special about the data point (instead of focusing on all the results as you normally would). What is important about doing that? You want to do it right away (not a week or a month later). Keeping the chart lets you identify when to use special cause thinking and react quickly (to fix problems or capture good special causes to try and replicate them).

You have to be careful as we tend to examine most everything as a special cause, when most likely it is just the expected result of the system (with normal variation in the data). Special cause thinking is not an effective strategy for common cause results.

Related: Quality, SPC and Your Career - Statistical Engineering Links Statistical Thinking, Methods and Tools

Performance and character

Response to, Toxic Employees

But what if this employee is a rock star salesperson or contributor but has the bad attitude? Do you put up with the attitude issue for the great performance?

Does performance override character?

Or do we want performance and character?

What if this person when confronted, justifies their behavior with “it’s the truth and I’m the only one with the guts to speak out”?

What if this person is a top executive with political ties to the company President yet others below feel the pain?

What if this person is not an employee but a customer?

Is it following our "respect to people principle" by not addressing this person’s behavior?

We want performance and character. It is not respecting the person (and more importantly all the others that must suffer) to ignore their toxic behavior. 

I must admit I do have sympathy for the "I'm the only one with the guts to speak out" claim. But that doesn't excuse bad behavior, speak out, but do in a non-toxic manner. 

You have to confront and address toxic behavior. It isn't easy. People with power and also people with a history to getting results can get used to being able to do whatever they want. Some cultures that is normal. 

It isn't ok in a lean culture. Bottom line. If the CEO accepts it they are deciding they don't want to be lean. They might want to adopt some lean tool (which can benefit even non-lean organizations). But allowing toxic behavior directly contradicts respect for people. 

Related: People are Our Most Important Asset - Negativity - The Lazy Unreasonable Man

How to Motivate Front Line Workers

I see respect for people (that I think requires striving for joy in work) is critical. Dr. Deming stressed the importance of letting people take joy in work. A big part of this are many sensible respect for people notions. But also he stressed the importance of allowing people to take pride in what they do. Critical to this is providing meaningful work and organizing the work so that people can see and feel the contribution they make.

The overly simplistic example is that tightening one screw all day on an assembly line is very easy to think of yourself as a cog in a machine. Work needs to be designed to let people take pride in their contributions. An understanding of the whole system and work cells often helps. Sharing information so everyone can think of the big picture helps. Companies that truly focus on a vision can do this very well. But it is not a simple - plug this idea in exercise. To build such a culture takes an understanding of psychology and a true commitment to respect for people. Posts on my blogs about motivation.

Response to: How to Motivate Front Line Workers - Trust Your Staff to Make Decisions - Douglas McGregor's classic, The Human Side of Enterprise - Respect for People – Understanding Psychology

Lean Six Sigma Health Care Sucess

Another Hospital CEO Talks Lean Culture

There’s a lot covered in the article – celebrating successes, communicating, and building on your successes. They also share a huge success in reducing waiting times for MRIs (from 25 to 28 days to just 3).

Great example. Senior leadership support and understanding is incredibly helpful. You can make progress without it. But eventually it becomes very difficult to work on the system without senior leadership support.

This example is also nice in showing that lean six sigma can work. So often organizations using the buzzwords don't have success. And it helps show different organizations can take different tactics. Many people don't like having a separate "improvement" office - as it can be seen to isolate it from everyday work. I think a separate, small, office, can help push improvement (especially in the first few years).

Related: lean manufacturing resources - blog posts on six sigma - resources for improvement health care management

Monopolists Provide Lousy Service

I think there are many companies that obviously do not attempt to provide good customer service: airlines, large banks and Verizon are examples that have huge numbers of customers being treated very poorly. If there are options to choose decent service it doesn't bother me so much (credit unions provide a very good alternative to large banks most often). Thankfully you can often avoid United, American... by choosing Jet Blue or Southwest but obviously that is not always possible. Verizon is even more annoying because they have bought their way into very anti-competitive positions (banks and airlines also obviously have done so alos).

Near monopolies have the freedom to provide lousy service. Companies like Verizon, American, Chase, Wells Fargo... attempt to make their customer hostility sustainable by securing monopolistic positions. It has worked pretty well for them. I think we are much more likely to get customer friendly policies by new companies coming along that don't sell out the oligopolists. Unfortunately the anti competitive behavior these companies favor it just to buy out customer focused alternatives instead of providing service themselves.

Regulators allow such anti-competitive behavior is another thing we could hope to see change. But the chance of proper regulation of anti-competitive behavior is not good. And hoping those companies stop being so customer hostile is not something that will likely work. I don't see good odds that the monopolistic customer hostile companies will change. Those companies that don't have monopolistic positions are not such a big issue because after providing universally bad service they go out of business. It would be nice if our regulators didn't allow the monopolistic behavior but they obviously are going to do their part to allow capitalism to function, bad service and high prices is what we can expect from the monopolistic companies.

Re: How to Design Poor Service – Expect 100% Utilization of People or Resources

Related: Why is Customer Service So Bad? - Verizon Provides Lousy Service = Dog Bites Man - Price Discrimination in the Internet Age

IT should focus improving the system

IT should focus on doing its part to improve the system (in systems thinking terms) of the organization. In the short run a big part of that is likely in improving process type activity, supporting others in doing their jobs. There also should likely be a role for building the capacity of the organization. Information technology is critical to long term success. Most organizations today do not have the knowledge they should have in management ranks, and elsewhere. IT should be working on that in various ways. One way is by helping people find and use good technology solutions today (this not only can improve results today but builds the capacity of the organization to further exploit technology going forward).
Here are posts on my blog about IT and management

IT should help build sales by providing good tools to those in the organization and by providing good tools to customers and potential customers. Make it easy to buy. Make it easy to find what you might want to buy. Make it easy for those in the organization to learn what customers might want (mine what they are searching for, where they seem to abandon the web site...).

Re: Where Should IT Focus?

Leaders Worth Following: Tony Hsieh and Jeff Bezos

Tony Hsieh and Jeff Bezos are leaders worth paying attention to. And that is rare among the well know business leaders I think. They both focus on customer focus not spreadsheets. They build successful businesses and know that it is critical to build a organization of people (not inter-changable figures on a spreadsheet).

I must admit I wouldn't have thought Zappos could be so successful. But Tony Hsieh made it work. Paying new employees to quit is not a practice many managers would have dreamed up.

Response to With 1800 employees, Hsieh is still an entrepreneur

Related: Zappos and Amazon Sitting in a Tree... - Akio Toyoda’s Message Shows Real Leadership

I have started to post some of my comments to other blogs to this blog (so I have them all in one place). My current management posts are made to the Curious Cat Management Improvement Blog.

Can I back out of my new job if I get a better offer?

Can I back out of my new job if I get a better offer?

I recently accepted an offer with an organization and started this past week. Four days into it, another potential employer I'd interviewed with once (at the same time I interviewed for my new job) has asked me to talk with them a second time. While I like the job I just started (and the employer), I would love the other position more - it feels more closely aligned with my interests and values, and it is 20 miles closer to home.
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response from Alison Green:
There are very few cases where I'd advise even considering taking a different job right after starting a new one, because doing so can harm your employer, your reputation, and even other job-seekers.

I don't see a significant problem with leaving. Alison Green has a great blog I just disagree with her on this question, but the points she makes are probably shared by far more people than share my views on this topic. There are costs to others and yourself, and risks to you and others. But that is part of business.

I have had candidates (that we offered but hadn't actually started yet) and new hires leave and seen other people think this is bad or unfair. I tell people to expect a higher level of turnover precisely because they were looking for jobs and the offers might not all come at the same time.

The world isn't all perfectly fair, sometimes you lose for no good reason. I don't see any reason to worry about it.

Also if you do a great job of showing people how great it is to work at your place then they probably wouldn't leave. Focus on that, not being mad at them.

But yes, if you do this, some of the people at the company you leave will probably be mad.

I do tend to take unconventional views. I like Zappos paying new employees to quit more than the idea of intimidating employees to stay because it is unfair to leave.

I would weigh the costs, myself. And the judgement would not just be what is best for me. The costs to others would definitely be a factor in trying to decide what was acceptable and what was the right decision.

I use this blog to post some of the comments I make on others blogs. You can follow my main management blog posts via RSS.

Agile Software Development and Lean Thinking

I think agile software development practices are by and very useful and in the spirit of lean thinking. Software development is a domain that is not equal to say manufacturing cars. There will naturally be differences in how lean ideas are applied. And then within different software development organization their will be differences.

There certainly can be issues with how agile is adopted. And how you look at features and releases can make sprints seem like bad batches. Kanban is being adopted more and more for agile teams as an alternative to sprints.

There is certainly some of http://agilemanifesto.org/ which seems to be against lean. "Individuals and interactions over processes and tools" But in my experience the agile community is very in tune with lean ideas but it is also an area very much filled with experimentation and with fairly big areas still far from settled. I discuss software development fairly often on my blog.

I see a strong future for agile software development and continue to work on using the concepts at work to build a successful software development organization, upon a foundation of Deming and lean manufacturing ideas.

In response to: Agile software development does not equal LEAN thinking

Related: Agile Practices are Needed, Not Just Words - Improving Software Development with Automated Tests - The Importance of Making Problems Visible

Agile Practices are Needed, Not Just Words

Agile is Fragile

I embrace Agile/Scrum development because I am firmly convinced that it addresses many of the problems that plague software development along with providing working professionals with the autonomy that they should have in the first place. If something isn’t working, most likely it isn’t the process that is at fault. I’d wager that there is an implementation or execution problem. 

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Many organizations struggle with implementing the basics. Jeff Sutherland has spoken frequently about the Nokia Test and how upwards to 80% of teams that claim to be doing Scrum don’t perform that basics (some don’t even know who the product owner is, let alone have a prioritized backlog). 

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When it comes to problems with Agile development, people tend to blame the process when in reality the problem(s) are in their implementation and/or support of the process.

Well said. I find many management failures are do to very poor implementations of a style - compared to just really bad ideas in the first place (though that also exists). I think agile has great potential but you can't just say we are doing agile and expect everything to work. Poor implementation of the ideas will lead to failure.

Also you have to realize, in many organizations, you have to make numerous modifications. In my organization we have had to modify things because of what the organization is willing to do. It is working well for us but we have to watch where we are weak and attempt to improve our ability to actually practice agile methods.

Related: Better and Different Management - Future Directions for Agile Management - Leaving Quality Behind – Again No

Why Do I Want To Do Better?

What Makes You Want to Do Better?

Many organizations are quick to assume that extrinsic rewards (oftentimes, money) are the only way to get people to take initiative (a form of “Theory X” thinking). Followers of Dr. Deming (and now fans of Daniel Pink and his book Drive: The Surprising Truth About What Motivates Us) realize that people have incredible intrinsic motivation if you don’t squash it, as an organization and leaders.

The biggest thing is that I dislike wasting my time. I want to eliminate the things that waste my time. And that also means I want my time to be as beneficial as possible. Therefore I want to find ways to create more good consistently. It is great to improve the system because then I get to have my effort not just let me be more effective (which lets me create benefits in the future more effectively) but I get to have the benefit I spent my time on multiplied by lots of people being more effective.

The only amount I care about other people noticing is when it helps me do more. Sometimes, it is helpful to get some new idea adopted if those responsible realize that they are benefiting from past improvements (otherwise people often just don't want to change). The incentives others give me for doing better don't matter to me. The one that matters most is letting me broaden the scope at which I work (so I can multiply the benefits I see from my effort).

I also do care about being able to work from home several days a week - and avoid the commute and focus without the distractions at the office.

I strongly believe a manager should focus on eliminating demotivation.

If you create an environment where you are removing the de-motivators and letting people improve the processes you will find people become more satisfied and less frustrated at work.

Are you working harder? And the VIBCO employee responded: "It doesn't feel like I'm working harder. I'm not stressed out. I'm getting more done and there’s a sense of accomplishment."

Related: Stop Demotivating Me! - Stop De-motivating employees - Understanding Psychology: Slogans are Risky Tools

What Should Employees Do? Focus on the Purpose and Improve

What should your employees be doing? by Harry Hertz, the Baldrige Cheermudgeon

Employees all have four common requirements to guide them: - keep each customer (loyalty is critical) - find new customers -get as much money as possible from each customer (as long as it is moral, legal and ethical) - you are in business to earn money - look for efficiencies (not based just on cost-cutting, unless it comes from elimination of waste). Cost-cutting alone leads to cutting services that customers or employees value. If point 3 is causing concern for public benefit organizations, reword it to "maximize return on investment from each customer (keeping it moral, ethical, and legal)".

I don't agree with number 3. I think Jeff Bezos says it well: "There are two kinds of companies, those that work to try to charge more and those that work to charge less." I would rather be a customer AND invest in those organizations working to charge me less instead of an airline, for example, following point number 3, as stated. Also that lists seems to have nothing about "respect for people" one of the 2 pillars of lean manufacturing. The two underlying principle of the Toyota Production System are continuous improvement (kaizen, genchi genbutsu, challenge [don't accept that things can't be better]...) and respect for people (respect and teamwork). And missing much of what Dr. Deming said about purpose.

Pay Doesn't Fix Overwork

The FLSA OT Exemption No Longer Computes! [the broken link was removed]

When the DOL enacted the FLSA back in 1938 there were a couple of things that could not have been taken into account. The whole basis for the overtime exemption was that certain employees were educated, trained, and responsible at a level that afforded a certain flexibility in how they get their job done. Generally the argument was that sometimes those professionals would work 40 hours a week, sometimes they would work 45, and sometimes they would work 35. Whatever it was, though, the expectation was that their annual salary should take into account the level of effort – and the time on task – required by the role.

 

I would say that those that many employees in such situations are paid a salary and are not paid for exact hours of work. Work has changed. I am a bit surprised we haven't seen more people appreciate the huge salaries many in the USA get given the current economy but I guess that is a bit foolish. 

We tend to compare our situation to anyone that has it better than us and say it is unfair we don't have it better. People would be a lot better off looking at all those that have it worse of than they do for no good reason and be thankful for what they have. 

At the same time I agree many organizations have reduced staff and piled too many responsibilities on those that are left. That is an issue to manage. But I don't see it as a pay issue but as a well being issue. 

The agile software development community has a great view "The sponsors, developers, and users should be able to maintain a constant pace indefinitely." That is a key to better managed organizations. Pay is important but it is separate from effective managing of overwork. It isn't good to overwork and then just pay more money and think you solved the problem. 

There does seem to be a problem of people having jobs that are too much. Part of which is due to always being on call. I think more than that though is the issue of policies and management that just makes the workplace much more annoying that it has to be. We need to improve systems so work is more enjoyable and sustainable. Also I think the FSLA assumed many would be working well over 40 hours a week on average. I think that is fine. what is a sustainable pace will vary and depend on the work.