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Six Sigma & Innovation – Co-Exist vs. Compete An Inside Look
Optimize :: Sustain :: Innovate :: Change :: Business Value ::
• To comprehend the benefits and relevance of six sigma and innovation in organizational performance
• To have an idea of the relationship of innovation and six sigma in enhancing
organizational performance
• To have a clear vision on the effects of implementing six sigma, or innovation, or both in the organization.
• To learn how can innovation and six sigma work together in the improvement
Learning Bites
Agenda
Six Sigma & Innovation – At Crossroads?
Why this thought is prevalent? – A Case in Point
Relevance of Six Sigma & Innovation in Org. Performance
Innovation – The Types and Need
Integrating Six Sigma & Innovation – A Case in Point
Co-exist or Compete?
In Summary…
Six Sigma vs. Innovation?
Six Sigma & Innovation seem to be at crossroads!
“Whether the relentless emphasis on efficiency had made 3M a less creative company?”
“At the company that has always prided itself on drawing at least 1/3rd of sales from products released in the past five years, today that fraction has slipped to only 1/4th .”
Operating margins went from 17% in 2001 to 23% in 2005. In first full year, capital expenditures slashed 22%, from $980 million to $763 million, and 11% more to a trough of $677 million in 2003 Sales, capital expenditures dropped from 6.1% in 2001 to just 3.7% in 2003 R & D funding constant from 2001 to 2005, hovering over $1 billion a year
“Innovation is a numbers game: You have to go through 5,000 to 6,000 raw ideas to find one successful business.“ “Six Sigma would ask: why not eliminate all that waste and just come up with the right idea the first time?”
Six Sigma & Innovation @ Crossroads! :: Case in Point
Six Sigma vs. Innovation?
Innovation
Six Sigma • Inject process efficiency & productivity
• Do things right • Low Risk Tolerance
• Top-Down approach
• Inside-out Focus
• Brave undiscovered, uncertain territory
• Do the right thing • High Risk Tolerance
• Bottom-up approach
• Outside-in approach
Key Processes Maturity / Consistency
CONSTITUTES
Workforce Capability
Process Capability
Performance
ENABLES
PREDICTS
Business Capability Model
Organizational Process / Performance Maturity Model
Organization performance irrespective of industry or size shows specific pattern of maturity with distinguishing characteristics
Pre Compliance 1
Compliance 2
Beyond Compliance 3
Innovation 4
Integrated Excellence 5
Operational Excellence 4
Innovation – Types & Needs
• Provides significant operating margin growth • Differentiates from rest of the pack and signifies change • Typically a phenomenon when successful
• CEO’s ranked top of priority lists* • Drives efficiency / effectiveness in products & services
• Focuses on delivery model innovation / new market penetration / partnerships for promotion • Not a day-to-day innovation
“CEO’s today face mounting pressure to innovate, yet finding ways to actually enable innovation remains a challenge for many”
Product / Service / Market
Operational
Business Model
* - Research Study by IBM
Six Sigma and Innovation working together – How?
Promote and ensure strong factual basis for implementing any creative ideas
Must incorporate creativity into the operational process excellence initiatives! – to come up with improvement opportunities
Deploy a cross-functional approach to problem resolution & guide users through sensing, understanding, deciding & acting in ways to create value
Take into account the “Business Voices” and balance them out to ensure optimal results
LSS Lean Six Sigma
SIfT Systematic Innovation
for Teams + • Optimization
• Sustainable Growth
Six Sigma and Innovation working together – How?
DEFINE MEASURE ANALYZE IMPROVE/ CONTROL SIfT
Voice of Customer Maximize Uptime
Voice of Business Minimize Cost and Maximize Security
Voice of the Product Data Center Stores/Moves Information
Voice of the Environment Minimize Kilowatt Hours Used and Ratio of Total Power/IT Power Voice of the Employee
Minimize Effort to Maintain
Critical to Quality (CTQ)
What are we really looking for…
1 2
PRIORITY???
INNOVATION & CHANGE
EFFICIENCY & EFFECTIVENESS
What are we really looking for…
1 2
PRIORITY???
INNOVATION & CHANGE
EFFICIENCY & EFFECTIVENESS
SCENARIO 1:
YES NO Efficiency & Effectiveness Innovation:
SCENARIO 2:
NO YES Innovation:
SCENARIO 3:
YES YES Innovation:
Undesirable & Unsustainable
E&E vs. I&C – A Fairplay?!
Unsustainable & Improbable
IDEAL
Efficiency & Effectiveness
Efficiency & Effectiveness
Integrating Six Sigma & Innovation Key Success Factors
An Innovation vision based on factual customer and market insights
Leadership committed to perpetual innovation
Key Success Factors & In Summary…
Alignment across the extended enterprise
Organizational capabilities that make innovation habitual
While most companies in the industry have mastered the art of teaching and implementing six sigma, integrating innovation into the scheme of things is the challenge.
Some key pointers to make the process easier…
Do you have a clear vision of where you want your company to be in two years? In five years? In ten years?
How closely tied is this vision to the needs of your current and target customers? And is your
understanding of these needs based on actual assessments or assumed information?
Will this vision require innovations in your business model? In your products or services? In your
markets?
What will you need to do at the operational level to enable and drive these innovations?
To support innovation, what changes will be required to your management approach,
organizational structures, metrics and skills?
Integrating Six Sigma & Innovation Key Success Factors Key Questions to ask yourself…
“If you do what you’ve always done, you’ll get what you always got!”
- W. Edwards Deming
