Efficiency and Productivity: A Lean Six Approach

Nicholas TancrediPUB 310 Summer 2014

Wanted: Leadership for Innovation“Todays innovation leader skillfully balances all the competing demands of innovation change initiatives: determining how much or how little structure is needed in any particular situation or with which group of employees; knowing what tools to use in each situation, and understanding the consequences of applying various tools and strategies in different situations; knowing where to reach a proper balance between the blue-sky and practicalAnd the necessary mix of disruptive innovation and incremental innovation” American Society of Quality White Paper, 2010, p. 6).

Efficiency, Productivity & InnovationEfficiency relates the amount of input to the amount of

output or outcome (O’Sullivan, Rassel, & Taliaferro, 2011, p. 57).

Productivity is the ratio of the amount of output (or outcome) to the amount input (O’Sullivan, Rassel, & Taliaferro, 2011, p. 57).

“Think of innovation not as a series of unrelated eureka moments, but rather as a process – a change process that can be managed with familiar change management and quality management methods” (American Society for Quality, 2010, p. 2).

Challenge the assumption that innovation is just related to structure. If one only thinks with common knowledge, then common knowledge will only give common results, which is no different than what is being done by everyone else (American Society for Quality, 2010, p. 2).

What is Lean Six Sigma? “Lean six sigma is an approach focused on improving quality, reducing

variation and eliminating waste in an organization. It is based on the concept of combining two improvement programmes, Six Sigma and Lean Enterprise” (Furterer & Elshennawy, 2005, p. 1179).

Lean Six Sigma can enhance the efficiency of processes, better deliver the quality of service to citizens, as well as lower the costs of providing these services. These tools have streamlined the processes and lowered the time to finish the financial processes (Furterer & Elshennawy, 2005, p. 1181).

Lean Six Sigma’s goal is growth, not just cutting costs. The aim of Lean Six Sigma is effectiveness, not just efficiency. By doing this, a Lean Six Sigma approach moves organizations not just to do things better, but to do overall better things (IBM Global Business Services, 2007, p. 4).

While organizing a Six Sigma initiative, one needs to be prepared to make significant improvement in performance based on innovative thinking. Concepts of incremental improvement must be taken out of the Lean Sigma Six plan, because having a less innovative mindset blocks creativity, and foils any hope of a creative initiative to transform an organization (Gupta, 2005, p. 17).

Creative Thinking (DMAIC)What is DMAIC? (Define, measure, Analyse, Improve,

Control)

Define – 1) Define process improvement need, 2) Identify goals, project scope, objectives and project plan 3) Form process improvement team

Measure – 1) Profile current state, Identify problems that contribute to process inefficiencies and errors, Identify root causes of problems

Analyse – 1) Analyse gaps from best practice, 2) Identify improvement opportunities and development an improvement plan, 3) Perform a cost-benefit analysis

Improve – 1) Implement improvement solutions, 2) Measure impact of the improvements, 3) Documenting procedures and training employees on the improved procedures

Control – 1) Design and implement process measures, 2) Implement a continuous process improvement approach to always improve 3) Celebrate the successes, reward and recognize the project team members

The DMAIC Model

Define

Measure

AnalyseImprove

Control

= Innovation

&Creativity

Innovation in Lean Six Sigma In almost every industry, including the public sector, the Lean

Six Sigma approach has served as a catalyst for broad-scale innovation (IBM Global Business Services, 2007, p. 5).

In generating new ideas, try adopting the following strategies: Look for ideas continually Never criticize; wonder Imagine uncharted territories Roam around the word in your mind Visualize situations Handle multiple variables Prioritize a combination of variables

Most innovators possess some or all of these skills: A quick system level understanding to speed

up the creativity process Unique and thoughtful ways to overcome

obstacles or get around constraints The ability to optimize a solution while

exploiting many constraints Commitment to change the paradigm Gupta, 2005, p. 15

An Innovation Process ModelInformation/

material:Tools, methods, people, method,

skills, and experience

Innovation Process: experience, play,

create ideas, observe, think,

innovate product, process or service

Is the idea economic or

practical? If not rethink, refine and

play harder

• This leads to the innovation process

• These are ideas that ask if the idea is economic or practical

• If the the idea does not fit the budget, then go back to the drawing board and design a new plan

Gupta, 2005, p. 16

Innovative ThinkingSpending More Isn’t the Answer

“We Just could not find a direct relationship between spending and performance….What we did find is that it’s much more important where you place your bets in terms of new products and technology, and how effectively and how effectively you manage the R&D function itself. The companies that really stood out in studies we have done are those that have been really focused on building capabilities across the entire innovation value stream-capabilities in areas like ideation, portfolio management, product development, and commercialization. It was much more about the capabilities that a company has and how efficiently and effectively they manage the R&D process, as opposed to how much they spend” –Booz & Company partner Kevin Dehoff

Calculating Innovation

“The “never” in never criticize is probably the most important thing to remember because ideas are generated out of positive energy” –Praveen Gupta

Resources(R)

Knowledge (K)

Play (P)

Imagination (I)

Innovation Value

Comments

Degree of resources or time committed.

Extent of knowledge based on research and experience.

Percentage of various variables explored.

Dimension extrapolated as a percentage of ideal solution for breakthrough improvement.

Estimated innovation level.

Initial estimation of the proposed model. Further work is required.

50%: limited time; insufficient resources.

75%: significant knowledge and experience gained; latest work is to be explored.

40% percentage of combination of variables explored mentally, experimentally or through simulation. Work is in progress.

66%: selected dimension is extrapolated such that improvement is expected to be about 30%, which is about 66% of the break-through improvement.

0.0182: long way to find an innovative solution due to lack of imagination and play. To accelerate, improve all elements of innovation.

Innovation value= 0.5((0.75+0.4+0.66)/3) squared=0.182 Einstein.

Works Cited American Society for Quality. (2010). Fresh Thinking on

Innovation and Quality. White Paper, pp. 1-9. Received: 25 May. 2014.

Byrne, G., Lubowe, D., & Blitz, A. (2007). Driving Operational Innovation Using Lean Six Sigma. Strategy & Change , pp. 1-13. Received: 30 May. 2014.

Furterer, S., & Elshennawy, A. K. (2005). Implementation of TQM and Lean Six Sigma Tools in Local Government: a Framework and Case Study. Total Quality Management, 1179-1191. DOI: 10.1080/14783360500236379. Received: 30 May. 2014.

Gupta, P. (2005, August). Innovation: the Key To a Successful Project. Six Sigma Forum Magazine , pp. 13-17. Received: 25 May. 2014.

O'Sullivan, E., Rassel, G. R., & Taliaferro, J. D. (2011). Practical Research Methods for Nonprofit and Public Administrators. Glenview, Illinois, USA: Pearson Education, Inc.

A Bright New Day Ahead

“Although Lean Six Sigma has traditionally been used used for operational improvement, leading companies have demonstrated it potential for driving broad-based innovation”–George Byrne, Dave Lubowe and Amy Blitz (IBM Global Business Services)