Six Sigma, innovation can co-exist

Implemented correctly, program can support and guide innovation

Senior managers have often been mystified and frustrated when their organization deploys a rigorous continuous improvement effort such as Six Sigma while simultaneously pushing employees to be more innovative. How can an organization possibly foster open-mindedness and creativity in the same environment as Six Sigma?

The fact is Six Sigma — which applies statistical methods to business processes to improve operating efficiency, reduce variation, avoid defects and reduce waste — can be a vehicle for generating new ideas, solutions, products and processes.

A Six Sigma program generates measurable savings for an organization which can then be invested in exploring innovative ideas. And Six Sigma methodology itself can be used to guide the business toward innovative solutions and generate a flow of new ideas required for innovation.

Hundreds of tools from statistics, structured problem solving, change management, project management and strategy can be used within this methodology to generate and implement solutions.

Savings support innovation

A solid Six Sigma deployment should be expected to generate substantial returns from cost reduction and new strategies. A good Six Sigma deployment must demonstrate, within two to five years, that it pays for itself at least three to four times over. The financial benefits can then be reinvested to support innovation.

The extent to which an organization will financially benefit from Six Sigma depends on the level of commitment and support given by the executive team and the extent to which Six Sigma is used to make fundamental business processes more efficient.

As an organization’s fundamental processes — sales, pricing, production, distribution, accounts receivable, purchasing, accounts payable, financial planning, accounting and HR — become more stable with fewer unwelcome surprises, the organization can apply employee expertise, energy and time to generating new ideas instead of “firefighting” recurring problems.

At this point, an organization should identify individuals with preferences toward innovative thought. This does not mean focusing innovative initiatives solely on areas such as research and development, engineering and technology. Employees who are part of the fundamental, day-to-day business are also capable of applying innovative thought to their areas of expertise.

Methodology generates innovative thought

During the “define” phase of a Six Sigma project (see sidebar), a clear vision of the overall goal must be defined and communicated. The project team, during the course of the remaining phases, may find the vision cannot be achieved through known means.

Six Sigma tools and methodology can help identify the gaps between the present and the vision and guide the organization toward innovations that fill those gaps and fulfill the vision.

For example, Richard Branson had what seemed an impossible vision to make space flight available to the layperson. His new company, Virgin Galactic, uses innovative technologies, such as using composites, not metal, in the spacecraft’s construction and a “feathering” technique to reduce the risks associated with re-entering the atmosphere, to make his vision possible within the next few years.

Six Sigma flexible

There’s a common misperception that Six Sigma methodology is linear and rigid, that each of the phases must be completed in order, one at a time. This is rarely the case. The findings from a project’s “analyse” phase can generate new DMAIC projects (see sidebar on page 23) that continually build upon each other.

For example, a purchasing department in a company with seven operating divisions launched a project to identify efficiencies in the process of buying maintenance, repair and operating supplies. In the analyse phase, the team discovered current metrics were meaningless because each division categorized suppliers differently. They realized if they could standardize supplier categories across all divisions, they could better understand spending patterns and enhance the entire organization’s purchasing power.

The team launched a smaller project to standardize supplier categories and build the process into the current purchasing system. Its completion led to several supplier contracts with multi-million-dollar cost reductions and the launch of an online bidding process providing competitive supplier quotes with significantly less time and effort required to negotiate a contract.

However, beware the dark side of this flexibility. It’s important to recognize the difference between being flexible in a decisive, goal-driven way and “analysis paralysis.”

In this state, there’s a lack of direction, decisions are avoided and projects aren’t driven to completion. Avoid this trap by checking back with the goals and vision identified in the define phase and ensuring the individual accountable for the project is capable of realizing the vision through to completion.

Angie Eichel is the president of Angie Eichel Consulting Group, a Mississauga Ont.-based process-improvement consulting firm, providing expertise, training and coaching in change management, structured problem solving and project management. She can be reached at (416) 902-1309 or [email protected].

Path to Perfection
What is Six Sigma?

Six Sigma, a term coined by engineers at Schaumburg, Ill.-based telecommunications firm Motorola in the 1980s to promote an aspiration towards statistically perfect products or processes, has evolved into a continuous quality-improvement process used by many organizations. It provides structured, logical methodologies to address challenges. The most popular methodology, designed to fix existing processes, is known as DMAIC and has the following phases:

• define the problem;

• measure the size of the problem;

• analyse the potential root causes of the problem;

• improve the process by addressing key root causes; and

• control the process to eliminate the problem.

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