Jul
9
Six Sigma’s Dirty Little Secret
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Six Sigma has been very, very good to me.
I’ve had the pleasure of doing work that interests me for the past 30 years because three guys – Bill Mitchell, Bob Galvin, and Marty Rayl - gave me freedom to gain practical knowledge about something where I had only academic knowledge.
I’ve met more brilliant and driven people than I could have ever expected in a normal corporate career (but usually not both in a single person – pretty interesting design by whatever you believe to be a higher power).
I’ve had a chance to teach and forever change many people’s way of thinking. It is a very interesting and gratifying process to watch. Not everyone has thanked me for it or been pleased with the outcome although I always have been.
I’ve learned that someone without an elite education can teach and enlighten someone who has an elite education. The reverse is obviously true as well.
I’ve had people with no recognized college degree teach me more about my profession and life than anyone else I’ve met (thank you Jim Blanden and Jim Berryhill).
In other words, I had a heck of a good time, learned, and had several levels of pretense and bias striped away in the process.
I’ve also made a little money along the way, but to quote my hero Billy Bob Thornton – “I don’t have a nickel of it left”.
Life is good.
The Six Sigma “industry” is a fraud.
It is filled with people who have never changed a thing.
Major portions of those that have changed things act petty and therefore tear down other good people in the wake of their pursuits.
It is focused on training, when execution is the only thing that matters. Training has become the focus because it is easier. You also don’t have to take responsibility for the results, you just point to your customer and blame the lack of result on them.
The offering under the label of Six Sigma has expanded as the content has become mediocre. Just look at those calling themselves universities – what a joke.
Self proclaimed gurus are writing books that proclaim the obvious as enlightenment. Lean and Six Sigma is the most obvious, but the “innovation” writings are a joke as well. Revelations such as people are more innovative when given time to think about the topic in advance is the one I’ve been laughing about since January. You want innovation? Hire innovative people and give them their heads, Bob Galvin knew that thirty years ago. So did Jack Welch and Larry Bossidy. You want to know more about how to do that? Learn Predictive Index.
The good news is that the ”industry” is dying. People who are honest about who they are, like Bill Hathaway, are taking over the training space and those with “university” attached to their name are on life support. The institutions that sold obvious things such as innovation are laying off in huge numbers. The only bad news here is there are a lot of really good people who trusted these charlatans who are looking for a job. Kind of like General Motors or war – collateral damage is always painful but a fact of life.
Six Sigma is dead, long live Six Sigma.
The growth in productivity consulting is in companies that just go in and take money off the table. There is phenomenal growth, driven by companies based in Europe and some old head cutters from the US. The problem is they are focused on organization and behavior; they are leaving process efficiency and effectiveness on the table. Any process improvements being obtained are happenstance, usually driven by great Six Sigma folks that are seeking shelter from the fallout mentioned above and just can’t help themselves despite their employer’s “model”. They are also not leaving any knowledge with their clients on how to do these things themselves.
What should be the new model? Simple –
1) A thorough evaluation of systems based on known best practices and an organization’s strategic direction. The evaluation is company wide, not just Ops and Supply Chain. This usually takes 2 to 4 weeks using 3 to 5 competent business people. This is done business unit by business unit, facility by facility.
2) A rapid deployment by seasoned change agents to take money off of the table and to demonstrate the possibilities to the client. Takes three to six months. It should have a payback period of 4 -6 months and should self fund the entire endeavor with a tidy profit for the customer. This is done business unit by business unit, facility by facility. This effort should include organization restructuring and address behavior.
3) Training in efficiency and effectiveness for the customer’s resources. Label it anything you want but it is the training of people to be expert in the flow of value, the reduction of variation, and the hitting of market windows with products and processes that are correct and able to run at rate on day one. This takes about 4 months per cycle and the ratio of mentor to student should be in the 1:4 region. Class sizes should be big enough to guarantee the cross organizational relationship that don’t happen in small classes and the number of instructors should be minimized.
What is different about this? It’s not focused on training; it’s focused on results. It’s not focused on haphazardly chosen projects; it’s focused on systems. And best of all, it can only be done by people who know how to implement and share back their knowledge.
Go learn Predictive Index, there is only a small portion of the population who can do this and only a portion of those want to live this lifestyle.
Long live the pursuit of efficiency and effectiveness. The need was there 100 years ago and it will be there 100 years from now. It has never been needed more than right now, industries are emerging, merging, and acquiring; big organizations have had knee jerk reactions to this bad economy and broken okay processes and ran knowledge out the door. And yes, organization and behavior need to be addressed as well.
Who cares about labels? Let’s go fix systems.
Gary
Nov
16
A Sense of Urgency?
Filed Under Human Architecture, Leadership, Strategy Execution | Leave a Comment
I saw Steve Forbes Friday night and listened to a fairly compelling argument that our current financial crisis is a series of bad decisions. President elect Obama, you should talk to him. The rest of you should find what he has been writing over the past months because his knowledge and depth were wasted on my short-term memory.
Four things that did stick with me –
1) We need a policy of a strong dollar. This is not negotiable.
2) We need to help our domestic auto industry in ways that will help their sustainability. Simple question we all need to understand is why are GM and Ford phenomenally successful outside the US? Forbes made the point that if GM and Ford would close down their US operations they would be seen as world-class companies. Wow – something to think about and it has little to do with unions, although the unions need to get their workers to work more often. Ten percent absenteeism is obscene – if the UAW deals with that they will be seen as more relevant. The work needs to be made more interesting as well, which is on the leadership of GM, Ford and Chrysler.
3) Taxes cannot be raised in a crisis. This means that spending must be cut. This is combination of stopping dumb things like bailouts that don’t address root causes. It also means efficiency in government vs the current placebos. Cut non-entitlement budgets across the board including the Pentagon and hire consultants that know how to implement and advise - instead of the mass training houses. Also buy all managers in government agencies a copy of Kotter’s latest book. Fire all who whine or block instead of seeing the opportunity. Efficiencies will be found and the work will be more interesting.
4) Health care has to be addressed with efficient system wide solutions. Piece-meal solutions will not cut it which means expansion of existing programs won’t do. Forbes’ example was that of medical tourism – why is a flight to Singapore and surgery to have a knee replacement one-fourth the cost of doing it in the US? How can these hospitals offer first class results with infection rates that are nonexistent? Lasik surgery is another example – success rates are up and costs are substantially reduced from a decade ago. Why? Understand the answer and you will be looking at what efficient reform looks like.
Forbes says it is time for Obama to turn into a pragmatic politician to make sure he is there for 8 years. Steve has some good thoughts, take some time to understand them and encourage your government officials to understand them as well. I personally would like to keep a smart person in the White House and have them surrounded by smart people. I don’t want Steve as my President, but I would be impressed if he became a trusted advisor to Obama.
Read what Steve is writing at - http://search.forbes.com/search/colArchiveSearch?author=Forbes
Gary
Nov
7
People and Processes
Filed Under Human Architecture, Leadership, Lean Enterprise, Six Sigma, Strategy Execution | Leave a Comment
These are interesting times we live in.
An economic crisis bigger than any in my lifetime.
Job losses in the US at catastrophic levels and it’s even worse in areas dependent on the US Big 3 automakers. Reports of GM buying all or part of Chrysler and the cascading effect on employment. Optimistic views talk in terms of 30,000 displaced in the metro Detroit area. Some reports say it will be 124,000. I think it is like what we have seen with the bank and credit crisis, it will be worse than current projections. GM announced just in the last few minutes that they will lay off 30% of their work force and stop funding 401K’s.
How are companies responding to this? They have stopped spending money. They are looking for cost savings in 2009. This will mean more job loss and it will mean many okay processes will be broken.
It is a time of hope and opportunity.
At a macro level in the US, it is the presidency of Barrack Obama. Many, many are willing to take the risk that he is real and that he can move us out of these troubled waters.
On a smaller level, many companies can use this time to redefine and reinvent themselves. Some companies get the opportunity of high risk investment by the government, some get the opportunity to take advantage of grants for business development in areas like alternative energy.
On a personal level, if you have been displaced in banking or the auto industry, it is a reasonable assumption you will not be going back to your old job. The opportunity is to learn new skills, to go into new industries, or maybe to start your own business.
What is the role of people who have dedicated their life to teaching, mentoring, and making companies processes better?
I think there are three distinct areas in which we should play –
1) For those displaced and looking for new skills, we should help find the grants and teach them new skills. This is not confined to training as Lean Masters or Six Sigma “belts”, but how about things like taking the person who has been working in Quality and has been taught the “real world” approach and getting them certified as a Quality and/or Reliability Engineer?
2) For companies that are in survival mode, we should go in and help them make quick gains by leading the improvement projects. Many companies will not be worried about training their internal resources in 2009, it is hard to think that way if you don’t know if you will be in business in 2010. I will offer a company gains on a focused project in one month or they do not owe me any money. They just have to commit the time and team on their end.
3) On the companies in the emerging sectors, they will be making the transition from startup to fulfillment. Many companies struggle with that. They also will not see clearly how to go to the outside for help since they have limited resources. Again grant money will need to be found, but we can go in and teach them to set up an efficient business system that can comply with things like ISO 9000 or 14001. We can go in and help set up their processes to flow and we can teach them best in class methods to run their processes with efficiency, effectiveness, and responsiveness.
How does this impact the traditional Lean Six Sigma consulting model?
In short, I think the model is dead.
Few companies will go for the idea of adding infrastructure and diverting 1% – 5% of their resources. Of those that have been doing it, many will pull back. For what it is worth, the original model had process improvement being everyone’s job where everyone got trained.
Does the focused full time model have merits? Of course, especially where is an apprenticeship every professional serves as they transition into a company or as we transition from professional to manager. But the idea of setting aside a significant portion of a scant resource in 2009/10 – companies will be running away from this idea in mass.
What is the new role?
The new role is the ability to give companies very focused help on people and processes.
People – two factors here, knowledge and behavior. Both can be assessed fairly succinctly. Companies will need to know if the remaining people in their enterprise are right people in the right jobs.
Processes – Are they efficient and effective at least with respect to their competition? If they are not, how do we offer to make significant gains in a very short amount of time.
This means we need new skills with respect to people and we need to be people who know how to really do what we have been teaching.
My opinion.
Gary
A special thanks to my friend and mentor, Elmano Nigri, of Arquitetura Humana in Sao Paulo, Brasil for helping me talk through this.
Oct
31
An Open letter to Governors Strickland (D – Ohio), Daniels (R – Indiana), Granholm (D – Michigan), and Premier McGuinty (Liberal – Ontario) – The Buck Stops Here (please)
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Your economy stinks and it is getting worse. It is in no small way being influenced by The Big Three US Automakers. And it is about to be made dramatically worse. This is either going to be because GM or Chrysler or both go bankrupt or they merge. Merge is a kind word, it is really that Chrysler will be bought and the lives of people who have dedicated their careers to Chrysler will be devastated.
First, let me say that I agree with Governor Granholm that the merger is the lesser of the two evils and because that is true, it is what is going to happen.
Why is this happening? I know people will point to Wall Street and the financial crisis and the corporate greed and all of today’s headlines and there is some truth to that, but the truth is that both of these once great companies have been in decline for a half of a century and today’s headlines are the corporate equivalent to bird flu – the weakest of the population die. Period, end of story.
The truth is all of the indicators have been there and every one of you has examples in your area of companies that have done the opposite. Think Toyota and Honda. What is different? Three factors –
1) Toyota and Honda have a local supply chain to a much greater extent than the Big 3. The Big 3 have “saved” billions by going to an Asian supply chain. Wow, some savings. What they have really done is avoided the hard work of building a competitive supply chain locally. You, nor the leadership of the Big 3 can do anything about the sins of our forefathers, but you can make sure that any concessions you grant in the future guarantee the rebuilding of local supply chains. Read The Machine that Changed the World if you are unclear about the concept.
2) Toyota and Honda don’t have the “legacy” costs of the Big 3. True, but this should have been “pay as you go” and it wasn’t. GM, Ford, and Chrysler are on the hook for promises made decades ago and not funded or funded and lost in high risk investments. Toyota and Honda are paying a living wage to their workers; in fact you will find they are preferred employers everywhere they go. You, nor the leadership of the Big 3 can do anything about the sins of our forefathers, but you can make sure that any concessions you grant in the future come with a guarantee to “pay as you go” and low risk investment.
3) The cost of the leadership overhead. This comes in two forms, number of layers of management and executive compensation. Go look at the org charts of GM and Toyota, notice any difference in the number of levels? Five is ideal and has been documented thousands of places. The Big 3 (still) have a lot more. Executive compensation - G Richard Wagoner Jr. Total Compensation: $8.5 million 5-Year Compensation Total: $22 million – Alan Mulally $2 million base, $18.5 million bonus – Robert Nardelli reportedly $1, but let’s see what happens at the sale. Sorry Rick, Alan, and Bob - I believe that you deserve to be paid well but that’s obscene while you are presiding over the destruction of people’s lives that have dedicated their lives to your companies. In a reflection of Toyota’s team-oriented approach, its executive pay is paltry by U.S. standards. Analyst Ron Tadross at Banc of America Securities estimates the total annual compensation of Toyota’s CEO at under $1 million - about as much as a vice president at GM or Ford Motor Co. makes. At the risk of being rude, it’s time to stop the bullshit.
Governors Strickland, Daniels, Granholm, and Premier McGuinty; you are going to be asked for concessions by these companies. Think about the concessions you should be demanding of them. The Buck can stop here (in the mid Americas) and also not in just a few hands.
Gary
Aug
26
New Beginnings
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Wow, the summer as I know it is over. After time in the Keys diving (fresh grouper and spiny lobster with good friends and good wine is as good as it gets), time in Canada with an ever extending family, and our annual Celebration of Life last Saturday (celebrating two births and one rebirth), 2 of our 3 kids are back in school today. Our youngest, Ali, went with great joy and Mom wept.
Which brings me to another idea that I think is right – Back to Breakthrough. I wish I were smart enough to have thought of the title, but that belongs to my friend, Mike Cyger, who centers the first ever conference help by iSixSigma around this theme. The idea is that in the beginning of this, the idea was big – to aggressively transform an entire enterprise. I have seen this happen several times in my career, most notably at Motorola, AlliedSignal, and GE.
All three were different, but had common themes –
1) All were supported from the top. At Motorola, ALL were trained and you could not hurt people who embraced the new way of working. At Allied and GE, some were trained and you could not survive as a professional if you did not embrace it.
2) All were exciting places to work. The excitement came from learning and growing a business.
3) There was no ambiguity about what to improve. At Motorola, it was everything and you were given targets of 68% reduction per year in defects, 40% reduction per year in cycle time (this was before the label of Lean existed – tools were the same). At Allied, it was all about money. The figured how much and average project would save ($125,000 later moved to $175,000), figured out how long an average project would last (4 months), figured out how many projects each belt could handle concurrently (2), and how much money they wanted to save ($680,000,000 in 95 and 96). Then they began to rotate out management that did not support the objective. At GE, it was about focus on the customer and freeing up cash flow – go read their annual reports, I cannot do those topics justice here. The point was the objectives were clear, people figure out the measures and paretos from there.
4) All had tremendous support infrastructures. By tremendous, I mean they had people that understood what it meant to be a champion (read In Search of Excellence for the definition). Some of the real legends in this realm came from these breeding grounds. I did not know them all (big enterprises) but Marty Rayl, John Lupienski, Mike Carnell, Richard Schroeder, Jim Lambert, and Craig Morton would all sacrifice their careers to move organizations. Some even thought I did okay on both teaching and supporting and I definitely have put my career on the line many times.
Point is, you don’t see this kind of thing lately.
I think Mike Cyger is on to something. It’s January 13 - 16, 2008 in Miami. Maybe we can even dive for some lobster, I know some great spots just 20 miles south of Miami Beach.
Be there of be square.
Gary
PS – My other new beginning is to start posting 3 – 4 time a week. Stay tuned.