Lean Six Sigma and Process Improvement, Day 2

I’m a bit better prepared for today’s conference: first of all, I showed up on time, and secondly, I have my iPhone tethering cable so that I can post even though there’s no open wifi here.

Today opened with a recap of yesterday’s session by Charles Spina of e-Zsigma, the conference chair, then he had an interview with two of the people who were on yesterday afternoon’s panel that was in the opposite track to that I attended: Audrey Maeren of Assiniboine Credit Union and Steve Hodlin formerly of DST Output, discussing how to move out of reactionary mode and into long-term sustainable growth of a LSS program within an organization.

The panel was in the form of a leadership forum with five questions posed:

  1. Which strategic imperatives should be realized through LSS deployment and process improvement initiatives within the next 12 months?
  2. How to maximize LSS deployment ROI particularly during this economic time?
  3. What processes within the organization will be a top priority for process improvement/process reengineering projects?
  4. How can companies turn recession-driven outcomes into business opportunities? How does this change the role of PE experts in a new business paradigm?
  5. What organizational structure has proven to be the most effective for quality/process improvement teams?

There was a strong focus in the responses on using the economic situation to your advantage: improving processes, cutting fat and becoming more competitive rather than just cutting headcount in a panic. This isn’t necessarily about cost-cutting, it’s about focusing on your value proposition and key differentiators (e.g., customer intimacy, social responsibility), and engaging your customers, suppliers and employers as part of the initiative. Assiniboine, for example, has a 5-year KPI to become carbon-neutral, so is always looking at ways to contribute to that goal through any process improvement: sometimes reducing process waste can reduce real waste, too. Since they’re a member-owned cooperative, there is less of a focus on profits than in many other financial institutions, but these sorts of goals are not uncommon in today’s corporate environments, too.

They had a few pointers for maximizing ROI on LSS projects: keep people on the projects through the critical points rather than moving them around, have frequent management reviews so that they’re aware of what’s happening and can help to get past any roadblocks quickly, and identify opportunities to train your customers or partners in LSS to help them become more efficient as well as improving the efficiency of your interactions with them. Early in your LSS program, it’s important not to just focus on hard dollars in your ROI, but if resources are short, then you will need to set thresholds that determine which projects go ahead: if a project can’t show some process improvement ROI relative to corporate goals, then you may not be able to take it on.

There was a really interesting discussion including audience members, about how misinterpretation of laws and regulations creates an incredible amount of waste: people think that a regulation needs to be applied in a specific (inefficient) way, and blocks the implementation of a more efficient process that is equally valid. I saw this recently in a customer engagement where we were considering the uses of process and content management in the organization, and the HR department insisted that certain processes had to be done on paper and they needed to maintain employee files on paper, to the extent that they printed email messages to add to the employee file. Knowing that paper recordkeeping for employee files is not required (at least in Canada), I showed them the relevant sections in the Canada Labour Code as well as Revenue Canada regulations that govern recordkeeping, but it continues to be a long cultural battle for this particular piece of process improvement.

The issue of alignment keeps coming up: not as a hand-waving idea, but as a concrete link between corporate goals and what’s being done on the front lines of companies. As Maeren made clear, if your corporate goals are focused on customer satisfaction, but the front-line operational units are focused only on cost-cutting, there’s a misalignment.

We discussed yesterday at lunch about how most organizations need a crisis to motivate significant process improvement efforts; the recession just provides an external trigger for the crisis rather than an internal trigger such as a merger. If you’re already in the mode of being able to respond to all types of crises, then weathering the recession in a process improvement group is just more of the same. It might be a time, however, to highlight some key Lean tools, such as value stream mapping and Kaizen, for some quick wins and to show the value of the process improvement team. Also, focus on some cash-intensive process improvements such as reducing inventory and shortening accounts receivable times.

Management needs to become process-focused, not just goal-focused: as Hodlin pointed out, you don’t lose weight by stepping on a scale. We see this so much in the BPM area as well, where BPM initiatives will not succeed unless the organization becomes process-centric. In part, this means that management needs to cede responsibility for some of the process decision-making to others, which allows those with a different view on the process to bring in improvements wherever they might occur. It can also be facilitated by spreading the LSS training out to the business areas, where either green belts are embedded within business areas, or business people are trained in key techniques that allow them to push forward process improvements from inside a business unit. There’s a certain commitment required for this: at Assiniboine, they pull subject matter experts from operational positions to work on process improvement, and define those SMEs as top performers that will cause pain to the operation when they’re removed from their operational position.

Spina was a great moderator: low key but he kept things moving along, asking questions of the two panelists and involving the audience as well as adding his own experiences to the mix. The small audience size is really a bonus with this sort of session, too, since it really fosters participation.

As a matter of disclosure, I should mention that IQPC provided me with a free pass to the conference, although I paid my own $3 subway fare to get here.

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