Learning from Experience VI

Nov 11th, 2011 Eli Schragenheim will lead a workshop on Learning from Experience. The purpose is to learn how to understand the cause and effect (the why) of disturbing and unexpected results from our actions AND, more importantly to take and apply the important lessons we learn.
The stories in these posts are all about unexpected effects that someone has experienced and that he or she could not properly understand. With Eli, we will look at such problems (bring your own!) and analyse them.
If you are interested The Workshop (in English) will be at the hotel Schiller in Olching (near Munich) followed by the TOC4U Meeting (mostly German) on Saturday Nov. 12th. You can register here: Register or call +49 6252 795 3070 if you have problems with the German registration page.

Six Sigma auf dem Rückzug! The Retreat of Six Sigma

QZ-Frage im Juli

That Six-Sigma is retreating in Germany is not surprising. But, what is the reason and what can we learn from it?
The people that launched six-sigma on the World said something very significant. The told everyone that to be successful a company’s black and green belts must accomplish many, many smaller projects. Where I used to work projects should deliver about 250’000€ each. With 100 such projects the improvements would reach 25 million Euros – to the bottom line.
The sad part was and probably still is, that it is not possible to identify the impact to the bottom line – there apparently was only a small positive impact to companies’ bottom lines. The size of the bottom line impact was insufficient to justify the huge investment and certainly not enough to motivate employees. No wonder Six-Sigma is retreating in Germany. I wonder what is happening elsewhere in the World?
The graphic below is a possible description of what is happening to Six Sigma (the green ovals represent an and – all the entities that pass through an and are required for the next logical entity. The graphic is a summary; there may be assumptions (we believe realistic) and logical ‘leaps’ (again we believe realistic).)
The graphic shows that since Six Sigma (and many other continual improvement methodologies) is not focused on the businesses limiting factor a lot of effort is wasted – at least for now. Bottom line impacts are delayed, managers are disappointed and eventually everyone moves to some other way of achieving personal targets. The effect is enhanced because there is a negative reinforcing loop (the red line) thatensures any continual improvement programme not focused on the limiting factor is certain to fail sooner or later. It is unfortunate because Six Sigma and other such methodologies have a lot to offer any business – production, project or service oriented.
What is missing is the correct focus on the limiting factor(s). In any business there are not many limiting factors at all – often-just one! If what I have just said is true, then the opportunity for success is great. The rules to follow will be something like:

1. Identify the limiting factor.
2. Decide how to exploit (get the most from; how to use the limiting factor in the best possible way) the limiting factor.
3. Subordinate everything else (the rest of the organisation, the policies, work behaviours etc.) to the decision you just made. This is not an easy thing to implement. Not easy because it means focus on one place instead of improvement everywhere.)
4. Eventually the limiting factor will be operating at its maximum capability. If it is still the limiting factor, now is the time to expand it.
5. If during a previous step the limiting factor has moved to another resource then go back to step 1 and start over. (Make sure that your own inertia become the limiting factor – when the limiting factor moves, ALL the experience you have is most likely invalid – go back to step 1.)

These 5 simple rules make Six Sigma, Lean and other improvement methodologies much more effective. The bottom line will receive a very significant boost; managers and employees get a motivation boost and reports of “Six Sigma auf Rückzug” will be replaced by the positive results achieved.

Beautiful picture from National Geographic

Instead of giving up on Six Sigma lets use a valid focusing mechanism to identify where scarce resources should focus their efforts. 

If we can learn how to do that how much more will continual improvements achieve for the bottom line?

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