Can a Lean and Six Sigma deployment damage your business?

Downward-Loss

Lean and Six Sigma (LSS) have been around for decades and have a respectable following. Like many of you, I have had the experience of being a part of a Lean Transformation. Also, like many of you, I have seen that it can be beneficial—but often not quite the panacea touted by the experts. Perhaps we have expected too much from this program and its ability to solve all our problems? It is inarguably one of the best frameworks in the manufacturing environment and for process improvement, but did the creators go too far by trying to use it as a management system in the C-Suite?
As a former Lean and Six Sigma practitioner, my response is yes. Most organizations can be more successful when they don’t aim for Lean perfection across the company. Instead, these organizations should implement a company-wide management system that best fits their objectives, which are often much broader than the objectives of LSS. Rather than waste extraordinary effort trying to be perfect, organizations can get the most benefit by utilizing the 20% of tools that garner 80% of the system benefits.

Why are we challenging the conventional view towards LSS?

Many of our clients have asked us about LSS’s use as a management system, and it is extremely common for LSS zealots to fight against anything else because LSS is the only way to be successful in their minds. We are not arguing that another system more fits the definition of perfect. Instead, we are writing this to give you, the reader, a better understanding of the deficiencies of LSS so you can make more practical decisions about how to run your business.

This article will argue that attempting to go ‘full LSS’ sub optimizes businesses. Yes, some businesses benefit from a robust Lean implementation, but we would argue it is not 100% of companies, nor likely even 5%.

There are often higher priorities than reducing Variation and Waste

A simple explanation of the aims for Lean and Six Sigma are: Lean = Reduce Waste | Six Sigma = Reduce Variation.

Yes, those both are admirable quests, but there are other business objectives beyond reducing Waste and Variation. Here are a few:

  • Organizational Flexibility (Netflix Model): Reed Hastings, the famed CEO of Netflix, aimed “to have a model where a company is organized around flexibility rather than exploiting the last bit of efficiency of some current model.”* This has immense benefits and has allowed their company to reinvent itself in times of rapid change.
  • High Performance Management System(HPMS): Rather than trying to do many things well, organizations that deploy HPMS resource the transformational projects first, at the expense of the useful many. HPMS collects inputs from Customers, Employees, Shareholders, and the management team to develop their strategy on a page, and operationalizes the strategy through team stoplight reporting and structured problem solving. This system has generated proven results in companies of all sizes.
  • Rapid Iteration (Agile Model): Agile process models have been incredibly successful for software, which allows for rapid failure cycles to build large complex products. Agile process models have been developed that focus on setting goals and driving cycles of improvement, believing that long-term planning is impossible to predict/achieve. These shine in environments where driving execution becomes the top priority.

But can’t Lean/6s solve for those, too?

We can shoehorn features in and say LSS was built for managing a business, in the same way, I can say that a sports car can function for family transport, though we know it won’t be a very good one!

A LSS practitioner would be quick to point out that LSS can increase flexibility, drive major business transformations, and be used for software development. There is a whole section of LSS that attempts to live as a strategic tool. We can shoehorn features in and say LSS was built for managing a business; in the same way, I can say that a sports car can function for family transport, though we know it won’t be a very good one! Over the years, people have tacked tools and methods to make LSS seem like a relevant management system for the C-Suite. There are multiple approaches, but it is misleading to assert that Lean is the best because of its success in manufacturing environments.

 

An intense focus on Waste comes at a cost

Not only does LSS have drawbacks as a management system, it also draws resources that could be utilized for better purposes. LSS is often used to streamline operations, but as we know, an organization often cannot save their way to success. Yes, it is important to become more efficient, but there are likely other things that are more important to work on first. I have seen this and heard from others at large manufacturers- where millions of dollars and thousands of hours were invested to create the perfect LSS lines. They looked amazing, but every dollar and hour invested has an opportunity cost and, I believe, the money could have been used somewhere else for a larger benefit.
W. Edwards Deming, whose work led to the development of Lean, stated “Optimizing the results for one process is not the same as operating that process in the way that leads to the most benefit for the overall system.” That large medical device company could have saved hundreds or thousands of lives by investing money in new product development rather than trying to squeeze manufacturing yields from 98.9% to 99.0%.

The strange behaviors that occur when people try to be perfect

Art Bryne, former CEO of Wiremold, summarized how silly this was: “You are trying to run a business here. You aren’t trying to run a karate class!”

Some readers may have had the same experience I had, where the organization was so set on creating the best LSS plant that they started to do things that didn’t make sense. In one organization I worked for, we were pressured into booking our results towards LSS projects when they were not related. I have also seen exorbitant costs making a line “look” Lean, when there were no added benefits to the employees or business. I have also seen the quest for certifying all employees with yellow, green, or black belts as a key business performance measure. Art Bryne, former CEO of Wiremold, summarized how silly this was: “You are trying to run a business here. You aren’t trying to run a karate class!”**
It’s a shame such a great system was taken to this point, begging the question how we got there. I believe that the orthodoxy and purity that are preached in the program rarely happen or should happen in the real world. Every new LSS practitioner sees the perfect manufacturing examples and wants to strive for perfection. The real world is messy and doesn’t always need to fit into a neat little box just as every manufacturing line doesn’t need to be a perfectly labeled one-piece-flow visual masterpiece. The more that we can cope with the world being messy and understand that aiming for perfection comes at a high cost, the better equipped we are to make prudent decisions on what tools to use where so we can utilize our limited resources effectively.

The practical view of LSS

LSS is a great program, and in our practice we use the tools every day. A manufacturing line should always try to achieve 1-piece flow to a set takt time. A sales organization should always attempt to develop repeatable sales processes. All employees should aim for continuous improvement. Still, we should not continue to believe that LSS is the best way to manage a business. We should look at LSS as we look at any other set of tools or systems and be free to call out its drawbacks as much as we look at the benefits.
Organizations should take a step back and decide what they want to accomplish. Is it to tackle big goals? Drive continuous improvement? Make an impact on our community? Save money?
Based on your responses, choose something that fits your organization and culture. Be practical instead of academic in your approach so you can avoid the suboptimal effects of an overdone program.

*Source: Interview of Reed Hastings and his new book: No Rules Rules on Freakonomics Podcast Sept 12, 2020

**Source: Lean Summit 2013 – Art Byrne – What does it take to Lead a Lean Turnaround? | 2013