Expertise and Managerial Competence Centre

Article 2: Design for Profitability is the Essence of 3rd Gen Lean Six Sigma

The goal of Six Sigma is Alignment – On Target No Variation. In Statistical Process Control (SPC) language, it is X-Bar No R (no variability around the performance target). In simpler daily language, it means 'Do the right things (target) and do the things right all the time (no variation)'. A number of organizations have already achieved this level of Six Sigma quality at the micro level or parts level (commonly called 3.4 parts per million). So, they have naively thought they have arrived.

Organizational Development (OD) specialists looking from a more macro perspective have doubts about the 'Sick' Sigma way. The reality, to OD specialists, is that these organizations are far from the benchmark of efficiency and effectiveness. Heavy investments in the Six Sigma black and green belts fall short in producing the desired work culture; few ever achieved and sustain peak performance.

It is true that the 1 st generation Six Sigma places a disproportionate amount of effort on the tools at the micro level. Findings among these organizations have also shown that they are not managed to their full potential value; each department tends to adopt a silo mindset. The Normal way of management shows that, even if each department does an excellent job, the sum of the departments' effort does not produce peak performance. This mode of management consumes much more resources, which could be put to better use. One senior executive lamented on the current Six Sigma implementation in the region , "Six Sigma is about mindset change. Providing staff with black belt, green belt or whatever belt training with no attempt to alter their silo mindset is just a waste of organization resources."

Return on equity is low for Normal way of management; at its worst it is called wastage or value destruction. What is waste? Peter F. Drucker's ably define waste,
"No matter how cheap or efficient an effort, it is waste, rather than cost, if it is devoid of results. And if it was incapable of producing results all along, it was unjustifiable waste from the beginning." Using pounds to earn pennies is suicidal. There is a real cost to equity. We have to stop this wasteful way of managing our departments.

Oblivious to the possibility of Alignment way of management, continuous improvement (DMAIC – Define Measure Analyze Improve Control) within the department first has little stand-alone value; at best sub-optimization. For organizational performance to become more than the sum of its parts, each department must first be aligned and integrated to support the common objectives. The objectives must be closely link to the mission of the organization. Organizations need to move to Alignment way of management (3rd Gen Lean Six Sigma Alignment Framework), reconfigure the departments to total alignment. Organizational alignment and with all staff acquired a Six Sigma Mind are the essences of 3rd Gen Lean Six Sigma.

The misalignments within and between the various departments have to be identified and removed. In the words of James C. Collins and Jerry I. Porras (Built to Last 3rd Edition), "Uncover misalignment that impedes progress. Most managers we've worked with fall short in eliminating misalignments. When misalignments crop up you've got to kill them as quickly as possible. Think of misalignments as cancer cells. It's best to get in there and cut them out before they spread too far. The vast majority of your time will be spent bringing the organisation into alignment."

Management innovation is about alignment and is the only way for an organization to renew its lease on success. First thing first, identify and correct misalignments that push the organization away from its mission or impede progress towards its vision. Immediate l arge benefits can be reaped with this first move to Alignment way of management. Later effort (DAMIC) is to continue to keep it in alignment.

Paraphrasing the words from Mikel Harry to make Six Sigma even easier to comprehend, it is to "increase revenues, lower costs and widen the gap between cost and revenue". To achieve a thousand pounds using four pounds is the ultimate of 3rd Gen Lean Six Sigma (also Tai Chi Principle). Now, you are not short of why but how. You need organizational alignment and at an accelerated rate. Attaining the ultimate of 3rd Gen Lean Six Sigma is no easy task, all three critical success factors need to be fulfilled: seek first to strengthen the cultural component; stay steadfast to the strategic component; and monitor closely on the tactical component. Design for Profitability, re-design the macro and micro processes so that defects and errors never arise in the first place.

Michael Pang, the Offensive & Defensive 3rd Generation Lean Six Sigma Founder, has developed a full range of proprietary 3rd Generation Lean Six Sigma methodologies in English and Chinese Languages. He was chosen to conduct workshop at the ASQ's 4 th Six Sigma Annual Conference 2004 at Phoenix , Arizona.