Drive Change in the firm through Work-Out & Six Sigma techniques

JWI 555 Organizational Change & Culture, week7 summary, 5/23/13

Work-Out & Six Sigma are two of the most important change leadership techniques. Learning about these methods and having a conversation with Jack Welch made this a very special week.

A. Work-Out, the Jack Welch way developed at GE

What is Work-Out ?
Work-out is a technique used to give everyone a voice and bring every brain in the game to eliminate unnecessary work and bureaucracy  (JWI 555, W7 L1). The end goal is to create an organization with a culture focused on candor, self-confidence, simplicity and speed - nimbly anticipating fast-changing business and economic conditions, eliminating unnecessary steps and activities continuously, giving people self-confidence to challenge the way things were done and take risks to do them differently.

What does Work-Out do to Leadership?
One of the most important cultural outcome of Work-Out is the grooming of leaders who 
(a) are prepared to act in a transparent way and
(b) have self confidence to engage in real-time public discussion and decision making

Three steps of Work-Out

Planning & Teamwork, Townhall meeting, Implementation are the 3 key steps in Work-Out.

(I) Planning & Team work: Participants define the problem statement, come up with ideas for business improvement, develop specific process and measurable solutions. Right people from across functional units - regardless of hierarchy -  are selected to implement. Thought-starter questions are used to stimulate dialog.

(II) Townhall meeting : Small groups brainstorm on improvement ideas, come together to remove overlapping ideas and begin detailed planning for top ideas. A presentation of recommendations is made a the townhall meeting. Decision makers - in front of a panel of senior mangers (for widespread buy-in and empowerment) - listen and managers are forced to make immediate Yes/No decisions.

(III) Implementation : an owner with a stake and passion is assigned and held accountable to take work steps forward. Business leaders anticipate energy dips and cheer lead when needed. The action plan is tweaked and the team is reconfigured as needed. Midpoint and final reviews are conducted for closure.

B. What is Six Sigma?

It is a quality improvement strategy and program that aims at transforming business processes
to reduce defects and drive down variation in products, services and customer experience. It overhauls a company's internal processes so that customers get what they want, when they expect it, every time.

It is an ongoing effort and a new way of life for the organization, not just a one-time project. It is expensive and time-consuming to implement and master. Requires commitment to major change
Requires training of internal consultants with different levels of expertise - green/black/masterblack belts.

Where does Six Sigma work best
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Best suited for routine and repetitive processes where variation creates errors, defects, excess costs
eg. manufacturing process improvement, product design, HR, Sales, Services

Benefits of Six Sigma:
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99.99967% parts defect free (only 3.4 defects per million)
Improves operational efficiency
raises productivity
lowers costs
Improves design processes
gets products to market faster
builds customer loyalty
has a capacity to develop a great cadre of leaders - specific leadership skills,analytical sophistication
Better brand image (Duran & Deming used six sigma to turn "cheap & shoddy" perception of "made in Japan" brand to one of higher quality, lower cost, faster speed to market (JWI 555, W7L2))
Changes the culture of the organization - great value placed on evidence & continuous performance improvement,
creates strong set of shared values, common approach to problems, commitment to production excellence
Shifts everyone from internal focus to customer-focus & quality-focus

5 steps of Six Sigma (DMAIC)
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(I) Define - Business Process
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Define where the process must improve
- problem statement                    Identify the problem eg. Voice of Customer; Outage
- where does process begin and end?             What is critical to Quality? Specify the process parameters based on internal & external criteria
- what is inside and outside the scope of the process?    get it to right experts, give customers a suitable target time for repair and resolution
- what are the outputs ?                Fix for the problem

(II) Measure-Metric to improve
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Define a quantifiable metric to provide a baseline and a yardstick for improvement
Count defects in the output of the process being improved.

manufacturing business
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- #defects in products coming off assembly line
- delivery time
- payroll processing accuracy
- time to fill empty positions
- customer satisfaction ratings.

service business
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- customer defections
- customer satisfaction ratings
- service TATs (mean time to repair - MTTR)

(III) Analyze-What factors drive success or failure ?
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Through analysis, figure out what key factors to Maintain and improve

eg. in a telecon firm, an outage resolution process identified 8 areas to be analyzed:
- systemic causes of outages
- organization of fix agents (resolution specialists)
- use automated diagnostics-testing methods
- reasons for chronic recurring outages
- use resolution tools
- effectiveness of network monitoring
- process for notifying customers of resolutions
- automatic generation of trouble tickets

Some areas straightforward to analyze
Some areas need statistical analysis to assess key variables and impact on MTTR
Analyze by customer, product, fix-agent

(IV) Improve-the business process
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Optimize the process to drastically improve variation, improve crtical-to-quality (CTQ) parameters, reduce costs
handoff session with operating managers: give data analysis and opportunities for improvement; hold accountable for improvement; consult and assist with six sigma team
Set up mini teams - meet weekly and conduct formal reviews every 30 days, 100 days
deep dive into the data, brainstorm to improve, develop specific plans for next 100 days.
eg. focus on the biggest detractors in the pareto
measure the metrics that matter and get sign-off from people that matter
automate
quantify cost savings

(V) Control-the business process
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Ensure six sigma quality levels are maintained and continuously improved as business conditions change
measure output quality, real-time measurement of specific operations at granular levels
develop a weekly dashboard for stats by product, customer, type of problem, tracking mean time to repair
drill down to different aspects of the process including lag times, TAT from start to sign-off
operations manager should continuously identify potential threats to quality & Attack them early

Dr DP