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Case study #3 Linking Execution to Strategy
Just three years into its Six Sigma initiative, a multinational, multi-industry conglomerate finds itself in an enviable position. A newly trained and highly effective cadre of divisional Champions, Master Black Belts, and Black Belts has contributed nearly $100 million in savings directly attributed to Six Sigma projects. In fact, key indicators are up throughout the corporation, and plans are under way to expand Six Sigma deployment. Don't we all wish our Six Sigma programs could be that successful? What does this company know that many others don't? They've mastered a skill that many CEOs and managers fail to master, described here by Ram Charan and Geoffrey Colvin in an article titled "Why CEOs Fail" (Fortune 6/21/1999):
Consider the [Eckhard] Pfeiffer episode. The pundits opined ...that his problem was with grand-scale vision and strategy. Compaq's board removed Pfeiffer for lack of "an Internet vision," said USA Today. Yep, agreed the New York Times, Pfeiffer had to go because of "a strategy that appeared to pull the company in opposite directions."
But was flawed strategy really Pfeiffer's sin? Not according to the man who led the coup, Compaq Chairman Benjamin Rosen. "The change [will not be in] our fundamental strategy we think that strategy is sound but in execution," Rosen said. "Our plans are to speed up decision-making and make the company more efficient.
... In the majority of cases we estimate 70% the real [reason CEOs fail] isn't the high-concept boners the boffins love to talk about. It's bad execution."
Charan and Colvin have picked up on the key stumbling block in any initiative, be it Six Sigma or something equally significant: the challenge of linking execution to strategy.
Unfortunately, pointing out the execution problem is about as far as most experts have gone. They tell us the goal to make sure that execution matches strategy but don't say how.
You have to read between the lines to find the answer. Here's Charan & Colvin again: "So how do CEOs blow it? More than any other way, by failure to put the right people in the right jobs and the related failure to fix people problems [our emphasis] in time."
In other words, the answer lies in behavioral issues, and, more specifically, in creating interactions throughout the organization that link results to strategy. Effective interactions are the linchpin behind both the development of effective strategies and the execution of those strategies.
These three elements are inextricably bound together in many ways:
The quality of thinking around strategy is influenced by the kinds of behavioral interactions that occur within the organization. For example, a turf war between two key departments within an organization negatively affects the quality of the strategic thinking and the commitment levels in that organization. The imposition of a task-oriented manager's decision will affect willingness to execute the task.
The quality and substance of behavioral interactions will affect execution. Experienced strategic planners know that lack of commitment within an organization (what people choose to do and not do) is as great a challenge to implementing a strategy as is the quality of the strategy itself.
Even companies that emphasize execution spend a lot more time identifying the physical elements of change (getting new equipment, designing new processes, developing new forms) than thinking about the behavioral implications of that change. Rarely do we take the time to analyze the impact of the change on people ("who will be required to change how they work?") or to develop specific plans for gaining commitment ("how can we involve others in helping shape how the new changes will be implemented?"). Instead, the new practices are simply dumped into the organization with an unspoken prayer that all will go well.
If a strategy isn't aligned with execution and highly functional behaviors, Six Sigma (or any other initiative) will have limited success at best, and will stand a good chance of fading into the dust as time passes. This resistance to "flavor of the month" fads is a natural response to top-down initiatives that ignore the importance of involving the entire organization in the effort, even parts that are not directly involved in implementation. Six Sigma deployment teams that feel their jobs are completed once they complete plans for training their Champions and Black Belts will likely end up with widespread compliance and passive resistance rather than strong commitment that drives concrete actions in support of that strategy. For an initiative (such as Six Sigma) to become "the way we do things around here" (a norm), it has to integrate all three components of the framework.
An Example of Three-Circle Thinking
The company described at the beginning of this article has done pretty well in covering all three circles in its implementation of Six Sigma. At a practical level, that means they put as much effort into how the strategies are implemented as to what the strategy is. Describing the depth and breadth of their tactics is beyond the scope of this article, but to demonstrate how they link strategy, execution, and behavior, here's a sample of what they've done to ensure their divisional Champions are highly effective:
1) They carefully selected and groomed Champion candidates. The current Champions are all well-respected senior managers who were on the fast track to advancement. All underwent extensive training on basic Six Sigma principles and tools (including DMAIC) and on leadership (including building awareness of their own leadership style). When confronted with a problem, these champions can not only analyze it from the perspective of special & common cause variation, but from an understanding of people dynamics. That means...
2) The Champions are extremely effective in managing their spheres of influence. Yes, technical knowledge of Six Sigma was considered essential in the people running the initiative, but the ability to work with people to develop commitment was given equal weight. As a result, Six Sigma has become "business as usual" within most divisions of this company, and the strategy of using Six Sigma as a tool for improving profits continues to produce tangible results.
3) The company has the right structure for deploying strategy. The Six Sigma Champions report directly to divisional presidents; the Corporate Champion reports directly to the CEO. These linkages ensure that the Six Sigma resources are kept informed of corporate priorities and that the managers who have bottom-line responsibility have a chance to influence the selection and monitoring of Six Sigma projects which, again, is essential in making sure that Six Sigma efforts contribute to areas of the business that are seen as critical to market success.
4) Champions lead an exhaustive project-selection process. This company knows that to use its Six Sigma resources most effectively, projects must meet four basic criteria:
a) be aligned with corporate strategy,
b) be of critical importance to customers,
c) contribute significant cost savings/quality improvements,
d) have a realistic chance of being completed within a reasonable timeframe.
It falls to the Champions to see that all project ideas are appropriately screened and vetted to make sure that the few chosen for implementation truly are the best candidates.
5) The Champions foster collaboration within all dedicated Six Sigma resources. The Champions have been instrumental in creating a supportive informal network among everyone involved in Six Sigma. By both example and directive, they encourage a lot of behind-the-scenes sharing of tips, lessons learned, guidance, etc. This networking improves the technical and personal skills of everyone every part of your process that nothing is going unnoticed as you proceed with the project. Second, it's helpful in identifying non-value added steps in the process. involved with the Six Sigma efforts, making it easier for them to build commitment to the effort and complete projects on time and within budget.
6) Six Sigma experience is considered a prerequisite for corporate advancement. The question many companies face is how to keep Six Sigma from becoming an isolated silo, an "organization within the organization." This company reinforces their statement that Six Sigma knowledge and experience is critical to its future success by explicitly requiring Champions to rotate back into more mainline corporate responsibilities within a few years. Several Champions have already been promoted to senior leadership roles, and have been replaced by high-performing Black Belts who had a proven track record of producing results. In this way, they help to bring Six Sigma knowledge and expertise into everyday corporate operations.
Ironically, the one potential problem at this company lies in the strength of its Champion-led deployment network. If they aren't careful, this strong infrastructure could soon be viewed as a separate clique by others in the organization, which could backfire by positioning Six Sigma as something peripheral to the company's "real work." Fortunately, they have started taking steps to create more explicit links between people working on Six Sigma fulltime, and those only partially deployed or not directly involved.
Conclusion
In our experience, we've seen many, many companies who have mastered the technical part of Six Sigma quite effectively: their Black Belts have an amazing depth of knowledge in topics such as variation, improvement, problem solving, customer focus, and so on. The problem these companies face is that Six Sigma hasn't really been integrated into their management structures and business flow. They haven't yet managed to integrate the three circles strategy, execution, and interaction in a way that exploits the full potential of Six Sigma.
© 2005 Lean Six Sigma Solutions
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LSSS, Lean Six Sigma Solutions, 5S, 6 Sigma, 6Sigma, Analizy, Analizy procesowe, Analyze, Analysis, Audyt, Audytor, AWO, BB, Benchmarking, Black Belt, BPMS, BQC, Brainstorming, Business Process Management System, Capability, CBA, Cellular manufacturing, Certyfikacja, Certyfikat, Champion, Chart, Coaching, Consulting, Control, Control chart, COO, COPIS, Cost & Benefit Analyze, Critical to Quality, CTQ, Cycle time, Data Collection Plan, DCP, Defect, Define, Design of Experiment, DFSS, DMAIC, DMAIC-NPI, DOE, Creative Workshop, Efektywność, Execution, Fishbone, FMEA, GB, Green Belt, Heijunka, Implementacja, Implementation, Improve, ISO, Issue log, Jakość, Jidoka, JIT, Just In Time, Kaikaku, Kaizen, Kanban, Kick-Off meeting, Konferencje, Konsulting, Korelacja, Leader, Lean, Lean Six Sigma, Lean SixSigma, Lean 6Sigma, Lean6Sigma, Lean 6 Sigma, Lean manufacturing, Lean management, Lider, Master Black Belt, MBB, Mapping, Mapowanie, Measure, Measurement System Analysis, Mediana, Memory jagger, Mentoring, Metodologia, Metodologia Lean, Minitab, MSA, Muda, NPI, Normy, Odchylenie standardowe, Operational excellence, Operations, Optymalizacja, Pareto, Parking lot, Plan Zbierania Danych, PM, PMI, PMO, Poka Yoke, Prince 2, Prince2, Proces, Process, Process management, Produktywność, Project, Project charter, Project management, Project Management Office, Projekt, Projekty, QNI, Quality, Quality Net Income, Regresja, Satandardisation, Scheduling, Seiketsu, Seiso, Seiton, Seminaria, Seminarium, Serii, Shitsuke, Single Piece Flow, SIPOC, Six Sigma, SixSigma, SMED, SPC, Sponsor, Standaryzacja, Statistical Process Control, Statistics, Statystyka, Strata, Supermarket, Szkolenia, Szkolenie, Takt time, Team, Team composition, Team contract, Total Quality Management, Toyota Production System, TPS, TPM, TQM, Transfer function, Value Stream Map, Value Stream Mapping, Variation, Variation management, VoC, Voice of Customer, VSM, Waste, Wdrożenie, Work Out, Work-Out, Workshop, Wydajność, Yield, Zarządzanie procesami, Zarządzanie zmiennością, Zmiennoć
LSSS, Lean Six Sigma Solutions, 5S, 6 Sigma, 6Sigma, Analizy, Analizy procesowe, Analyze, Analysis, Audyt, Audytor, AWO, BB, Benchmarking, Black Belt, BPMS, BQC, Brainstorming, Business Process Management System, Capability, CBA, Cellular manufacturing, Certyfikacja, Certyfikat, Champion, Chart, Coaching, Consulting, Control, Control chart, COO, COPIS, Cost & Benefit Analyze, Critical to Quality, CTQ, Cycle time, Data Collection Plan, DCP, Defect, Define, Design of Experiment, DFSS, DMAIC, DMAIC-NPI, DOE, Creative Workshop, Efektywność, Execution, Fishbone, FMEA, GB, Green Belt, Heijunka, Implementacja, Implementation, Improve, ISO, Issue log, Jakość, Jidoka, JIT, Just In Time, Kaikaku, Kaizen, Kanban, Kick-Off meeting, Konferencje, Konsulting, Korelacja, Leader, Lean, Lean Six Sigma, Lean SixSigma, Lean 6Sigma, Lean6Sigma, Lean 6 Sigma, Lean manufacturing, Lean management, Lider, Master Black Belt, MBB, Mapping, Mapowanie, Measure, Measurement System Analysis, Mediana, Memory jagger, Mentoring, Metodologia, Metodologia Lean, Minitab, MSA, Muda, NPI, Normy, Odchylenie standardowe, Operational excellence, Operations, Optymalizacja, Pareto, Parking lot, Plan Zbierania Danych, PM, PMI, PMO, Poka Yoke, Prince 2, Prince2, Proces, Process, Process management, Produktywność, Project, Project charter, Project management, Project Management Office, Projekt, Projekty, QNI, Quality, Quality Net Income, Regresja, Satandardisation, Scheduling, Seiketsu, Seiso, Seiton, Seminaria, Seminarium, Serii, Shitsuke, Single Piece Flow, SIPOC, Six Sigma, SixSigma, SMED, SPC, Sponsor, Standaryzacja, Statistical Process Control, Statistics, Statystyka, Strata, Supermarket, Szkolenia, Szkolenie, Takt time, Team, Team composition, Team contract, Total Quality Management, Toyota Production System, TPS, TPM, TQM, Transfer function, Value Stream Map, Value Stream Mapping, Variation, Variation management, VoC, Voice of Customer, VSM, Waste, Wdrożenie, Work Out, Work-Out, Workshop, Wydajność, Yield, Zarządzanie procesami, Zarządzanie zmiennością, Zmienność, LSSS, Lean Six Sigma Solutions, 5S, 6 Sigma, 6Sigma, Analizy, Analizy procesowe, Analyze, Analysis, Audyt, Audytor, AWO, BB, Benchmarking, Black Belt, BPMS, BQC, Brainstorming, Business Process Management System, Capability, CBA, Cellular manufacturing, Certyfikacja, Certyfikat, Champion, Chart, Coaching, Consulting, Control, Control chart, COO, COPIS, Cost & Benefit Analyze, Critical to Quality, CTQ, Cycle time, Data Collection Plan, DCP, Defect, Define, Design of Experiment, DFSS, DMAIC, DMAIC-NPI, DOE, Creative Workshop, Efektywność, Execution, Fishbone, FMEA, GB, Green Belt, Heijunka, Implementacja, Implementation, Improve, ISO, Issue log, Jakość, Jidoka, JIT, Just In Time, Kaikaku, Kaizen, Kanban, Kick-Off meeting, Konferencje, Konsulting, Korelacja, Leader, Lean, Lean Six Sigma, Lean SixSigma, Lean 6Sigma, Lean6Sigma, Lean 6 Sigma, Lean manufacturing, Lean management, Lider, Master Black Belt, MBB, Mapping, Mapowanie, Measure, Measurement System Analysis, Mediana, Memory jagger, Mentoring, Metodologia, Metodologia Lean, Minitab, MSA, Muda, NPI, Normy, Odchylenie standardowe, Operational excellence, Operations, Optymalizacja, Pareto, Parking lot, Plan Zbierania Danych, PM, PMI, PMO, Poka Yoke, Prince 2, Prince2, Proces, Process, Process management, Produktywność, Project, Project charter, Project management, Project Management Office, Projekt, Projekty, QNI, Quality, Quality Net Income, Regresja, Satandardisation, Scheduling, Seiketsu, Seiso, Seiton, Seminaria, Seminarium, Serii, Shitsuke, Single Piece Flow, SIPOC, Six Sigma, SixSigma, SMED, SPC, Sponsor, Standaryzacja, Statistical Process Control, Statistics, Statystyka, Strata, Supermarket, Szkolenia, Szkolenie, Takt time, Team, Team composition, Team contract, Total Quality Management, Toyota Production System, TPS, TPM, TQM, Transfer function, Value Stream Map, Value Stream Mapping, Variation, Variation management, VoC, Voice of Customer, VSM, Waste, Wdrożenie, Work Out, Work-Out, Workshop, Wydajność, Yield, Zarządzanie procesami, Zarządzanie zmiennością, Zmienność
LSSS, Lean Six Sigma Solutions, 5S, 6 Sigma, 6Sigma, Analizy, Analizy procesowe, Analyze, Analysis, Audyt, Audytor, AWO, BB, Benchmarking, Black Belt, BPMS, BQC, Brainstorming, Business Process Management System, Capability, CBA, Cellular manufacturing, Certyfikacja, Certyfikat, Champion, Chart, Coaching, Consulting, Control, Control chart, COO, COPIS, Cost & Benefit Analyze, Critical to Quality, CTQ, Cycle time, Data Collection Plan, DCP, Defect, Define, Design of Experiment, DFSS, DMAIC, DMAIC-NPI, DOE, Creative Workshop, Efektywność, Execution, Fishbone, FMEA, GB, Green Belt, Heijunka, Implementacja, Implementation, Improve, ISO, Issue log, Jakość, Jidoka, JIT, Just In Time, Kaikaku, Kaizen, Kanban, Kick-Off meeting, Konferencje, Konsulting, Korelacja, Leader, Lean, Lean Six Sigma, Lean SixSigma, Lean 6Sigma, Lean6Sigma, Lean 6 Sigma, Lean manufacturing, Lean management, Lider, Master Black Belt, MBB, Mapping, Mapowanie, Measure, Measurement System Analysis, Mediana, Memory jagger, Mentoring, Metodologia, Metodologia Lean, Minitab, MSA, Muda, NPI, Normy, Odchylenie standardowe, Operational excellence, Operations, Optymalizacja, Pareto, Parking lot, Plan Zbierania Danych, PM, PMI, PMO, Poka Yoke, Prince 2, Prince2, Proces, Process, Process management, Produktywność, Project, Project charter, Project management, Project Management Office, Projekt, Projekty, QNI, Quality, Quality Net Income, Regresja, Satandardisation, Scheduling, Seiketsu, Seiso, Seiton, Seminaria, Seminarium, Serii, Shitsuke, Single Piece Flow, SIPOC, Six Sigma, SixSigma, SMED, SPC, Sponsor, Standaryzacja, Statistical Process Control, Statistics, Statystyka, Strata, Supermarket, Szkolenia, Szkolenie, Takt time, Team, Team composition, Team contract, Total Quality Management, Toyota Production System, TPS, TPM, TQM, Transfer function, Value Stream Map, Value Stream Mapping, Variation, Variation management, VoC, Voice of Customer, VSM, Waste, Wdrożenie, Work Out, Work-Out, Workshop, Wydajność, Yield, Zarządzanie procesami, Zarządzanie zmiennością, Zmienność