"If you didn't do it in Six Sigma, then it didn't happen."

Guest Columnist - Quality Digest

Wow, this is pretty bad... allegedly about GE. Granted, any dysfunctional Lean company could end up with similar dynamics. So none of this is knock on Six Sigma... it's about human nature and organizational dynamics.

There's an expression that pretty much describes Six Sigma's infiltration at GE: If your only tool is a hammer, every problem starts to look like a nail.

Again, the same would be true about Lean. The point isn't to "implement Lean" -- the point is better serving your customers or improving the business. Not everything is a Lean problem. Lean isn't a silver bullet for any organization, nor is Six Sigma.

I explained that while I was doing this project, I had found and fixed several other processes. I was immediately admonished by one of the Black Belts for doing so. She told me I should've turned these into Six Sigma projects. I explained that it made more sense to me to quickly make the fixes so we could start reaping the benefits right away. Her retort was, "If you didn't do it in Six Sigma, then it didn't happen." Of course, her metric of preference was dollar savings from Six Sigma projects. She couldn't care less that what I did was the right for the business. She, like many other Six Sigma "devotees," was only interested in managing her career.

Wow. Sad. Has anyone else seen similar dynamics with Six Sigma? With Lean? The same thing can happen with Kaizen Events... don't fix something without first scheduling an Event (which might not be for a few months out). Don't let Kaizen Events or Six Sigma get in the way of your improvement efforts...

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The Value Stream of Succession Planning and Leader Development

by Jamie Flinchbaugh, co-author, The Hitchhiker's Guide to Lean

What's the purpose of thinking about work as a value stream? Is it just a buzzword? It helps us identify how our activities connect and flow together in order to deliver value to some customer. So let's look at the process of succession planning and development from that perspective. Succession planning as a value stream might be considered a subset of the much larger talent development value stream (see wikipedia on succession planning).

When we don't think of succession planning as a value stream, we just think in terms of the end result. The end result is knowing who will replace a key position if that person leaves, is fired, or is otherwise not available. Most organizations skip to the final result: they name one person who best fits into that role. That answers the open question on the table, but it doesn't solve the real problem, which is how do I get someone to the point that they could replace someone.

GE is an example of someone doing this right. They have systems, evaluations, relationships, goals, and resources all designed on developing leaders to their full potential with the assumption that tomorrow's division presidents and CEOS are working somewhere in the company today. When Jack Welch was getting ready for his retirement, he had 3-4 individuals that he, the board, and the shareholders all would have been comfortable as a replacement. Warren Buffett is in a similar situation, with 2-3 "deemed worthy" successors sitting in the wings. On the other hand, no one can imagine or can see anyone being groomed and prepared to take over for Steve Jobs at Apple. The naming of a successor is not just an event, it is instead the end result of a thought out and managed value stream of leaders.

As with any value stream, we must consider its design and execution in the context of the changing environment in which it operates. As it relates to succession planning, a great example is found in the privately-held family business. The commonly-accepted flow was that "dad" (it's not always dad but the majority still is) would run the business until they were in their 50s or 60s at which point they would retire. The son, daughter, son-in-law, or other next-generation-representative would then take over in their 30s or 40s with some experience behind them but also plenty of time to make their own mark and take the business to a new level. How is the environment changing? Quite clearly, each generation is living longer, and working longer. This has a dramatic impact on the value stream. If dad is going to run the business until they are 75, son doesn't want to wait until they are 50 to take over. So instead they leave and find something else to do. Now there is no one "downstream" in the succession process to take over. Right now there are many privately-held business in that condition looking for a solution in ownership and leadership.

How do you look at succession planning as a value stream? Ask yourself these questions:

First, what is the value, what are customers willing to pay for? This is defined by having a clear leadership model. There is no right leadership model, you must develop that based on who you are, who you want to become, and where you want to be.

Second, what is the takt time, or customer demand rate? You will need to develop leaders at a certain pace, and that pace is probably constantly in flux depending on your current conditions. If you industry is headed for a certain level of decline, it might not be as attractive and you have to develop people at a faster pace to replace outgoing leaders. It's just as important to know if you have a slow need for new leadership.

Third, understand the activities that make up that value stream, from initial hiring to exit. Look at the flow. Very often, there is a great deal of batching of the development of leaders centered around late in the value stream. It is very helpful to spread more of that change upstream to earlier in a leader's career. Although it is spread across more "product" that may not make it, it is cheaper and those investments have longer to pay you back.

Lastly, measure it, manage it, and improve it. Measure you pace, your success rate, and your fallout in the succession planning value stream.

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GE's CIO and Lean Results

GE's CEO controls information worth billions - July 21, 2008

It's always interesting to read about GE's shift from a Six Sigma company to a Lean Six Sigma company. Their CIO, Gary Reiner, is responsible for their Lean Six Sigma program, which is unique for a Chief Information Officer.

From the FORTUNE article:

You've been in charge of GE's Six Sigma initiative since it started, in 1996. Are you still getting value out of it?

We've been aggressively trying to migrate away from talking about tools and instead to talking about outcomes. Six Sigma is a tool. It is a wonderful tool, but it is a tool. What we're talking more about as a company is outcomes, and the two outcomes we really want are product reliability and customer responsiveness.

So we start with that and work our way back to what tools are needed to make that happen. For product reliability, the Six Sigma tools are sensational. On the responsiveness side, it's often less about using Six Sigma and more about getting the right people in the room to map out how long it takes for us to do something in front of customers and, using mostly common sense, take out those things that get in the way of meeting our customer needs responsibly.

That's great that they are focusing on outcomes, not just tools. He's right about Six Sigma, but it would also be true to say that you shouldn't just focus on tools with Lean either. Are you doing the right things for the customers and for the business? That's the real point of any of it. What Reiner describes above sounds very much like a Value Stream Mapping exercise to identify waste and waiting time through the whole process, not just any one area.

For example?

In our GE Money business we offer private-label finance to retailers. We are the financing behind jewelry stores and pharmacies and the like. Sad to say, it was taking 63 days from when a retailer contacted us saying it wanted to consider using us as a private-label financier until it could conduct the first transaction with our financing. No one had calculated this before we went on this journey.

We did a number of what we call lean workouts, where we get everybody in the room to map out the process, and they got it down from 63 days to one day. The leader of that business was able to go out and have as his marketing campaign, "Enroll today. Transact tomorrow." When we did that, sales doubled. And there are 30 examples of that throughout the company.

That's a wonderful example of using the Lean approach to take non-value-added time out of a process. Look how they used Lean to drive sales and revenue, not just as a "cost cutting" exercise. Nice stuff.

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Signs of The Lean Buzzword Spreading?

Networks Plot Course - WSJ.com

As the entertainment industry works to recover from the recently-ended writers' strike, the WSJ article featured a quote from a division of General Electric:

"[the networks] are hoping to maintain some of the cost-cutting benefits of the strike, such as ending costly studio deals through the use of force majeure clauses. "

We're a little bit leaner and more agile now," says Marc Graboff, co-chairman of NBC Entertainment and NBC Universal Television Studio, units of General Electric Co"

Are the buzzwords of Lean and TPS spreading that far and wide throughout GE now that the TV people are talking that talk? Or was it just the "everyday" use of the words as we often hear?

You might remember this earlier post about a funny "Six Sigma' clip from the NBC show 30 Rock. Will we see 30 Rock mentioning the Toyota Production System, whenever they finally get new shows back on the air?

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Six Sigma In the Newsroom

Technology Review: "You Don't Understand Our Audience"

It's just one part of a very interesting article in the MIT magazine by John Hockenberry, a former reporter for NBC news. NBC (and NBC Universal) are a part of the General Electric (GE) corporate umbrella (also recommended is the part about trying to use GE "corporate synergy" to get an interview with the Bin Laden family).

Hockenberry's thoughts on the use of Six Sigma and GE culture were sort of funny, something you sometimes see skewered on the show "30 Rock". (Another funny link here)

Six Sigma in the Newsroom
Perhaps the biggest change to the practice of journalism in the time I was at NBC was the absorption of the news division into the pervasive and all-consuming corporate culture of GE. GE had acquired NBC back in 1986, when it bought RCA. By 2003, GE's managers and strategists were getting around to seeing whether the same tactics that made the production of turbine generators more efficient could improve the production of television news. This had some truly bizarre consequences. To say that this Dateline correspondent with the messy corner office greeted these internal corporate changes with self-destructive skepticism is probably an understatement.

Six Sigma--the methodology for the improvement of business processes that strives for 3.4 defects or fewer per million opportunities--was a somewhat mysterious symbol of management authority at every GE division. Six Sigma messages popped up on the screens of computers or in e-mail in-boxes every day. Six Sigma was out there, coming, unstoppable, like a comet or rural electrification. It was going to make everything better, and slowly it would claim employees in glazed-eyed conversions....

While Six Sigma's goal-oriented blather and obsession with measuring everything was jarring, it was also weirdly familiar, inasmuch as it was strikingly reminiscent of my college Maoism I class. Mao seemed to be a good model for Jack Welch and his Six Sigma foot soldiers; Six Sigma's "Champions" and "Black Belts" were Mao's "Cadres" and "Squad Leaders."

I know there are times when Lean and Six Sigma seem completely foreign to folks in areas like healthcare. So how do we address that? I think a key is emphasizing about how Lean (or Six Sigma, for those using that) are methodologies that are meant to improve the way you do your work. We are turning the hospital into an "assembly line" but we're using the methods of an assembly line in the context of hospital priorities and values.

It sort of reminds me of the phrase that's used, that China has "capitalism with Chinese characteristics." It's euphemistic, in that it becomes an Orwellian phrase where "capitalism" means whatever you say capitalism. We have to be careful that "Lean with hospital characteristics" doesn't become something we don't recognize as Lean. Yes, we can be sensitive to patient needs the unique dynamics of healthcare, but there are also ways in which healthcare needs to be shaken up, for the sake of patients and employees.

One more thought on China - it struck me that Hockenberry compared GE to a totalitarian system... remember our discussion here about large businesses being "Soviet" in nature?

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Comments from GE's CEO

An interview with P&G and GE CEOs Lafley and Immelt - December 11, 2006:

I saw this yesterday and it jumped out at me, from a FORTUNE magazine interview with Proctor & Gamble's CEO, A.G. Lafley and GE's Jeff Immelt:

"A.G., your company employs more people outside the U.S. than in it and has for a long time. Jeff, at GE it's about fifty-fifty, and you've said you make major appliances in Louisville but can't make a dime of profit doing it. Can American workers compete and raise their living standard in a global economy?

Immelt: It's all about innovation and technology. Look at jet engines. We spend $1 billion here on R&D. We have a dominant competitive position. Our workers are very highly paid and highly skilled, and we can export from Boston or Cincinnati to the rest of the world; 80 percent of our orders come from outside the U.S. We can go toe to toe with anybody, and we'll be able to do that for a long time.

Appliances - we can't do that. Our high-end appliances are now made in China and Mexico. Our responsibility - and again I learned this from Jack [Welch] - is not to throw a bomb in the middle of the place. But every year we'll shut down a line. We'll get 80 percent, 90 percent of the people to retirement and pay to retrain the others, and we'll have a thriving business as we do it. It doesn't do any good to be dishonest with people. We're not going to put big investments in Louisville just to lose money."

Is Immelt speaking out of both sides of his mouth? Clearly, GE has gone down the outsourcing/offshoring path. But, GE is also supposedly embracing lean, or at least a GE version of lean.

Immelt says, on the one hand, they can be competitive (in certain products, like jet engines) and ship from the U.S., but on the other hand he claims they can't make a dime manufacturing appliances in Kentucky. Would lean change this equation? Is GE even trying?

To say it's all about innovation and technology.... isn't it all about people? Isn't that how Toyota views the challenge, to develop people? Is GE embracing the "Thinking Production System" or just looking to cut costs and to make excuses?

More Praise for Jack Welch

From NBC's "30 Rock", a very funny show, again:

Jack Donaghy (Alec Baldwin): "Jack Welch has such unparalleled management skills that they named Welch's grape juice after him... because he squeezes the sweetest juice out of his workers' mind grapes."

Liz Lemon: (Tina Fey) "That doesn't even make sense."

Donaghey: "No, it doesn't, does it? I wrote it down in the middle of the night"

"30 Rock" on Jack Welch and Six Sigma

We know Dilbert makes fun of Six Sigma, but the new NBC show "30 Rock" does a great job of skewering GE culture (of which NBC is a part) and Six Sigma. 30 Rock is easily the funniest workplace show (even better than The Office). No, this isn't a paid pitch for NBC.

In the most recent episode, the boss (played by a hilarious Alec Baldwin) tells the employee (Tina Fey):

"Do you know why Jack Welch is the greatest leaders since the Pharaohs? Because he didn't only involve himself in our work lives, but our personal lives as well. He introduced us to the finest booze, the most restrictive country clubs. He gave us the names of the most discreet private investigators to spy on our ex-wives. He held our hands during our triumphs... and our senate hearings. "

It's all delivered in a Welch-worshipping sincerity. Baldwin's character, Jack Donaghy, is a long-time successful GE exec who was promoting into a title of "Vice President of Network and Microwave Programming" (ah, GE synergies!!!). Donaghy definitely would NOT think Welch is a turkey.

It cracks me up that GE-owned NBC would allow a character to imply such things about Welch, that they golfed at clubs that exclude minorites or that they regularly spy on their ex-wives. I guess they aren't that afraid of Welch after all.

Here's a great video of Donaghy explaining Six Sigma to the writing staff at the TV show he's now in charge of.

Funny funny stuff. It's a consistently funny show, in a very dry way.

Is Jack Welch a Turkey?

Welch spreads business gospel from MIT pulpit - MSNBC Wire Services - MSNBC.com

Jack Welch himself sure seems like the turkey with comments like this:

"Don't fall in love with your workers," a business instructor tells a student who's launching a small startup company. "If you've got 16 employees, at least two are turkeys."

I realize Jack Welch is no longer the CEO at GE. He doesn't speak for them anymore, but he was extremely influential on their culture and I'm sure he's revered even today. But I'm embarrassed that MIT and the Sloan School of Management (where I earned my MBA) is associated with comments like this.

There is a lot of buzz about how General Electric is adopting Lean in addition to Six Sigma. With a comment like Welch's (again, realizing he's teaching from the perspective of a retired old turkey not as GE CEO), I would suspect that GE will do better on the "eliminating waste" front than they will on the "respect for people" front. The Toyota Production System preaches respect for people -- and that doesn't mean coddling someone if they truly are a poor performer. "Respect" doesn't mean being nice and making excuses for someone. But respect also means not calling names and insulting your current or former employees. Having respect for employees is hardly "falling in love with them."

If GE had to force the bottom 10% out of the company ("And don't bother trying to improve the performance of underachievers in the bottom 10 percent of the company's work force, he said."), you have to ask why GE would hire turkeys in the first place.

It reminds me of the great quote from Peter Scholtes -- if you're firing dead wood, didn't you hire live trees to start with?

My understanding of the Toyota approach is 1) you're extremely careful in selecting people at hiring so you AVOID "turkeys" and 2) you coach and lead people, you develop them rather than giving up on them as "turkeys." It's fair to tell someone they're underperforming and here are the things they need to do better. It seems disrespectful to tell someone they're a turkey to get rid of them. Toyota WOULD "bother" to try to improve the performance of people. Am I wrong on that?

Jack Welch speaks like this about people all the time. He's a man who apparently made money in spite of all the "turkeys" who worked for him. I guess money and financial success doesn't mean you have grace or class.

I guess Prof. Welch would call me a "boss hater" for daring to question his wisdom. Another obnoxious phrase he has spun. What do you think? Click on "comments" to participate.

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GE Can Really Help Spread Lean

IndustryWeek : Driving Incremental Value Through Lean Six Sigma

GE did so much to help popularize Six Sigma, will they do the same for Lean? As a lean guy, I hope GE is incredibly successful with their lean efforts - it will give the Wall Street Journal and Business Week something positive to write about lean, other than Toyota. Instead of "Just in Time Supply Chains are Risky" articles, the media can write about GE's lean success. That would help us all, wouldn't it?

Even with the problems I had with getting refrigerator service scheduled, I'll hold out hope that GE can get lean right.

GE's definition of Lean:

GE, an early adopter of Six Sigma, has been working to combine Six Sigma's core principles with that of Lean, a methodology focused on waste reduction (as opposed to defect reduction). GE's hybrid approach to Lean Six Sigma is in part based on the venerable Toyota Production System (TPS), which seeks to compress the timeline from order receipt to payment received by removing waste. GE's Lean Six Sigma mode is guided by four key principles:

1. Define what the customer perceives as value in the product or service.
2. Map the value stream of all steps (value and non-value added).
3. Establish the flow of products, services and related knowledge from supplier to customer.
4. Continuously improve the process to perfection
   

The article, written by GE people, uses Toyota and Dell as examples of "floor efficiency." I guess they are aluding to Dell also being "lean," like Toyota, but if you've been reading my blog for a while, you know how I feel about that.

Wall St. Doesn't Respect GE's Processes

With Its Stock Still Lackluster, G.E. Confronts the Curse of the Conglomerate - New York Times

Thanks to blog reader Steve for sending this my way. This article has some examples of how GE is using Lean to drive improvements across business units. Ideally, this is how a business (such as power systems) should benefit from being part of a conglomerate - common processes and sharing of ideas (such as lean).

The locomotive division showed how G.E. techniques helped it discern that customers wanted to speed up the time between order and delivery, and then to whittle that time down to 10 days from 31.

The consumer finance division showed how it was using the same tools to shorten the 63 days it takes for G.E. to agree to administer a store’s private-label credit card.

Going from 31 days to 10 days is the typical scale of cycle time improvements that can be achieved using lean. I bet they can still get faster than 10 days.

The article focuses less on Lean methods and more about how Wall St. looks at GE.

“We are definitely honing the total G.E. message, trying to make everyone understand how the pieces of G.E. fit together,” said Keith S. Sherin, the chief financial officer. “Investors should realize that G.E.’s management spends tons of time focusing on processes to achieve growth.”

Does Wall St. understand processes? Or just the end-result, bottom-line numbers? It seems that they only focus on the numbers. I guess, at some point, you might just have to just manage the business the best you can and hope that the Wall St. results follow? I bet you get into more trouble by focusing only on Wall St. and trying to "jumpstart" your stock, as that can be a distraction from customers, employees, and processes.

Will Dell, GE and Wal-Mart Replace Toyota as the Standard of Efficiency and Excellence?

Evolving Excellence: (Superfactory Blog)

Thought provoking post from the Superfactory blog. The blogger asks the question "Has Toyota become an "old" benchmark for modern-day excellence? "

My short answer is "no." Check it out... my comments are there on the Superfactory blog page.