Lean Six SIGMA for Service: How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions [Englisch] [Gebundene Ausgabe]

Together with K.Yang's Design for Six Sigma for Services, George's book form a pair of well-meant, but utterly ineffective efforts to translate the six sigma know-how into applicable tools for designing and improving service products and processes.

Both books suffer from exactly the same problem: a very strong manufacturing background, which refuses to stay out of the way, while the authors try to explain 6S concepts and techniques under a services business light.

Examples after examples are taken from pure manufacturing processes - the sort with names like "etching" and "plating".

This is not a matter of bad didactics. It is not a question of learning through manufacturing examples and then easily applying the same concepts and techniques in the services environment. As both authors promptly address at their introductory "why this book" paragraphs, service processes are inherently different from manufacturing processes. Most of them do not even have any physical output. Their tasks or "repetitive units of work" have usually to be described in such high-level, generic ways that render them useless - think of the tasks of a senior associate in a large law firm. That is precisely why the services industry needs so badly a body of knowledge about quality management. George's and Yang's books, unfortunately fall far behind, on this task.

These are books on quality of services that do not cover, to any meaningful length, the role of call centers in designing services processes (not to mention the whole science of quality maangement in call centers); they do not touch the subjects of scripting, Queuing Theory, yield management or any other obvious subjects that come to the mind of any practitioner of process improvement in the banking, retail, hospitality, or professional services industries.

What is behind this?

George is the guy that invented Lean Six Sigma. Yang is a Ph.D., practitioner and professor of quality engineering. Why can't these top-notch professionals produce useful tests on their field of expertise, when it comes to service industry applications?

My hypothesis is that large services companies - the sort of clients that hire projects that are sufficiently large and complex to call (and pay) for methodology and theory building - have consistently neglected the consulting firms that specialize in quality engineering projects, like George's George Group, Yang's Enterprise Excellence Institute, as well as their eminent ancestors, Juran and Demming Institutes. These companies have, instead, hired mainly management consulting firms - the McKinsey's and Accenture's - to help them in their challenges with processes and quality improvement. Why would that have happened?

The advent of business process reengineering (BPR), in the early 90's, was severely criticized by the quality engineering practitioners and warmly embraced by the management consultants. This happened exactly at the time when the IT revolution (decentralized networks, low-platform applications, etc.) opened the gates for radical innovation in services process engineering. Banks, insurance companies, hospitals, retail chains, everybody in the services industries (much, much more than in the manufacturing arena) had their plates full of opportunities for radical process innovation - the sort of projects management consultants were selling, not the step-improvements, group-oriented sort offered by quality consultants. And you know what? These clients were right in their choice.

The problem is, now that all this new technology has been deployed in all these new processes, now that jobs were eliminated by the millions, all over the world, productivity has soared but so has confusion, bad services, non-conformity. So now is the time for our friends in the quality engineering trenches to step-up and actively target the services industry. Maybe they should forget about writing books, right now - they do not yet have the raw material for a complete corpus of knowledge on quality engineering for services. Maybe they should start learning from veterans of process improvement for services outside the quality management community. And definitely, they should start learning by doing large projects for large services organizations.

I have heard Six-Sigma discussed often, but truly thought it was something that applied to manufacturing only. Same with Lean: Kanban, Toyota, JIT. I am a manager in a professional services industry. So, outside of memorizing the theory for exams during B-School, I thought little more of Six-Sigma.

Michael George has opened my eyes. He points out (in a non-technical way) both the differences in Lean and Six Sigma, and how they complement each other. He does this through some description of the Lean and Six-Sigma techniques, and follows up with some revealing case studies, how Lean and Six-Sigma tools can apply to services.

Six-Sigma brings an awful lot to the table. Six-Sigma was the backbone of Jack Welch's eye-popping success at GE, shaving hundreds of millions off of the company's cost structure. A proscribed series of steps, Six-Sigma's customer focused methodology (DMAIC) allows the practitioner, generally referred to as Green or Black Belts, to rationally Define a problem, Measure it, Analyze the causes, make adjustments to Improve the problem, and ultimately Control the corrected process. In each of these steps, Six-Sigma deploys standard tools that help the practitioner ensure that processes are producing standardized outputs well within specs. The result, if implemented correctly, is higher quality output. Increased quality= less quality costs (scrap, customer returns) =increased margins.

Lean is largely managing processes to increase the velocity of them. Increased velocity means less work in process (WIP). Lean means determining which activities are value added, and which are not. Then, you get rid of the bathwater and keep the baby.

When the two methodologies are combined, you have greater velocity (product turns), less inventory in the pipeline and processes that build value for the customer (Lean Concepts). You also have measurable quality standards that are continually fine tuning the processes, honing in on fitting more and more perfectly the specs desired by consumers. This reduces quality costs dramatically (Six Sigma Concepts).

George follows up with some interesting case studies of how Black and Green Belts have worked to improve processes in Lockheed-Martin, Bank One and, most interesting of all, the city of Fort Wayne, Indiana (Yes, Virginia, if there is rationality in government, there just may be a Santa Claus!). I would have liked to see more of the technical aspects: A case study from the problem definition phase through control, how the various Lean and Six Sigma tools were applied instead of the macro-level explanations of before and after.

I liked the book well enough. It gave me an overview, and an idea of how to implement the tools. However, I would have appreciated some down and dirty, nuts and bolts how-to. After all, the book jacket promises to teach you how to shave dollars from the bottom line. Still, an invaluable, thought provoking read for any manager in a service industry. You may want to pick up "Business Process Mapping" by Jacka and Keller, and "Statistics for Six-Sigma Made Easy" by Brussee to familiarize yourself with the nuts and bolts of Six-Sigma Quality tools.

The last time I checked, Amazon and its online partner Borders offer more than 600 different books on the subject of Six Sigma. Presumably hundreds of millions of dollars are spent each year on consulting services, training programs and materials, workshops, seminars, etc. in what continues to be a remarkably active area of business initiative. That said, it should be added that a substantial percentage of Six Sigma or comparable process improvement initiatives fail, many within 60-90 days after launch. (Percentage estimates vary.) By now I have become convinced that the most valuable business books are written in response to especially important questions. For example, Jim Collins' two books: "How to build an organization that will last?" and "How can a good or even mediocre company become great?" Here is the question posed by Michael George: "How to conquer complexity and achieve major cost reductions by using Lean speed and Six Sigma quality to improve services and transactions?"

In essence, Lean Six Sigma for services is a business improvement methodology that maximizes shareholder value by achieving the fastest possible rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital. Presumably George agrees that it would be a fool's errand to read his book (or any other), then charge ahead with implementing all of the recommendations it makes. With all due respect to what can be learned from organizations such as Lockheed Martin, Bank One's National Enterprise Operations group, Stanford Hospital Clinics, the City of Fort Worth, and Caterpillar, Inc. (all of which George rigorously examines), the fact remains that they and all other organizations (regardless of size or nature) are unique in terms of their culture, needs, interests, available resources, etc. George wrote this book inorder to help his readers to understand:

1. How to apply Lean tools to achieve greater speed in service processes

2. How to integrate Lean and Six Sigma

3. How to use shareholder (or stakeholder) value to drive project selection

4. How to to use Lean Six Sigma to cut costs by reducing complexity

To me, the key point is to understand what both Six Sigma and Lean offer to organizations which heavily rely on the services they provide and then -- with meticulous care -- formulate an appropriate "game plan" which will enable the given organization to achieve its desired objectives. Hence the great importance and value of George's counsel when formulating such a plan, then implementing it while making necessary modifications along the way.

More a quibble than a complaint, I wish George had devoted somewhat more attention to the subject of measurement. True, he identifies basic metrics of deployment and affirms the importance of establishing baselines; however, he only briefly discusses tools such as the Pareto chart, FMEA, and Gage R&R.

That said, I strongly recommend this book. Credit George with explaining quite effectively how and why Lean and Six Sigma are complementary and, when properly combined, how and why they create a business improvement methodology that maximizes shareholder value by achieving the fastest possible rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital.

Those who share my high regard for this book are urged to check out George's Conquering Complexity in Your Business: How Wal-Mart, Toyota, and Other Top Companies Are Breaking Through the Ceiling on Profits and Growth and his more recently published book, Fast Innovation: Achieving Superior Differentiation, Speed to Market, and Increased Profitability. Also, Frederick Reichheld's The Ultimate Question: Driving Good Profits and True Growth, Barbara Bund's The Outside-In Corporation: How to Build a Customer-Centric Organization for Breakthrough Results and Jason Jennings' Think Big, Act Small: How America's Best Performing Companies Keep the Start-up Spirit Alive as well as Robert Kaplan and David Norton's The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment.