Chapter 1 - Why Lean and Six Sigma?

Before you read this book from the beginning, you can skip to the heart of the book in Chapter 6 - How You Can Get Started

I accidentally fell into my job. I was good at math in high school, and I was forced to pick a major in college. After stuggling with computer science and biology, I went back to what was working, Statistics. Later I would realize that there was a need for this skill, and companies would pay me money! I feel fortunate that I landed in this career path almost by accident.

In the late 1990’s, Six Sigma was gaining momentum in industry, and coincidentally my skills would be even more in demand as I entered the workforce in 1999. I started working full-time at Rockwell Collins¹, a large aerospace manufacturer near my hometown of Iowa City, Iowa. That’s where I picked up my knowledge in Lean principles, which is another popular approach to solving problems. Over the past 20 years, I’ve been trying to take the best of both approaches, and to apply the correct approach to whatever problem I was working on. Practicing these two approaches over many years has given me the confidence that I can solve any problem thrown at me. What an amazing feeling!

What makes the Lean and Six Sigma methodology effective is the structured ways in which problems are solved. There are many ways to solve problems, and most companies and organizations often solve these problems incorrectly. They are inconsistent in how they handle problems, with an incorrect focus on quick, short-term cost reductions to meet financial metrics. For publicly traded companies, they are even more incentivized to achieve short-term goals to align with quarterly and annual reports.

How companies solve problems can vary greatly, even from department to department. Some follow the Lean approach, while others embrace Six Sigma. Some create their own approach, while others do not use any formal methodology. It also depends on how committed they are to the approach. Some say they are using Lean or Six Sigma, but when you dig deeper, there usually isn’t much going on. Others make it the way they run their business, but don’t talk much about it. Bottom line, how a company solves problems should be assessed based solely on their actions, not what they say.

Going forward, if I refer to an organization using Lean Six Sigma, I’m assuming they are actually adopting and implementing the principles to the best of their abilities, not just using the tools on special occasions.

An organization that is fully implementing Lean and Six Sigma should be following a structured problem solving approach, and looking for the best long-term solution. The solution should maintain or increase employee and customer satisfaction. They should collect and analyze data to reduce waste and inefficiency, which will free them up to increase customer and stakeholder value. If a company uses Lean and Six Sigma to lay off employees, they are implementing it incorrectly, and this negatively impacts employee morale! No one will want to participate in future improvement work if they feel their job might be in jeopardy. There is usually plenty of work that needs to be done within an organization, so free time should be used to work on these other tasks. This should lead to more value for the customer, without adding additional people.

Let’s look at an example.

If an organization is looking to reduce health care costs for the bottom line of their company financials, and they follow the traditional cost cutting approach of solving problems, they might come up with the following quick, short-term solutions:

• Increase co-pays to employees for physician visits.
• Increase deductibles to employees for medical bills.
• Decrease quality of services to employees.
• Decrease number of places for employees to obtain services.
• Decrease access to services for employees.
• Use cheaper and less effective healthcare providers.
• Use cheaper and less effective medications.

The typical organization might achieve their cost reductions in the short term with these solutions, but at what expense in the long term? The costs are shifted to the employee, and services are reduced, or the quality of care is degraded. Employees may decide to delay care, leading to higher costs overall, both to the employee and the company. The company may have achieved short-term cost reductions, but sacrificed employee satisfaction while increasing long-term costs. Employees will more likely leave the company, which will increase costs to re-hire and re-train new employees.

In contrast, a Lean Six Sigma organization should look for waste and inefficiency in the process, and will likely come up with the following analytical, long-term solutions:

1. Identify the top drivers of health care costs by symptom or treatment.
2. Investigate the root causes of the top drivers through analysis, experimentation, employee interviews, and observations.
3. Change and improve the process and incentives for employees, to reduce long-term costs for the employee and the organization.
4. Track and monitor costs to identify when changes occur in the future, to quickly identify health care cost increases.

The company might offer health screenings at work, subsidized gym memberships, incentives to bike to work, improved food in the cafeteria and snack machines, or even personal trainers for at-risk employees. The end result is that the organization will reduce long-term health care costs to the employee and the organization, while maintaining or improving the quality, access, and number of services available to the employees. A win-win for everyone!

They might take a little longer to get to their cost reduction goals, but the employee satisfaction will not degrade (and should improve, if done correctly). The long-term costs will be much lower, not only in health care expenses, but could reduce worker compensation issues, or reduce missed days due to injury or illness.

This is the reason why Lean Six Sigma has been so successful within some organizations, but has been rejected or abandoned at other organizations. It comes down to whether the organization leaders are looking for successful, long-term financials results, or simply using the tools to achieve short-term results, but potentially negative long-term results.

It’s easy to blame the organizations for this incorrect thinking, but many improvement practitioners act just like the companies they work for, making short-term decisions that impact their long-term success. They make decisions every day in their personal life that save them money in the short term, but end up costing them more money or stress in the long term. You might opt for the less expensive vehicle, but pay more in gasoline over the life of the vehicle. You might buy less expensive food, but have more health issues and costs in the future. You might take that job offer that pays more money, but leads to more stress and less free time with your family.

In the next chapter, I will give you some ideas on how you can start to shift towards more rewarding work, using your process improvement skills.