The Six Sigma way to identify what to change

Six sigma practitioners have been pointing out six sigma also provides approaches to decide what requires change in an organization.

If one were to look at what Stephen A. Zingraf says in 'Six Sigma-The first 90 days' (2006,Prentice Hall) six sigma methodologies provide a quantitative understanding of the relationship between the process outputs and the process inputs. The output of a process is a function of a set of inputs of a process (Y=f(x's)). where Y is the output and X's are the inputs. This understanding can be translated into the strategic planning process

Y Return on investment =f(Profits, Investments)
    Y Revenue =f (Quantity Sold,Average Selling Price,Discounts)
         Y Profits = f (Revenue,Product Cost, Business Costs)
              Y Cash Flow = f( Profits,Working Capital)
                   Y Economic Value Add = f(Profits,Capital Charges)

The process of six sigma is designed to identify the most important inputs,optimize those inputs and then control them. In Six Sigma parlance the critical Ys  (big Ys) are a function of inputs.Projects improving those inputs will improve the performance on the outputs.

So an organization attempting to identify what needs to change can use an analysis of x's and Y relationship to decide what to change.
But how does one decide the big Y's that require focus. Do organizations stumble by picking wrong areas to concentrate improvement actions?

Business Model :Key to deciding what to change

As a response to my earlier post of how does one decide what to change in an organization, a colleague referred me to the book 'Confronting Reality'.

My colleague was  pointed out that a review of the 'business model' will enable one to identify what needs to be changed.

The authors ( Larry Bossidy and Ram Charan, 'Confronting Reality" 2005) define a business model as a statement of an organization's current reality and its likely-as opposed to hoped-for- future direction.
The business model ( see figure) has three essential components

• the environment in which the business operates
• the organization's financial targets
• Activities of the business:strategy formulation,operating activities,selection deployment,development of people, and organizational processes and structures

The authors believe the business model provides a blue print of taking action.Repeated review of the components of the business model till a harmonization can be achieved will throw up the factors that need to change..

Any thoughts?

The How Vs What of improvement

Most of my posts have been around how to enable change or improvement. Have a sponsor,engage him,create a burning platform,have a good project team etc etc. This approach,sort of,assumes that you know what to change or improve.

I guess this is far from true.

My gut feel is that most organizations and leaders (and managers) are faced with bewildering choices when it comes to deciding areas to focus for improvement.

There is a school of thought which attributes decisions on what to improve etc to leadership. The leader,(in many cases para dropped into a new situation) uses his intuition,previous experience,his reading of the context etc to make decisions on what to improve.Many of them go on safaris; meeting clients, analysts, employees etc, gather opinions and reach conclusions. And then rolls the improvement or 'transformation' journey.The levers available to him or her are many; people,organization structure,processes,product or services mix,support technology etc etc.

Is there an objective way to decide what to change? What sort of systematic analysis can identify the exact components that needs to change. Are techniques like benchmarking adequate to identify performance improvement opportunities. How does one identify opportunities to make quantum improvements that can help one leap frog over competition?

Any thoughts?

The disappearing project sponsor

Have any of you been in situations where you see the project team and sponsor disappear for a project which you thought you were only supporting?

Kotter's "Leading Change" talks about creating a guiding coalition as a vital part of enabling change.I also realize that assembling the right project team is essential for any improvement initiative.But increasingly I understand the need for one critical element of the project team : a clearly identified and engaged project sponsor.

In today's world ; probably due to the complexity of today's organizations; decisions to start an improvement initiative may be taken due to top down direction or bottom up (typically middle management) initiative.  Identifying a sponsor becomes vital if the initiative requires changes in many parts of the organization and also organizational resources.Having a sponsor who signs off saying that this initiative needs to be undertaken is not sufficient.

The project team needs to ensure that the identified sponsor is 'engaged' through the life cycle of the improvement project. And that is where many project teams fail. They get the decision to go ahead and then attempt to fight the internal battles on their own.In many cases they even fail to keep the sponsor informed of the progress (or the lack of it).This leads to the sponsor slowly losing interest  and moving on to what she considers to be more urgent priorities..

Here is a shortlist of actions that can help project teams keep the sponsor engaged and the project successful

• Clearly identify the sponsor
• Ensure that the project objectives are linked to the sponsors objectives/goals for the year etc
• Establish governance mechanisms that ensures sufficient project sponsor time commitment and  adequate reporting of progress and issues to the sponsor
• Ensure meetings/communications etc are undertaken to keep the sponsor informed of progress and also take feedback
• Find opportunities to demonstrate sponsor commitment
• Ensure that communications of project progress to larger stakeholders go from the sponsor
• Invite the sponsor to physically present in meetings to explain project/impact etc
• Invite the sponsor for celebrations of wins etc from the project

Are there are other good practices to engage the sponsor?

Quantifying benefits and the benefits dependency network

In an earlier note I asked about the importance of benefits calculation and demonstration for the success of an improvement initiative.One of our constant struggles have been to quantify benefits.

A benefits dependency network is a recommended tool to enable the investment objectives and their resulting benefits to be linked in a structured way to the business,organizational and IS/IT changes required to realize those benefits.John Ward and Elizabeth Daniel "Benefits Management" provides detailed instructions and examples for developing a benefit dependency model

The recommended steps to draw a benefit dependency model are the following

• Understand the drivers acting on the organization and identify the investment objectives for the particular project or initiative
• Identify the business benefits that will result if the investment objectives are achieved
• Identify the changes to the ways individuals and groups work that are a necessary part of realizing the potential benefits identified
• Business changes are those new ways of working that will be required permanently in the future if the benefit is to be achieved and sustained
• Enabling changes are one off changes necessary to allow enduring business changes to be brought about
• Identify IS/IT enablers that will support the enabling changes

How relevant is this model in a generic improvement initiative. Can this be used to develop a business case? Are there examples available to take the discussion forward?

Is there a connection ?

Between execution discipline and organizational change management?

Here is an interesting paragraph from an old book ,Execution ;The Discipline of Getting Things Done ( Larry Bossidy & Ram Charan 2002 Random House)

"Every body is talking about change.In recent years,a small industry of change meisters have preached revolution,reinvention,quantum change,break through thinking,audacious goals,learnings organizations and the like.....But,unless you translate big thoughts into concrete steps for action,they are pointless"

So..
Does the discipline of Organizational Change Management help execute better?