Lean and SixSigma do not deliver the Required Performance Improvement

Most organisations must change in order to survive over the long run. This change could be slow or alarmingly fast. It depends on the type of industry and the political and economical situation. However, due to the globalization and the realization that money in the public domain is scarce, changes will forever occurring in both the profit and non-profit sectors in industries, in markets, in technology, in methods, in processes, in skills, in regulations, and in management itself.

Many organisations already face the pressure to change in order to improve the performance of the organisation. Asa result, they may have implemented improvement programs like Lean and SixSigma. Although these programs have value with important concepts and useful tools and methods, due to flaws in the thinking regarding the underlying assumptions and the implementation efforts, many organisations have not achieved significant performance improvement from these programs.

One of the major underlying assumptions is that many, many small improvements will result ‘savings’, efficiency gains, waste reduction and/or even employee morale, and that the sum of these improvements will improve the overall performance of the organisation. The implementation efforts, therefore, were geared towards improving the entire organisation with many many small improvement programs/projects. The effort and time invested in these programs is usually huge and involves many training sessions for employees and active participation of all of them to find ways to improve their local area, resulting in local-area improvement results, like fewer defect rates in function A, less waste in Function D, shorter processing time in Function K, less variation in process ABC, etc.

Studies, however, have shown that these local improvements have not resulted in significant improvements at the bottom line of the organisations. How is this possible?

One of the major reasons is that local improvements do not automatically yield results at the level of the organization. This is due to the fact that organisations consist of business processes and activities. One can compare a business process as a chain with each of the activities being a link. Normally, the strength of the chain is determined by the strength of the weakest link. The same applies to the business processes within an organisation.

It is far better to focus on strengthening the weakest activity within a business process than improving all links except the weakest link. Without focusing on the weakest link, organisations may also be trying to improve the weakest link, but that would be more a matter of chance and luck than a concentrated effort. After all, without identifying and knowing the weakest link and above all understanding the behaviourial impact of the weakest link on the entire business process, all efforts are spread across the entire business process.

So, if this is the case, what should organisations and managers do?

We will get back to the answer on this question in the next blog. Stay tuned!

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About iCPM Solutions

This is a blog in which I am presenting my thoughts about integrated Constraints-based Performance Management Solutions. I would appreciate any feedback, comments and tips around a topic. I am working on developing a full integrated framework for CPM based on a synthesis of various theories and common best practices. However, the most important inputs will be based on the TOC concepts, since those are dealing with constraints and as we all know constrainst are preventing us from reaching our goals. Hence the reason for the name Constraint-based Performance Management. This blog is part of my website www.icpmsolutions.com You can reach me through my email, LinkedIn Profile and Website. I hope you all enjoy reading my blogs.
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