Often different parts of an organization (such as engineering, supply-chain management, and manufacturing) are schooled in different tools and approaches for process improvement. Perhaps you work at a site or in a department that has favored one set of methods and techniques over others. As a result, you may not be equally well acquainted with all of your options for continuous improvement. In a smaller organization, you might find that everyone follows only one approach while ignoring others.

One reason for this variation is that many process improvement approaches have their origins in specific and limited areas of the enterprise. For example, lean engineering began in the manufacturing world, as did Six Sigma. In contrast, CMMI was created from the Capability Maturity Model for Software and the Systems Engineering Capability Model—models that addressed two key aspects of the engineering development world. Your goal now should be to apply continuous improvement tools to all aspects of an operation, and irrespective of origins, to select the specific process improvement methodologies or techniques that best address the problems at hand and lead to the desired business results. That could even mean applying CMMI to manufacturing, or lean engineering to software development. Operations and service functions also follow processes that should be examined with an eye toward continuous improvement.

A culture of continuous improvement and innovation is a culture that embraces change. People at all levels in the organization routinely and frequently look for ways to improve. Because its environment is constantly changing, an organization that never changes is in danger of failing to understand the dynamic needs and desires of its customers and stakeholders. At the same time, change for the sake of change is both unsettling and counterproductive. Instead, the goal is to implement change that improves the ability of the organization to meet its business objectives. With a culture of continuous improvement, all employees (from upper management on down) know that they have a stake in the game. Every employee looks for opportunities to improve and welcome improvement suggestions from others. Everyone knows how he or she aligns with the goals of continuous improvement.^[2]

Sometimes your customers—especially those who want you to succeed and improve—will establish requirements for your operations, such as having an ISO certification, demonstrating a CMMI maturity level, or developing a plan on how you intend to use lean engineering. For example, an ISO certification might be required to do business in some European countries, a CMMI appraisal at specified maturity or capability levels might be called out in an RFP to bid on a contract, or a sub-contractor on a particular job might be required by an acquirer to execute a lean engineering plan. However, the benefits of focusing on process improvement extend far beyond your need to respond to such external encouragement.

From time to time, take the opportunity to think more clearly about what it really means to “embrace change.” A culture of continuous improvement helps you to develop and maintain processes that will achieve the following goals:

To make this cultural shift become reality, continuous improvement initiatives must outline the various changes needed at all levels in the organization: senior management, program management, functional management, program personnel, and the champions for process improvement. In a smaller organization, many of these roles may be combined—and might even be yours.

Cultural change in an organization requires top leadership at all levels to be engaged, accountable, and committed. Leaders should be ready to explain and defend from a business perspective the investment that they are making in continuous improvement. Their support must be strong, consistent, and visible to build a consensus among practitioners that the endeavor is not merely the management approach du jour. (Whatever happened to total quality management, anyway?)

Executive buy-in and support are critical to obtain resources for process improvement activities and to ensure rewards for the innovation and additional hard work required for change. When initiatives cut across organizations, executives must bridge the organizational gaps and soothe the bruised egos that inevitably appear in the course of multidisciplinary endeavors. Leadership must achieve consensus among both middle management and the practitioners; otherwise, process improvement will become a paper exercise that produces hollow artifacts and lackluster performance.

For these reasons, it is essential to get commitment from executives early and often. Help them construct the “elevator speech” they need to counter resistance from middle management.^[3] Executives must “walk the talk” and understand that if they take actions that belie process improvement tenets, this seemingly subtle message will be heard just as loudly as public denigration of the program. Help them develop an ongoing communication strategy, achievable goals, and good metrics for their own performance plans that can trickle down to their direct reports. Above all, make sure that upper management is notified of early successes. These stories can be trotted out to defend the program when the first wave of cash-flow problems, schedule adjustments, or other similar crisis occurs.

Leadership continuously focuses everyone on the big-picture goals:

The benefits of a skilled workforce and a strong process focus are realized best when managers lead the charge. Concentrate on keeping your executives aware, involved, and excited. If you do, you will be well on your way to a successful continuous improvement program.

Improvement efforts require organizational support and the allocation of resources. Those efforts should support stated business objectives and goals. Those who advocate specific process improvement projects have the obligation to make explicit the link between those projects and the organization’s stated business strategies. If a specific process improvement activity can improve the chances of winning critical business in the future, it is more likely to be embraced.

Some improvements target cost savings; others tackle cost avoidance. Process improvement will have more success, however, if a majority of those improvements directly target cost savings. Simply put, the resources expended on a specific process improvement effort should be offset by the future savings that will result from instituting the change. A convincing business case for this should be made before starting any larger-scale process improvement effort.^[4] In particular, each process improvement effort that exceeds a certain size threshold should have a project charter that provides a business case.

A successful process improvement proposal will detail which data is to be collected, how that data is to be used, and what the measure of success will be; it will make a clear business case for the change. Having good data available to support business decisions and to run programs well is a central goal of any continuous improvement initiative. Senior management may listen politely when well-meaning individuals state their fervent beliefs about why some change should be made, but it is the appropriate collection, analysis, and use of data that is likely to win approval and maintain management commitment to the activity.

In recent years, virtually all of the major process improvement initiatives have emphasized the importance of focusing on customer value and on managing customer expectations. Six Sigma, lean engineering, and CMMI, for example, share this feature.

For instance, listening to the voice of the customer (VOC) is an essential component of the Six Sigma methodology. Typically, the defects that Six Sigma projects seek to correct manifest themselves in a failure to meet a measurable customer requirement. An important aspect of any Six Sigma improvement is its impact on customer satisfaction and how it adds value to the customer by better meeting the customer requirements.

Similarly, one of the 12 overarching principles in the Lean Enterprise Model (LEM) is having a continuous focus on the customers. Within the LEM, emphasis is placed on the following concerns:

An essential theme within the CMMI models is the identification and involvement of all key project stakeholders, where “stakeholder” is understood to mean a group or individual that is affected by or in some way accountable for the outcome of an undertaking. Stakeholders may include project members, suppliers, customers, and end users. In CMMI, Integrated Product and Process Development (IPPD) is defined as a systematic approach that achieves a timely collaboration of relevant stakeholders throughout the life of the product in an attempt to better satisfy customer needs, expectations, and requirements, including quality objectives.

In CMMI, the customer appears in many contexts. Customer needs are viewed as essential to defining quantitative process objectives. The requirements development process in CMMI is characterized as transforming customer needs into product requirements, whereas final validation of the product focuses on whether customer needs have been met. Process improvement activities are to be undertaken in part because of their effects on customer satisfaction. A part of project planning entails addressing all the commitments that have been undertaken with the customer. Information from progress reviews should be communicated to customers, as well as the status of program risks. As in the LEM, in CMMI customers should be considered for inclusion in integrated product teams. During all stages of product development, life-cycle cost issues should be brought to the attention of the customers. In all of these areas of the CMMI model, as well as in others, what customers want and need is paramount.

Having seen how Six Sigma, lean engineering, and CMMI all value the role of the customer, we must also issue a call for common sense: Anything—even a customer focus—can be overdone. For example, care must be taken when customer views are undeveloped, inconsistent, or just plain wrong. It is not a good idea to unthinkingly accept everything that the customer says is needed, and the effects of a customer’s change of mind on cost, schedule, and quality must be carefully examined. Even with these provisos, however, continuous improvement should always be undertaken (as the Six Sigma, lean engineering, and CMMI approaches indicate) with a close eye maintained on customers. Indeed, careful consideration is needed from the start regarding not just the benefits that improvement efforts might provide to a customer, but also the role a customer might play in those continuous improvement efforts.

For many years and in many business contexts, discussions about quality and the importance of an organizational focus on quality have generated strong interest. To highlight one example, for many years the U.S. automobile industry has strived to improve both the quality of its products and consumers’ recognition of that improved product quality. Clearly something still is missing, as the U.S. domestic market share in this industry continues its slide. We may surmise that this slide will be reversed only after both quality products and consumers’ recognition of quality are firmly entrenched.

Needless to say, quality does not stand alone. We are all familiar with the sign in the print shop: “Good, Fast, Cheap: Pick Any Two.” In other words, a good product with fast service will not come cheaply; a fast and cheap product will not have the highest quality; and a good product at a reduced cost may be obtained, if one is willing to be patient. Of course, it is easy for a shop owner to pronounce with authority (and advertise) that he provides his customers with all three: good, fast, and cheap. Nevertheless, such a pronouncement does not make it easier to do in the real world.

In many industries, a similar list of three items might be this: cost, schedule, and quality. In this case, it is clear that we do strive for all three: meet the financial targets, deliver the product on time, and have the end result meet the customer’s expectations for a quality product. However, on a daily basis we tend not to give the quality dimension equal emphasis. While cost and schedule issues are objects of incessant attention, aspects of product quality (including product performance, reliability, supportability, and field availability) are often the subject of less intense monitoring. In the end, a project may compromise on quality to achieve cost and schedule objectives.

In a culture characterized by continuous improvement, quality is the responsibility of everyone. Quality shortcomings are prime candidates for the scrutiny of a process improvement project. Indeed, any candidate process-improvement project should be evaluated in part based on how it affects both the quality of products and customers’ recognition of that quality. It is especially important to make sure that the processes contributing to better quality are not (easily or routinely) compromised as a result of cost and schedule pressures.

So far, we have discussed various aspects of an improvement project. Clearly, not all of the activities that relate to improvement occur in the context of a formal and organized project. If you are doing your job and collecting data to monitor your progress, and that data tells you that an adjustment is needed, you do not need a large and expensive team of experts to help you fix the problem. At the other end of the spectrum, if a problem could have a major impact on the business—one that will require study and investigation to understand both the extent of the problem and its root causes—then running a project-like activity is needed. Multi-month, multi-person activities need formal criteria to prioritize and authorize the outlay of resources.

Here is the kind of information typically required in a proposal for a large-scale process improvement event:

Templates that outline all of the required information are useful in planning such a project. In considering the continuum of small and large process-improvement projects, it is the larger ones that tend to need the full criteria set. For smaller improvements or in smaller organizations, just making sure that the effort and resources are consistent with the expected payoff may be sufficient.

From a strategic point of view, the first “key” of process excellence involves nurturing a culture of continuous improvement, while identifying and using appropriate tools and methodologies to improve your processes. The other four “keys” (discussed in Sections 2.3.2 to 2.3.5) are examples of such tools and methods (Figure 2-1).

Figure 2-1. Five keys for continuous improvement

An infrastructure for process excellence allows process knowledge to be used to improve the business. A process library holds the organization’s policies, process requirements, procedures, guidance, and related process information (e.g., templates, checklists). Most organizations will develop multiple processes to meet the needs of all the kinds of projects that they do—large or small, normal or time critical, and so forth. Guidance in applying the appropriate process in a given situation is extremely important.

Process excellence relies on the identification of both successful and unsuccessful practices, and on the use of lessons learned; these two go hand-in-hand. Suppose that some process change has been identified that, if it were more widely practiced, would bring a significant competitive advantage (via cost savings, reduced cycle time, or some other criterion). In one scenario, a successful practice (or lesson learned) is stored somewhere so that potential benefactors who want to improve their own operations can search for improvement ideas. In another scenario, a group—a committee, council, or integrated process team (IPT)—that oversees a successful practice actively identifies potential benefactors throughout the organization and “pushes” the information out to them in an effort to maximize the potential benefits. Of course, in the case of unsuccessful practices, warnings—rather than kudos—are recorded or communicated.

The best way to derive value from lessons learned and successful practices is not just to list them, but to incorporate them into the standard processes and procedures by which business is routinely conducted. This should be a central activity in any culture of continuous improvement. Those who champion improvements to standard processes should be recognized for their efforts.

To understand the effects of process improvement, process performance must be measured and monitored. While the extent to which defined processes are followed is important, the extent to which they contribute to meeting business objectives and delivering value to your customers is even more telling. When changes are made, they must be implemented and deployed correctly to ensure that they deliver their full value to the organization. Business priorities and gaps drive process improvement activities. The process monitoring infrastructure is in place to ensure that all the necessary support activities needed to realize the expected benefits occur. For instance, if you improve one process but don’t take into consideration adverse effects on enabling or dependent processes, as well as the effects of the change on users, you may actually see a reduction in business performance.^[5]

Usually primary process performance indicators (such as product quality, schedule, cycle time, and productivity, and the impact that these may have on customer satisfaction and cost) are used to measure the effectiveness of a process improvement program. Improvements related to these indicators typically support the achievement of company business goals, which may include increased profitability or larger market share.

By identifying which performance indicators are to be targeted for improvement, and then selecting process improvement projects that focus on those indicators, you are in a position to begin the calculation of business value and return on investment (ROI) from the project. To quantify the benefit associated with an indicator, you need to specify an appropriate metric, such as defects per unit, hours per unit, days for the project, costs saved or costs avoided, or a customer satisfaction score. You can convert these metrics into dollar amounts, based on the value of hours saved, the amount of additional business garnered, or the amount of additional profit generated, for example. Similarly, you need to quantify the cost of the improvement activity, including purchases, development work, training, maintenance, and fees. Finally, by dividing the financial benefits by the financial costs, and then subtracting 1, you can compute the ROI. For example, if an effort cost $50,000 and had a benefit of $50,000, there would be a 0 percent ROI. By contrast, if an effort that cost $50,000 had a benefit of $100,000, the project would have a 100 percent ROI.^[6]

One industry standard whose use may promote process excellence is ISO 9000. Actually, this certification comprises a family of standards that represents good management practices to ensure an organization can consistently deliver products or services that meet its customers’ quality requirements. Within the ISO 9000 family of standards, ISO 9001:2000 is the one that contains process requirements; it covers these five areas:

There is substantial overlap between the requirements in these five areas and the process requirements in CMMI. While some differences in coverage exist, in general we predict that an organization that meets CMMI requirements will likely meet most ISO 9001:2000 requirements, and (to a lesser extent) vice versa.

Capability Maturity Model Integration (CMMI), which is the principle topic of this book, comprises a framework for coordinating process improvement efforts across an enterprise and measuring and monitoring the status of those efforts. Given that we will describe CMMI in detail in Part II of this book, here we will offer only a brief exposition of this model.

The CMMI provides a basis for benchmarking the “capability” of individual processes and the “maturity” of organizational efforts relating to process. One distinctive feature of CMMI is its use of “levels” to measure both of these things: the capability of an organization in individual process areas (from capability level 0 to capability level 5, with capability level 5 being best), and an overall organizational process maturity rating (from maturity level 1 to maturity level 5, with maturity level 5 being best).

Periodic CMMI appraisals can provide a broad-brush scorecard indicating where process strengths and weaknesses exist, and which areas deserve attention in future process improvement planning. The teams that are formed to conduct a CMMI appraisal are usually led by someone from outside the organization being appraised. This must be the case when level values are assigned; the independence of the lead appraiser guards against any biased ratings. In contrast, the members of the team who come from within the organization being appraised play important roles in helping the team understand the processes within the user’s context and interpret the organization’s vocabulary. It is these team members who have sufficient knowledge of the organization to probe it for process weaknesses and strengths.

The lean engineering approach to process improvement is a result of the Lean Advancement Initiative (LAI), a U.S. consortium of government, industry, labor, and academic institutions. In the early 1990s, the U.S. Air Force began to ask whether the advances that had been made in lean-engineering automobile production in Japan could be applied to the U.S. aerospace industry. As a result, LAI was started at the Massachusetts Institute of Technology (MIT) in 1993 to help reduce the cost of producing aircraft and other aerospace products. The Lean Enterprise Model focuses on the reduction of waste to improve the flow of information and work products, and the efficient creation of value for the enterprise.

Similar to other process improvement methods, a basic premise of lean engineering is that there is always a better way to provide products and services by continuously improving operations. Managers and employees learn to question the need for every work-sequence motion, for every item of in-process stock, and for every second that people, material, or machines are idle.

A key activity in a lean engineering approach is to focus on the process steps by which “value” is added to work products. A step that moves one toward the functionality of a product or service that is valued by a customer is a “value-added” step, whereas a step that does not is “non-value-added.” A mapping of the “value stream” is created to depict all of the process steps used in creating the product, some of which may add value and some of which may not. For each step, the extent to which “value” is added to the product is determined. The central objective is to use this analysis to reduce the time during which no value is added, such as a part sitting unused for days in a queue during a manufacturing process.^[7]

A complete value-stream map of a process is called a “current-state map.” To reduce the number of non-value-added steps in a process is to “eliminate waste.” It is through the elimination of waste that one tries to move from the current-state map to a “future-state vision.” ^[8]

Here are some key principles for any lean engineering journey:

For example, in a large organization it may take on the average six weeks to get an international travel request approved. In this case the traveler is the customer. A mapping of the current state for the travel approval process may show that 12 signatures are needed for international trips, and that paper is passed sequentially to 12 different individuals. Much of the time during the six weeks is taken up with the non-value-added activities of mailing the request from one location to another and having the request sit in an in-box somewhere awaiting a signature.

A future-state vision for this process may be to get a decision on the travel request within four working days, on average. Perhaps the needed signatures could be reduced from 12 to 4 without jeopardizing any needed oversight or checks or exposing the company to any unnecessary risk. Perhaps some of the signature approvals could be received concurrently instead of serially. Perhaps an electronic distribution would be speedier than relying on the company mail system. By mapping the value stream with experts and process owners and identifying the non-value-added steps, one can chart a course for improving this process.^[9]

For an operation to be and stay lean, managers should frequent the venues in which value is created for the organization. They should ask questions about problems and their causes, help employees understand that they have management support for their efforts to solve the problem, and make sure everyone understands which data would be used to show that the problem has been addressed.^[10]

Six Sigma is an improvement methodology developed and used by Motorola, Texas Instruments, General Electric, Allied Signal, Lockheed Martin, Honeywell, and many other companies. The popularity of the Six Sigma model is due in part to the publicity regarding former General Electric CEO Jack Welch and his commitment to achieving Six Sigma capability. The Six Sigma methodology and tools are applicable to any process, including manufacturing, services, and engineering.

Six Sigma has four major objectives: (1) maintain control of process, (2) improve constantly, (3) exceed customer expectations, and (4) add tangibly to the bottom line. This methodology brings with it several tools, such as failure modes and effect analysis (FMEA), regression analysis, process simulation, and control charts. Within the Six Sigma framework there is an explicit use of statistical tools to understand and address process variation.

One central concept is analyzing a process, measuring the number of defects that may occur, and then systematically working to determine how to improve the process so as to eliminate as much as possible the causes of defects. Defects are defined as anything outside of customer specifications. To achieve the Six Sigma goals, a process must not produce more than 3.4 defects per 1 million opportunities, where an opportunity is defined as an action with a chance for a defect.

There are several Six Sigma improvement methodologies, the most widely used of which is called DMAIC (), which stands for five process steps: define, measure, analyze, improve, and control. Figure 2-2 illustrates the key Six Sigma concepts.

Figure 2-2. The Six Sigma DMAIC method

Define. The Six Sigma team defines the project’s purpose and scope, creating a project charter as a contract between the organization’s leadership and the team. The charter contains (for example) the problem statement, the business case for the project, the scope, the roles of the various team members, the milestones, and the required resources. The team obtains information on the customer (the voice of the customer [VOC]) and uses this data to develop a list of CTQs (critical to quality), CTCs (critical to cost), and CTDs (critical to delivery). More generally, we refer to all three of these components as CTX analysis. CTXs are requirements necessary for a product or service to fulfill the needs of a customer. Basic facts about the processes to be improved are captured using SIPOC (an acronym for “suppliers, inputs, processes, outputs, and customers”). In other words, SIPOC defines which inputs are needed for the process and who supplies those inputs, and which outputs are produced by the process and who makes use of those outputs.

The team may also identify “key characteristics,” which are features of a product or process whose variation may play a key role in product fit, performance, service life, manufacturability, or some other central requirement. If a key characteristic is not being met, you may need to consider a redesign, or better process control, or better inspection and testing.

Measure. The team measures the performance of the current process relative to the CTXs. The goal is to collect data relating to a process, to identify defects that are produced by the process, and to determine the possible causes of those defects. A variety of methods are available to collect, organize, and display the data. It is at this stage that the existing process is characterized and mapped, a baseline is defined, and the process capability is determined.

Analyze. The team identifies and verifies the underlying root causes of the defects produced by the existing process and quantifies their effects. Tools such as fishbone charts are useful in identifying the various causes and interdependencies at work in producing defects. Correlation and regression analysis, hypothesis testing, and statistical process control (SPC) are other methods of analyzing process data. The goal in this step is to identify sources of variation.

Improve. The team screens the potential causes of variation, reviews variable relationships, and optimizes the process. Improvement actions are identified and plans are established based on a cost–benefit analysis. Changes may be implemented in pilot tests to determine their effectiveness.

Control. The team validates the measurement system, determines the new process capability, and ensures that process controls are in place for monitoring and controlling the new process. The gains expected from the implemented changes are measured and maintained. Once the value of the new process has been documented, the results are made available to the process owner. And, of course, the team celebrates its success.

One way to think about Six Sigma, and its relationship with lean engineering and CMMI, is to focus on three key, interconnected process features: maturity, efficiency, and control. In general terms, maturity models such as CMMI focus on the maturity and capability of processes, lean engineering focuses on process efficiency and the removal of waste, and Six Sigma addresses process control and the reduction of process variability. It should be obvious that your toolkit for continuous improvement could benefit from including tools that help with all three aspects: maturity, efficiency, and control.

The somewhat formal title of “knowledge management” (KM) means simply managing data and information for the organization to promote its value as a shared resource. The goal of KM is to make relevant organizational knowledge available to those who need it, when they need it. To accomplish this task, an organization needs to have processes and tools in place to facilitate the flow of information. The larger the organization, the more “knowledge” there is, and the more daunting the management challenge. The effective use of organizational knowledge can have many beneficial results—improved performance and competitiveness, better sharing of successful practices, and better team collaboration, to name a few.

There are many ways in which a culture of continuous learning and improvement depends on the effective management of organizational knowledge. If an important lesson learned is not known by those for whom it would be useful, prior mistakes could be repeated. If information about corporate strategic goals is not widely disseminated, business decisions could be out of alignment and might run counter to each other. If insight into customer preferences is lacking, one of the prime targets for process improvement could be misunderstood. We can facilitate continuous improvement activities by working toward the KM goal of having organizational knowledge available to people when they need it.

In many organizations, one important aspect of KM is knowledge retention. As a workforce ages and members with expert knowledge approach retirement, a challenge that emerges is the need to assure that critical knowledge is not lost to the organization. One response to this issue is simple: hire retirees back as independent contractors. While this plan can have many benefits, it is helpful to supplement it with a more comprehensive approach to the issue, including mentoring of new talent by the experts, requiring succession planning, and requiring knowledge transfer planning and execution.

Starting in Chapter 3, we will explore in detail one of the five keys to continuous improvement: CMMI. Our brief discussion here is intended to encourage current and potential CMMI users to adopt an expansive view toward continuous process improvement. You need to strive for process excellence and a culture amenable to continuous improvement by developing indicators that help you achieve your business objectives. A variety of improvement strategies are available to you in the tools and techniques offered through ISO, CMMI, lean engineering, and Six Sigma, as well as other methods. You need to look at the big picture and not just CMMI. Good management of your knowledge resources is a critical foundation for any improvement strategy.