Chapter 11
Implementing a Six Sigma Culture
Sections
Implementation Process
Phase I—Mobilizing
Phase II—Planning
Phase III—Piloting
Phase IV—Implementing the Six Sigma System
Summary
Endnotes
“First, have a definite, clear practical ideal: a goal, an objective. Second, have the necessary means to achieve your ends: wisdom, money, materials, and methods. Third, adjust all your means to that end.”
—Aristotle
Six Sigma is not green, black, or any color belt. It is not DMAIC (Define, Measure, Analyze, Improve, and Control), DMADV (Define, Measure, Analyze, Design, and Verify), or DFSS (Design for Six Sigma). It is not saving money. It is not the silver bullet that corrects all problems. Organizations that think it is are in for a big surprise and limited success.
What then is Six Sigma? It is a new way of thinking, behaving, and managing. It is a firm belief that we all can be nearly perfect and do nearly perfect work all the time, and that we all have the inert potential to be creative. We need to think of applying this kind of thinking to each of the healthcare stages (see Figure 11.1).
Figure 11.1. The healthcare stages
We are always surprised at the number of organizations that look at Six Sigma initiatives as groups of Green and Black Belts running around solving problems. This has a negative, not a positive, impact upon the organization. They relieve management of accountability for change. In the past, management used the technical talents that were assigned to them. Process optimization was done by design, manufacturing, and quality engineers. Organizations that just use Six Sigma to solve problems have limited success. The organizations, which were the most successful in using Six Sigma as just a problem-solving tool, were the ones that had the most problems to solve. But organizations that used Six Sigma to change their culture were the ones that reaped the big harvest. The difference between these two types of approaches is that the first type of organization measures its success on dollars saved, while the second type of organization measures its success on improving customer satisfaction.
“In healthcare, a million dollar savings is unimportant compared to saving one life that could have been lost.”
—H. James Harrington
In healthcare, there are many opportunities to reduce the number of errors that occur every day and to save lots of money, but most of all there is a unique opportunity to save lives. A typical hospital has millions of opportunities to be successful or fail every day. Healthcare professionals cannot rely on a few groups of Black and Green Belts who are looking for million dollar savings’ project opportunities. At the Six Sigma level, an organization could have more than 1,200 (based upon 1 million opportunities per day) needless deaths per year in just a single hospital. We are lucky that not all of the errors that occur result in death. For example, a nurse could drop a bedpan; it would cause a mess, but not a death. The checks and balances already placed in the system catch some of the other errors. In healthcare, we need to be much better than 3.4 defects per million critical opportunities. We need to be closer to 3.4 per billion critical opportunities. This means that everyone within the healthcare organization needs to be actively involved in the Six Sigma process.
The healthcare professional is faced with a major problem because the specification limits on their product (the patients) they are working with is very broad. A manufacturing operation has many close tolerances on all parts that provide consistency in the process. They all go together in the same way. In healthcare, each patient is different. They have different allergies, different blood types, different medical histories, and so on. It is like having a one-of-a-kind manufacturing production line. This means that the healthcare professional has to be more creative and more adaptive than most other types of professionals. All of these things make up the complexity and increased risk that the healthcare professional faces each day.
In spite of all of this, or maybe because of all of this, there are many opportunities to apply Six Sigma concepts in the healthcare arena. For example, at North Carolina Baptist Hospital, a Six Sigma team attacked the problem of getting patients from the emergency department into the Cardiac Catheterization Laboratory for treatment in the shortest possible time. As a result of this, they were able to reduce the cycle time by more than 41 minutes.[1] It is this type of result that converts skeptics into believers.
Bank of America had the right idea. Its Six Sigma program focused on customer satisfaction and resulted in a 25 percent improvement and saved more than $2 billion. They focused on improving customer satisfaction and credit risks assessment reduction plus fraud prevention.[2]
“In the medical field (alone), bioscience will shift the health paradigm to such a degree that (within two decades) we’ll look back on the medical practices of today the way we now look back on those in medieval Europe.”
—The Long Boom: Schwartz, Leyden and Hyatt
Implementation Process
“For 40 years, I have been lecturing and writing on Process Improvement, and each time management thinks it is a new idea. They must be deaf, blind and forgetful.”
—H. James Harrington
It is not easy to make the required transformation in a healthcare unit. Everyone is already doing their best to do a great job already. Everyone is overworked. Everyone has their own job to do. They all are trying to satisfy the patient, the doctors, the government, the insurance companies, the patient’s families, and yes, each other. Prices keep going up. The medical technology is changing so fast that it is almost impossible to keep up with it, and everyone is looking for a way to earn some easy money by suing the healthcare provider (HCP). With all this going on, who has the time or the desire to take on an additional project? The real answer is that you just cannot afford to fail to continuously improve. The trick is, "How can you convince the Executive Team, key doctors, and enough of the staff that the Six Sigma activities are worth investing their valuable time and effort in so that the Six Sigma project can get started and keep expanding?”
Based upon our experience, the following five-phase approach is one of the most effective methods that we have run across to bring about the required transformation:
• Phase I—Mobilizing
• Phase II—Planning
• Phase III—Piloting
• Phase IV—Implementing the Six Sigma System
• Phase V—Internalizing the Six Sigma Culture
“When I climb Mount Rainier, I face less risk of death than I’ll face on the operating table.”
—Donald M. Berwick, CEO of the Institute for Healthcare Improvement, Harvard Medical School
Phase I—Mobilizing
“A useful motto during the start-up phase is ’Think big—Start small.’”
—Ernst & Young
The mobilization phase is subdivided into seven activities:
• Activity 1—Finding and Developing a Six Sigma Advocate
• Activity 2—Analyzing Six Sigma Fit with the Strategic Plan
• Activity 3—Defining Six Sigma Improvement Opportunities
• Activity 4—Building a Six Sigma Business Case
• Activity 5—Approving and Organizing for Phase III Pilot
• Activity 6—Setting Preliminary Objectives for the Pilot
• Activity 7—Selecting an External Consultant
Activity 1—Finding and Developing a Six Sigma Advocate
“Someone has to lead. Why not you?”
—H. James Harrington
All Six Sigma projects start with a single individual or a very small group of people who want to get more information about Six Sigma and how it can be used to improve the healthcare provider’s performance. We will call this individual—the Six Sigma Advocate (this person may be you). This individual is often a forward-thinking individual who has read articles or talked to friends who have experienced implementing Six Sigma initiatives in healthcare or other industries. Often the Advocate is a new hire who has come from another healthcare provider that is doing Six Sigma, and he/she has already had some experience with the results that a Six Sigma initiative has on the organization that he/she left. Based upon these early contacts related to Six Sigma, the individual will continue to expand his/her knowledge of Six Sigma until reaching a point where he/she feels comfortable enough to contact executive management, requesting permission to conduct a concept study to determine whether Six Sigma is right for the organization. Once the Executive Team approves the concept study, the individual (or group) will start to collect more articles, read more books, and even attend conferences to become knowledgeable about what Six Sigma is and what it can do for the organization. Often the individual will contact consultants to get their advice about what they would do to start a Six Sigma program within the organization.
If the Advocate is convinced that a Six Sigma initiative may be in line with the organization’s culture, the Advocate is ready to move on to Activity 2.
Activity 2—Analyzing Six Sigma Fit with the Strategic Plan
“If the glove doesn’t fit, it is time to quit.”
—H. James Harrington
If the initial study phase convinces the Advocate that the organization could benefit from the Six Sigma initiative, the Advocate will need to prepare a business case that will be used to convince the Executive Team that the investment in time and effort will provide adequate return on investment and improve the organization’s competitive advantage. This business plan has to answer two questions that are on everyone’s mind:
• Why should we do something different?
• Would the Six Sigma initiative be the best answer to the problems we are facing?
We find that during this activity, it is best to have a small group developing the business case. This team should be made up of members from the strategic planning group, finance, practicing physicians, administration, sales, and quality.
The business case should be directed at ensuring that the goals set forward in the strategic plan are met or exceeded. By doing this, the Six Sigma initiative is directly connected to the organization’s day-to-day operations. We cannot overemphasize the importance of developing a good business case, as it will determine whether the organization will go forward with the Six Sigma initiative. It must provide the Executive Team with a compelling reason to go forward with the initiative. The business case must provide logically researched answers to these two questions.
The strategic plan is the baseline and targets all rolled up into one. It should define the future of managed care evolution and its impact upon the HCP. It should answer and incorporate plans to questions such as
• Is our leadership capable of handling dramatic change?
• Has the time come when we need to compete on costs?
• Do we have the ability to shift from treatment to health maintenance?
• Do our rewards and recognition systems motivate staff (support, administration, nurses, and physicians) to invent new creative approaches to medical care?
• Do we have the ability to serve the needs of the population we service, and do we understand how our service population and services’ needs will change over the next five to ten years?
• Do the board, management, clinicians, suppliers, alliance partners, and medical community realize and want change to take place, and if so, what type of change does each stakeholder want?
• Do we understand the difference between customer’s needs (must have), expectations (things they should get), and niceties (things that set the HCP apart from other healthcare providers)?
• How big a change do we need in order to compete in the market today and in the future?
One of the key parts of the strategic plan is a set of vision statements that defines the changes that are required in the HCP. The primary vision statement is the one for the total HCP that defines where the organization is heading. Back in the 1930s, doctors used to come to people’s homes when they were ill. Today, the sick person drags himself/herself to the HCP. Even with the expansion of outpatient care, we still rely on the patient to come to the HCP location for diagnostics and treatment. The future is leading to in-home care where the patient will not have to come to the HCP location. Electronic monitoring devices will become more and more prevalent, allowing the physician to monitor and treat the patient using IT technology as a communication system. This virtual treatment will replace the need for many of the long stays in the hospital.
Kurt Miller, partner with Arthur Andersen Consulting, depicts the traditional healthcare system as laid out in Figure 11.2.[3]
Figure 11.2. Traditional healthcare system
You will note that in the historical, traditional healthcare system, the groups and individuals involved were connected in a logically sequential flow of activities. Each one had individual and segregated roles and positions in delivering the healthcare cycle.
As Kurt Miller points out, "Managed care has brought together the supplier, selectors, and payers or physicians, hospitals, and insurers. Most importantly, it has aligned hospital and physician incentives to reduce inpatient utilization, and therefore, cost.”
We predict that in the future the individual will become an active participant in the healthcare delivery process and incentive structure.
Based upon considerations like these, you can see why the overall vision statement has to really address what direction the organization is going to take.
Vision statements can define how the key business drivers need to change over the next five- to ten-year period. Business drivers are the controllable factors within the HCP that impact the performance of the HCP. Business drivers are the major parts within the organization that management has the power to change—things that impact the organization’s performance by adding or subtracting resources, changing standards, redesigning processes, or modifying behavioral patterns. There are usually 8 to 12 business drivers in a HCP. One business driver that is common to all HCPs is leadership and support. Another one is the organization’s processes. For each of these business drivers, a vision statement needs to be developed that defines how this business driver needs to change over the next five years. For example, the following is a typical vision statement for operating procedures:
•Major processes are documented, understood, followed, easy-to-use, prevents errors, and are designed to be adaptable to our stakeholders’ changing needs. Staff members use them because they believe that they are more effective and efficient than the other options. Technology is effectively used to handle routine, repetitive, time-consuming activities and to remove bureaucracy from the processes.”
Other types of vision statements focus on things such as
• Technologies. How will the technologies’ information need to change to keep up with the needs of the HCP industry and to remain competitive in the future?
• Structure and facilities. The future configuration and facilities will need to be much different to accommodate the home care approach.
• Markets and customers. Today, we have a hard time even defining who is the customer. Is it the patient, employee, employee’s family, health plan member, insurer, physician, or all of these? What are their future needs? How will we need to service this changing market, and what markets do we need to service? In the future, we will need to establish strategic alliances and partnerships with key customers, suppliers, and other HCPs. There will be a change in the HCP’s scope and variety of products and services to bring them in line with their specific target markets and patient population.
• People. Our people will have even more need for technical knowledge that can be obtained and assimilated much faster than it is today. Teams will give way to teamwork. The future HCP must send a daily flow of communications concerning "What is going on in the HCP?" "How is the HCP changing?" "What is changing that impacts each specific individual?" and "What is the new knowledge related to the individual’s profession?”
The business-driver vision statements are very important because they provide the HCP suppliers, employees, and management with a clear vision of how the organization will be changing and its impact upon how they will be required to perform and be treated. The gap between the present performance and the business-driver vision statement will drive the performance improvement activities over the coming years and will have a major impact on the application of Six Sigma concepts.
Why is improvement for HCPs so important? The National Committee for Quality Assurance (NCQA) in its 2005 "The State of Healthcare Quality" report, produced by the U.S. News and World Report magazine, reported that over the past six years, quality improvements in healthcare has resulted in the prevention of 67,000 deaths. These improvements were applied to 64.5 million people. If the payment in a wrongful death suit is only $1 million, that amounts to a savings of $67 billion to the HCP industry.
“Any kind of health plan might potentially be an excellent plan. But realistically, only the ones that measure quality are going to achieve excellence.”
—Margaret E. O’Kane, NCQA President[4]
As healthcare providers, we can’t just focus on servicing the sick. We also have to help the well stay well and live longer. The estimated deaths attributed to failure to deliver recommended care in 2004 were by category:[5]
• Controlling high blood pressure: 12,000 to 32,000 deaths
• Smoking cessation: 8,300 to 13,200 deaths
• Diabetes care—HbA1c control: 5,300 to 11,700 deaths
• Colorectal cancer screening: 4,100 to 6,200 deaths
• Cholesterol management: 3,400 to 7,200 deaths
• Prenatal care: 1,000 to 1,750 deaths
The strategic plan should also include a set of Performance Indicators measurements called KPIs (Key Performance Indicators). There are different performance indicators for each of the many levels and departments within the organization. The HCP should have a high level set of measurements that are in keeping with the balanced scorecard concept. Typically, these high-level KPIs are things such as
• Percent of customers who document complaints
• Bed occupancy percentage
• Percent utilization of high-cost special equipment
• Staff satisfaction level
• Turnover rates
• Operating cost ratio to dollars collected
• Percent increased in collections per year
• Percent of insured inpatient stays billed
• Percent of insured outpatient visits billed
• Average age of insured claims outstanding
The HCP should have a set of lower-level measurements called CPIs (Critical Performance Indicators) that back up and support the higher-level measurements. They may or may not be included in the strategic plan, but there should be a relationship of the CPIs in the individual units and departments to the high-level KPIs. Often these CPIs are efficiency and/or effectiveness measurements of the processes within the departments. For example:
• Average wait time to be admitted
• Average time to process specific lab work
• Percent lost records
• Average response time to a bed call
• Average time in critical recovery by operation type
• Percent billing errors
• Percent of patients who receive recommended healthcare
•In a study conducted by Rand Health and Pfizer Inc. in 2005, evaluating 182 measurements of health for 22 common medical conditions covering more than 300 patients, they found that only 55 percent of the patients received the recommended care.”[6] This study revealed that the current practice of examining administrative records alone does not provide an accurate picture of how the recommended procedures are being implemented. When just the administrative information was used, it indicated that 83 percent of the patients received the recommended care. This is more than a 50 percent higher rate than the actual quality of the treatment.
Having a good set of measurements that relate to the HCP’s vision statements is a good starting point. But, to understand what needs to happen, there should be a set of improvement objectives year by year for each KPI and CPI. These improvement objectives provide good insight into the areas that are in need of and have the priorities for major improvement.
The Strategic plan should have both strategic initiatives and tactical initiatives included in it. Examples of strategic initiatives include the following:
• Financial stability plans
• Formation of Knowledge networks
• Continuous care model
Examples of tactical initiatives include the following:
• IT expansion
• Training plans
• New equipment plans
• New Service Plans
Activity 3—Defining Six Sigma Improvement Opportunities
“The big opportunities that lead to renewal and the strategic decisions that capture them seem more like the whimsical flight of a butterfly than the path of a carefully aimed arrow.”
—Robert H. Waterman, Jr.
The Six Sigma team needs to also review the customer satisfaction data to define hot spots that provide opportunities for increased customer satisfaction. It is also recommended that meetings with some small focus groups of employees and customers are conducted to define the important improvement opportunities as viewed from their standpoint and to provide them with a quick overview of Six Sigma.
Another good information source is the projects that are being implemented or that are approved for implementation. Many of these projects are IT projects that will result in major changes in the organization’s processes. Frequently these proposed projects are excellent candidates for the Six Sigma initiative.
Six Sigma has built into in it some effective approaches to redesign the HCP processes. Making a list of the HCP business processes and then evaluating them to define how well they are performing is another way to identify Six Sigma improvement opportunities. The following lists provide examples of typical HCP core processes and sub-processes that could be Six Sigma improvement opportunities.
Market information capture Customer engagement
Market selection Inventory management and logistics
Inpatient services Direct business
Outpatient services Plan business
Customer fulfillment Develop processes
Customer relationships Manage process operation
Customer feedback Provide personnel support
Marketing Market products and services
Solution integration Provide consultancy services
Financial analysis Plan the network
Accounting Provide support services
Human resources Management information resources
IT infrastructure Manage finance
Typical HCP sub-processes:
Perform diagnostic testing
Perform pharmacological procedures
Perform psychological social service care
Render patient transport
Render quality and cost control
Provide communication
Coordinate processes and interfaces
Promote referring physician and PCP relations
Continuing care referrals
Housekeeping process
Distributing materials and medicine
Education and training
Billing and collection process with insurance organizations
Perform surgical procedures
Perform therapeutic procedures
Render clinical support
Provide charging, billing, and collection services
Assess and protect against financial and not-clinical risk
Provide accounting and financial services
Scheduling patients and resources
Discharge, bill, and transfer patients
Transporting and movement of patients
Purchasing materials and medicine
Staffing process
Admitting and registering patients
In the Riddle Memorial Hospital’s 2006 Process Improvement Initiative Business Plan, it defined the following processes as core processes:
• Emergency room
• Inpatient encounter
• Pharmacy
• Imaging
• Physician practices
• Advanced life support
• Operating room
• Out-patient encounter
• Registration and scheduling
• Housekeeping
• Cerner information system
In addition, it defined the following processes as support processes:
• Labor relations
• Technology
• Facilities management
• Supply chain management
• Project management
• Billing
• Credit and collections
• Legal
The Patient Journey
“The truth of the matter is that when it comes to quality, the customer has all thevotes.”
—John Guaspari
One of the best ways to identify improvement opportunities is to define the patient journey throughout the care cycle. Figure 11.3 shows a typical journey.
Figure 11.3. The patient’s journey through the care cycle
In order to understand how the physicians’ and staff’s daily behaviors and practices in the HCP setting follow the patient journey, the following approaches may be used:
• Walking in the Patient’s Shoes. In this approach, team members actually go through the patient treatment process. Often these individuals are not identified to the hospital staff as "test patients," so they get no special treatment. In the consumer business, these individuals are called mystery shoppers. This allows them to experience anxieties, expectations, discomfort, and emotions that a real patient would experience.
• Document tracking. Using the patient’s chart, analyze each step the chart takes. This helps to understand how the chart-handlers feel about how the patient is being taken care of.
• Shadowing Staff. Team members accompany the doctors, nurses, and staff, observing their work and the bottlenecks they face in their daily routines.
• Patient and Family Interviews. This approach provides data about their expectations, feelings, and disappointment as they progress through the patient journey.
• Process Walk-Through. Using the major processes as a starting point, a team follows the process flow, reviewing each step in the process. This helps define problems in the hand-off between each department.
• Workflow Analysis. By looking at the movement of patients and staff, you are able to identify wasted effort and increased cycle time. This can include workflow mapping by area or in some cases, just observing what is going on in a specific location within the HCP (for example, emergency care admittance).
Typically, the patient’s journey has six improvement opportunities:
1. Entering the HCP
2. Being informed
3. Finding the way
4. Waiting for service
5. Using the care facilities
6. Paying the bills
Based on this body of knowledge and information, the team should be able to identify a number of opportunities to apply the Six Sigma methodology to. We suggest that the team review these opportunities based on a set of guidelines that the team develops. Figure 11.4 is a two-dimensional analysis based on
• Impact on the HCP
• Likelihood of success
Figure 11.4. Selecting the right project
In most cases, these two-dimensional approaches are inadequate to make these important divisions, as many factors need to be considered. The following are typical factors that HCP may use to help select the opportunities that will make up the pilot phase:
• Does it support the strategic plan?
• Is it a patient safety issue?
• Will it improve patient central care?
• Will it decrease death rates or just save money?
• Will it improve the work environment?
• Is there a high payback if the problem is solved?
• How hard is the problem to solve?
• Is it a problem that the Six Sigma methodology can address?
• Will it provide a competitive advantage?
Informed Approach to Selecting Opportunities
“Make a habit of discussing a problem on the basis of the data and respecting the facts shown by them.”
—Dr. Kaoru Ishikawa
World-class organizations continuously strive to provide superior products and services to their customers. As a result, they ensure that all improvement efforts focus on improving external customer satisfaction. Because a Six Sigma effort is a major undertaking for all organizations, which directly impacts the service-related customer interface, it should be linked to customer satisfaction.
Traditional approaches to define improvement opportunities can be thought of as "internally focused" and "defensive mechanisms" that try to correct and prevent problems from recurring. A more appropriate approach is "customer-focused" and "offensive mechanisms" so that business processes are truly world-class. The informed approach we are going to describe in this section is an objective method for prioritizing business processes, based on the importance of the process (as determined by external customer expectations), and the degree to which the process can be improved (as determined by its current quality).
This approach embodies the following principles:
• Linking improvement efforts to customer expectations
• Focusing on prevention, as well as correction, activities
• Emphasizing the areas with the greatest potential for improvement
• Working on a manageable number of projects
• Using facts, not perceptions, for selection of projects
• Ensuring constancy of purpose
The informed approach differs from the other approaches because it is based largely on actual data collection from customers and internal operations, instead of opinion. It is therefore more time-consuming. The Executive Improvement Team should undertake this effort by
• Understanding External Customer Requirements. External customers have several requirements related to the facilities and the services (both healthcare- and administration-related) that are provided by the HCP. The service-related requirements are satisfied by the organization’s business processes; therefore, it is essential to understand these requirements. This can be done by actually talking to customers and documenting their requirements, or by using information that already exists in various parts of the organization (comment cards, customer service data, and so on). It is important to understand not only the requirements but also the importance of each of those requirements, because the aim of the organization should be to focus on the key requirements.
• Evaluating the Importance of Business Processes. External customer requirements are met by the organization through the execution of one or several business processes. This needs to be understood by management, and is best achieved by identifying the processes that directly and indirectly impact the external customer. Once the business processes that impact the external customer have been identified, the importance of these processes can be evaluated. Those processes that have major impact on important external customer requirements will be rated the highest, and will be considered primary candidates for the Six Sigma project.
• Evaluating the Improvement Opportunities. No process is so perfect that it cannot be improved. Continuous improvement is the basic principle of quality and business everywhere; the degree of improvement possible depends on the current state of the process. There are several key indicators of effectiveness, efficiency, and adaptability, such as cycle time, rework, backlog, cost, and so on. The Executive Team should select a handful of meaningful indicators and then rate every process based on the information it can gather about the process. Processes with greater opportunities for improvement should be rated the highest, because they are primary candidates for DFSS (Design For Six Sigma).
• Selecting the Critical Processes. After gathering the data on the processes, the Executive Team is now ready to select the critical processes for improvement. It should be obvious that the critical processes are those that are high in importance as well as high in improvement opportunities, and these are the ones that should be attacked first. Correspondingly, processes that are not very important from a customer viewpoint and appear to be functioning quite well should not be selected for initial improvement efforts. Figure 11.5 shows a matrix that can be constructed based on the data gathered. It is a helpful tool that provides a clear overview of all processes and helps make the final selection.
Figure 11.5. Matrix for setting process priorities
The same approach can be applied to improving the internal workings of the organization, by replacing the external customer with the business unit. This is not as self-serving as it might seem. As you improve the internal workings of the organization, you reduce cost and provide a better quality of work life for the employees. As internal costs go down, the cost to your external customer can be reduced. As the quality of work life improves, the organization’s output improves.
Remember that every process, every activity, and every job within an organization exists for only one reason: to provide our customers and/or consumers with products and services that represent value to them. The rippling effect of improving any activity should have a positive impact on the external customer.
Weighted Selection Approach
“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.”
—Henry Ford, Sr.
In this opportunity-selection approach, each opportunity is evaluated on a number of parameters. For example:
• How changeable is it? = 2 points
• Will it reduce cost? = 2 points
• Decreased death rates = 5 points
• Improve patient care = 4 points
• Improve staff morale = 3 points
• Reduce wait time = 1 point
Each of these parameters is weighted by a point score from 1 to 5. A rating of 1 indicates that it is a low priority and a 5 that it is a very high priority.
In Table 11.1, typical improvement opportunities are listed with the six parameters defined in the previous example.
Table 11.1. Typical Improvement Opportunities
• Reducing inpatient wait time
• Reducing billing errors
• Reducing pharmacy errors
• Reducing response time to bed calls
• Improving information sharing
• Reducing record errors
• Offering better customer parking
• Increasing inventory turns
• Reducing tobacco cessation
• Improving risk management
• Reducing medication administration
• Recording Medication Administration Records (MAR) errors
• Reducing critical-care recovery time
• Standardizing procedures for different treatments
• Reducing outpatient processing cycle
The six evaluation parameters are listed A through F in the top of Table 11.1 along with the related weighting factor. Each of the improvement opportunities are evaluated on a scale of 1 to 5 for each evaluation parameter. A rating of 5 indicates that the opportunity will be easy to take advantage of or that it will have a big impact on the HCP. This rating is then multiplied by the weighted factor for the parameters being evaluated to define a score for the opportunity/evaluation parameter combination. For example, in Table 11.1, Reduce Billing errors was evaluated at the 2 level (difficult to change) and column A (how changeable is it) has a weighting factor of 2. The total score for the "Reduce Billing Errors / How Changeable Is It" combination is 4 (2x2=4).
By summing up the individual scores for each parameter for an opportunity, the total weight for that opportunity can be calculated.
Based upon the analysis in Table 11.1, MAR errors are the most important improvement opportunity. Prescription errors are estimated to kill up to 25,000 people a year.[7] You might think that physicians care more about their money than the health of their patients. When they write a check, they write out the dollar amount and then double-check it by writing out the amount in numbers. The same physicians scribble in almost illegible instructions on prescription forms. Errors are very common—for example, the interpretation of the prescription was 10mg and it should have been 1.0mg.
Selection Process
As you finalize your selection of the business processes that will have Six Sigma applied to them, remember the 4 Rs:
• Resources. There is a limited amount of resources available, and the present processes must continue to operate while we are improving them. Often, this means that a new process will be operating in parallel with the old process while the new process is being verified. Don’t overextend yourself.
• Returns. Look closely at the potential payback to the business. Will the process reduce costs? Will it make you more competitive? Will it give you a marketing advantage?
• Risks. Normally, the greater the change required, the greater the risk of failure. Major changes always are accompanied by resistance to change. Breakthrough activities have the biggest payback, but they also have the biggest chance of failure.
• Rewards. What are the rewards for the employees and Six Sigma Team (SST) members working to improve the process? How much will their quality of work life be improved? Will the assignment be challenging and provide them with growth opportunities?
Based on the results of this analysis, the Executive Team will typically select 10 to 25 critical processes to which the Six Sigma approach will be applied. The number will vary based on the size and complexity of the organization.
Using one of these three approaches, the Executive Team can decide which opportunities will be part of the pilot phase and which can be scheduled for later analysis. Consideration should be given to balancing the workload within the organization and ensuring that all functions are participating. This approach concentrates attention on critical issues, sets priorities for resources, and ensures that the effort is manageable. While it is a relatively simple and useful way to select business opportunities, this approach has a number of drawbacks, including
• Pet projects" commonly are identified.
• Management perspectives may not be supported by hard facts.
• Top management may sway the decision.
Medication Administration Records (MAR) Errors
Although MAR errors are a big healthcare problem, it is not one that should be tackled by the SST. Six Sigma projects should last less than three months in most cases.
“We believe we can change how healthcare uses I.T. and it starts with the federal government.”
—President George W. Bush speech at Vanderbilt University Medical Center, May 2004
The U.S. Department of Health and Human Services awarded more than $8 million in contracts in 2005 to 15 projects designed to help clinicians, facilities, and patients implement evidence-based patient safety practices.[8]
Dr. David Brailer, the former National Health IT coordinator, defines his goal as improving the nation’s quality of healthcare and reducing cost through the use of technologies such as electronic health records and electronic prescription-ordering systems. It is estimated that these types of IT systems will save the U.S. $140 billion per year by improving patient care and eliminating redundant tests.[9]
Brailer worked with the Santa Barbara County Health Data Exchange to design and install the first peer-to-peer electronic healthcare information data exchange in the U.S. It allowed hundreds of physicians, hospitals, and labs to have timely access to patients’ medical formation.
As you can see, correcting MAR errors is a big problem and a major project with a lot of IT involvement. It is not a SST-type project that can be put to bed in three months. That does not mean that the Six Sigma approach cannot help to solve this problem. In fact, you should at least have one Six Sigma Black Belt on the MAR transformation team to help them analyze the problems and the potential solution.
Activity 4—Building a Six Sigma Business Case
“If we look at Quality as it has been implemented in the past, we won’t be successful in reducing patient errors.”
—Monica Berry, President, American Society for Healthcare Risk[10]
With the help of the selected guidelines, the team should select a small quantity (two to five projects) to build a business case around. The business case should include both tangible and intangible impacts. It also should include the estimated cost to investigate, analyze, and define the solution to the selected opportunities. In most cases, the projects should last less than three months. If the business case looks good (and it usually does look good), the team should schedule a meeting with the Executive Team to provide them with a quick overview of the Six Sigma methodology and present the business case to them.
Often it helps if you use some examples to back up your business case. Typical Six Sigma savings as reported in "Six Sigma and Its Impact on American Business," a presentation by Dr. Ronald Snee (Sigma Breakthrough Technologies, Incorporated, October 17, 2000,), are as follows:
• Increase dryer throughput—$100,000
• Reduce freight cost (shipping)—$700,000
• Reduce warranty manufacturing—$150,000
• Reduce cost of waste disposal environmental—$320,000
• Reduce time to issue bills by 50 percent ($2.6 million)
• Implemented forecasting model sales—$500,000
• Reduce obsolete inventory and production planning—$1.7 million
• Increase warehouse input by 100 percent—$250,000
• Reduce travel cost—$1.3 million
Activity 5—Approving and Organizing for Phase III – Pilot
“You must have your senior leadership team committed to doing this (Six Sigma). Expect that the first year will be the most difficult, but it will be easier from there.”
—Louise Goeser, Vice President of Quality, Ford Motor Co.
The desired outcome from this meeting is an improved budget to train three to five teams of Green Belts and cover their efforts to solve the selected projects. These Green Belts will make up three to five Six Sigma Improvement Teams. It should also include the cost of bringing in a consultant Black or Master Black Belt to provide the training and to work with the Green Belts to take full advantage of the pilot improvement opportunities. Sometimes the HCPs prefer to select an internal person to train as a Black Belt to lead the pilot projects. On the surface, this may look like a less-expensive way to go. In reality, it is usually more expensive as it slows down the projects and decreases their impact.
The Executive Team should also, at this point in time, select an individual to become the Six Sigma Champion. The Six Sigma Champion is typically an upper-level manager who leads the implementation of the Six Sigma program. Often, as a result of this meeting, a Six Sigma Executive Improvement Team is formed. Sometimes this is a very small team made up of three to four members. In other cases, it becomes a very big team. The following is an example of the people who could make up the team:
• Chief Executive Officer
• Chief Medical Officer
• Chief Financial Officer
• Chief Operating Officer
• Vice President, Management Care
• Vice President, Hospital Administration and Nursing
• Director, Quality Improvement
• Director, Quality Management
• Director, Care Management
• Vice President, Sales and Marketing
• Chairman, Primary Care
• Chairman, Medical Specialties
• Chairman, Surgical Specialties
• HCP Health Plan Director
• Associate Director, Care Management
• Associate Director, Information Systems
• Outside consultant
For each of the selected opportunities, an Executive Sponsor should be assigned. This individual will watch over the Six Sigma activities to be sure they are on schedule and help if SST runs into any organizational bottlenecks that it cannot address.
Activity 6—Setting Preliminary Objectives for the Pilot
“We must stop comparing ourselves against yesterday and start measuring ourselves against tomorrow.”
—Colby Chandler, past Chairman and CEO, Eastman Kodak Company
Once the Executive Team has selected the pilot opportunities to which Six Sigma will be applied, it should develop a set of preliminary objectives that will be used to provide vision and direction to the Six Sigma Teams (SST). These preliminary objectives will ensure that an initial common understanding exists between the SST and the Executive Team. Depending on the amount of knowledge and the data that the Executive Team has about the selected processes, these objectives will be more or less quantified. In some cases, the objectives may only set the direction for the SST (for example, reduced cycle time). In other cases, improvement objectives may be provided (for example, reduced cycle time by 20 percent). The preliminary objectives should address effectiveness, efficiency, adaptability, and cycle time. In all cases, the objectives should be focused on meeting or exceeding customer expectations and can drive incremental or breakthrough improvement, depending on the degree of improvement desired.
It is very important not to blindly accept the preliminary objectives as the goals for the SST. Normally, these objectives are set without detailed data or understanding of the present opportunity. Letting the SST set its own goals provides needed ownership. These goals often are more aggressive than the Executive Team-set objectives.
Activity 7—Selecting an External Consultant
The last activity in Phase 2 Planning is selecting an External Consultant to help with the training and implementation of your Six Sigma initiative. This is one of the most important activities in your Six Sigma initiative.
“All of the most successful implementations have used experienced external consultants who have saved these companies months and even years in their implementation process.”
—Michael Brassard and Diane Ritter
This is no place to try to save money. The consultant cost will be 2 percent of the total cost and less than .1 percent of the savings. It has always been my dream to find an organization that would let me put in a Six Sigma program for free and just give me 10 percent of the savings. Time after time, it has been proven that you get the best return on investment when you select the very best consultant without basing your selection on consulting cost. Your risk of failure goes up exponentially when you try to cut cost by using less experienced consultants or when you decide you can do it yourself by just sending a few people to Black Belt classes. It is just like taking a doctor right out of school with no internship and putting them in charge of the Heart Surgery Protocol Flow Committee. Time after time, when we have talked with organizations that complain that Six Sigma or TQM did not work for them, we find that they tried to do it without the proper experienced help and with little or no budget set aside for the initiative. You cannot expect an individual who you send to a Six Sigma Black Belt class to have the depth of understanding to attack all of the complex problems that your organization is facing without years of experience in using these complex approaches. The problems you are facing today are very complex or you would have already solved them. Even a trained Black Belt is an apprentice until he/she has five or six different projects under his or her belt.
Six Sigma consultants can be divided into three major categories, each of which has their own advantages and disadvantages:
• Instructors
• Implementers
• Process Experts
Instructors
Instructors are those individuals who usually come out of universities and have a great deal of experience in adult learning. They can take a book, a curriculum, or another person’s material and do an excellent job of presenting it in an interesting and informative way. They typically have read a lot and, as a result, have some excellent examples that back up the materials they are presenting. They do an excellent job of presenting materials for management, and Green Belt and Black Belt certification. Their disadvantage is they have had little or no experience in implementing Six Sigma programs and are only familiar with the Black Belt body of knowledge. It is difficult for them to relate theory to practices.
Implementers
These consultants are experts in installing Six Sigma initiatives throughout an entire organization. They know what steps need to be taken to bring management on board. They know how to sell Six Sigma programs across the entire organization. They do an excellent job of developing business cases. They work very well with the Executive Team and finance. They are big-picture consultants that need to understand the corporate strategy. They usually are less effective at working with and motivating the first-line managers and employees. They do not like to get their hands dirty. They are very good in the conference room but not as good in the classroom.
Process Experts
These are the people who want to understand the details. They spend most of their time in the processes not at their desks. They can be found in the operating room, morgue, test laboratories, and admissions. They are excellent net workers. They know the processes and problems firsthand. Their weakness is they are not as good at teaching as the other two types of consultants but get to the heart of the problem much faster and are usually much better change agents.
Making the Selection
How do you know which type you need? Table 11.2 indicates the strength of these three types of consultants and should help you make your selection. You may want more than one consultant. Select an organization that has all the skills that you need, but stay with one consulting firm so they get to know your culture.
Table 11.2. How Different Types of Consultants Perform
Of course, you would like consultants that do all three activities outstandingly, but this is really not the case. When you do find these consultants, they are more generous and do an acceptable job in all three areas, but do not excel in any one of the areas. As a customer of the consultants, define what activity is most important to you and target to get a consultant who excels in that activity. In most HCP Six Sigma initiatives, you will want to find a consulting firm that will provide three different consultants who excel in each of the three areas.
The following are other things to consider when using and selecting a Six Sigma consultant:
• Have they managed a business?
• Have they had experience working with SSTs solving problems?
• Do they have experience in dealing with and mentoring senior executives?
• Do they understand the IT enablers?
• Is their expertise limited to Six Sigma?
• Do they have good chemistry with the senior executives?
• How will they get the total HCP personnel involved?
• What kind of result have they had in improving customer satisfaction?
Note
Most consultants want to talk about dollars saved. The true value of Six Sigma is improving customer satisfaction.
• Are they Certified Quality Engineers?
• Are they Certified Project Managers?
• What software do they used to track assignments?
• What software do they used to track project status?
• How have they been recognized by their professional societies? (Example: The American Society for Quality in the United States, The European Organization For Quality in Europe, The Asian Pacific Quality Organization in Asia.)
• What books have they written? Are they creators or followers? What approaches do they have to training Green Belts and Black Belts?
• How many Master Black Belts do they have in their organization?
• Who will be working on the floor helping solve problems on all three shifts? (Be sure that you meet these individuals and like them.)
• What kind of results have they had in the HCP industry? Who on their team was on the SST that solved the problem and what was that consultant’s role?
Our advice is to select the consultant who can help work with you on the floor to the advantage of your opportunities, not the one who has the flashiest presentation.
Phase II—Planning
“The healthcare system is not built around quality. It also doesn’t really care about costs.”
—Michael Porter, Professor, Harvard Business School
Once the pilots are approved by the Executive Team, the Six Sigma initiatives start in earnest. The external consultants and the Six Sigma Sponsor will be the primary drivers of this phase. It is made up of the following seven activities.
• Activity 1: Define the Scope of Each Opportunity
• Activity 2: Define the Six Sigma Team (SST) Members
• Activity 3: Train the SST Members
• Activity 4: Organize the SSTs
• Activity 5: Define Measurements
• Activity 6: Prepare a Project Plan
• Activity 7: Prepare the Organizational Change Management Plan
“It is better to prepare and prevent rather than to repair and repent.”
—H. James Harrington
Activity 1—Define the Scope of Each Opportunity
What is the difference between 3 Sigma and 6 Sigma in HCP? Let’s look at one example. Let’s assume that the HCP treats 2 million patients per year, and 50 percent of them undergo medical tests. What would be the impact on the HCP services?[11]
• 2 Sigma = 106 prescription errors per day
• 3 Sigma = 11 wrong medical tests per day
• 4 Sigma = 2 misplaced personal items per day
• 5 Sigma = 1 wrong test per month
• 6 Sigma = 1 customer complaint in 2.3 years
It is very important to bring the external consultant into the organization and provide him/her with an excellent understanding of the organization’s objectives and culture. At a minimum, consultants should have an excellent understanding of the following documents:
• Vision statement
• Mission statement
• Values
• Strategic focus
• Critical success factors
• Five- to ten-year business objectives
• Performance goals
• Improvement strategies and active projects
The consultants also should understand the product and services that the organization provides, the types of customers that it services, and the culture within the HCP organization. The consultants would need to know how you define customer needs and how you measure customer satisfaction. This type of indoctrination pays off big as the consultant helps you get full value from the Six Sigma initiative.
Armed with this type of understanding and knowledge, the consultant would be able to aid the Six Sigma Sponsor or the Sponsor’s delegated representative to define the scope of the opportunities that make up the pilot phase. The scope of each opportunity needs to be defined so that the people who make up the SST will have the right background and interest. The scope of the opportunity can vary all the way from a single task in an activity that is part of a bigger process, made up of hundreds of activities, to other opportunities that will include the total process that flows through many departments and functions within the HCP.
Another consideration is determining what needs to be accomplished. Basically, there are two options:
• Reduced variation
• Relocate the medium or center point
In the first case, we reduce the deviation around a center-preferred operating point. For example, if an injection was defined as 1.0mg + or –0.1mg of fluid and through experiments, you were able to calculate that the 3 Sigma limit was + or –0.1mg, the objective for the SST would be to reduce the 6 Sigma level to + or –0.05mg. As Figure 11.6 indicates, during Phase A the major effort is directed at bringing the process under control. During Phase B, the processes stabilize so we can start to focus on reducing variation at that activity. In Phase C, we reached the Six Sigma point where the variation at a 3 Sigma level is equal to or less than half of the specified limits. This approach is often used to improve manufacturing operations that have specific tolerances which combine to produce a deliverable end-product.
Figure 11.6. Reducing variation
In the second case, the SST will be assigned to set a new center point (see Figure 11.7.) It is typically used when the objective is to reduce cost, cycle time, or processing time. This type of opportunity is usually directly related to a complex process that goes across many units (see Figure 11.8).
Figure 11.7. Setting a new center point
Figure 11.8. The DMAIC process
The DMAIC (Define, Measure, Analyze, Improve, and Control) is used to reduce variation on simple process improvement projects. The DMADV (Define, Measure, Analyze, Design, and Verify) is used to define new products and processes and to improve present products and processes (see Figure 11.9).
DMAIC - (Process Improvement)
Figure 11.9. Two Six Sigma improvement concepts
Note that in both cases the first three activities are the same (Define, Measure, and Analyze). It is only in the last two activities that there is a change, but don’t be misled. The activities that go on during Define, Measure, and Analyze are very different in the two improvement cycles. The DMAIC cycle is used to reduce variation and to improve simple processes. It is usually applied when
• Customers’ needs can be mapped by refining the existing process
• The project is part of an ongoing continuous improvement program
• A single activity or task within the process needs to be changed
• A single customer performance requirement needs to be changed
• Competitors’ performance is relatively stable
• Customers purchasing behavior is stable
• Technology is stable
The DMADV cycle is a more rigorous cycle and can be applied to major processes. It is based upon the process redesign and benchmarking methodologies previously developed. It is used when
• No processes exist in the present time
• Existing processes need to undergo a major improvement greater than 20 percent
• The project is of strategic importance
• Multiple activities need to be changed
• Multiple customer requirements need to be addressed
• Customer behavior patterns are changing
• Competitors’ performance is improving rapidly
• Supporting technology is changing
Activity 2—Define the SST Members
“Few incentives are more powerful than membership in a small group engaged in a common task, sharing the risks of defeat and the potential rewards of victory.”
—Robert Reich
The consultant and the Six Sigma Sponsor need to define the make up of the individual SST based upon the types of changes that will need to be made. For example, if the opportunity is limited to one natural work team’s environment, the SST will need to be made up of these people who are involved in the activity being studied. You may also need technical people who support the equipment the natural work team is using and someone from IT who is familiar with the supporting software. Often, the problem is not the fault of the natural work team; it might be because the supplier is not providing the correct inputs to allow the natural work team to do error-free work. It is sometimes good practice to have the customer for the output on the SST, particularly when that customer is an internal customer.
For complex, cross-functional processes, the consultant should prepare a block diagram of the process that identifies who is performing each key operation. This is a very important step in the cycle because it forces the consultant to mentally walk through the total process. It is strongly recommended that the consultant do some research before he or she starts to construct the block diagram. He/she should read the prevailing procedure and talk to the people in the process. The consultant must have a good view of the total process before putting pencil to paper.
Figure 11.10 is a typical block diagram that was used by a consultant and the Six Sigma sponsor to define the team members. Once the block diagram is prepared, the consultant should meet with the manager of each department on the block diagram to discuss the project with them and explain what the project’s mission will be. They should also define who the proper person is within that department to represent the department as part of the SST.
Figure 11.10. Block diagram of selecting the process team
SST Members
An SST is a group in which members are working together as a collective, cooperative, and cohesive force. Great care should be taken in selecting the members of each SST because individuals will be working together for an extensive period of time.
The SST members will be charged with the responsibility for creating a solution that takes advantage of the assigned opportunity. They primarily represent his or her department on the team and will be trained to become Six Sigma Green Belts.
Major responsibilities include the following:
• Participate in all SST activities (Example: training in Six Sigma techniques, attend meetings, conduct walk-through, participate in problem-solving, collect and analyze data)
• Conduct SST activities in his or her department as required by the Black Belt (Consultant) (Example: Obtain local documentation, develop a flow chart of the department’s process activities, measure efficiency, and help implement department changes)
• Obtain appropriate resources (Example: Time for the activities to be performed within his or her department)
• Implement changes in the process as they apply to his or her department (Example: Supervise production of new documentation, organize training, and perform follow-up work)
• Chairs a sub-process team as appropriate
• Support Change (Example: Provide information, encouragement, and feedback, and listens to complaints)
• Train and evaluate other department members as appropriate
• Solve process-related problems
• Provide his or her department with a better understanding of how it fits in to the total process and Six Sigma program
• Collect and analyze data
SST Membership Time Requirement
The SST members should expect to devote roughly four hours per week to the project. However, depending on the application selected, the time requirement could be as much time as 50 percent of the work week during the first two months. For example, the Executive Team might decide that a critical process (billing, accounts payable, outpatients’ treatment) requires immediate attention. This could mean a full-time assignment for about four weeks for all team members. The full-time approach is frequently used to prepare a business process for computerization or to have a significant immediate impact on the organization’s near-term performance. Although the Executive Team should be ready to make the appropriate investment, launching an SST generally does not require this level of commitment. It is important that the SST members are relieved of some other normal work in order to participate on the SST. It is not fair or practical to expect them to continue all of their present assignments that are already keeping them busy 125 percent of their time and add to it an additional assignment as a Green Belt.
Activity 3—Train the SST Members
“World-class companies realize that firms have access to the same equipment, technology, financing, and people. The ’half-life’ of any academic degree is extremely short; therefore, the real difference among companies is the degree to which employees are developed.”
—Ernst & Young
The implementation model we are suggesting makes use of a consultant as the Six Sigma Master Black Belt that will manage the three to five opportunities (pilot project). The team members will be trained as Green Belts and function as Green Belts. At the end of the pilot, the best performing Green Belts will be recommended for Black Belt training.
Green Belt training is typically 40 classroom hours. Subjects to be covered are
• Introduction
• Enterprise-Wide Deployment
• Why companies initiate Six Sigma
• The necessity to revise cultural thinking
• Six Sigma roles and responsibilities
• Six Sigma deployment models
• Cost of quality
• Business examples
• Beginning the case study
• Focusing on the Customer
• Customer analysis
• Customer CTQs (Critical-to-Quality requirements)
• Changes in customer needs over time
• Customer requirements versus customer needs
• Customer alignment matrix
• Continuing case study and applying new knowledge
• Business Process Improvement
• What is a business process improvement?
• Looking at the organization as a system
• Process flow
• Reengineering versus process improvement
• Process matrix
• Moments of truth
• Detailed process mapping
• SIPOC analysis
• Business examples
• Continuing the case study and applying new knowledge
• Define
• Target (board)
• Benchmarking
• Area activity analysis
• SIPOC
• Process definition and mapping (high level)
• Continuing the case study and applying new knowledge
• Measure
• Detailed process map ("as-is")
• Identification of process Xs and Ys
• What to measure
• Why, where, and when to measure
• How to collect data
• Five-step data collection plan
• Continuing the case study and applying new knowledge
• Analyze
• Visually interpret data
• Value-stream analysis
• Vital few analysis
• Should-be" process map
• Opportunity analysis
• Continuing the case study and applying new knowledge
• Improve
• Solution analysis
• Charter revision
• Final revision of "as-is" map
• Cost-benefit analysis finalized
• Completion of project plan components
• Scheduling models
• Change management strategy
• Project planning strategy
• Risk analysis
• FMEA (plus other risk analysis models)
• Continuing the case study and applying new knowledge
• Control
• Maintaining the gain
• Measurement plan
• Control tools
• Standards
• Procedures
• Accountability
• Continuing the case study and applying new knowledge
• Introduction to Lean Thinking
• What is "lean thinking?”
• Lean" topics for the Black Belt
• How is lean thinking applied to DMAIC?
This training can be presented in a number of ways. The most conventional way is to have the consultant conduct a five-day class for each of the teams. We believe that this approach is not the correct one for HCPs. Taking a group away from the day-to-day activities puts a big strain on the organization. Our experience is that it’s next to impossible to get a physician to take five days off in a row, let alone the 20 days that are recommended for a Black Belt.
One of the big advantages of having a consultant leading the pilot programs is that this person can give Just-In-Time training to the SST members. We suggest that the team meets two times a week for two to three hours for 12 weeks in order to complete its assignment project. At each of these meetings, the consultant will present the SST members with the tools needed to continue their assigned project. This way, they will learn the required Green Belt tools while they are working with real-time improvement opportunities that they will get credit for solving. Not only will the organization benefit from the new skills these teams acquire, but also it will benefit from the money saved as a result of taking advantage of the improvement opportunities. In most cases, the money that is saved by the SSTs will more than pay for the consulting cost, the SST members’ time away from their normal jobs, and the cost of making the change. At the end of the 12-week period, the consultant will provide the SST members with an instructional class that will fill in any of the Six Sigma tool requirements that they have not had an opportunity to use in solving their specific opportunity. There should also be a Green Belt competency test given to them at this point in time to be sure they understand the Green Belt tools.
Activity 4—Organize the SSTs
“You can’t make bread with just flour. The same is true of teams. It is the mixture of skills that makes the breakthroughs.”
—H. James Harrington
The SST has been formed for a specific purpose. The Sponsor has initiated this team because there is a process or problem to address or a new innovation is soon to be launched. The SST members have been chosen as a part of this team because they have specific knowledge, expertise, or experience that is considered invaluable to the success of the team’s task. Do not make the mistake, however, of assuming that this assignment is already translated into the goals that are necessary for a successful team outcome. The goals are set when the group can wholeheartedly agree on them. Figure 11. 11 is a typical project charter worksheet.
Figure 11. 11. Typical project charter worksheet
The Charter
The charter is a written project plan that identifies what will be done, how it will be done, why, and when. It should be no more than two pages. It is generally written by the Sponsor (sometimes with the Black Belt) as a starting point, and should be modified by the team as needed.
The team should carefully review its charter and make necessary modifications to ensure that the charter accurately reflects the objectives and the scope of this team. The team will also need to change the charter to reflect any change in direction that the team deems necessary.
Once the team finalizes the charter, team goals should be developed along with operating ground rules. (See Figure 11.12 for a typical Facilitator’s team charter.)
Figure 11.12. Facilitator team charter
Goals
Although your charter has a stated objective, the team will need to decide whether that objective should be divided into goals. Discussing and agreeing on specific goals will help the team get on the "same page" regarding the implications of the charter objective and how the team plans on achieving it. The team should never assume that everyone on the team understands the charter in the same way until they have discussed and agreed on its meaning.
Common goals provide team members with the following:
• Purpose. Goals are designed to help the team accomplish its charter.
• Clarity. Goals help the team transition from abstract ideas to concrete tasks.
• Direction. Goals help the team identify next steps to take.
SMART goal characteristics are as follows:
• Specific. Goals should be specific
• Measurable. Goals must be measurable
• Attainable. Goals are attainable
• Relevant. Goals are relevant to the charter
• Time-bound. Goals are time bound
Ground Rules
The ground rules are a set of standards of behavior and attitudes that the team agrees to abide by. They should be established in the beginning stages of the team’s formation and should include expectations regarding
• Punctuality
• Respect for team members
• Member responsibilities/commitments
• Meeting etiquette
• Juggling team tasks with normal work tasks
The entire team is responsible for seeing to it that the ground rules are established and followed.
The following is a set of typical ground rules:
• Attendance
• Arrive on time, and stay until the end.
• Start on time and finish on time, unless otherwise agreed.
• Make every effort to attend. Provide advance notice to the meeting chairperson if you cannot attend, and arrange for a representative to attend in your place.
• No unannounced interruptions.
• Objectives and Agenda
• Publish an agenda and stick to it unless otherwise agreed.
• Clearly state the objective for the meeting and stay focused.
• Use the group’s time wisely; deal with the most important issues, or share information of general interest.
• Communication
• Use active listening; recognize that every idea or concern may be valuable.
• Do not dominate the conversation.
• Be concise.
• Use sensitivity; question, do not challenge.
• Participation is essential. Express your honest viewpoint or concern.
• No hidden agendas.
• Focus constructive criticism at exposing or removing obstacles.
• Respect and Courtesy. Avoid behaviors that discourage involvement:
• Interrupting
• Side conversations
• Killer" phrases, body language, or gestures.
• Not paying attention.
• Respect and understand others’ position and feelings.
• Teamwork
• Explore and disagree within the meeting. Present a single approach outside.
• Strive for consensus. Use appropriate decision-making tools if necessary. Resolve irreconcilable differences outside the meeting.
• Have some fun: Set up $1 fines for improper behavior, or go out to dinner together each month or quarter.
• Support and Follow-up
• Review meeting effectiveness periodically.
• Address problems openly.
• Assign a facilitator to monitor team processes and behaviors.
• Assign a scribe to record and issue minutes.
• Assign a timekeeper to keep the meeting on schedule.
• Make clear action assignments and carry them out.
• Use visual media (flipcharts, overheads) to share ideas.
Team Development
HCP executives who are familiar with Six Sigma will understand the benefits of having ordering physicians, medication supplies’ dispensing, pharmacists, delivering nurses, and support staff work as a team to reduce medication errors. Together they can define how prescription errors occur (for example, a pharmacist read it incorrectly), when it occurred (physician wrote it incorrectly) and/or why it occurred (technician inputted it incorrectly).
It is well understood that a team does not begin functioning at full efficiency from its very inception. Basically, the team is like a husband and a wife who have to learn how to live together, to respect the other’s good points, and to forgive their weaknesses.
Stages of Team Development
There are four key stages (see Figure 11.13) in the development of a team. Each stage is important to the successful lifecycle of your team.
Figure 11.13. Four key stages of team development
The stages of team development are
• Forming
• Storming
• Norming
• Performing
The Forming Stage is marked by uncertainty and tentativeness:
• Accepted behaviors are not yet clear.
• Member feelings may reflect excitement and anticipation.
• Statements about what the team should do are ambiguous.
• Members usually try hard not to offend each other.
The Storming Stage is signaled when members are no longer tentative and ambiguous and are willing to express their differences of opinion:
• Resistance to different approaches may develop.
• Members express strong opinions.
• Members who agree may try to band together.
• Sharp attitude changes may accompany disagreement.
• As conflict is expressed, some members may attempt to withdraw.
• If handled improperly, tension and disunity can undermine the success of the team.
During the Norming Stage, the team begins to "rally" around their ability to accomplish the team objective:
• Members learn how to communicate with each other.
• Members develop trust and respect.
• Dissent and social conflict die out.
• Members have learned how to give and receive feedback.
• Responsibilities are evenly distributed.
• Decisions are made.
At the Performing Stage, both the team dynamics and the team’s product become tangible to the members (see Figure 11.14).
Figure 11.14. Life cycle of a team
• Members experience a high level of interaction.
• Members experience positive synergy and increased performance.
• Members are comfortable with each other.
• Members reach consensus and are confident of their solutions.
There can be many circumstances that trigger a return to a previous stage, such as a new Sponsor, a change of scope, or a change of deliverable (see Figure 11.15). If a new member joins the group, the team will return to the Forming Stage until everyone is familiar with the new team member. If a Sponsor adds a specification to the charter late in the project, the team may return to the Storming Stage.
Figure 11.15. Looping back to previous stages
Types of Teams
“The greater the loyalty of the members of a group toward the group, the greater is the motivation among the members to achieve the goals of the group and the greater the probability that the group will achieve its goals.”
—Renis Likert
In the sports world, there are many types of teams. Most of us were first introduced to the team concept in school while playing on or watching sports. In sports, you have three outcomes: The team can win, lose, or tie. When the team ties, no one wins or loses. In business, we need an outcome where everyone wins.
Football is an example of a group of people working in a team. The decisions are made by the quarterback or the coach. Everyone has his/her own role to play, and each person plays that role independently. The plays are pre-planned, and everyone has his/her own work assignment. This is very much like the way the laboratories perform in HCP organizations. Working in a team has its own set of characteristics:
• Activities are pre-planned and go on in parallel.
• Management makes all the decisions, as decisions are centralized.
• Personal focus is hierarchical.
• The major disadvantages are the lack of flexibility and the long cycle time to make a decision.
Another type of team has its members work as a team. Basketball is a good example of this type of team. The activities of a basketball player have to be integrated with the other team members. Decisions must be made fast and on the spot; everyone is involved and contributing all the time. Anyone can score. The players are continually making the decisions. The coach develops their skills and builds their morale, but success depends on the decisions that individual players make during the game. The nurse and the physician working in the operating room work in much the same way that a basketball team works together. Working as a team has its own set of characteristics:
• Activities are not pre-planned. The team’s activities are interdependent and integrated.
• The players make most of the decisions spontaneously.
• Players have on-the-spot flexibility.
• The weakness to working as a team is that it takes time to build the required level of trust.
When playing baseball, the players work on a team. They all are working toward the same goal. They all have different jobs and their own set of measurements. Most of the decisions are made by the manager. In this case, the team is a lot like a project management team in HCP organization. Each team member is doing his/her job of batting, pitching, or catching, but the result of the activity is not based upon help from other team players. The characteristic of working on a team are
• Activities take place in sequence, usually independent of input from the previous activity.
• Each player is an independent expert.
• Although the team is measured on the final score, each team member is also measured individually.
• Decisions are a combination of decentralized ("Shall I swing at this pitch?") and centralized ("When will the pitcher be removed from the game?").
• The weakness in working on a team is the lack of opportunity for the players to help each other. An example is that no one on the team can help the person who is up to bat.
The Different Ways SST Are Influenced
“If management is split about teams, implementing them won’t work, plain and simple.”
—Deborah Harrington-Mackin
In a Six Sigma project, a number of types of people influence the SST. They can be classified as
• Managers
• Team Leaders
• Facilitators
• Advisers
The Manager is the one who makes the final decision. The organization’s employees are charged with the responsibilities but do not have the authority to deviate from the manager’s direction. This leads to bureaucracy throughout the organization (see Figure 11.15).
Figure 11.16. Manager influence on SST
The Team Leader is an individual who is part of the team and shares decision-making with the team. The leader takes an active role in keeping the team on track and growing the abilities of the team. He/she is a Green or Black Belt (see Figure 11.17).
Figure 11.17. Team Leader influence on SST
The Facilitator for a team does not get involved with the team’s decisions, but he/she is involved with the team decision-making process. The Facilitator focuses on the team process, not on the problem the team is solving (see Figure 11.18).
Figure 11.18. Facilitator influence on SST
The Adviser is not a member of the team, but he/she is invited to help the team when its members feel that they have reached a point where they need someone with specific technical skills. For example, a Master Black Belt could be asked to help design a very complex experiment, or someone from IT could be asked to recommend a software package or to evaluate a number of software packages before they are purchased (see Figure 11.19).
Figure 11.19. Advisor influence on SST
Activity 5—Define the Measurements
“A good measurement system listens to many voices.”
—H. James Harrington
When you talk about measurements, you have to consider five different voices:
• The Voice of the Customer
• The Voice of Management
• The Voice of the Supplier
• The Voice of the Employee
• The Voice of the Process
Each of these voices tells you different things, and usually they have different requirements. You need to listen carefully to all five voices.
“In Japanese, the same word—okyakusama—means both ’customer’ and ’honorable guest.’ Disney World has always thought of its customers as its ’guests,’ and many companies address their customers as being part of their ’family.’ Customers in today’s marketplace are looking for the special treatment that typically honors guests—and they are receiving it.”
—Peter Capezio and Debra Morehouse
The Voice of the Customer is a very key part of the Six Sigma process, as Six Sigma is specifically designed to meet customer expectations. Typically, the Voice of the Customer has three different ingredients:
• It defines what they must have. These are the basic ingredients; without them, the customer will be very dissatisfied.
• It defines the things that they expect to have, although these are not things that they need to have. They will compromise these to get a lower price.
• It defines things they would like to have. These are the nice things—the frosting on the cake. If they get these, they’re delighted with you. These are the ones that really lead to long-term customer relationships—customers for life. These customers feel that they have been given the greatest value by interfacing with your organization.
“The Voice of the Customer guides world-class leaders’ every action and decision.”
—Y.S. Chang, George Labovitz, and Victor Rosansky
The Voice of Management is also a very important input. Management has an obligation to keep the company profitable, to be able to meet payroll, and to pay the investors a reasonable return on their investment. Management focuses heavily on efficiency and cost control.
The Voice of Supplier is another important input. We are all very dependent on the suppliers, and if the supplier cannot meet our requirements, there is little chance that we will succeed. Imposing unrealistic requirements on your supplier can lead to failure throughout the organization.
“If your employees are your most valuable asset, your suppliers run a very close second.”
—H. James Harrington
The Voice of the Employee is a key element. Our employees are a major asset, and we must take care of them. We must ensure that they are properly trained and motivated. We have to understand that change is difficult for them, and we need to control the amount of stress that change is subjecting them to. Our employees are an investment, not a cost.
The Voice of the Process involves the process itself. It speaks loud and clear about its capabilities. Too often, we ignore the Voice of the Process or don’t listen to it. It is absolutely essential that we certify each piece of equipment and each step in the process to understand its capabilities, and when it goes into the unreliable and erratic state, we correct the situation. The least complicated condition for the SST is when the assignment is to reduce variation related to a specific dimension on a print. In this case, the customer requirements are specified and the tolerance limits are documented. All the SST needs to do is to reduce the variation down to the point that the calculated Six Sigma limit and the print limits are the same. Unfortunately, that is often a lot easier to say than to do. We have seen SSTs working for weeks trying to refine a specific sequence of activities to reduce variability when the equipment’s capability exceeded the specification tolerance. Don’t accept that the print tolerance is correct. Often, the print tolerance is set arbitrarily, and it is much easier and more effective to change the print specification than to buy new equipment. Often, a combination of refining the task and adjusting the print limits is the correct answer.
When it comes to process type improvements, there are three main measurements:
• Effectiveness. The extreme to which an output of a process or sub-process meets the needs and expectations of its customer. A synonym for effectiveness is quality. Effectiveness is having the right output at the right place at the right time at the right price. Effectiveness impacts the customer. Typical effectiveness measurements are appearance, timeliness, accuracy, performance, reliability, usability, serviceability, durability, cost, responsiveness, adaptability, and dependability.
• Efficiency. Relates to the extent that resources’ usage is minimized and waste is eliminated. Productivity is a measurement of efficiency. Typical effectiveness measurements are
• Processing time
• Resources extended per unit of output
• Value-added cost per unit of output
• Percent of value-added time
• Poor-quality cost
• Wait time per unit
• Adaptability. The flexibility of a process to handle future changing customer expectations and today’s individual special customer request. It is managing the process to meet today’s special needs and future requirements.
Adaptability is an area largely ignored, but it is crucial for gaining a competitive edge in the marketplace. Customers always remember when you don’t handle their special needs. Basic quality involves satisfying customer requirements; however, for many customers today, good enough is not enough anymore. HCPs must exceed customer needs and expectations, now and in the future, by
• Empowering people to take special action
• Moving from meeting basic requirements to exceeding expectations
• Adjusting and adapting to ever-changing customer expectations
• Continuously improving the processes to keep ahead of the competition
• Providing a non-standardized activity to meet a special customer need
Typical measurements of adaptability would be
• The average time it takes to get a special customer request process compared to standard procedures
• The percentage of special requests that are turned down
• The percentage of time the special requests are escalated (for example, in the HCP industry the more people a customer has to talk to in order to get a need satisfied, the less chance that person will be satisfied)
Adaptability requirements should be established at the beginning of a process improvement cycle so that the improvement activities can consider these parameters and data systems can be established to measure adaptability.
Activity 6—Prepare a Project Plan
“Plans are nothing; planning is everything.”
—Dwight Eisenhower
Project management is one of the most important Six Sigma tools that the SST has available. It is very important that each project uses this tool effectively to manage the assigned project. The Project Management Methodology has been well defined by the Project Management Institute in a methodology they call PMBOK (Project Management Body of Knowledge). The project management knowledge areas are
• Integration Management
• Scope Management
• Planning and Estimating Management
• Documentation and Configuration Management
• Time Management
• Financial and Cost Management
• Quality Management
• Human Resource Management
• Communication Management
• Risk Management
• Procurement Management
Everyone who manages a project should have a detailed understanding of each of these knowledge areas. It also advisable that all members of the project team have a working knowledge of them. We feel that every Master Black Belt should also be a Certified Project Manager if he/she is going to work well in leading the Six Sigma activities.
The project plan is used to pull together the key project information into a single place. It should include things such as
• Project mission
• Project budget
• Project objectives and goals
• Risk analysis
• Assumptions
• Schedules (work breakdown structures)
• Training plans
• Project charter
• Team Members’ names and committed times
• Any special directions/limitations
One of the most important parts of the project plan is the work breakdown structure. It defines what will be done by whom and when. Figure 11.20 is a sample work breakdown structure. We feel that the Microsoft Project software package is an effective tool to generate work breakdown structures for the SST. It does an excellent job of organizing a single project and defining the critical path through the project. However, it has major drawbacks when it comes to managing a portfolio of projects like the Master Black Belt needs to do.
Figure 11.20. Combined three-year improvement plan
Note
For more information on how to manage projects, we suggest reading Project Management Excellence by Dr. H. James Harrington and Dr. Thomas McNellis (Paton Press, 2006). Appendix A in that book provides a list of the PMBOK 75 tools and techniques along with a self-evaluation quiz to determine how good your project management skills are.
“Defining an objective is like telling a railroad ticket clerk your destination before you buy a ticket. If you have not decided on a destination, you cannot buy a ticket.”
—Katsuyoshi Ishihara
Activity 7—Prepare an Organizational Change Management Plan
The biggest single reason that Six Sigma and TQM programs have failed is that they have focused on the technology, knowledge, and processes and have forgotten the "people side" of the equation, and people is what change management is all about. (see Figure 11.21).
Figure 11.21. Change management
Almost all the major Six Sigma process changes have a major impact upon the people working in the process that is being improved. Sometimes it affects just one person; other times it affects everyone within the process. Many of the Six Sigma programs have eliminated many jobs, because the re-work assignments and no-value-added jobs are removed and business-value-added activities are removed from the process. In Six Sigma, we treat organizational change management as a process (see Figure 11.22).
Figure 11.22. The change management process
The Change Management Process starts with the individual in the current state. This is a state where he/she feels very comfortable. The person is in control, has his/her own specific job, and knows more about it than anyone else. As we apply change to the process, the individual goes into a transition state. At this point, the person has lost control of his/her job and doesn’t know if he/she will be able to function in the new environment. The person is worried, and often resistance groups are formed. Eventually, the individual moves into the future state with the promise that this new state is a better condition than he/she had in the current state. Unfortunately, it’s very difficult to get the individual to move from one state to another. If he/she feels that there is less pain in the current state than the pain he/she perceives will be subjected to during the transitional period and in to the future state, it is next to impossible to get anyone to change (see Figure 11.23).
You would think that the individual understands the pain he/she is having in the current state better than anyone can, and it’s usually true they do. But, there is another part of current-state pain that he/she usually doesn’t understand. It is the ”what if we don’t change• pain related to the current state. Very often if we don’t change, it could mean the organization will lose its competitive advantage and jobs will be eliminated. Management has to surface "what-if" pain so that individuals can make a fair decision about how much resistance they are going to apply to the change. As an SST member, you need to look at the individuals who will be impacted by your proposed improvement and answer the following three questions for them:
• What’s in it for him or her?
• Why is the change necessary?
• Why is it important to the organization?
Figure 11.23. Pain management
Resistance is normal, so it should come as no surprise to the SST. In fact, the team should be concerned if there is no resistance because that often means that the affected people have just given up and will not cooperate when you need their support and/or their acceptance of the change. If the affected people will not accept the required changes, even the very best Six Sigma program will fail.
Your change management plan has to create a burning platform that will cause the individual to move from the current state, through the transitional period, to the future state. This change management plan should be part of your project plan.
Note
For more information on organizational change management, we suggest you read Change Management Excellence by Dr. H. James Harrington (Paton Press, 2006).
Once the organizational change management plan has been integrated into the project plan, the updated project pan should be reviewed and approved by the Executive Team. This approval allows the project to enter into Phase III Piloting.
Phase III—Piloting
“Pilot because, as a wise man once said, ’The best-laid plans of mice and men often go astray.’”
—H. James Harrington
The Piloting Phase is subdivided into five activities:
• Activity 1: Define
• Activity 2: Measure
• Activity 3: Analyze
• Activity 4: Improve or Design
• Activity 5: Control or Verify
Hopefully you have recognized these activities as DMAIC or DMADV approaches to the Six Sigma Improvement Strategy that we have already discussed earlier in this book.
Note that some of the tasks usually done during the Define activity have already been completed in Phase II Planning. The SST has been formed, and initial training has been completed. The SST has been assigned, and a project plan has been prepared and approved by the Executive Team.
This is the most interesting and challenging part of the Six Sigma process. We liken it to a "Who Done It?" story, only with Six Sigma it is "What Caused it?" story. Too often, the organization tries to turn Six Sigma activities into "Who Done It Activities." This is absolutely the wrong way to operate. There is enough blame for everyone, so there is no need to waste time defining "Who Did It?" It is always better to spend your effort in defining "Why It Happened" and how the processes can be changed to keep it from recurring.
The crime has already been committed: There are too many errors, too many customer complaints, it takes too long to do it, or it costs too much. These are the crimes that Six Sigma has been designed to solve and return the criminal (the process) back to a productive member of society.
Well, the call is out. Sherlock Holmes, with his black cape and his trusty magnifying glass, has been replaced with an electronic microscope that can see all the way down to 3.4 defects per million and beyond. Along with him are his trusted friends, •The Watson Green Family of Process, Problem and Analyst, Laboratory Technicians, and IT Specialists.• Together there is no crime so complex that they cannot solve. The first job this team has is to get to the crime scene and start to collect clues that can be analyzed and put together to solve the puzzle.
Just like the Sherlock Holmes story on TV, which lasts 60 minutes minus time for the commercials, the Six Sigma project should be time-boxed in to a three-month maximum, minus the time to do the team’s regular work assignments. Unlike the detective story that ends with the detective bringing the suspects and interested parties together at the scene of crime and revealing the culprit along with the explanation that proves the culprit caused the crime, the SST has to go further to define the cause, which is often hard. But creating a permanent fix that prevents the problem from recurring is the real challenge. It is like the detective having the responsibility for defining the rehabilitation of the criminal, and then having to justify the return on investment for the rehabilitation process.
Often Green and Black Belts become part of long-term research projects that last for one, two, or even three years, but these are not real Six Sigma projects. Sure, the skills that these Black and Green Belts have often are very valuable in these research projects and should be used.
It is not our intent to take you back through how to use DMAIC and DMAV methodologies; that would be redundant. But based upon our experience and other studies, the following are the most useful SST tools:
• Process Mapping
• Root Cause Analysis
• Cause and Effect Analysis
• Process Redesign
• Benchmarking
• Failure Mode and Effects Analysis (FMEA)
• Lean
• Process Capability
• Project Management
• Brainstorming
• Workflow Analysis
• Trend Analysis
• Design of Experiments (DOE)
• Error Proofing
• Standardization
The DMAIC cycle has 12 toll gates designed into it. They should be followed to be sure you come up with the best answer (see Figure 11.24).
Figure 11.24. Six Sigma tollgates
Just one word of caution from a dear departed friend of ours, Dr. Kaoru Ishikawa, the man who made quality happen in Japan:
“It is true that statistical methods are effective, but we overemphasize their importance. As a result, people on the Executive Team fear or dislike quality control as something very difficult. We overeducated people by giving them sophisticated methods where at that stage simple methods would have sufficed.”
—Kaoru Ishikawa, What Is Total Quality Control: The Japanese Way (Prentice Hall, 1985)
At the end of the improvement or design activities, the SST has defined its preferred solution to take advantage of the opportunity, along with an estimated cost to implement the solution and the projected savings as a result of this implementation. This information should be presented to the Executive Team for its approval. Often, the Executive Team will accept these results, if they are well-presented and supported by sound reasoning, as proof that the Six Sigma approach is good for the organization. In other cases, they will hold off approving the Six Sigma approach until the solutions have been implemented and the results are well-documented.
In Executive Team case, the Executive Team will be required, at some point in time, to take a position to define if the pilot was successful or unsuccessful and to make a decision about what the organization’s future involvement in the Six Sigma initiative will be.
If you did a good job in conducting the pilot and had selected opportunities that had real potential, the Executive Team will not only approve the project to continue in Phase IV (Implementation), but it will be excited about reaping the additional benefits from entering into the project very fast. For purposes of this book, we will assume that the Executive Team is anxious to continue the Six Sigma initiative. We will also assume that more than 60 percent of people were able to pass the Six Sigma Green Belt exam and were certified as Green Belts.
Phase IV—Implementing the Six Sigma System
“Six Sigma has forever changed GE Everyone...is a true believer in Six Sigma, the way this company now works.”
—Jack F. Welch, former GE Chairman
Phase IV Implementation is divided into seven activities:
• Activity 1: Organizing
• Activity 2: Defining the Six Sigma Roles
• Activity 3: Training the Six Sigma Team
• Activity 4: Selecting the Six Sigma Projects
• Activity 5: Forming the SST’s
• Activity 6: Executing the Six Sigma Projects
• Activity 7: Internalizing the Six Sigma Culture
Activity 1—Organizing
“I don’t give a damn if we get a little bureaucracy as long as we get the results. If it bothers you, yell at it. Kick it. Scream at it. Break it!”
—Jack Welch, former GE Chairman
Now that the decision has been made to implement the Six Sigma initiative within the organization, its time to establish the Six Sigma organizational structure. Although we will be talking about a special Six Sigma organizational structure, we must be careful it is not a stand-alone structure. It should be an integrated part of the total organization. The people who make up this Six Sigma structure will report into the normal organization structure. (For example: a Black Belt, who is working on accounting problems, will report to the Accounting Manager.)
“Six Sigma System is about creating a culture that demands perfection...and gives employees tools to enable them to pinpoint performance gaps and make the necessary improvements.”
—William S. Slovropoulos, Dow President and CEO
A Six Sigma system is designed to increase profits and customer satisfaction. It is an organized, documented, and understood approach to eliminate root causes of errors throughout the organization by reducing variation and developing streamline processes that are more effective and efficient. The Six Sigma organizational structure is the key part of the Six Sigma System. Figure 11.25 shows a typical Six Sigma structure.
Figure 11.25. Six Sigma structure
Figure 11.26 is a top-level Six Sigma organizational structure for one of the HCPs we have worked with. You will note that, due to the organizational structure and the size of the operation, they divided the Six Sigma initiative into to four different parts. All four initiatives are brought together and coordinated by the SS (Six Sigma) Steering Committee.
Figure 11.26. Six Sigma HCP organizational structure
Activity 2—Defining the Six Sigma Roles
Each level of management and every employee plays an important role in the Six Sigma System. Each is dependent on each other, and each role adds value to the Six Sigma System.
The Executive Team/Six Sigma Steering Committee
“The company cannot buy its way into quality—it must be led into quality by top management.”
—Dr. W. Edwards Deming, Out of Crisis (1986)
The Executive Team sets the direction and priorities for the organization. As a result, it must be the owner of the Six Sigma System. It is responsible for managing the system to ensure that it is operating effectively. It needs to be the role model by including Six Sigma thinking into the way it functions. It is responsible for developing the organization’s strategic plan that will be the basis for selecting the Six Sigma projects. It needs to understand the Six Sigma System well enough to be able to justify redirecting resources from other day-to-day, business-as-usual work to attack the waste that is causing less-than-perfect performance.
The Executive Team will appoint the Six Sigma Champion and Black Belts. It will also conduct periodic reviews of the Six Sigma System’s progress and make the required adjustments when the system is not as effective as it should be.
“In fact, not only did Nasser (Ford’s CEO, Jacques Nasser) go through the Six Sigma training, but he also regularly champions Six Sigma projects.”
—Louise Goeser, Vice President of Quality, Ford Motor Company
Figure 11.27 shows a typical Six Sigma infrastructure.
Figure 11.27. Six Sigma HCP organizational structure
Six Sigma Champion/Six Sigma Sponsor
The Six Sigma Champion is the Six Sigma Project Manager. He/she is responsible for developing and implementing the Six Sigma System. The Six Sigma Champion ensures that all functions are supporting the Six Sigma System by providing the properly skilled people for the required time and maintaining the Six Sigma activities as a high priority within the function. The Six Sigma Champion will also ensure that there are adequate funds in the annual budget to cover the cost of the Six Sigma process. Management must realize that they cannot assign employees to the Six Sigma activities without removing at least a portion of the workload they previously had. Expecting employees to do Six Sigma projects, in addition to what they were doing, is the major cause for Six Sigma and TQM failures around the world. A Green Belt will be expected to spend between 20 to 60 percent of his/her time working on the assigned projects during the problem-solving and implementation cycle.
The Six Sigma Champion will work with the Executive Team to define the improvement opportunities that are necessary for supporting the strategic plan. The Six Sigma Champion will set the goals and expectations for the Six Sigma Team and approve all projects before they are started. The Six Sigma Champion normally is a senior vice president of the organization. Often during the startup phase of the Six Sigma System, a consultant is assigned to this position due to the amount of time and sophisticated problem-solving experience that is required to justify and organize the first year’s Six Sigma activities.
“Effective delegation is perhaps the best indicator of effective management simply because it is so basic to both personal and organizational growth.”
—Steven Covey
Business Unit Sponsor (BUS)
Often Business Unit Sponsors’ (division, function, and sector) people will be assigned to the Six Sigma process. The BUS provides a local view of the problems that are affecting the business unit’s performance and how the business unit needs to react in order to support the strategic plan. He/she is often held accountable for the success of the Six Sigma System in the business unit. The BUS is responsible for ensuring that the business unit provides the required Six Sigma resources. He/she also provides input into the Six Sigma Champion related to the business unit’s priority improvement needs. The BUS is typically a business unit executive.
Master Black Belt (MBB)
One Master Black Belt for every 15 to 20 Black Belts is the standard practice. A MBB is a highly-skilled Project Manager who should be Project Management Institute Certified. MBBs are the heart of the organization’s Six Sigma process. The MBB must be a higher-skilled and more-experienced individual than a Black Belt. This person should be an experienced teacher and mentor who has the wisdom gained from experience in using the Six Sigma tools. The MBB is responsible for
• Certifying Black Belts and Green Belts
• Training Black Belts
• Developing new approaches
• Communicating best practices
• Taking action on projects for which the Black Belt is having problems in defining the root causes and implementing the change
• Conducting long-term Six Sigma projects
• Identifying Six Sigma opportunities
• Reviewing and approving Black and Green Belt project justifications and project plans
Typically, an MBB will interface with 15 to 20 Black Belts to provide mentoring and development service in support of their problem-solving knowledge.
Most organizations, when they start a Six Sigma process, do not have people who possess the experience to take on the role of an MBB even when they have completed the four-week Black Belt training program and the two-week Master Black Belt training. Training alone does not provide the required experience that is needed to function as an MBB. As a result, organizations normally hire a consultant to serve as the Master Black Belt for the first 6 to 12 months, and then they select one of their Black Belts who has performed the best, to gain the additional Master Black Belt training and experience for the following years.
Black Belts (BB)
“Black Belts are the work horses of the Six Sigma System.”
—H. James Harrington
One Black Belt for every 100 employees is the standard practice. Black Belts are highly skilled individuals who are effective problem-solvers and have a very good understanding of the most frequently used statistical tools that are required to support the Six Sigma System. Their numberone priority is to define and develop the right people to coordinate and lead the Six Sigma projects (Green Belts). Candidates for Black Belts should be experienced professionals who are already highly respected throughout the organization. They should have experience as a change agent and be very creative. Black Belts should generate a minimum of $1 million in savings per year as a result of their direct activities.
Black Belts are not coaches. They are specialists who support the Green Belts. They may be used as SST leaders of complex and important projects. They do manage the projects that they are assigned to lead. The position of Black Belt is a full-time job; he/she is assigned to train, lead, and support the Six Sigma problem-solving teams. They serve as internal consultants and instructors. They normally will work with four to six problem-solving teams at a time. The Black Belt assignment usually lasts for two years. It is recommended that the organization have one Black Belt for every 100 employees. A typical Black Belt spends his/her time as follows:
25 percent Running projects that he/she is assigned to lead
20 percentHelping Green Belts who are assigned to lead projects
20 percentTeaching either formally or informally
25 percentDoing analytical work
10 percentDefining additional projects
The Black Belt must be skilled in five areas:
• Project Management
• Leadership
• Analytical thinking
• Adult Learning
• Organizational Change Management
Based upon our experience, most of the Six Sigma Black Belt training has been directed at analytical skills. Even the selection of the Black Belts is based upon their analytical interests. This is all wrong. Traits to look for in selecting a Black Belt are
• Trusted leader
• Self-starter
• Good listener
• Excellent communicator
• Politically savvy
• Has a detailed knowledge of the business
• Highly respected
• Understands processes
• Customer-focused
• Passionate
• Excellent planner
• Holds to schedules
• Motivating
• Gets projects done on schedule and at cost
• Understands the organization’s strategy
• Excellent negotiation skills
• Embraces change
Black Belts should be specialists and not have coaches. It is incredibly important to build a cadre of highly skilled Six Sigma Black Belts. However, they must not be placed in charge of the management of the improvement process. Black Belts are sometimes responsible for managing individual projects, but not directing the overall improvement process; that should be the job of management. Don’t just keep management engaged in the process—keep them in charge of the process.[12]
Green Belt (GB)
Being a Green Belt is a part-time job. A Green Belt is assigned to manage a project or work as a member of an SST by the Six Sigma Champion and his/her manager. Sometimes a Green Belt is the manager of the area that is most involved in the problem, although we prefer that it is a highly skilled professional who has a detailed understanding of the area that is involved in the problem. Green Belts should be people who could be candidates for future Black Belt assignments, if they excel in the way they manage the project on which they are assigned to work.
The primary responsibility for the Green Belt is to form the project’s SST and manage (coordinate) its activities during the entire product cycle. The Black Belt will support the Green Belt by providing Just-In-Time training to the project team when the Green Belt feels it is necessary. Green Belts are also expected to identify other Six Sigma opportunities and bring them to management’s attention.
Yellow Belts (YB)
Yellow Belts are the people who have served on an SST and completed one successful cycle. They will have a practical understanding of some of the basic problem-solving tools and the DMAIC. They are usually classified as the Yellow Belts when management accepts the project and the SST is dismantled. During the project, they will work part-time on the project and still remain responsible for a reduced quantity of their normal work assignments.
Process Owner
All major cross-functional processes should have a process owner assigned to them. This is not a full time job. The Process Owner is the individual appointed by management to be responsible for ensuring that the total process is both effective and efficient. This is a key concept that must be understood to make the process management strategy work. Conventional-functional management has worked well for a number of years, and it is probably the best type of organization, but it has its shortcomings. Functional competition, although healthy in some cases, can be self-defeating because it puts all the functions in competition for limited resources. Frequently, the organization that puts on the best show gets the most resources, but it may not have the biggest need. In other cases, resources are allocated to part of a critical process by one function, but interfacing functions have different priorities and, as a result, only minor improvements are made.
What needs to be done is to stop looking at the business as "many large functions" and start looking at it as "many business processes that flow across functions." (Figure 11.28 shows a view of how the process manager looks at processes). This allows the organization to select the process it wants to improve, obtaining the maximum return on its investment. It is very evident that the process is the important element, and that the process owner plays a critical role in making the total process mesh together. The process owner concept provides a means by which functional objectives can be met without losing sight of the larger business objective.
Figure 11.28. Business Process Management
The Process Owner must be able to anticipate business changes and their impact on the process. The owner must be at a high enough level to understand what direction new business will take and how it will impact the process.
Blue Belts
“Blue Belts keep the Six Sigma culture alive in the organization year after year.”
—H. James Harrington
The Blue Belts are the normal population that may never be assigned to an SST, but need to be part of the Six Sigma culture. They need to be able to apply Six Sigma concepts to their day-today activities. They will receive two to three days of training covering the following subjects:
• How teams function
• What the Six Sigma processes are about
• How Six Sigma applies to them
• How to define who their customers are
• The seven basic problem-solving tools
• How to flowchart their process
• Area Activity Analysis
Activity 3—Training the Six Sigma Team
“No company can escape the need to re-skill its people, reshape its product portfolio, redesign its processes, and redirect its resources... The real issue is whether transformation happens belatedly—in a crisis atmosphere—or with foresight—in a calm and considered atmosphere...whether transformation is spasmodic and brutal or continuous and peaceful.”
—Hamel and Prahalad, Competing for the Future
One of the basic Six Sigma beliefs is that the employees are an investment and not a cost. The accountants classify equipment and buildings as investment, but they treat their employees as a cost. Management requires the oil to be changed regularly in their cars and trucks because it costs less to maintain them than burn out their motors.
They require their measurement equipment to be re-calibrated, but when it comes to maintaining our most valuable assets (our people), managers are misers. Training of all our employees is required maintenance if they are going to perform at the Six Sigma level. Effective training is one of the most important investments that organizations can make. The Six Sigma System is based upon providing the organization’s employees and management with many new skills that makes the total organization more competitive and profitable. Without good training, the Six Sigma System will fail. The following are the typical training program timelines for the various Six Sigma assignments:
• Executive Training: 16 hours
• Sponsor/Champion Training: 5 days
• Master Black Belt Training: 5 days
• Black Belt Training: 20 days
• Green Belt Training: 10 days
• Yellow Belt Training: 3 days
• Blue Belt Training: 2 to 3 days
Six Sigma Executive Training
“If it isn’t important to the executives, it isn’t important to the organization.”
—H. James Harrington
The objective of these two eight-hour-day classes is to prepare the Executive Team to understand and participate in the Six Sigma System. It is very important that the executives understand and can talk the Six Sigma language. They must have, at a minimum, a basic working knowledge of the Six Sigma methodology, concepts, and tools in order to ask the correct questions and get relevant answers to their questions. It is recommended that the first class be held during Phase I. This first training session should answer questions such as
• What are the Six Sigma theory and methods?
• What is the history of Six Sigma?
• What is "Six Sigma Thinking"?
• What are the Six Sigma roles and responsibilities?
• Why should we spend our efforts doing Six Sigma?
• How is this different than TQM and ISO 9000?
• What is the difference between 3 Sigma and 6 Sigma, and why is it important?
• What are the basics of the DMAIC approach, and what are its major tools?
• How will it be applied in my area?
• How will we manage the change it will bring?
• What is the implementation strategy?
• How will benchmarking be used?
• Will it work on business processes as well as manufacturing activities?
• What lessons can we learn from other organizations?
• What will it cost and how much will it save?
• Who will do it and how much of our time is required?
Implementing a successful Total Six Sigma program requires a change in the corporate culture that starts with Executive Management. During these two eight-hour sessions for executives the following subjects will be discussed:
• Maximizing Customer Satisfaction
• Increasing Quality Levels
• Business Measures (KPIs)
• Six Sigma Business Strategy
• Organizational Six Sigma
• Business Measurements
• Process Capability
• Critical Roles and Responsibilities
• Overview of Six Sigma Tools
• Six Sigma Deployment
• Implementation Strategy
• Measuring Success
• The Executive’s Role in Six Sigma Systems
• Defining and Improving Executive Processes
• How to Select People for the Six Sigma Program
• Basic Six Sigma Tools
• Selection of Six Sigma Projects
The second eight-hour class should be held after the pilot is complete and the Executive Team has made the decision to implement a Six Sigma system. During this class, the executives will work on developing a solution to one of the executive improvement opportunities that was identified during the first class. They will also select the projects that will be assigned to SST as well as naming the individuals (Black Belts) who will lead these projects.
“The executives need the training more than anyone else, because in most cases they need to make the biggest change.”
—H. James Harrington
Six Sigma Sponsors/Champion
The Six Sigma Sponsor/Champion plays a key role in the Six Sigma System. This person is responsible for developing and implementing the Six Sigma System, and provides the interface on the day-to-day Six Sigma operations to the CEO. He/she is ultimately responsible and accountable for the success of the projects sponsored. That places a great deal of pressure on this person to identify the best possible opportunities and to push for very creative solution to these opportunities.
The Six Sigma Sponsor/Champions should attend the Six Sigma Executive Training. In addition, they should attend a five-day class. The Six Sigma Champion/Sponsor course includes quantitative analysis and data manipulation exercises and should only be considered for participants who are comfortable with such activities. A typical course would include the following subjects:
• Overview
• Overview of Six Sigma
• Why Six Sigma?
• Random variation
• Data collection
• Basic data analysis
• How to deploy Six Sigma
• Basic Six Sigma tools
• Problem-solving approaches
• Process mapping
• Project Management
• Return on investment (ROI)
• Risk management
• Project planning
• Organizational change management
• DMAIC: Define
• Voice of the Customer
• Project definitions
• Project financials
• Matrices and deliverables
• Project scheduling
• Change management
• DMAIC: Measure
• Process definition
• Poor-quality cost
• Process matrices
• Establishing process baseline
• Control charts for variables and attributes
• Analyzing sources of variation
• Lean thinking
• Sampling
• Hypothesis testing
• Linear regression
• Multiple linear regression
• DOE Introduction
• Design Selection
• DMAIC: Improve
• Tools
• Models
• Transformations
• Response surface
• DMAIC: Control
• Tools
• Serial correlation
• Multivariate control charts
• Design for Six Sigma
• Control plan
• Process characterization and capability
• Project guidelines and selection
• Deploying Six Sigma
• System for management
• Business planning
• Balance scorecard
• Strategic planning
• KPIs
• Leading Six Sigma
• Process scorekeeping
• Process management
• Process redesign
• Process reengineering
• Fast Action Improvement Teams (FAST)
• Interpreting data
• Developing business cases
• DMADV
Master Black Belt Training
“The Master Black Belt is the guru of the organization. He/she knows all, sees all and can do all.”
—H. James Harrington
The MBB training is the ultimate class for Six Sigma professionals. It is a one-week training program directed toward those professionals who are Six Sigma Corporate Leaders. (The prerequisite is Green Belt Training and Black Belt Training.) The program focuses on applying Six Sigma to the entire organizational model, and when striving for organizational excellence, each Six Sigma role must contribute to the total effort every day and in a different way.
The Master Black Belt Certification program targets those professionals who will oversee the corporate Six Sigma effort in various organizational "Domains of Influence.”
The powerful tools, techniques, and software that are used in this course allow those individuals who attend the course to provide immediate value to their company.
Points of interest include the following:
• Lessons learned analysis
• Advanced leadership skills
• Advanced topics, tools, and applications:
• ANOVA
• DOE
• Confidence intervals
• Continuous data
• Control charts
• Correlation analysis
• Discrete data
• Gage R&R
• Hypothesis testing
• Measurements
• Metrics
• Multicollinearity
• Probability distribution
• GFD
• Sampling
• Serial correlation
• Taguchi methods
• Tools analysis
• Transformations
• TRIZ
• Advanced facilitation skills
• Advanced topics in technology
• Advanced project management skills
• Advanced Lean tools and techniques
Course Outline
Day One
1 I. Introduction and Overview
3 Introduction
4 Course Overview
5 Minitab or QI Macros Overview (package provided with course materials)
6 Minitab or QI Macros Overview and Exercises
8 II. Advanced Leadership Skills
10 Getting the Most from a Position of Leadership Without Direct Authority
11 Leadership Techniques—Achieving Results and Why Leaders Fail
12 Leadership and Personality Analysis—How to Use That Information to Influence
13 Consulting Leadership—Important Elements and Why They Have Been So Successful
14 A Tactical Leadership Approach—The Identification and Elimination of Roadblocks
15 Understanding Organizational Models and the Associated Impact on Process Leadership
16 Executive Leadership, Expectations on MBBs and Alignment for the Greatest Gain
17 Cost Reduction Leadership—Delivering the $$ That the CEOs Have Come to Expect
18 Value Chain Leadership and How to Use It for Customer and Internal Innovation
19 Organizational Excellence Leadership—What It Is and How to Achieve It
20 Technical Leadership—Harnessing Technology to Reduce Defects and Reduce Cycle Time
21 Knowledge Management Leadership, System Integration, and Data Intelligence
22 Root Cause Analysis Leadership—Making Change Last
23 Thinking "Out of the Box"—Skills or Process Leadership
24 Project Selection Leadership—Moving the Big Ys on the Corporate Radar Screen
25 Performance Leadership—How to Put the Right Equations Together for Total Optimization
26 Change Agent Leadership—Know Who Can and Can’t Change Corporate Culture
27 Metrics Leadership—The Best Metrics, and How Many Metrics Are Too Many
28 Collection and Analysis of Metrics for the Entire Business—Packaging Content Counts
29 Team Leadership—How to Make Team Output Greater Than the Sum of Its Parts
30 Benchmarking Leadership—The Best and the Worst Cases and How to Apply the Best
31 What Is Lean Leadership and How Do You Best Approach Tough Decisions
32 Review the Most Fruitful Areas for MBB focus
33 Internal Tools to Best Enable MBB Success
34 Advanced Leadership Case Study
Day Two
1 III. Advanced Concepts, Topics, and Tools
3 DOE Revisited
4 Advanced Business Examples
5 Advanced Topics in Quality Function Deployment
6 Advanced Business Examples
7 Advanced Topics in Total Six Sigma
8 Advanced Business Examples
9 Advanced Case Study with Minitab or QI Macros
11 IV. Advanced Facilitation Skills
13 What Makes a Great Facilitator?
14 When to Facilitate
15 How to Facilitate
16 What Should the Results Look Like from a Great Facilitation Session?
17 Advanced Facilitation Tools and Techniques
18 Advanced Business Examples
19 Exercises
Day Three
1 V. Advanced Concepts, Topics, and Tools
3 Full-Factorial Designs
4 Advanced Business Examples
5 Fractional Designs
6 Advanced Business Examples
7 Advanced Topics in Discrete Data Analysis
8 Advanced Business Examples
9 Control Charts Revisited
10 Advanced Business Examples
11 Advanced Case Studies with Minitab
13 VI. Advanced Technical Skills
15 15 Ways Technology is Transforming Corporate Strategy and Processes
16 Data Warehousing
17 Creating Centers of Excellence
18 Business-to-Business Internet Marketing and Sales
19 Building a Successful Extranet
20 E-Commerce Leadership and How to Create a Portfolio of Transactional Processes
21 Customer Relationship Management Tools and Techniques
22 Supply Chain Management Tools and Techniques
23 Business Online
24 Leading Digital Change
25 Making the Most of Digital Value
26 Area Activity Analysis
27 Seamless Organizational Processes
28 Advanced Business Examples
29 Exercises
Day Four
1 VII. Advanced Concepts, Topics, and Tools
3 Advanced Transformation Topics
4 Advanced Business Examples
5 Advanced EWMA Topics
6 Advanced Business Examples
7 Advanced Case Studies with Minitab
9 VIII. Advanced Project Management Skills
11 DMAIC Advanced Project Topics
12 DFSS Advanced Project Topics
13 BPMS Advanced Project Topics
14 Tools and Techniques to Manage Multiple Six Sigma Projects
15 Multi-tasking
16 Coaching—Professional Teams Have Coaches, So Why Is a 50 Percent Season a Success?
17 Mentoring—The Areas that Black Belts Request the Most
18 Escalation Policies and Pulling the Plug on Bad Projects
19 Communications Planning
20 Complete Project Management Process Review—Inputs and Outputs
21 Software Development Models and When to Use Each
22 How DMAIC Maps to the Project Management Life Cycle and System Development Life Cycle (SDLC)
23 The CMM (SEI) Model—What It Is and What the Levels of Certification Are
24 Risk Analysis Models—Contingency and Disaster Recovery Planning
25 DMAIC Project Template (best practices)
26 DFSS Project Template (best practices)
27 Quality Management and Variance Analysis for Project Managers
28 Advanced Business Examples
29 Exercises
Day Five
1 IX. Advanced Concepts, Topics, and Tools
3 Multiple Regression Analysis and Forecasting Models/Advanced Business Examples
4 Taguchi Concepts
5 Advanced Business Examples
6 TRIZ
7 Advanced Business Examples
8 Advanced Case Studies with Minitab or QI Macros
10 X. Master Black Belt Certification Exam
12 Certification Exam
13 Final Certification Assessment
Black Belt Training
Six Sigma initiatives should be customer-focused and project-driven. Research shows, however, that even the most efficient Six Sigma organizations launch process improvement projects without aligning deliverables with "Customer Critical to Quality Requirements" (CTQs), focus too much on statistical packages that are not completely understood by Project Managers, and many projects fail because of a distinct lack of project management skills. This four-week course covers the critical aspects of how to align customer CTQs and analyze data results with "easy-to-use" Microsoft Excel packages, and also covers the most important aspects of leading projects in a Six Sigma environment.
The Black Belt Certification program targets those professionals who will implement projects in a Six Sigma environment. The average cost to train a Black Belt is between $30,000 and $40,000.
The powerful tools, techniques, and software which are used in this course will allow those individuals who attend the course to provide immediate value to their operation.
This four-week training program is directed toward those professionals who will lead Six Sigma Projects (pre-requisite is Green Belt Training). The classes are typically held for five days and then the attendees go back to their organization for three weeks to apply what they learned. The total program covers four months.
Points of interest include the following:
• Enterprise Deployment
• Focusing on the Customer
• Business Process Improvement
• Project Management Topics
• Define—Complete Review
• House of Quality
• Quality Function Deployment
• Probability Distributions
• Measure—Complete Review
• Sampling Techniques
• Analyze—Complete Review
• ANalysis Of VAriance between groups (ANOVA)
• DOE
• Simple Regression
• Improve—Complete Analysis
• Hypothesis Testing
• Control—Complete Analysis
• Control Charts
• Close Out—Complete Analysis
• Introduction to "Lean" Thinking
Course Outline
I. Enterprise-Wide Deployment
• Why Companies Initiate Six Sigma
• How Companies Initiate the Six Sigma Effort
• The Evolution of Six Sigma
• Six Sigma as a Gauge for Corporate Success
• Six Sigma Roles and Responsibilities
• Six Sigma Deployment Models
• Poor Quality Cost
• Introduction to DMAIC and DMADV
• Six Sigma Implementation Methodology Five Absolutes
• Preparing Leaders to Launch and Guide the Six Sigma Effort
• Green Belt, Black Belt, and Master Black Belt
• Political Challenges
• Healthcare Industry—Six Sigma Case Study
• II. Process Improvement
• What Is Process Improvement?
• What Does Process Improvement Have to Do with Six Sigma?
• Business Processes and Six Sigma
• Process Flow Structures
• Process Disruption in Large Organizations
• Process Measures of Capability
• Process Mapping
• Process Tools and Techniques
• Processes in Virtual Organizations
• Suppliers Inputs Process Outputs Customer (SIPOC)
• Case Study
• III. Project Management
• The Project Management Life Cycle
• Project Management Process Analysis
• Roles and Responsibilities Reviews
• Project Management Variance Analysis
• Earned Value and How to Use It Successfully
• Project Initiation Analysis and Six Sigma
• Project Planning Analysis and Six Sigma
• Project Implementation Analysis and Six Sigma
• Project Control Analysis and Six Sigma
• Project Closeout Analysis and Six Sigma
• Risk Analysis and the WBS
• Contingency Planning
• DMAIC Project Template Review
• Reengineering Project Template Review
• Case Study
• IV. Define
• Define Model
• Tools and Concepts
• Process Mapping
• Voice of the Customer
• SIPOC
• Kano Model
• CTQ Matrix
• Quality Function Deployment
• V. Measure (Laptop Required)
• Measure Model
• Discrete and Continuous Data
• Definition of Defect Opportunity
• Calculating Process Sigma
• Descriptive Statistics
• Measures of Central Tendency
• Measures of Dispersion
• Run Charts
• Sampling Techniques
• Data Collection Approach
• Introduction of Statistical Software
• VI. Analyze (Laptop Required)
• Analyze Model
• Application of Discrete Data
• Chi Square Test
• Binomial Distribution
• ANOVA
• Poisson’s Distribution
• Uni-Variate and Bi-Variate Analysis
• Hypothesis Testing
• T-Tests
• Relevant Tools and Concepts Using Control Charts
• Pareto Analysis
• Cause and Effect
• Root Cause Analysis
• Affinity Diagrams
• Regression Analysis
• VII. Improve
• Relevant Tools and Concepts
• Design of Experiments
• Introduction
• Terminology
• Planning and Organizing Experiments
• Randomized and Randomized Block Designs
• Full Factorial Experiments
• Fractional Factorial Experiments
• Taguchi Robustness Concepts
• FMEA Risk Model
• VIII. Control
• Control Model
• Control Analysis
• Control Charts
• Control Charts for Variable Data
• Control Charts for Attributes Data
• Interpreting Data
• Closeout Model
• Post Process Audits
• X. Design for Six Sigma (DFSS)
• DFSS Explained
• When to Use DFSS
• DFSS Process
• Paradigm Analysis
• Idealized Design
• Prototype
• XI. Green Belt Training
• Adult Learning Methods
• Preparing to Teach Potential Green Belts
• Five-day Green Belt Training Course Materials and Schedule
• Developing Exercises
CERTIFICATION EXAM (Black Belt)
• Certification Exam—120 minutes
• Final Certification Assessment
Green Belt Training
“They call them Green Belts because they save lots of greenbacks (dollars).”
—H. James Harrington
Global competition, cost-cutting, outsourcing, customer turnover, changing technology, global competition, and a challenging economy have battered many companies to the brink of bankruptcy. Time waits for no one, and only those organizations best adapted to these changing conditions survive in today’s tough business environment. From the optimization of operational efficiencies to shorter cycle time to value-added customer partnerships, the philosophy and application of Six Sigma best practices are optimizing the very nature and culture of successful businesses around the world. Green Belts, too, have the opportunity to significantly contribute to the success of the company.
The Green Belt Certification training is targeted to those professionals who operate at the team member level. These critical professionals, who make the greatest contribution toward the successful outcome of process improvement projects, will find extreme value in the course. The powerful tools, techniques, and software that are used in this course will allow those individuals who attend the course to provide immediate value to their operation.
The ten days of instruction are typically spread throughout a one-month period to provide time for participants to apply what they learn and receive guidance and project mentoring from course instructors at no additional charge. This is a two-week training program; this course is designed for anyone who will be directly involved with Six Sigma Project as a Team Member. The average cost to train a Green Belt is $7,500.
We will not discuss the details of the Green Belt class because we covered it earlier in this chapter.
Yellow Belt Training
The Yellow Belts (sometimes called White Belts) are individuals who have received fundamental Six Sigma training. They often help to solve problems by inputting their personal experience and expertise to work on an SST. They also often help collect data that is used by the SST. This training allows them to solve the day-to-day problems they face. The Yellow Belt training is a three-day class that covers the following:
• What the Six Sigma process is about
• How does Six Sigma apply to them
• Six Sigma goals and metrics
• Six Sigma teams
• How to be a part of an SST
• Six Sigma implementation and management
• Creating customer-driven organizations
• Selecting and tracking Six Sigma projects
• How the Six Sigma System works
• Simple Six Sigma tools
• Fast action solution teams (FAST)
• Area Activity Analysis (AAA)
The course is designed to provide a broad understanding of the Six Sigma improvement methodology, concepts, and language, along with a complete toolbox of basic process improvement methods applied within the Six Sigma System, including basic statistical process control charts. Individuals who have completed the Blue Belt training only need one day of training to bring them up to the Yellow Belt level.
Blue Belt Training
“Organizations that don’t use Blue Belts usually stop their Six Sigma projects without changing the organization’s culture.”
—H. James Harrington
The Blue Belts improvement effort is directed at continuously improving the work that goes on in their assigned natural work team. Management looks to them to improve their output between 5 to 15 percent each year by working smarter, not harder. This requires them to be well trained in basic problem analysis and solving tools. They take a two- to three-day class that covers the following topics:
• How teams function
• What the Six Sigma processes are about
• How Six Sigma applies to them
• How to define who their customers are
• The seven basic problem-solving tools
• How to flowchart their process
• Area Activity Analysis
• How to be more creative
• Simple statistics
Training—The Starting Point
•I hear, I forget
I see, I remember
I do, I understand.”
—Chinese Proverb
Training is just the beginning of the learning and using process. There is a long road to travel from the time you complete a Six Sigma class until you have mastered what you were presented. Bloom’s Taxonomy[13] points out that there are six levels of learning and using: Benjamin Bloom created this taxonomy for categorizing the level of abstraction of questions that commonly occur in educational settings. The taxonomy provides a useful structure in which to categorize test questions, since professors will characteristically ask questions within particular levels, and if you can determine the levels of questions that will appear on your exams, you will be able to study using appropriate strategies.
1. Remember. The ability to remember what was presented (recognition, recall, or rote knowledge). Hopefully the training brings you up to this level.
2. Understanding. The ability to read and interpret data, reports, graphs, tables, and so on.
3. Apply. The ability to apply what you have learned to the assigned tasks.
4. Analyze. The ability to break down information into its constituent parts and recognize the relationships in complex scenarios.
5. Evaluate. The ability to make sound judgment calls related to the information you have selected to generate new ideas and solutions and to develop value propositions.
6. Create. The ability to look at the different parts and different situations to see patterns and/or structures and put them together in a way that has never been done before.
It takes time, effort, and experience to move from Level 1 to Level 6. Each time a Green or Black Belt cycles through a project, he/she becomes closer to becoming a Level-6 performer.
Activity 4—Selecting the Six Sigma Projects
“The best time to stop a poor project is before you begin it.”
—H. James Harrington
“Right now, there is little true focus on that (preventing disease rather than treating illness). There’s a bit of lip service to it, and there’s a lot of talk about anti-smoking and fitness and keeping your weight down.”
—Michael Porter, Professor, Harvard Business Review
Now is an excellent time to look at what the HCP is doing and where it wants to go. The HCP of the future must offer the best quality at the lowest cost and that only the sickest patients will require hospital care. This means that the HCP must look at the services they provide from a strategic marketing perspective. The buying power or influence has shifted; the customer has become elusive. Who is the HCP customer—the patient, the employee, the employee’s family, the healthcare plan member, the insurer, and/or the physician? Which one is the HCP customer? Or maybe they all are? At least the healthcare system has to be value-added to each of them.
The following will help the HCP accomplish this task and identify major improvement opportunities:
• Define the impact of managed-care penetration on the hospital:
• Identify how many hospital patients and potential patients belong to capitated health plans.
• Estimate the penetration of managed-care patients over the next three to five years.
• Estimate the impact of managed-care revenue on the hospital’s total revenue stream over the next three to five years.
• Identify the cost structure required to cover operating costs and achieve targeted margins.
• Compare the required cost structure to the hospital’s current cost structure to show the need for dramatic change.
• Define patient-population-change trends over the next five years, considering the aging patient population. (For example, the number of acute-care beds occupied each day has dropped 25 to 30 percent in most competitive HCP markets. At about $1,000/day for an acute-care bed, that is a lot of money.)
• Analyze competitor’s business trends and estimate their impact on the HCP.
• Define the HCP core capabilities and competencies.
• Identify best practices and best-practices trends in the industries.
• Profile the potential customer base.
• Profile other stakeholders.
• Define new and/or improved services that are needed.
• Define and evaluate major processes.
• Define probable market scenarios (for example, an HMO decides not to approve the HCP for services).
This type of analysis should lead to a five-year improvement plan that will identify many improvement opportunities over a number of years. It is also a good time to define who the stakeholders are and what they will expect from the HCP system. Performance measurements and targets need to be established. They are called Key Performance Indicators (KPIs), and should relate to the stakeholder expectations, which typically are the following:
• Patients. Trust and belief that they are getting the best professional and personal care.
• Health Plan Provider. Low cost with effective results/total value-added activities. No unjustified activities. Follow standard procedure.
• PCPs (Primary Care Physicians). Effective access to patient records and participation in patient planning and monitoring.
• Specialists. Instantaneous response to patient test requests.
The Group Health Corporation of Puget Sound, Seattle, Washington, when they were developing their business goals and operations, defined their changing environment as shown in Table 11.3.
Table 11.3. Group Health Corporation Changing Environment
“ Those little cards inserted with bills or set on table tops are not designed to elicit an accurate measure of the customer’s experience with that company. They’ll give some tepid information on the level of customer satisfaction, but they are not a useful complaint system.”
—James G. Shaw, CEO, Shaw Resources
During the first Executive Team training session, the executives agreed on a set of guidelines that would be used to qualify projects as Six Sigma projects. Typical guidelines require
• The solution should have a significant impact upon the external customer’s perception of the organization and/or satisfaction.
• The solution should result in a minimum savings of $200,000.
• The solution was not one that was being already addressed.
• The solution will be implemented within 90 days from the start of the project.
• The solution had a significant impact upon the business performance/processes.
• The impact of the solution can be measured and documented.
“The measurements or indicators you select should best represent the factors that lead to improved healthcare outcomes; improved customer, operational, and financial performance; and healthier communities. A comprehensive set of measures or indicators tied to patient/customer and/or organizational performance requirements represents a clear basis of aligning all processes with your organization’s goals.”[14]
—Harry S. Hertz
“In fact, one and a half points of customer satisfaction drive about one point more loyalty. In North America alone, that translates into more than $2 billion in incremental revenue and roughly $100 million in profit.”[15]
—Louise Goeser, Ford’s Vice President of Quality
Process Maturity Grid
In Phase I (Activity 3), a list of the major core processes were developed. Now is the time to evaluate each of these processes, using the Process Maturity Grid. The grid has six levels, with Level 6 being the lowest level (unknown status). Level 2 (error-free) is the Six Sigma Level. Level 1 should be the target that every organization should be striving to reach. This Maturity Grid was developed by Ernst & Young in 1989 and has been used to define process maturity every since. It can be used to measure your progress to improve your process. We do not recommend that all your processes reach the Level 1 development state, but at least all of your major processes should be at that level.
“Too few organizations understand how good their processes can be since they have no measure of how good they can be.”
—H. James Harrington
Introduction to the Process Maturity Grid
Qualification usually is a one-time event because it is designed to validate that the process can perform to its designed specification. But today, organizations that wish to excel have expanded this concept to evaluate the maturity of their business processes. (For example, the software industry has agreed to a five-level process development maturity grid.) We like to use a six-level maturity grid for all business processes (see Table 11.4).
Table 11.4. Six Levels of the Process Maturity Grid
To determine whether the process has evolved to the next level, eight major change areas are addressed:
• End-Customer Related Measurements
• Process Measurements and/or Performance
• Supplier Performance
• Documentation
• Training
• Benchmarking
• Process Adaptability
• Continuous Improvement
For each level, a set of requirements has been established. The requirements are more stringent as you move up in levels. Until the process is evaluated, it is considered to be at Level 6. Figure 11.29 shows the six levels versus eight items. As the color gets darker, the requirements become closer to world class.
Note: The darker the color, the better the performance.
Figure 11.29. Six levels versus eight items
“Don’t make the mistake of trying to run when you are still trying to walk.”
—H. James Harrington
Requirements to Be Qualified at Level 5
Qualification Level 5 signifies that the process design is understood by the SST and is operating to the prescribed documentation.
All processes are classified as Level 6 until sufficient data has been collected to determine their true status. Normally, processes move from a qualification Level 6 to a qualification Level 5. To be qualified at any level, all the criteria in each of the eight major change areas (for example, supplier performance, process measurements, and/or performance) must be met or exceeded. Those for Level 5 are
• End-Customer Related Measurements
• Measurements reflect the end-customer’s view of the process.
• End-customer requirements are documented.
• End-customer feedback system is established.
• End-customer effectiveness charts are posted and updated.
• Process Measurements and/or Performance
• Overall effectiveness and efficiency are measured and posted where they can be seen by employees.
• Effectiveness and efficiency targets are set.
• Process operational and/or control weaknesses are evaluated and meet minimum requirements.
• Supplier Performance
• All suppliers are identified.
• Documentation
• Process Is Defined and Flowcharted
• Flowchart accuracy is verified.
• Documentation is followed.
• SST members and process owners are named.
• SST mission is documented.
• Process boundaries are defined.
• Training
• SST is trained in the basic tools and the fundamental BPI tools.
• In-process training needs are evaluated and documented.
• Resources are assigned to support training needs.
• Benchmarking
• Not required.
• Process Adaptability
• Not required.
• Continuous Improvement
• Basics of BPI are in place.
• All major exposures are identified, and action plans are in place.
• A detailed plan to improve the process to the Level 4 is agreed to and funded.
Requirements to Be Qualified at Level 4
When a process evolves to qualification Level 4, it is called an effective process. Processes qualified at Level 4 have a systematic measurement system in place that ensures end-customer expectations are met. The process has started to be streamlined.
To be qualified at Level 4, the process must be able to meet all the requirements for the qualification Level 5, plus the following requirements:
• End-Customer Related Measurements
• End-customer requirements are met.
• End-customer expectations are documented.
• Process Measurements and/or Performance
• Overall effectiveness targets are met, and challenge targets are established by the SST.
• Poor-quality cost measurements are developed.
• Some internal efficiency measurements are established.
• Internal effectiveness measurements and targets are 50 percent complete and posted.
• Overall process cycle time and cost are defined.
• No significant effectiveness, efficiency, or control exposures exist.
• Substantial improvement activities are underway.
• Supplier Performance
• Meetings are held with critical suppliers, and agreed-to input requirements are documented.
• All critical suppliers meet input requirements.
• Documentation
• Process is flowcharted, and documents are updated.
• Overall process is fully documented.
• Documentation of sub-processes starts.
• Readability is evaluated.
• Training
• In-process job training procedures are developed for all critical activities.
• People are assigned to conduct job and process training.
• SST is trained in statistical process control.
• Benchmarking
• Plan exists to benchmark end-customer requirements.
• Process Adaptability
• Data is collected that identifies problems with present process adaptability.
• Continuous Improvement
• Process is operational, and control weaknesses are assessed and deemed containable.
• A plan for improving the process to Level 3 is prepared, approved, and funded.
• The process philosophy accepts that people make mistakes, provided everyone works relentlessly to find and remove causes of errors.
Requirements to Be Qualified at Level 3
When a process evolves to qualification Level 3, it is called an efficient process. Processes qualified at Level 3 have completed the streamlining activities, and there has been a significant improvement in the efficiency of the process.
To be qualified at Level 3, the process must be able to meet all the requirements for qualification Levels 5 and 4, plus the following:
• End-Customer Related Measurements
• End-customer expectations are met.
• Challenge targets are set by the SST.
• Process Measurements and/or Performance
• There is a significant improvement in Poor Quality Cost (PQC).
• Internal effectiveness and efficiency measurements are in place and are posted, with targets set by the affected areas.
• There is a significant reduction in cycle time, and in the amount of bureaucracy.
• Overall efficiency targets are met.
• Most measurements show an improvement trend.
• Key process control points are identified.
• Tangible, measurable results are realized.
• Supplier Performance
• Meetings are held with all suppliers, and agreed-to input requirements are documented.
• All critical suppliers meet input requirements.
• Documentation
• Sub-processes are documented.
• Training requirements are documented.
• Software controls are in place.
• The readability level of all documents is at a grade level less than the minimum education of the people using them.
• Employees understand their job descriptions.
• Training
• All people performing critical jobs are trained in the new procedures, including job-related training.
• In-process job training procedures are developed for all activities.
• Plans are in place to train all employees, who are part of the process, in team methods and problem-solving tools.
• SST understands one or more of the BPI 10 sophisticated tools.
• All employees in the process receive training on the total process operation.
• Benchmarking
• End-customer requirements are benchmarked.
• Plan exists to benchmark critical activities.
• Plan exists to benchmark the process.
• Process Adaptability
• Employees are trained to distinguish how far they can deviate from the established procedures to meet a customer’s special needs.
• Future process change requirements are projected.
• A proactive internal and external customer complaint system is established.
• The end-customer reviews the process change plan and agrees that it meets his or her needs over the strategic period.
Continuous Improvement
• A plan to improve the process to the Level 2 is developed, approved, and funded.
Requirements to Be Qualified at Level 2
When a process has evolved to qualification Level 2, it is called an error-free process. Processes qualified at Level 2 are highly effective and efficient. Both external and internal customer expectations are measured and met. Rarely is there a problem within the process. Schedules are always met, and stress levels are low.
To be qualified at Level 2, the process must be able to meet all the requirements for the previous qualification levels, plus the following requirements:
• End-Customer Related Measurements
• End-customer expectations are updated.
• Performance for the last six months never fell below end-customer expectations.
• The trend lines show continuous improvement.
• World-class targets are established.
• End-customers are invited to regular performance reviews.
• End-customer desires are understood.
Process Measurements/Performance
• All measurements show an improvement.
• Benchmark targets are defined for external customers and critical in-process activities.
• In-process control charts are implemented as appropriate and the process is under statistical control.
• Feedback systems are in place close to the point where the work is being done.
• Most measurements are made by the person doing the job.
• There is tangible and measurable improvement in the in-process measurements.
• No operational inefficiencies are anticipated.
• An independent audit plan is in place and working.
• The process is error-free.
Supplier Performance
• All supplier inputs meet requirements for the last three months.
• Regular meetings are held to ensure that suppliers understand the changing needs and expectations of the process.
Documentation
• Change level controls are in place.
• Documents are systematically updated.
Training
• All employees in the process are trained and scheduled for refresher courses.
• Employee evaluation of their training process is complete, and the training meets all employee requirements.
• Team and problem-solving courses are complete. Employees are meeting regularly to solve problems.
Benchmarking
• Process is benchmarked, and targets are assigned.
• SST understands the keys to the benchmark organization’s performance.
Process Adaptability
• Employees are empowered to provide the required emergency help to their customers, and are measured accordingly.
• Resources are committed to satisfy future customer needs.
• Process adaptability complaints are significantly reduced.
Continuous Improvement
• The process philosophy evolves to the point at which errors are unacceptable.
• Everyone works relentlessly to prevent errors from occurring, even once.
• Surveys of the employees show that the process is easier to use.
• Plans to improve the process to Level 1 are prepared, approved, and funded.
• The process measurement trendline indicates that the process has improved at an annual rate of at least 10 percent in 75 percent of the measurements, and there are no negative trends.
Requirements to Be Qualified at Level 1
Qualification Level 1 is the highest qualification level. It indicates that the process is one of the ten best processes of its kind in the world, or it is in the top 10 percent of like processes, whichever has the smallest population.
Processes that reach qualification Level 1 are called world-class processes. Processes qualified at Level 1 have proved that they are among the best in the world. These processes are often benchmark target processes for other organizations. As a rule, few processes in an organization ever get this good. Processes that reach Level 1 truly are world-class, and continue to improve so they keep their world-class process status.
To be qualified at Level 1, the process must be able to meet all the requirements for the previous qualification levels, plus the following:
• End-Customer Related Measurements
• End-customer expectation targets are regularly updated, and always exceeded.
• World-class measurements are met for a minimum of three consecutive months.
• Many of the end-customer desires are met.
• Process Measurements and/or Performance
• All measurements exceed those of the benchmark organization for three months.
• Effectiveness measurements indicate that the process is error-free for all the end-customers and in-process control points.
• Supplier Performance
• All suppliers meet process expectations.
• All suppliers meet process requirements for a minimum of six months.
• Documentation
• All documents meet world-class standards for the process being improved.
• Training
• Employees are regularly surveyed to define additional training needs, and new training programs are implemented based on these surveys.
• Benchmarking
• Ongoing benchmarking plan is implemented.
• Process Adaptability
• In the last six months, no customers complained that the process did not meet their needs.
• Present process handles the exceptions better than the benchmark organization’s process.
• Continuous Improvement
• All process measurement trend lines indicate that the process is improving at an annual rate of at least 15 percent.
• An independent audit verifies world-class status.
• Plans are approved and in place to become even better.
It is important to note that the goal for all Level 1 processes is to go beyond world-class to become the best-of-breed process. Although some processes become "best-of-breed" for short periods of time, it is very difficult to stay number 1. It requires a great deal of work and creativity, but the personal satisfaction is well worth it.
For more information related to process maturity grids, read Dr. Harrington’s book, Business Process Improvement (McGraw-Hill, 1991).
Making the Selection
“Measure twice, cut once.”
—The Carpenter’s Rule
An initial list of Six Sigma opportunities was developed by the executive committee during Phase I that was not addressed in the Pilot Phase. This provides the start for the potential Six Sigma project list. During Phase II and III, the Six Sigma Champion Black Belt and pilot teams should be instructed to search out and turn in any other Six Sigma opportunities that they run across. These are added to the potential Six Sigma project list. An opportunity must have the following supporting data:
• Definition of the opportunity
• The benefits to the organization if the opportunity is taken advantage of
• An estimate of the dollar savings
• A definition of what parts of the organization will be affected and how will they be affected
Often ideas are submitted to the Six Sigma Champion that had not been thoroughly evaluated and quantified. In many cases, the Six Sigma Champion or the Black Belt will need to collect additional required data. The Six Sigma Champion should personally be able to support the input data before it is submitted to the Executive Team.
The initial selection of Six Sigma projects will be made at the second Executive Team training class. Each executive will be instructed to bring to the class one or two of their projects that they would like to have an SST work on. These inputs will be added to the potential Six Sigma project list.
Now the first inclination is to ask the question, "Why not do all of them right away? After all, each one will add at least $200,000 to the bottom line." That’s a very good point, but if you did all of them at once, probably it would have a major impact upon your ability to meet your commitments to your present customers. That is why you need to slow down and consider how many resources you can afford to devote to the Six Sigma System.
The first decision that the Executive Team needs to make is, "Will Black Belts be assigned full-time as the Six Sigma best practices recommends?" Remember BBs should be very proficient people who have a good future with the organization. It is a major decision to take these high-potential individuals and pull them out of the normal workflow for one or two years. It is also a major career decision for the individual.
We suggest that you start this activity by selecting three to five full-time Black Belts that will be assigned to one to three projects. Too often, the Black Belts are selected because they have some specific skills needed to solve a specific problem. This is a bad practice. The Black Belt should be a person that can effectively manage many projects at the same time, not someone who can solve a specific problem. Select them because they are people you want to develop for future higher-level management assignments. By selecting an individual, you are in effect putting him/her on the fast track to the top.
The next step is for the Six Sigma Champion to lead the Executive Team through a prioritization process similar to the one defined in Phase I. The objective of this prioritization process is to identify one to three projects that will be assigned to each of the designated future Black Belts. For each of these assigned projects, the Executive Team should clearly document what it considers acceptable results from the project and the project time frame to complete the project. After the Black Belts are trained and the initial projects are well underway, the Six Sigma Champion can assign additional projects to them.
There will be a continuous flow of requests for Six Sigma projects coming in from the various managers throughout the HCP as the various departments gain better understanding of the Six Sigma process. This means that the potential Six Sigma project list will need to be prioritized from time to time and, as the Six Sigma System grows and gains momentum, you will want to add many more Black and Green Belts. (The normal ratio is for 1 Black Belt to every 100 HCP employees, and 1 Green Belt for 20 HCP employees. This means if the HCP has 2,000 employees, you will end up with 20 Black Belts and 100 Green Belts by the end of the first year.)
The Executive Team should set high-improvement objectives for each project and each Black Belt. Jack Welch, when he was chairman of GE, was willing to ask the organization to make improvements at seemingly impossible levels and rates. This is what Dr. W. Edwards Deming called "Arbitrary Number Goals" and "Cheerleading." But, it worked for GE and it can work for your organization. Sometimes you need a cheerleader to keep you trying to do your very best.
Activity 5—Forming the SSTs
“Successful companies achieve average savings of $400,000 to $600,000 per ’Black Belt’ project and add millions of dollars to the bottom line.”[16]
—Steven A. Zinkgraf, Author
The Executive Team should identify the Black Belts and assign projects to them. If the selected Black Belts were part of the Pilot Phase and have been certified as Green Belts, you have a good start to move ahead rapidly to provide them with the skills required to perform as a Black Belt. All of a sudden managers want their star people to become Black Belts because they want them working on their pet projects. In addition, many employees see the Black Belt assignment as a very positive career move. As a result, you will have two types of Black Belt candidates:
• Certified Green Belts
• Employees with no Six Sigma training
Let’s look closely at these two types of candidates.
The Black Belt Candidates Who Are Certified Green Belts
These Black Belt candidates were good performers during the Pilot Phase and passed the Green Belt examination. In this case, the potential Black Belts can attend a five-day class to prepare them to manage the SSTs that will provide them with enough skills to get through the Define and Measurement phases of the Six Sigma process. Thirty days later, they should take another five-day class to provide them with the information they need to get through the Analyze, Improve, and Control phases. With this approach, the candidates can bring data related to the project that they are assigned to and work on it during this second five-day training program. At the end of their first project, they should attend a three-day class to exchange experience and to provide them with additional detailed tools and approaches. At the end of the three-day class, they will be given a two-hour examination. Those who pass the examination will be certified as Black Belts.
Black Belt Candidates with No Six Sigma Training
In this case, the candidate has not worked on a Six Sigma project, and it will be important for him/her to get trained very fast. We suggest that this individual take the Green Belt training with the other SST members for one week and then take the first week of the Black Belt training. Two weeks later, he/she should take the second week of the Black Belt training. The third week of the Black Belt training will follow about two weeks later. At the end of the first project, the candidate should attend a five-day Black Belt training program that will end with the Black Belt exam. The following is a timeline for this training:
• Week I: Green Belt Training with SST
• Week II: First Week of Black Belt Training
• Week V: Second Week of Black Belt Training
• Week VIII: Third Week of Black Belt Training
• Week XII: Fourth Week of Black Belt Training and Exam
The Master Black Belt or the Six Sigma consultant should work closely with these types of Black Belt candidates during the first project.
What If the Candidate Fails the Black Belt Exam?
“The wisest of the wise may err.”
—Aeschylus
This represents a very difficult decision for the Executive Team. If the Black Belt candidate is dropped from the Six Sigma initiative and put back into his/her old assignment, it is very embarrassing for everyone. On the other hand, you cannot afford to have a poorly-skilled individual assigned full time to the Black Belt activities. Based upon our experience and the results of other Six Sigma certification exams, it is not unusual for only 70 percent of the candidates to pass the Black Belt exam the first time.
We recommend the following to our clients when a Black Belt candidate fails to pass the exam:
• Determine if the candidate just barely failed (for example, their grade was 65 and the passing grade is 70) but the project results were acceptable. In this case, we let them conduct another project and repeat the fourth week of the Black Belt training and re-take the exam.
• For individuals whose grades were below 60, we recommend that input be collected from the Six Sigma Champion, the Master Black Belt, and the individual’s instructor to determine if they feel that the individual had been really trying and was capable of succeeding. If there is common agreement that the individual tried and is capable and the results of the project he/she is working on were satisfactory, we would suggest that you give the individual another three months to complete one or more projects. After this time, the candidate should then repeat the fourth week of Black Belt training and re-take the exam. Throughout this probationary cycle, the Master Black Belt should work closely with the individual. Of course, the individual should be informed that failure to pass the test on the second try would mean that he/she will be re-assigned.
Note
Some organizations that believe the Six Sigma System has an excellent chance of being adopted by their organization will set aside three to four Black Belts to go through a conventional four-month Black Belt training program in parallel with the Pilot Phase. This allows them to have a group of trained Black Belts on hand when they enter the Implementation Phase.
Activity 6—Executing the Projects
“Great works are not performed by strength, but by perseverance.”
—Samuel Johnson
Now that Black Belts or Black Belt candidates have been prepared to form SSTs, the real benefit from the Six Sigma System is close to being realized. The procedures that the Black Belt or Black Belt candidates should go through to form a SST and the SST’s activities during the project were discussed in the Pilot Phase of this chapter so they will not be repeated here.
When to Use DMAIC and DMADV
DMAIC is used under the following conditions:
• A process exists.
• Customer needs can be met by changing the existing process.
• The project is part of an on-going continuous improvement activity.
• Only a single process needs to be changed.
• A single customer performance requirement needs to change.
• Competitor’s performance is stable.
• Customer’s purchase behavior is stable.
• Technology is stable.
Examples of DMAIC problem-solving methods:
• Reduce the cycle time to process a patent.
• Reduce the number of customer complaints about incorrect records.
• Increase the number of prompts on the customer service system.
• Reduce the number of errors in sales’ leads lists.
• Improve search time for critical information.
DMADV is used under the following conditions:
• No process exists.
• Existing processes have reached the limits of its capability.
• Project is of strategic importance.
• Multiple processes need to be changed.
• Multiple customer performance requirements need to be addressed.
• Competitor’s performance is dramatically improving.
• Customer’s behaviors are changing.
• Technology is evolving.
Examples of procedures that the DMADV development method is designed to address:
• Add a new service.
• Reduce the total number of customer complaints.
• Create a multiple-source lead tracking system.
• Create a real-time access to live help.
Activity 7—Internalizing the Six Sigma Culture
“Changing the culture of an institute is a slow process, and one that is best not rushed. If the effects of TQM are to be lasting, people have to want to be on board.”
—Edward Salis
Six Sigma is not just SSTs attacking major problems throughout the organization. It’s about a new culture that requires everyone doing near-perfect work all the time. It looks impressive to have a team work on a problem for three months and save $200,000 dollars, but it is often better to have 5,000 small problems solved that saved $1,000 each. Yes, this small savings adds up to real big profits fast. The organization needs to get everyone thinking Six Sigma and Lean. If a process has 800 activities in it with an average of three failure opportunities in each activity, that’s 2,400 different failure opportunities that need to be analyzed and improved to the Six Sigma level. Of course, that is an impractical and impossible task if you are assigning an SST to each opportunity. If the SST spends three months on each failure opportunity, that would require 600 years just to do one process. Of course, this is ridiculous. It is the individuals doing the work every day that brings a Six Sigma culture into the organization. This can only be accomplished when each natural work team understands its processes and is committed to supplying the internal and external customers of these processes with Six Sigma level output. A Natural Work Team (NWT), sometimes called a Natural Work Group (NWG), is any group of people who are assigned to work together and report to the same manager or supervisor.
Each natural work team and each individual in that natural work team needs to understand that he/she has a customer for their output; that customer maybe the person who is sitting beside them, the person that is across the room, the person that’s in the next building, or maybe an external customer to the organization. These customers all have needs and expectations of the inputs they receive. All excellent organizations realize that they need to listen to the voice of both the internal and external customer if they are going to survive. This applies to every nurse, doctor, nurse’s aid, lab technician, accountant, manager, and janitor. The real Six Sigma challenge is how you get each member of the HCP performing at the Six Sigma level. It is even difficult to define the number of failure opportunities at the individual levels. First, think about how many failure opportunities a manager has each day—a hundred, a thousand, ten thousand, and a hundred thousand? How many error opportunities does a doctor, nurse, accountant, x-ray technician, and so on, have? And is it even worth while calculating all the potential error opportunities and measuring them? Many HCPs believe that the concept of error opportunities is legitimate, and taking the time to establish an accurate measurement of the number of error opportunities per individual is not cost-effective nor value added.
Making Your NWTs Hum
“In essence, a team that is just starting out is not really a team, even though everyone might call it one... Don’t fool yourself.”
—Richard S. Wellins, William C. Byham, and Jeanne M. Wilson
The NWT is the engine that drives the organization. Only by educating, empowering, and continuously communicating with the NWT can any organization perform at an acceptable level. Of course, the organization is made up of individuals, each with different personalities and needs that must be managed. But success comes not from each individual doing his or her own thing, but from individuals working together to create outputs that are greater than the sum of the outputs of the single individuals.
“The face-to-face group is as significant a unit of organization as the individual. The two are not antithetical. In a genuinely effective group, the individual finds some of his deepest satisfaction.”
—Douglas McGregor, Author
Internal and External Supplier/Customer Relationships
Defining customer/supplier relationships is only one part of making an area function effectively. There are many other factors that also must be considered. For example,
• What is the area responsible for?
• What is acceptable performance?
• How does the area fit into the total organization?
• How well do the area’s employees understand their roles and the ways they can contribute?
• What are the important activities that the area performs from top management’s standpoint?
“Area Activity Analysis (AAA) is the only effective and systematic way to make the internal- and external-customer relationship work.”
—H. James Harrington
It is important to note that all these questions pivot around the activities that the area is involved in. It is for this reason that the Area Activity Analysis (AAA) methodology broadened its perspective to go beyond the customer/supplier partnership concept to embrace a complete business view of the area.
“Groups become teams through disciplined action.”
—John R. Katzenbach and Douglas K. Smith, Authors
We believe it is important to get everyone thinking about striving to perform at 3.4 errors per million opportunities, but it is often impractical to put these measurements in place. At the individual level it is often better to use the Error-Free Criteria. The Error Free approach measures the duration between errors and sets the objective of increasing the duration between errors. This becomes a very personal measurement system where the individual can set personal goals per their own desires. If the present error-free duration is 10 hours for an individual, he/she can set, as an objective, to improve to 15 hours, then to 25 hours, then to 50 hours, and so on. This allows each individual to always be striving for improved measurable performance improvement. At the natural work team level, we have found AAA as the most effective approach to establishing the internal and external supplier customer relationships and measurements. We will discuss this approach parting the next part of this chapter.
But before we go any further, let’s discuss what we mean by customer/supplier relationships as they relate to internal and external customers. Basically, a customer/supplier relationship can develop in one of two different ways:
• An individual or organization can determine that it needs something that it does not want to create itself. As a result, it looks for some other source (supplier) that will supply the item or service at a quality level, cost, and delivery schedule that represents value to the individual or organization. We will call this organization the customer.
• An individual or organization develops an output that it believes will be of value to others. Then the individual or organization looks for customers that will consider the output as being valuable to them (for example, the Internet, VCR, and so on). We will call this organization the supplier.
Although both these situations reflect real life, we will use the first one to discuss how the customer/supplier relationships develop. We feel that after reading this explanation, the reader will be able to apply the concept to the second situation.
“A customer’s assessment of the quality of any organization is based on the best that customer has seen. The customer does not know what is technically or organizationally feasible.”
—David Hutchins
The customer defines a need (requirement) for an input and begins looking for some source that can fulfill this need (see Figure 11.30).
Figure 11.30. Search for a potential source
To find a source for this input, the customer needs to define the performance parameters related to the required input, when the input needs to be delivered, how good the input needs to perform, and how much the individual or organization is willing to pay for the item or service. Usually, all of this data is communicated to potential sources of the item or service with the exception of how much the customer is willing to pay for the item or service. Once the potential source of the input receives the potential customer’s information (requirements), it is evaluated to determine if the source has the capabilities of providing the input to the customer in keeping with the customer’s performance, quality, and delivery requirements. If there is a near match, the potential source will contact the customer and discuss how their differences can be resolved. Once these requirement issues have been resolved, the potential source will determine how much it will cost them to provide the input to the customer and add to this cost their profit margin, so that a total compensation requirement can be defined. These compensation requirements are then communicated to the customer. Through the negotiation process, a closure of all outstanding issues between the customer and the potential source is reached (see Figure 11.31). It is important to note that at this point the potential source is not a supplier because the customer often is negotiating with other potential sources to provide the same product or service.
Figure 11.31. Complete definition of the potential source’s and customer’s requirements
If the potential source represents the best-value option to the customer, the customer will agree to accept the input as long as it is in compliance with the negotiated requirements. The customer also agrees to compensate the potential source for the item or service as negotiated. With an external customer, this act often takes the form of a purchase order. Once the potential source agrees to the provisions defined by the customer, it enters into a contract (formal or informal, verbal or written) to provide the input to the customer that meets the requirements in return for the agreed to compensation. At this point in the process, the potential source becomes the supplier (see Figure 11.32).
Figure 11.32. Agreed-to requirements that both the supplier and customer are committed to provide
“The customer deserves to receive exactly what we have promised to produce—a clean room, a hot cup of coffee, a nonporous casting, a trip to the moon on gossamer wings.”
—Philip Crosby
Note
It is important to note that the agreed-to requirements include both the customer requirements and the supplier requirements for compensation.
Now that an agreed-to requirement package has been developed, it is up to both parties to live up to their part of the agreement. The supplier provides the input to the customer, and the customer evaluates the input to determine if it meets the defined requirements. The customer then provides feedback to the supplier related to the performance of the input compared to the agreed-to requirements. This feedback should include both positive and negative data. If the input meets the customer requirements, the customer’s feedback that documents positive performance often takes the form of paying the supplier the compensation that was agreed to. We suggest that even if the customer requirements are met, it is a good idea to provide positive feedback to the supplier and suggest ways that the supplier can improve future inputs. All too often, the customer pays the bill but is still not happy with the supplier’s output. This represents a major problem with the customer, not the supplier. The suppliers have every right to believe that they are doing a good job if the only feedback they receive from the customer is positive (paying their bills). In the case where the input does not meet the customer requirements, the deviation should be defined so that the supplier can correct the problem. Often, the supplier’s compensation is tied into the correction of these problems (see Figure 11.33).
Figure 11.33. The complete Supplier/Customer Model
You will note that in Figure 11.33 there is a corrective action/improvement feedback flow from the supplier to the customer. This information flow provides the customer with assurance that past problems will be corrected and/or that continuous improvement is scheduled related to the supplier’s output.
What did we learn from this analysis? There are two key points:
• A customer/supplier relationship cannot exist unless the requirements of both parties are understood and agreed to. Too often, customers expect input from suppliers without understanding their requirements and/or capabilities. On the other hand, too many suppliers provide output without defining their potential customer’s requirements and obtaining a common, agreed to understanding of both party’s requirements.
• Both the customer and the supplier have obligations to provide input to each other. The supplier is obligated to provide the item or service and define future performance improvements. The customer has an obligation to provide compensation to the supplier for its outputs and feedback on how well the outputs perform in the customer’s environment.
The customer/supplier process has a domino effect. Usually, when a supplier is defined, that supplier requires input from other sources in order to generate the input to its customer. As a result, most organizations become both a customer and a supplier (see Figure 11.34).
Figure 11.34. The Cascading Customer/Supplier Model
Although the procedures related to internal customer/supplier partnerships are less stringent and have been simplified because the internal customer does not pay for the services that are provided, the concepts are equally valid. Too often, we set different standards for internal suppliers than we have for external suppliers. As a result, many of the internal suppliers provide inputs that are far less valuable than it costs to produce the inputs. This often results in runaway costs and added bureaucracy.
Area Activity Analysis (AAA)
With AAA, we will show you how to apply the customer/supplier model to the internal organization, thereby improving quality and reducing cost and cycle time of the services and items delivered both within and outside of the organization.
“Area Activity Analysis is the best approach to developing a true performance culture.”
—H. James Harrington
Area Activity Analysis is one of the few, if not only, improvement tools that is specific to an individual NWT and focuses on the internal and external customer/supplier. It’s based on a model that has a supplier providing input into an area (organization) that adds value to produce an output that a customer needs. This tool works best with organizations that are well along with their overall improvement effort. It is used to understand how a natural work group fits into the overall picture and to establish the natural work team’s measurements.
A Natural Work Team (NWT) or a Natural Work Group (NWG) is defined as a group of people who are assigned to work together and report to the same manager or supervisor. AAA projects are implemented by NWTs.
AAA is known as "The People’s Improvement Tool." Why? Because this is the one tool that helps the individual within a particular work area to identify what he/she does for the organization and assists in determining the area’s improvement opportunities.
The AAA methodology has been divided into seven different phases (see Table 11.5) to make it simple for an NWT to implement the concept. Each of these phases contains a set of steps that will progressively lead the NWT through the methodology.
Table 11.5. AAA Implementation Approach
We will briefly describe each of the seven phases of AAA. Implementing these seven phases will bring about a major improvement in the organization’s measurement systems, increase understanding and cooperation, and lead to reduced cost and improved quality throughout the organization.
Phase I—Preparation for AAA
AAA is most effective when it precedes other initiatives that are taking place such as Six Sigma, Continuous Improvement, team problem solving, Total Quality Management, Reengineering, or new IT systems. It is also best to implement the AAA methodology throughout the organization. This does not mean that it will not work if other improvement activities are underway or of it is only used by one area within the total organization. In the preparation phase, the good and bad considerations related to implementing AAA within an organization should be evaluated. A decision is made whether or not to use AAA within the organization. If the decision is made to use AAA, an implementation strategy is developed and approved by management. Phase I is divided into five steps:
1. Analyze the environment.
2. Form an AAA project team.
3. Define the implementation process.
4. Involve upper management.
5. Communicate AAA objectives.
Phase II—Develop the Area’s Mission Statement
A mission statement is used to document the reasons for the organization’s or area’s existence. It is usually prepared prior to the organization or area being formed, and is seldom changed. Normally, it is changed only when the organization or area decides to pursue new or different set of activities. For the AAA methodology, a mission statement is a short paragraph, no more than two or three sentences, that defines what the area’s role and its relationships with the rest of the organization and/or the external customer.
Every area should have a mission statement that defines why it was created. It is used to provide the area manager and the area employees with guidance related to the activities on which the area should expend its resources. Standard good business practice calls for the area’s mission statement to be prepared before an area is formed. The mission statement should be reviewed each time there is a change to the organization’s structure or a change to the area’s responsibilities. It should also be reviewed about every four years, even if the organization’s structure has remained unchanged, to be sure that the mission statement reflects the current activities that are performed within the area.
A service policy is a short statement that defines how the area will interface with its customers and suppliers.
During Phase II, the AAA team will review and update the area’s mission statement. If a mission statement does not exist, the AAA team will prepare a mission statement. In all cases, any change to the mission statement must be approved by management before it is finalized. Phase II is divided into six steps:
1. Obtain present mission statement.
2. Develop preliminary area mission statement/NWT manager.
3. Develop preliminary area mission statement/each employee.
4. Develop a consensus draft area mission statement.
5. Finalize area mission statement.
6. Develop the area’s service policy.
Phase III—Define the Area’s Major Activities
During this phase, the AAA team will define the activities that are performed within the area. For each major activity (activities that account for more than 10 percent of the area’s resources), the AAA team will define its output and the customers who receive that output. An activity champion is also assigned to each activity. Phase III is divided into eight steps:
1. Identify major activities for each individual.
2. Combine into broad activity categories.
3. Develop percentage of time expended.
4. Identify major activities.
5. Compare list to area mission statement.
6. Align activities with mission.
7. Approve of the area’s mission statement and major activities.
8. Assign activity champions.
Phase IV—Develop Customer Relationships
During this phase, the AAA team will meet with the customers who are receiving the outputs from the major activities conducted by the area to
• Define customer’s requirements.
• Define the supplier’s requirements.
• Develop how compliance to the requirements will be measured.
• Define acceptable performance levels (performance standards).
• Define the customer feedback process.
Phase IV is divided into seven steps:
1. Select critical activity.
2. Identify customer(s) for each output.
3. Define customer requirements.
4. Define measurements.
5. Review with customer.
6. Define feedback procedure.
7. Reconcile customer requirements with mission and activities.
Phase V—Analyze the Activity’s Efficiency
For each major activity, the team will define and understand the tasks that make up the activity. This is accomplished by analyzing each major activity for its value-added content. This can be accomplished by flowcharting the activity, and collecting efficiency information related to each task and the total activity. Typical information that would be collected is
• Cycle time
• Processing time
• Cost
• Rework rates
• Items processed per time period
Using this information, the AAA team will establish efficiency measurements (sometimes called Key Performance Indicators) and performance targets for each efficiency measurement. Phase V is subdivided into six steps:
1. Define efficiency measurements.
2. Understand the current activity.
3. Define data reporting systems.
4. Define performance requirements.
5. Approve performance standards.
6. Establish a performance board.
Phase VI—Develop Supplier Partnership
Using the flowcharts generated in Phase V, the AAA team identifies the supplier that provides input into the major activities. This phase uses the same approach discussed in Phase IV, but turns the customer-supplier relationship around. In this phase, the area is told to view itself in the role of the customer. Their interfaces are called internal or external suppliers. The area then meets with their suppliers to develop agreed-to requirements. As a result of these negotiations, a supplier specification is prepared that includes a measurement system, performance standard, and feedback system for each input. This completes the customer-supplier chain for the area, as shown in Figure 11.35.
Figure 11.35. Detailed Process Model
The supplier is an organization that provides a product (input) to the customer (source: ISO 8402).
The internal supplier refers to areas within an organizational structure that provide input into other areas within the same organizational structure. The external supplier refers to suppliers that are not part of the customer’s organizational structure.
Phase VI is divided into five steps:
1. Identify suppliers.
2. Define requirements.
3. Define measurements and performance standards.
4. Define feedback procedure.
5. Obtain supplier agreement.
Phase VII—Performance Improvement
“It is only when management supports, in both word and deed, the goal of continuous improvement that it will begin to see increases in both quality and productivity.”
—Donald Wheeler and David Chambers
This is the continuous improvement phase that should always come after an activity has been defined and the related measurements are put in place. It may be a full Six Sigma, TQM, or just a reengineering activity. It could be a minimum program of error correction and cost reduction or a full-blown Six Sigma project.
During Phase VII, the NWT will enter into the problem-solving and error-prevention mode of operation. The measurement system should now be used to set challenge improvement targets. The NWT should now be trained to solve problems and take advantage of improvement opportunities.
All the members of the natural work team should be trained in the following (note: these are your Blue Belts):
• Six Sigma principles
• What 3.4 errors per million opportunities means
• What error-free performance means and how to measure duration between errors
• Plan-Do-Check-Act and/or DMAIC
• Basic problem-solving tools:
• Brainstorming
• Check sheets
• Graphs
• Nominal Group Technique
• Force Field Analysis
• Cause-and-effect diagrams
• Flow charting
• Team operating ground rules and team-building methods
The individual efficiency and effectiveness measurements will be combined into a single performance index for the area. Typically, the area’s key measurement graphs will be posted and updated regularly.
“The hunger for performance is far more important to team success than team-building exercises, special incentives, or team leaders with ideal profiles.”
—Katzenbach and Smith, in The Wisdom of Teams: Creating the High-Performance Organization, Harper Business, 1994.
We further suggest that a 4-by-5-foot area performance board be set up in a very visible part of the area with the following posted on it:
• The area mission statement
• The area performance report
• Improvement plans and their associated measurement charts
• An up-to-date picture of the NWT
• A list of the area’s customers
• Letters from customers (both positive and negative)
• A list of the people who make up the NWT, their dates of hire, and their birthdays
• Board posting procedure
We recommend that the area’s manager encourage the NWT members to post improvement ideas and suggestions for any measurement on this board in a section of the board called "New Ideas." This eliminates the need to wait for a meeting to get actions started on good ideas. The manager in the area should review the posted ideas at least once a day and move them from the "new idea" part of the board to the "ideas in progress" part of the board (see Figure 11.36).
Figure 11.36. Performance board
“Visual reminders get attention and results. You need them to keep you focused.”
—H. James Harrington
We cannot overemphasize the need to keep the performance board up-to-date. Nothing telegraphs management’s lack of interest in performance improvement more than an outdated performance board. I have seen performance boards with reports on them that are six months old. We like to see a statement on the board that defines when the board is updated. For example: "New reports and graphs will be posted each Tuesday that reflect the previous week’s performance." If for some reason the new reports and graphs cannot be posted on schedule, an explanation of why the graphs and reports are not available and a new target date for their availability should be posted on the performance board.
We find it is good business practice to write a short document that defines what can and cannot be posted on the performance board. Some organizations will allow personal items to be posted, such as postcards from NWT members who are on vacation. We do not recommend this practice because it is hard to control. First the manager posts a postcard from an employee, then someone posts a birthday card, then someone else puts up a notice that she has a car for sale. We find it is best to clearly define what can be put on the performance board, who can put it up, where they can put it, and when it will be taken down. This type of procedure needs to be defined for each different area of the board.
During Phase VII, management should show their appreciation to NWTs and individuals who expended exceptional error during the AAA project or implemented major improvements.
Phase VII is divided into eight steps:
1. Set up the reporting systems.
2. Identify the activities to be improved.
3. Install temporary protection, if needed.
4. Identify measurements or tasks to be improved.
5. Find best-value solutions.
6. Implement solutions.
7. Remove temporary protection, if installed.
8. Prevent the problem from recurring.
Six Sigma Communications
Throughout the Six Sigma initiative, the Six Sigma Champion and Executive Team should be releasing a series of news items holding meetings and personally selling the Six Sigma concepts of near error-free performance. The results of the SST activity should be highlighted on the organization’s website and newsletter. This ongoing communication flow should highlight the culture and behavior changes that the organization is undergoing. It should also be used to give liberal credit to the people who are bringing about these changes, especially at the employee level. Many organizations post pictures of the SST members and the results of their activities on the bulletin boards around the organization. It is important not to just promote the SST activities, as this is just a small part of the total transformation the organization goes through. The communication system needs to focus upon how the individual behavior patterns and performance objectives need to change in order to keep up with the Six Sigma standards. A detailed communication plan should be prepared that provides monthly reinforcement of the importance of everyone improving their performance to near perfection.
The Executive Team Six Sigma Culture
The culture change starts with the Executive Team. We are never surprised when we go into an organization and find that the most and biggest problem set on the top floor in the executive boardroom. If the Executive Team does not change, the rest of the organization will not change. To help the Executive Team change at General Electric, Jack Welch tied the 10,000 top manager’s bonus system into the Six Sigma program. GE executive bonus system runs between 20 to 70 percent of the manager’s base salary plus additional stock options. As much as 40 percent of the bonus was based upon how well the managers implement Six Sigma in their related areas.16 The single most cost-effective and fastest way to transform an organization is by transforming the Executive Team. Who has the biggest impact upon the employee’s involvement in the improvement process by management levels follows:
• Top Management: 50 percent
• Middle Management: 26 percent
• First Line Managers: 19 percent
The key to embedding a Six Sigma culture within an organization is to change the behavioral patterns of the Executive Team. Our data indicates that the average executive makes between 50 to 80 behavior errors per week, and at the Six Sigma level we want our assembly workers to make no more than one error every three months. It’s almost as though we pay people more if they will make more errors.
Dr. Joseph M. Juran has long stated that 80 to 85 percent of all problems are caused by management. Donald Stratton, Manager of Quality at AT&T Network Systems, reported the following findings in a Quality Progress article:[17]
• 82 percent of the problems analyzed were classified as common cause. These are process problems owned by management.
• 18 percent of the problems analyzed were classified as common cause. These are problems that were caused by people, machinery, or tools. Only a small portion of these problems can be solved by employee teams.
• Of the 82 percent management controlled:
• 60 percent of the corrections could be implemented by first- and second-level management
• 20 percent could be implemented by middle management
• 20 percent could only be implemented by top management
It is easy to see that the major problems within organizations throughout the world are the processes that management is responsible for modifying and controlling. Unfortunately, all the talk in the world and the desire to do something good does not get it done. The employees cannot correct the problems that management has created. Only management’s personal involvement in the improvement process will bring about the required changes.
Top Management Culture Change
“The culture of the organization changes only to the degree that the top management behavior changes.”
—H. James Harrington
Top management are all for change, as long as it is someone else who changes. The number one improvement rule is: Top management must change first.
Why should top management change? Aren’t they already successful? Look at all the money they are making. In truth, more than 99 percent of top managers have a lot of opportunity to improve. In fact, none of us are perfect and most of us have many opportunities to improve our own personal behavior patterns.
To prepare their personal performance indicators, top managers need to define what they do. I don’t mean things like "motivate employees" or "manage R&D." These are their assignments. Examples of what management does include the following:
• Attend meetings
• Read and answer mail
• Answer telephone calls
• Make decisions
• Delegate work
• Chair meetings
Once top management has completed a personal list of what they do, they need to define behavioral patterns related to these activities that could be improved:
• Start meetings on time.
• Do not attend meetings that can be delegated to employees.
• Return all telephone calls within eight hours.
• Don’t set items aside that can be done quickly.
• Always show up on time for meetings.
• Read all new mail each day.
• Don’t use overnight mail if the project can be finished earlier and sent by regular mail.
• Talk to three customers each day.
• Make a minimum of three one-hour tours of the employee work areas each week.
• Read five technical articles each week.
• Have the office organized so well that there is no need to search for lost or misfiled items.
• Have a clean desk at the end of the day.
• Stop doing things that can be delegated.
• Stop using bad language in the workplace.
• Arrive at work on time.
• Have an agenda in each attendee’s hands before any meeting is held.
They then should select a maximum of eight of these behavioral patterns that they want to improve. Each selected behavioral pattern should be recorded on a card similar in size to an airplane ticket, which can be carried easily in a purse or a coat pocket. Each time the executive does not behave as defined, he or she has made an error, and a check mark should be placed behind the appropriate behavioral pattern. Once a week, the total number of check marks should be counted and plotted on a run chart. We recommend that each executive set an improvement target of 10 percent of the first month’s average error rate. When this target is reached, it is time to add eight more behavioral patterns to the list and start over again. In organizations where top managers have a high degree of confidence and credibility, each top manager is encouraged to post his or her personal performance run chart in his or her office, demonstrating to their fellow workers that top management accepts the fact that they personally need to change and improve. (Figure 11.37 is an example of a CEO behavioral error-rate chart.) Eventually this same approach will be used by all managers and employees to measure their personal improvement.
Figure 11.37. Executive behavioral performance chart
“Employees listen to your tongue with interest but they believe in the way that the tongue in your shoes go.”
—H. James Harrington
Executive Values
Each executive is also encouraged to define his or her personal set of values that govern their behavior at work and in their personal life. These values seldom mirror images of the organization’s values or principles because they reflect the total person. We encourage every top manager to post these value statements in a very visible place in their office and/or conference room. Sharing these personal values with their fellow managers and employees and posting then where they can influence the executive’s behavior has a major positive influence on the individual and the organization. Don’t be afraid to let your employees know you are human.
John D. Rockefeller had 11 management creeds (principles) that he posted and tried to live by. A sample of these are
• I believe in the supreme worth of the individual and in his right to life, liberty, and pursuit of happiness.”
• I believe in the dignity of labor, whether with head or hand; that the world owes no man a living, but that it owes every man an opportunity to make a living.”
• I believe in the sacredness of a promise, that a man’s word should be as good as his bond; that character—not wealth or power or position—is of supreme worth.”
• I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty.”
Dr. H. James Harrington has selected the document entitled •The Man I Want to Be.• The following is just a sample statement. The total document can be found in Appendix B.
“A man who would be concerned with how he could help me instead of himself, who would give me loyalty instead of demanding of me, who would think of himself as my assistant, instead of my boss, who would think it was his job to help me do my job better.”
Six Sigma Suggestion Programs
“There is nothing more fragile or precious to an individual than his or her idea.”
—H. James Harrington
A suggestion system is one of the best ways to provide your employees with a way to continuously improve and get recognition for their activities. World-class organizations are receiving an average of two suggestions per month per employees; 90 percent of them are implemented.
How does the suggestion process work? National Cash Register Company developed the concept back in 1896. The value of the suggestion program is that it offers the person closest to the work activity the opportunity to suggest improvements. This results in more effective utilization of assets, increased productivity, waste reduction, lower product costs, and improved quality. As Paul Petermann, then manager of Field Suggestions at IBM, put it, "Ideas are the life-blood of the company, and the suggestion plan is a way of getting these ideas marketed.”
The formal suggestion process requires that employees document their ideas for improvement and submit them to a central suggestion department that is responsible for coordinating and evaluating the ideas and reporting back to the employee. The suggestion department reviews each suggestion and chooses an area within the organization that is best suited to evaluate the suggestion. The evaluation studies the recommended changes to determine if they will provide overall improvement in quality, cost, or productivity. If the suggestion is accepted by the evaluation area, the evaluator will determine what tangible savings will result from implementing the idea.
Paul Revere Insurance Company employees submitted 20,000 suggestions during the first three years of their improvement process. The suggestions were a major contributor to the organization’s improved performance:
• Income up 200 percent with no additional staff
• The organization moved from number 2 to number 1 in the insurance field
Frank K. Sonnenberg, in his article "It’s a Great Idea, B..." wrote, "A new idea, like a human being, has a life cycle. It is born. If properly nurtured, it grows. When it matures, it becomes a productive member of society." He points out that at 3M, some people claim that the company’s 11th commandment is, "Thou shalt not kill an idea.”[18]
The following is a quotation from Toyota’s Creative Suggestion System manual:
“The system came to Toyota from the United States back in 1951 when Toyota was still a newcomer in the automobile industry. Two Toyota officials traveled to the United States to study modern management methods, and at Ford Motor Company they saw a suggestion system being used that inspired them to try a similar system in Toyota.”
Starting with this very modest introduction, the Japanese, in a very methodical way, expanded this application and used it much the same way they did statistical process control and Total Quality Control. Starting from a zero base line, they expanded the idea to the point that today it is the most effective employee involvement tool used in Japan, surpassing even the Quality Circle movement. In a study done by the Japanese Suggestion Association, they reported, "As viewed from the relationship with small group activities, which is the nucleus of suggestion activities, 50 times as many suggestions are made for every solution of one problem by one circle." Dr. Kaoru Ishikawa, the father of the Japanese quality process and the Quality Circle concept, stated, "In Japan, only 10 percent of the quality improvements come from teams. The remaining 90 percent come from individual suggestions.”[19]
Now let’s compare Japan’s and the United States suggestion programs:
Now this data may be interpreted that the U.S. goes after the big, important problems and the Japanese workers focus on the insignificant problems. But look at the bottom line. The average eligible Japanese worker saves the organization more than $3,500 per year over the savings generated per American worker.
Getting Ideas Flowing
“Creativity is thinking up new things. Innovation is doing new things.”
—Theodore Levitt
For the average organization, it is easy to embrace the concept of tapping the hidden powers of the employees’ ideas. The problem is, how do you do it? How do you keep your credibility with the employees if they start turning in ideas and swamp the process? A good way to tap into this reservoir of ideas and not open the floodgates is to hold an "idea week." In this approach, management announces to the employees that a specific week will be set aside to see how many improvement ideas can be generated. For example, "The week of January 16 to 21 will be set aside to see how many ideas can be turned in that will improve the safety and quality or reduce costs.”
Idea Sharing
“I believe the real differences between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.”
—Thomas Watson, Jr.
An important part of developing a creative environment within an organization is the open sharing of the ideas that are generated. Many organizations accomplish this by maintaining a list of new and creative ideas that is made available to the entire organization. Often this data is stored in a computer database that can be sorted in many different ways, providing a valuable database to help solve future problems.
3M has made use of "innovation fairs" to exhibit new ideas. Employees from product engineering, marketing, production, and other departments attend these fairs to gain new ideas and to discuss the ideas that are being exhibited with their creators.
To keep the Six Sigma System operating, we find that focusing your suggestion system on small suggestions that the employees can implement themselves is the most effective approach.
“The never-ending task of self improvement.”
—Ralph Waldo Emerson
There are a lot of small improvement opportunities related to each job, and the person who is doing the job is the best person to identify and implement these ideas. For example, an operator put her work into a pail and when it was full, carried it to the next operator. Her suggestion was to put wheels on the pail so she could just push it with her foot to the next operator. When the next operator removed the parts, she could just kick it back to the other operator. No big deal, but it saved two people time and effort, resulting in increased productivity.
These ideas are documented on a very simple form and approved or rejected by the individual managers. This approach is working in Japan and the U.S. For example, Dana Corporation received an average of 38 ideas per person with 82 percent of them implemented.[20] For more information about this approach to suggestion systems, read The Idea Generator by Bunji Tozawa and Norman Bodek.
Rewards and Recognition to Support Six Sigma
“Performance will matter to the individual if rewards are dependent upon performance.”
—Edward M. Baker
The rewards and recognition system needs to be changed or the organization’s culture will not accept the Six Sigma System. If your measurement and reward systems remain the same, then you cannot expect to get different results.
The complexity of today’s environment and the sophistication of today’s employees make it necessary to carefully design a reward process that provides the management team with many ways to say thank you to each employee, because the things that are valued by one individual may have no impact upon another. In addition, the reward process needs to be closely aligned with the organization’s personality. The reward process that functioned well in the 1990s is probably inadequate today because the personalities of most organizations have undergone major changes. The influx of women and various minority groups has had a major impact on the way the reward process needs to be structured.
In today’s environment, men’s attitudes have changed. The male population is aging, and men are often not the sole breadwinner for the family, causing them to be less financially driven. Because of this, it is easy to see, for example, why time-and-a-half pay is no longer a satisfactory reward for giving up a Saturday for many employees. It is for these reasons that we need to take a fresh look at our reward processes to upgrade them so that they meet the needs of today’s organizations and their aggressive goals.
Vince Lombardi said, "Winning isn’t everything. It’s the only thing." This is true for many people, but for others it is enough to help someone else win. At the Olympics, only one man stood on the top platform to receive the gold medal for cross-country skiing, but without the many people standing along the route to give him water, he would not have won. To these "little people" (and there are a lot more of us little people than there are gold medal winners), often recognition is simply having someone else acknowledge your worth. Recognition is something everyone wants, needs, and strives to obtain. Studies have shown that people classify recognition as one of the things they value most.
Ingredients of an Organization’s Reward Process
A good reward process has eight major objectives:
• To provide recognition to employees who make unusual contributions to the organization and stimulate additional effort for further improvement.
• To show the organization’s appreciation for superior performance.
• To ensure the maximum benefits from the reward process by an effective communication system that highlights the individuals who were recognized.
• To provide many ways to recognize employees for their efforts and stimulate management creativity in the reward process.
• To ensure that management understands the variation enhances the impact of the reward process.
• To improve morale through the proper use of rewards.
• To reinforce behavioral patterns that management would like to see continued.
• To ensure that the employees recognized are perceived as earning the recognition by their fellow employees.
Why does recognition matter? George Blomgren, president of Organizational Psychologists, puts it this way, "Recognition lets people see themselves in a winning identity role. There’s a universal need for recognition, and most people are starved for it.”[21]
Definition: Reward is something given or offered for a special service or to compensate for extra effort expended.
“Everyone hears ’thank you’ in a different way. You need to find the right way to reward each individual.”
—H. James Harrington
Rewards can be subdivided into the following categories:
• Compensation. To financially reimburse for service (s) provided.
• Award. To bestow a gift for performance or quality.
• Recognition. To show appreciation for behaving in a desired way.
After the organization has provided the employee with a paycheck and health coverage, what more can or should the organization do for the employee? Management is obligated to do more than just eliminate their financial worries. Employees excel when they are happy, satisfied, and feel that someone else appreciates the efforts they are putting forth. A tangible and intangible reward process can go a long way to fulfilling these needs when properly used.
Research has proven that when management rewards employees for adopting desired behaviors, they work harder and provide better customer service. The benchmark service organizations are more likely to have well-defined and well-used approaches for telling their employees that they are important individuals. Individuals in the world-class organizations who go beyond expectations are held up as customer heroes and role models for the rest of the organization. This provides a continually more aggressive customer performance standard for the total organization.
Key Reward Rules
The reward process needs to be designed, taking into consideration the following points:
• Organization’s culture
• Desired behavioral patterns
• Employee priorities
• Behavior/reward timing relationships
• Ease of use
The reward process must be designed to be compatible with the culture and personality of the organization. Things that may be very desirable in one organization can be quite inappropriate in another.
Cut the bureaucracy out of your reward process as much as possible. Give management general guidelines, and eliminate the checks and balances in all but the most significant rewards. For example, an individual should not be given more than three minor awards each year, and no more than 10 percent of the employees should receive major contribution awards each year. Be sure that the employees are not given special awards for just doing their jobs.
Give the manager the power to give the reward and process the paperwork later. Major rewards should be processed through a rewards board to be sure that required standards are met, but there should be a long list of rewards that the manager can give to the employee on the spot—for example: dinners for two, movie tickets, theater tickets, or $50 merchandise certificates.
Types of Rewards
Everyone hears "thank you" in different ways. The reward process must take these different needs into account. Some people want money, some want a pat on the back, others want to get exposure to upper management, while still others want to look good in front of their peers.
American Express has one awards program that it calls "Great Performer Award Luncheon." Typical activities that won employees invitations to these luncheons were
• One American Express employee bailed a French tourist out of jail in Columbus, Georgia
• Another took food and blankets to travelers stranded at Kennedy Airport
Are these unusual performances for employees to take up on their own? Yes, but that’s what we need if we want to have empowered employees and a truly world-class organization.
It’s easy to see that the reward process is only limited by the creativity of your people and the individuals who design the process. The National Science Foundation study made this point: "The key to having workers who are both satisfied and productive is motivation; that is, arousing and maintaining the will to work effectively—having workers who are productive not because they are coerced, but because they are committed.”
To help structure a reward process, let’s divide the rewards into the following categories:
• Financial Compensation
• Salary
• Commissions
• Piecework
• Organizational bonuses
• Team bonuses
• Gain-sharing
• Goal-sharing
• Stock options
• Stock purchase plans
• Benefit programs
• Monetary Awards
• Suggestion awards
• Patent awards
• Contribution awards
• Best-in-category awards (example: best salesperson, or employee of the year)
• Special awards (example: president’s award)
• Public Personal recognition
• Private Personal recognition
• Peer rewards
• Customer rewards
• Organizational awards
Basically, the following media are used individually or in combination to produce desired behavior.
• Money
• Merchandise
• Plaques/trophies
• Published communications
• Verbal communication
• Special privileges
A well-designed reward process will use all six, because each has its own advantages and disadvantages. One of the biggest mistakes management makes is to use the same motivating factors for all employees. People are moved by different things because we all want different things. The reward process needs to be designed to meet the following basic classifications of needs:
• Money
• Status (ego)
• Security
• Respect
The Leapfrog Group has developed a Web-based compendium of incentive and reward programs aimed at improving healthcare in both inpatient and outpatient settings. The compendium provides details on both financial and public recognition programs initiated mainly by health plans, purchasers, or purchasing coalitions and aimed at hospitals, physicians, health plans, and consumers. Freely available on the Leapfrog Group website at http://www.leapfroggroup.org/rewards_compendium, the summary allows users to sort by location and program target, and search the programs using a built-in keyword search function, such as one related to quality and safety practices. The compendium has been supported by the Commonwealth Fund and the Robert Wood Johnson Foundation.[22]
Conclusion
“Things have gotten bad enough and people have tried all the simple things, and they haven’t worked. I think most people are now stepping back and saying, ’My God, we’ve got to rethink this whole system.’”
—Michael Porter, professor, Harvard Business School
If you have implemented the recommended processes, you will have a very effective and profitable system in place that should grow your market share and improve your customer satisfaction level. But this is not the end of the Six Sigma initiative; it is just the beginning. As the Six Sigma process matures, it will continue to gain momentum. First, no one wants anything to do with it. Then all of a sudden everyone wanted to be part of it. Starting slow and getting at least 10 percent of the organization behind the Six Sigma initiative is key in the start-off phase. Once the results are documented, there will be no question in anyone’s mind that this is the right thing for the HCP. As you implement your Six Sigma initiative, there are some things you need to look out for:
• Don’t label all the ideas as new ones.
• Don’t select small aspects of a larger concept.
• Don’t streamline without process redesign.
• Don’t do process change without the cultural change.
• Don’t redesign without fundamentally re-thinking the way you are doing business.
• Don’t think that the change process is not going to affect you personally.
• Don’t make Six Sigma separate from the normal business structure of the HCP.
• Don’t make Six Sigma a problem-solving initiative. It should be a strategic initiative that sets new culture and behavioral patterns.
• Don’t measure your Six Sigma by dollars saved alone; a much more meaningful measure is lives saved.
The Six Sigma program should result in establishing a very extensive set of KPIs (Key Performance Indicators) for the HCP. Some typical high-level, general KPIs are
• Patient satisfaction
• Employee satisfaction
• External doctor satisfaction
• Turn-over rates
• Ratio of management and staff to patient
• Percentage of medical records completed within 30 days
• Percentage of billing arrears
• Percentage of multi-skilled employees
• Percentage of staff cross-trained, admittance cycle time, outpatient wait time
• Operating cost ration to dollars collected
• Collections to full-time equivalent (FTE)
• Percentage increase in collections fiscal year 2006-2007
• Percentage of insured inpatient stays billed
• Percentage of insured outpatient visits billed
• Average claims generate by FTE for insured outpatient visits billed
• Average claims for insured outpatient visits billed
• Average age of insurance claims outstanding
Specific sub-process measures are
• Number of calls attempted
• Number of calls connected
• Number of demographic changes
• Number of next-of-kin changes
• Number of employment changes
• Number of insurances identified or changed
• Number of billable insurances of total identified
• Dollar amount billed: inpatient
• Dollar amount billed: outpatient
• Preregistration (monthly)
• Dollar amount collected: inpatient
• Dollar amount collected: outpatient
These KPIs should be a direct result of the AAA process where each natural work team’s processes are analyzed to define efficiency and effectiveness measurements. The result is a balance scorecard for the HCP that is extremely robust and reflects real business needs and measurements. These measurement systems should cover all the major healthcare systems including HCP governance, resource management, patient acquisition, health maintenance, health restoration, and continuous learning.
“No one has ever reached the point that there is no room for improvement”
—Dr. H. James Harrington
Endnotes
1. Porter, Annette Wilkerson. Six Sigma takes root at North Carolina Baptist Hospital. Visions, Fall/Winter, 2005.
2. Jones, Milton M. Jr., "Six Sigma...at a Bank?" Six Sigma Forum Magazine, February 2006.
3. Miller, Kurt. "Beyond Traditional Reengineering." Redesigning Healthcare Delivery, by Peter Boland. 210. Berkeley CA. Boland Healthcare, Inc. 1996
4. Dusharme, Dirk. Healthcare quality increases. Quality Digest, December 2005.
5. Ibid.
6. Smith, Laura. Healthcare report cards unreliable. Quality Digest, April 2006.
7. Levinson, William A. Taking the QMS cure. Quality Digest, December 2005.
8. Hackle, John. The agency for healthcare research and quality. Quality Progress Editor, August 2005.
9. McGee, Marianne Kolbasuk. Brailer gets vote of confidence. IT Magazine, May 31, 2004.
10. Revere, L., K. Black, and A. Hug. Integrating Six Sigma and CQI for improving patient care. The TQM Magazine 16: 2, 105-113, 2004.
11. Goel, Parveen S.; Gupta, Praveen; Jain, Rajeev; and Tyagi, Rajesh K. Six Sigma for Transactions and Service. New York: McGraw-Hill. 2004.
12. Brassard, Michael and Diane Ritter. Sailing Through Six Sigma. Marietta, Ga. Brassard & Ritter, LLC. 2001.
13. Bloom, Benjamin S. Taxonomy of Educational Objectives. Allyn and Bacon, Boston, MA. Copyright (c) 1984 by Pearson Education. Adapted by permission from the publisher.
14. Hertz, Harry S. Healthcare Criteria for Performance Excellence. Gaithersburg, MD: Baldrige National Quality Program. 2004.
15. Paton, Scott M. No small change: Making quality Job 1 again. Quality Digest, September 2001.
16. Brassard, Michael and Diane Ritter. Sailing Through Six Sigma. Marietta, Ga. Brassard & Ritter, LLC. 2001.
17. Harrington, H. James and Harrington, James S. Total Improvement Management. New York: McGraw-Hill. 1995.
18. Ibid.
19. Ibid.
20. Goel, Parveen S.; Gupta, Praveen; Jain, Rajeev; and Tyagi, Rajesh K. Six Sigma for Transactions and Service. New York: McGraw-Hill. 2004.
21. Harrington, H. James and Harrington, James S. Total Improvement Management. New York: McGraw-Hill. 1995.
22. Hackle, John. Leapfrog Group provides incentive program summary. Quality Progress, November 2004.