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David Boghossian

Six Sigma

Enterprise Performance: The New Quality Goal

It's not easy, but DMAIC can help

Published: Tuesday, August 11, 2009 - 15:44

As the founder of PowerSteering and a practitioner in strategic management and continuous improvement for more than 25 years, I have seen my share of management fads come and go, and even been in the room when some of them were created. 

There were quality circles and total quality management (TQM), of course, but I have been around long enough to remember when manufacturing resource planning (MRP) and MRP II were all the rage. I worked with George Stalk when he brought “Time-Based Competition”—a variant of the Toyota Lean System—to the consulting world in 1985. About the same time, it seemed that Michael Hammer and Index were about to take over the world with “Reengineering” and the latest trend in strategy was creating variations around C. K. Prahalad's and Gary Hamel’s Core Competences of the Corporation (Harvard Business Review, 2009). Entire consulting empires rose and fell on the popularity of the growth share matrix or the REMAP methodology. Those were the days.

Now, having been around the block several times, it seems we have all become jaded skeptics.  We recognize that this succession of management fads were all variations on a theme, angels dancing on the head of a pin, or worse, focused so intently on a single aspect of the enterprise that we optimized it at the expense of others. The result: a frustrating game of corporate “whack a mole” with little sense of the enterprise as an integrated system.

Enter lean, Six Sigma, hoshin, and the other tools of the modern quality movement. Leading practitioners today seem less concerned with which approach and tool set is employed, and more committed to the intensity of execution around a chosen methodology. We have known this in our hearts for years: That a good strategy passionately executed beats the best strategy half-heartedly executed every time. So, the underlying lessons of the last 15 years of advancement are less about DMAIC itself and more about data-based decision making, measurement, and follow-through.

Whether you’re using DMAIC (define, measure, analyze, improve, control) kaizen, reengineering, the Army manual’s OODA (observe, orient, decide, act), or the Marine’s SMEAC (go ahead and look it up), the principles of data-based action are at the tactical core of nearly every organization. And, as Tom Peters has said, the organization that can complete more “OODA loops” faster, wins.

But what about strategy? Over the years, we have found that it’s entirely possible to implement improvements that dramatically benefit operational performance, but offer little or no strategic benefit to the organization. Enter strategic alignment, portfolio management, and goals deployment as the tools of choice to accomplish the first half of Jack Welch’s dictum “Do the right things right.” And it turns out that it’s frequently a lot easier to find 20 percent improvement by making sure you're doing the right things, as opposed to getting 20 percent better at doing them. Nearly every large portfolio of projects has a significant percentage of activities that are redundant, off-strategy, and/or doomed to eventual failure. Stopping such activities is frequently worth an immediate benefit of 15-20 percent of the total portfolio budget. Jim Collins, in Good to Great: Why Some Companies Make the Leap... and Others Don't (HarperBusiness, 2001), makes the point—It is important to focus on what must be done, but it is equally important to decide what to stop doing.

Over the last decade, there has been a great deal of discussion and focus about driving corporate performance through effective execution of company strategy. From Kaplan and Norton’s balanced scorecard to Ram Charan and Larry Bossidy’s book Execution: The Discipline of Getting Things Done (Crown Business, 2002), to countless publications by experts in the quality community, the emerging consensus is that strategy, in the absence of effective action and execution, is meaningless. I recall sitting with David Norton almost a decade ago when the balanced scorecard had just begun to catch on and observing to him that the column in his matrix labeled “Initiatives,” which represented the execution step of strategy, might be thousands of people working on thousands of projects. Perhaps that was the beginning, along with many subsequent conversations, of their latest installment The Execution Premium (Harvard Business School Press, 2008), which deals directly with the challenges of turning strategy into action.

Strategy into action. It remains at the leading edge of management science. Very few organizations do it well, and even those that do often get there more through art than through science. Extremely rare are organizations that have a well defined, documented, trainable, continuously improvable process for executing strategy. 

Boiling it down, all of the methodologies for tackling this challenge amount to variations on a theme:

  1. Focus on a few critical strategic goals
  2. Identify key performance indicators (KPIs) that measure progress toward those goals
  3. Assess initiatives against a screen of strategic effect and cost benefit
  4. Execute programs that deliver the benefits
  5. Review progress against KPI targets in real time and adjust course quickly when necessary.

 

But wait, for those of us that have been doing lean and Six Sigma (or frankly any of the major process improvement methods now in use) for the last decade plus, this advice should feel eerily familiar, since what is it but:

  1. Define goals and issues
  2. Measure current performance
  3. Analyze root causes and how to address them
  4. Improve the process or product
  5. Control the process to make sure the results are real and sustain over time

 

We already know how to do this. The answer to strategic execution has been under our nose for all this time. It revolves around taking the learnings and tools, if not the specific processes of quality improvement, and building a new data-driven, metrics-focused, and results-oriented culture across the enterprise. The beauty of this insight is that it allows us to start in familiar territory, with processes and tools we already have. We can become the center of excellence for execution in our organizations. Anything that requires us to change processes or products, add new capabilities or infrastructure, or build new market success is best approached using this mindset. In fact, every innovation, everything we must do to become the organization we need to be next quarter, next year, or three years from now, should be part of this execution system, and managed using these familiar tools.

That's not to say that this will be easy. If it were, it would be done already. It requires discipline and focus, and an unswerving commitment to excellence, but the way is clear. We have always said that everyone across the enterprise should be using these quality tools. Now we can prove it.

Discuss

About The Author

David Boghossian’s default image

David Boghossian

David Boghossian is a Founder of PowerSteering Software Inc. He has more than 20 years of experience in the Six Sigma and business process improvement field, where he has focused on using innovative tools to deliver more focused strategic information to decision makers.

As a management consultant, Boghossian pioneered the use of "hoshin" and "strategy deployment" tools for the implementation of corporate strategy, one of the core tenets of the PowerSteering product line. He also developed and implemented one of the first on-line distance learning programs to teach quality and strategy concepts to front-line managers.

Boghossian holds AB and MPA degrees from Harvard University. He also held a year-long appointment as a Lucius Littauer Fellow at Harvard's Kennedy School of Government, focused on business/government relations.

Comments

Excellent article!

Excellent article! Enterprise performance, enterprise excellence, what ever you want to call it, it's all about planning how to execute to get to the 'future state/to be' level. I've taken "forgive human error, but not process error" out of my screen saver marquee and replaced it with "strategy, in the absence of effective action and execution, is meaningless." Beautiful! Thank you.