Instantis Six Sigma Maturity Model TM

Transcription

1 Instantis Six Sigma Maturity Model TM By Prasad Raje, CEO Instantis, Inc. September 2006 Instantis, Inc. All Rights Reserved.

2 Introduction As organizations adopt and deploy Six Sigma, they evolve through several stages of maturity. Until now, however, there has been no formal description of this evolution. The Instantis Six Sigma Maturity Model, introduced here, outlines five levels of Six Sigma development. The intent of the model is to help Six Sigma practitioners, deployment leaders and executives: 1. Benchmark where their companies stand in relation to broader patterns experienced by other organizations. 2. Assess the areas of strength and performance gaps in their deployments. 3. Pinpoint specific steps they might take to close gaps and graduate to the next stage of their Six Sigma journey. 4. Communicate progress to their Six Sigma teams and to the broader community within their companies in order to garner additional support for their continuous improvement efforts. This model has been built out of the experience of working with dozens of leading Six Sigma companies, as well as input from the Instantis Six Sigma executive advisory board consisting of prominent consulting firms, authors and luminaries in the field. The Instantis Six Sigma Maturity Model outlines each of the five levels along various axes and describes the evolution of the organization along these axes as it progresses through the levels. Time frames that organizations typically spend at each level as well. Simple exit criteria define the transition from one level to the next. The model is designed as a general guideline, not a prescriptive roadmap for Six Sigma implementation. The five levels are: 1. Launch - This is the starting point wherein an initial few visionaries in the organization launch Six Sigma, training is initiated and projects are begun. 2. Early Success - The initial projects are yielding results and early successes are being achieved. 3. Scale and Replication - The early success has led to other parts of the organization buying in to Six Sigma and a broader launch of projects is under way. 4. Institutionalization - Throughout many parts of the company, projects are yielding broadbased financial impact. 5. Culture Transformation - Six Sigma is part of the organizational DNA, financial impact is sustained and the Six Sigma culture is pervasive even beyond the Six Sigma practitioners and beyond the company boundaries. Page 2

3 Overview of the Instantis Six Sigma Maturity Model Culture Transformation Culture Change Beyond DMAIC Strategy Maturing Software Reporting Financial Impact Project Selection People Training Leadership Support Launch Anecdotal Ad hoc Burning Platform Driven Few Champion, Exec 1-2 Visionaries Scale Replication Early Success Maps, Goals Excel, Stats Project Tracking Aggregate, Average Aggregate, Average Cost Reduction Consistency, EP Low Hanging Copy Success More Believers Career Development External, BB/GB External, Custom Validated Cross-Org Institutionalization DNA of Org. DFS, Lean IT, New Pdt Dev Project Roll-up Full Closed-Loop Portfolio Mgmt Strategy + Portfolio Cross-org Comps Validation; TLG Idea Pipeline Repatriated Internal, elearning Expected Multi-Year History General Ledger Formalized Eval Majority Internal, Specialty Ingrained Level 1 Level 2 Level 3 Level 4 Level Months 6-18 Months Months Months 36+Months

4 Level 1: Launch Typically, Six Sigma is launched within an organization as a result of a burning platform in the business, the arrival of a new CEO with a prior Six Sigma background, a competitive benchmarking exercise or a bottom-up effort in a business unit. Thus, the launch can be topdown or bottom-up, but launches are generally quicker and more successful when they are topdown. The launch usually occurs with the help of an external consulting and training firm. Consultants typically preside over initial executive and Champion sessions designed to establish the potential impacts of Six Sigma on business operations, revenues, costs and the company culture. There is buy-in to start the initial training sessions to certify a core group of Black Belts and Master Black Belts who will lead the initial projects. Organizations generally appoint a vice president or director of Six Sigma who reports to an executive sponsor and whose charter is to ensure a successful deployment of Six Sigma. In bottom-up launches, there may not be as much senior executive involvement; support may only exist at a divisional level. Table 1: The Axes of Launch Axes Leadership Support Training People Project Selection Financial Impact Characteristics Initial visionaries needed to provide impetus for adoption; topdown or bottom-up Executive buy-in via external trainers; Champion training; initial Black Belts identified and trained A few driven believers, rest of the organization mostly skeptical Usually a burning platform provides focus, but need to avoid boiling the ocean ; need to manage excessive expectations None yet, no projects completed Reporting None yet, no projects completed Key Challenges: To ensure that the initial team executing the Six Sigma effort has the necessary support in the organization, and to ensure proper project selection in order to drive successes at the next level. Duration and Next Level: This level typically lasts between three and nine months. An organization moves to the next level when initial training is completed and the first set of projects is under way, although not yet completed. Page 4

5 Level 2: Early Success At this level, the initial projects are well under way - many have been completed. Improvements have already demonstrated significant financial and other impacts. The support that was given to the initial team is being validated by the early results. This is a critical show me stage, where it is important for the early successes to be made visible so the rest of the organization can see the real impact from Six Sigma. This is where the ambiguity and uncertainty about the potential business impact of Six Sigma are replaced by proven, relevant examples of business problems faced by the company and addressed by the successful application of Six Sigma. Table 2: The Axes of Early Success Axes Leadership Support Training People Project Selection Financial Impact Reporting Software Characteristics The initial projects completed validate the vision of the leadership A few waves are completed, usually still external Initial results are helpful; but rest of the organization is still waiting to see if this will affect them Low-hanging fruit (easy to identify projects that will yield high impact) are plentiful Initial results are having some impact; usually focused on cost reduction No consistency yet, no roll-ups because number of projects is still small Focus is on statistical tools for the Belts Key Challenges: To ensure that projects are completed in a reasonable time and that they have meaningful financial impact on the business. Duration and Next Level: Typical companies stay at this level for between six and 18 months. A company moves to the next level of Six Sigma maturity when the initial successes have led to the other organizations in the company beginning to adopt Six Sigma.

6 Level 3: Scale/Replication At this level, the company has experienced solid success from the initial deployment and other parts of the company are buying into Six Sigma. This is the stage at which the Six Sigma effort scales across the company and gathers momentum. Many waves of training are in progress across many parts of the company. Projects are being pursued at multiple organizational levels. Table 3: The Axes of Scale/Replication Axes Leadership Support Training People Project Selection Financial Impact Reporting Software Strategy Maturity Characteristics Decision to drive Six Sigma throughout the company, leadership across the company buys in Many waves across the company; often external trainers; content is customized to the company Six Sigma now seen as a career development path; change agents throughout the organization see a platform that works Usually replication of the patterns of success already done (similar projects for similar problems in plants/distribution centers, etc.) Consistent measures of impact are in place Enough projects completed so that average impact per project, per Belt, etc. can be predicted; aggregate impact across the organization is significant Software goes beyond statistical tools to project tracking; consistent application of methodology and financial impact reporting is ensured Creation of strategy maps to ensure that the mass of projects under way are aligned with corporate and organizational priorities Key Challenges: To ensure that the methodology is consistently applied in other parts of the company, and to ensure that financial impact and results are replicated. It is important to have a strong company deployment leader who ensures consistency of methodology and results. Duration and Next Level: The Scale/Replication level typically lasts for between one and three years. A company goes to the next level when significant financial results have come in throughout the various organizations in the company and significant financial impact is being reported company-wide. Page 6

7 Level 4: Institutionalization At this level, it is not just replication of the success of another organization, but replication of the success within each organization in the company. There is enough financial impact from projects in each organization that meaningful comparisons can be made between organizations on average project impact, average cycle time, total impact, etc. The Six Sigma processes have become institutionalized throughout the company. Table 4: The Axes of Institutionalization Axes Leadership Support Training People Project Selection Financial Impact Reporting Software Strategy Maturity Beyond DMAIC Characteristics Top leadership across the business units, geographies and divisions are all expected to be Six Sigma supporters Very large scale; usually internalized, use of in-house Master Black Belts as trainers; e-learning is used for scale Initial Black Belt waves have been repatriated, with enhanced career prospects and positions in the organization Formal idea-generation/evaluation process in place to ensure continued flow of meaningful projects; no more low-hanging fruit Strict controls in place to ensure validation of results; measures evolve to include revenue impact Comparison of results for each organizational unit is done; aggregate corporate-wide results are reported Project tracking typically evolves to include knowledge management and portfolio management Strategy maps at corporate and organizational level; going beyond alignment, to actually launch projects to impact the strategic goals DMAIC is mastered; but DFSS, Lean, Kaizen, etc. also are integral parts of the organization Key Challenges: To set up consistent processes for Six Sigma execution. For example, consistency should be achieved in areas such as project selection and scoring, approvals,

8 financial impact measurement and validation, project execution roadmaps, reports, Belt training, etc. This should be pursued while allowing for controlled variation in different parts of the company, ranging, for example, from manufacturing to transaction-heavy organizations. Duration and Next Level: The institutionalization level can last from between two and four years, or more. A company progress to the next level after multiple years of company-wide adoption of Six Sigma leading to Six Sigma being embedded throughout all parts of the company. Page 8

9 Level 5: Culture Transformation At this level, the company has had sustained success with Six Sigma for a long period. Six Sigma is embedded in the company DNA. Six Sigma is the way we do business is truly practiced. The methodologies of Six Sigma are applied not just to Six Sigma projects and by people trained in Six Sigma, but throughout all execution processes. Six Sigma also has been applied to the extended enterprise customers, vendors, distribution chain and supply chain for mutual benefit. The culture is data-driven, process- and metrics-oriented and focused on financial impact. Table 5: The Axes of Culture Transformation Axes Leadership Support Training People Project Selection Financial Impact Reporting Software Strategy Maturity Beyond DMAIC Culture change Characteristics Top leadership across the business units and geographies are all expected to be supporters Very large scale; usually internalized, use of in-house MBBs as trainers; e-learning is used for scale Initial Black Belt waves have been repatriated, have risen in career stature and position in the organization Formal idea-generation/evaluation process in place to ensure continued flow of meaningful projects; no more low-hanging fruit Strict controls in place to ensure validation of results; measures evolve to include revenue impact A results comparison is routinely done for each organizational unit; aggregate corporate-wide results are reported Integrated portfolio and strategy mgmt across the enterprise; replacement of legacy with vendor apps Full closed-loop of strategy, to projects, to roll-up of project results, to strategic goals Six Sigma is being applied in spirit to all project portfolios new products, IT projects The entire organization operates at a higher performance level; Six Sigma is embedded in the culture; extends to customers, vendors, supply chain, distribution chain.

10 Key Challenges: To continue to keep Six Sigma fresh and to innovate in the new areas where it can be applied as the company inevitably goes through natural business cycles of growth, threat, acquisitions, etc. Duration: There is no end-point or duration at this level. Page 10

11 Technology Requirements The proper use of software technology is essential to ensure success at each level of maturity. The following are some basic software requirements. 1. The software should provide capabilities to drive alignment between strategy and execution so that there is a clear line of sight between project selection and results and stated strategic imperatives and priorities. 2. The software should support robust executive-level reporting to properly roll up the aggregate financial impact of Six Sigma on the company. For the belts, reporting should be designed to facilitate the daily monitoring and execution of projects. 3. The software should support rich built-in reporting and dashboarding, as well as flexible access to the raw data to enable user-defined reporting. 4. Software should ensure consistent application of the methodology and support knowledge sharing and collaboration. 5. The software functionality should scale as the project scope grows and matures from Level 1 to Level The software performance should scale from a few belts to thousands of users and from a few projects to tens of thousands. 7. The software should be easy to use for daily routine tasks, but also be robust and sophisticated enough to support the more complex needs of large (Level 5) organizations. 8. The interface should be constructed so that sophisticated features stay hidden if they are not needed, but can be enabled as the initiative matures. 9. The software architecture should be flexible to enable changes over time and enable easy migration of old projects and data to new versions.

12 Instantis EnterpriseTrack Instantis EnterpriseTrack meets these basic requirements and goes well beyond them in order to address the needs of the largest and most sophisticated Six Sigma deployments. EnterpriseTrack is designed to scale with the needs of organizations as they graduate from Level 1 to Level 5. The table below lists some of the key features of EnterpriseTrack and their relevance at each of the Levels of Six Sigma Maturity. Level 1 Level 2 Level 3 Level 4 Level 5 Feature Launch Early Success Scale Institutionalization Culture Change Idea evaluation Idea portal Approval workflows Chartering process Charter scoring Confidentiality Integrated to Statistical tools Integrated with ereference, training Project Roadmaps Tollgates Flexible roadmaps by organization Project Team definition Flexible team by organization Project Metrics Standard financial model Flexible financial model Financial approval workflows Flexible financial workflows Project level automated storyboards Executive Dashboards What-if scenario dashboards Built-in reports Flexible data extraction Searchable Knowledge base Document repository Best Practices sharing Project replication Hierarchical Strategy Maps Strategy Alignment to projects Project financial rollup to strategies Project metrics rollup to strategies Support for portfolios beyond Six Sigma Page 12

13 Next Steps Recommended next steps are as follows: 1. Assess your own company s level in the Maturity Model. You may do this internally by benchmarking with other companies or with the help of a consulting firm. 2. Perform a gap analysis and identify what critical dimensions need to progress at your level of maturity. 3. Communicate the findings to others in your company and get buy-in to fix the gaps. 4. Lay out a roadmap of how your company should get to the next level and work towards getting there. 5. Assess your needs for software to help you on the journey. 6. Contact Instantis for further details on the Maturity Model and how we might help with your Six Sigma journey. About the Author: Prasad Raje is the founder and CEO of Instantis, a provider of ondemand software for managing top-down initiatives to improve financial performance and achieve operational excellence. Dr. Raje has 19 years of experience in the technology industry, and he has led Instantis in the deployment of Six Sigma software at dozens of leading Global 1000 companies such as Credit Suisse, McKesson and Xerox. He has a doctorate in electrical engineering from Stanford University and is the inventor on eight U.S. patents.