Why Continuous Improvement Programs Fail: One Approach Fits All
Numerous business leaders have spoken up against using Six Sigma in innovation. This is a classic case of one size does not fit all. Six Sigma should be used where the process is structured and the company is trying to make the process more efficient and effective. Unfortunately, creativity and innovation does not follow a set or defined process and companies that have applied a rigid Six Sigma approach to the innovation process have undoubtedly suffered (readers should note the emphasis on the word rigid). 3M corporation which was renowned for its innovations a decade ago is an apt case in point where, after years of applying Six Sigma across all functions and measurably reducing innovation–which was the core competency of the company, it was finally dropped as a continuous improvement tool in R&D in 2007. As a corporation, 3M dropped from the Bloomberg Businessweek 2010 list of The 50 Most Innovative Companies Globally for the first time since 2004 when it was ranked number one. When James McNerney was hired as the CEO of 3M in 2000 from GE, he brought the Six Sigma concepts that were popularized by Jack Welch.
The Six Sigma methodology, in fact, did help 3M in improving their processes and profits. As the Businessweek article states, “This Six Sigma drive undoubtedly contributed to 3M's astronomical profitability improvements under McNerney; operating margins went from 17% in 2001 to 23% in 2005.” However, the company found out that creativity was getting stifled when applied to the innovation process. George Buckley, the CEO who took over in 2007 said, “Invention is by its very nature a disorderly process” where a structured framework like DMAIC or DFSS will not be best suited. As of 2011, Six Sigma is still a preferred continuous improvement methodology at 3M but primarily in the supply chain and manufacturing areas. Note: even though Six Sigma was discontinued in the R&D division in 2007 at 3M, the company has not been able to make it back into the list of most innovative companies. So, the problem that 3M is facing in coming out with innovative products might be symptomatic of other issues within the company and not necessarily because of the deployment of Six Sigma across 3M.
In a creativity conference sponsored by the Harvard Business School, Mark Fisherman, MD, president of the Novartis Institutes for Biomedical Research stated that, “If there is one device that has destroyed more innovation than any other, it is Six Sigma.” Having said that, as leading neuropsychologist Madeleine Van Hecke et al. who have studied the effect of Six Sigma methodology on innovation said in The Brain Advantage, “The point is not to say that Six Sigma isn’t valuable–just that there are times and places to apply it.” A good example of where Six Sigma can be applied over the lifecycle of an innovative invention would be the new product introduction or new product development process. Once the creative thinkers and innovators have come up with a potential product, the design for Six Sigma methodology can absolutely be applied to develop a product that is free of defects, is launched on-time and within budget, and meets the customers’ requirements.
Another approach would be to apply tools like Quality Function Deployment, which is widely used in DMADV projects, to map current capabilities with customer needs and identify products for the future. Furthermore, Lean methodology and concepts of Kanban and Value Stream Mapping can be applied to reduce waste and inventory in the process, engage suppliers and distributors, and ensure lower costs in product development and distribution which in turn lead to higher margins for the business. In the article “Is Six Sigma Hard Sell Now?” that appeared in the Chief Executive.net, Mike Nichols, president of the American Society for Quality was quoted as saying that, “Six Sigma as well as Lean and Process Management can help any organization execute better, and meet and exceed customer’s expectations.” He also believes that “the better a company becomes at executing, the more opportunities it opens up for innovations.”
A much better example of the wrong application of Lean would be when a company is downsizing and reducing its workforce. Even though many leaders still do so, Lean should not be used as a tool to reduce workforce. As an eZine article states, “When a company needs a transformation, or specifically headcount reduction, this should be done prior to any continuous improvement initiative. [I]t is critical for Lean's success to educate the executives to the problems with headcount reduction. [P]eople will not find a way to eliminate their job [using Lean techniques].” Such kinds of initiatives are almost always set up to fail.