Operationalize Your Strategic Plan Using Lean Six Sigma
Charan, R. & Colvin, G. (1999). Why CEOs Fail. Fortune, June 21: 68-78
Sixty to ninety percent of organizations fail at executing their strategy (Kaplan & Norton, 2004). According to Charan and Colvin (1999) in their article, “Why CEOs Fail,” an estimated 70% of companies fail at this, not because of bad strategy, but as a result of poor execution. If you find yourself constantly pushing to meet strategic objectives, pulling teams back into alignment, or wondering why improvement projects fail to produce the intended results, you may need to take a hard look at your strategy execution abilities.
A great tool any organization can use for successful strategy execution is Lean Six Sigma (LSS). Lean Six Sigma is a management science methodology focused on identifying the critical drivers of success, eliminating defects, and removing any non-value added activities (waste). This methodology utilizes a framework that systematically steps through a set of phases – Define, Measure, Analyze, Improve, and Control (DMAIC) – to guide project activities. Even if you’re new to LSS and don’t have a comprehensive system in place, you can still take advantage of the tools and the overall approach.
The first step in a successful Lean Six Sigma strategy execution process is to facilitate senior leaders through GE-style Action Workouts, using LSS tools and techniques to create tactical plans that nest with strategic goals and objectives. In my experience, most strategic plans are long, drawn-out, elaborate documents that brief well but lack practicality for managers to implement with little direction. Even senior-level executives dread reading through them.
During the Action Workout, the organization’s strategic plan is translated into tactical, understandable actions for each department, with associated metrics and performance indicators selected. This approach uses the organization’s primary strategic dilemma as the LSS problem statement. The DMAIC framework is then used to guide the organization through a series of steps that prioritizes goals, systematically identify critical objectives, and map core processes that impact value creation. Throughout the process, basic LSS tools, such as Failure Modes and Effects Analysis (FMEA), Quality Function Deployment (QFD), X-Y Matrix, and Kano model, are utilized. You can then move on to making those critical decisions that involve prioritizing projects/activities and focusing resources/investments.
After the tactical plans are developed, you have to put in place appropriate metrics to chart progress and use tollgate-style reviews to monitor progress against your goals and objectives. This type of rigor should be relatively seamless to adopt if LSS is already engrained in your organization’s culture. If it isn’t, you can still get value out of this approach by following the same steps, but instead of using the LSS vernacular, use a vocabulary that is familiar to your company. For instance, “tollgate reviews” can simply be called “management reviews” or “status update meetings.”
Using LSS as a management tool to create tangible actions that nest with your strategy translates the organization’s plans into relevant, practical, and pragmatic actions that will resonate with managers, thus increasing the likelihood of successful implementation. Having a strategic plan, in and of itself, is no guarantee of success. Without skilled, precise execution, you will waste the precious resources you’ve devoted to your attempts at improving your business and your bottom line.
Kaplan, R. S. & Norton, D. P. (2005). Creating the Office of Strategy Management. Harvard Business Review.