You can’t get somewhere if you don’t first evaluate your suitability for the journey. Nor can you make that journey if you don’t have a clear sense of where you’re going. That’s why you need to assess where you are, where you’d like to go, and how well equipped you are to get there—before you take your first step. Especially if you’re an organization that wants to achieve ambitious business goals.

In this chapter, we’ll cover the basic concepts, activities, and tools involved in assessing your organization’s readiness for change. We’ll show you an assessment road map, and we’ll cover the mountaintops of assessing your business needs, working culture, strategic intent, competitive position, and personnel. Finally, we’ll summarize what’s involved in surfacing opportunities for improvement that become Lean Six Sigma projects.

Three activities are key for Lean Six Sigma leaders as they engage in the Assess phase of deployment. First, you assess your organization’s readiness for change. Second, you evaluate your market, customer, and organizational situation. Third, you conduct an opportunity assessment that yields a list of Lean Six Sigma projects for practitioners to tackle.

Your first assessment step is to define your organization’s performance-improvement needs. From there, you can learn more about how ready your organization is for real change. Finally, you can figure out who your greatest change proponents are, and who will be slower to change. You’ll have to work both ends of this spectrum to be successful with Lean Six Sigma.

Regardless of the size and complexity of your organization, you need a rigorous and efficient assessment approach that will quickly define your current performance, and especially identify shortfalls. Basically, your Needs Assessment should look for burning platforms—reasons your organization needs to change significantly and quickly. Some of these could include increased competition, customer satisfaction issues, erosion of market share, need to cut costs, need to grow revenue, and desire to change the culture.

You’ll need a burning platform for change to enroll your organization into the ways and means of Lean Six Sigma. And you need to enroll people convincingly because Lean Six Sigma involves a lot of discipline and extra effort for a lot of people. Basically, you’re asking everyone in the organization to define, and refine, the way they think about and do their work.

Most well-designed and well-managed performance-improvement initiatives have a significant impact on an organization’s culture. And when this is the case, you can expect to encounter resistance. That’s why you’ll want to address this resistance by raising awareness of your Lean Six Sigma initiative as early in the process as possible.

The way you can assess your organization’s readiness for change is to collect some data. Find out if the culture of your organization is geared for Lean Six Sigma. Use climate surveys, stakeholder interviews, and power and influence charts. Use, too, any lessons learned from past initiatives that succeeded or failed. Interview specific executives, managers, and employees.

Responses to the following questions can help you assess the cultural readiness of your organization for change:

We covered a process and some tools for assessing Lean Six Sigma project stakeholders in Chapter 9. These include the Stakeholder Analysis tool, the Power Influence Map, and the Stakeholder Action Plan. We refer you back to this chapter for details, because these tools also apply to assessing the stakeholders involved in a Lean Six Sigma initiative.

Using these tools, you should focus your stakeholder assessment on the executives and decision makers in your organization. As well, you should strongly consider using an objective party from the outside to help with this task. It’s difficult to clear the way for Lean Six Sigma deployment without clearing certain hurdles at the executive level; and it’s difficult to clear those hurdles without the involvement and initiative of an outside force.

Don’t underestimate the importance of your stakeholder assessment and resulting Stakeholder Action Plan. Any initiative that requires significant change, such as Lean Six Sigma, must have strong, steady, and real support from leaders at all levels of the organization. Some pointers to this end include …

Your next assessment step is to understand several important aspects of your current organizational situation. Specifically, this includes understanding your intended strategic direction. As well, you’ll need to assess market trends and your competitive position in your industry. Further, you’ll look at your customers’ needs and wants, and how well you’re meeting them. And finally you should conduct an assessment of your people: who are they, and how capable are they of leading and implementing Lean Six Sigma?

It’s important to make sure your Lean Six Sigma deployment plans are aligned with your organization’s strategic priorities. And you can achieve this by following a process that, while simple, requires a good deal of work, negotiation, communication, and tenacity. Generally speaking, here are the steps you should follow:

Lean Six Sigma empowers steps 2 through 4, and arguably step 1 as well. It’s easier to have a bold vision if you also have a way of achieving that vision. With Lean Six Sigma, you have a rational way to develop cascading business objectives and metrics. You also have the tangible skills and practitioners you need to translate strategy into action (Lean Six Sigma projects).

No one likes surprises—and this is especially valid when it comes to market changes and competition. That’s why you want to assess your company’s position in the competitive landscape. Then you can use this information to determine the focus and pace of your Lean Six Sigma rollout.

The key to assessing your market and competitive position is to manage the future by transforming information into intelligence, and transforming intelligence into strategic and tactical initiatives. The tools you can use to do this include Market Needs Analysis, Trend Analysis, SWOT (Strengths/Weaknesses/Opportunities/Threats) Analysis, Growth Analysis, and the Boston Consulting Group Segmentation Matrix.

To cope with change, every business must regularly define and evaluate its customers’ needs, wants, and desires. But this is only part of the equation. The other part involves looking at your products and services and assessing their value proposition to the customer. In other words, how well are your products and services positioned relative to the competition in providing customers what they want?

Some questions you can ask to help you figure out your customer value proposition are:

Of course, these are very simple and broad questions, while the practice of customer assessment can be deep and extensive. This is especially true for larger organizations with so many different products and services and very large numbers of diverse customers. Therefore, the key to remember is: always listen to your customers and don’t assume you know what they want or need. Ask them!

And don’t assume they’re happy with you, either. Create formal listening posts, like feedback cards, to measure how they feel. Find out where you’re falling short, and target these areas as priorities for Lean Six Sigma.

As much as Lean Six Sigma is a critical method for improvement, you need the right people to really make it happen. Therefore, you need to assess your human resource capabilities prior to designing your specific deployment. This way you can determine where you are strong, and where you may have human resource gaps to fill.

The key to remember is that you need change agents to lead a Lean Six Sigma initiative, and also to implement the associated projects. So whatever assessment process or instrument you use, make sure it can identify the change agents as well as those who are not as open to change. You’ll have to be aware of who’s who in both categories and take actions to 1) empower the change agents and 2) contain those who could oppose change.

Needless to say, strong and tangible commitment to a Lean Six Sigma initiative precedes its success and sustainability. Without a doubt, disengaged leaders and project team members can stall or cause an initiative to fail. On the other hand, positively engaged project team members will yield better and faster results.

Your final assessment step is fully defining and clarifying what needs to be done to achieve the objectives you identified during your Needs Assessment. Essentially, this boils down to defining opportunities for Lean Six Sigma projects that are in direct support of your organization’s strategies and business needs. To this end, there are a number of tasks you need to accomplish. The rest of this chapter outlines those steps.

The following chart shows the steps you go through to select Lean Six Sigma projects. As you do this, you need to communicate often with all your stakeholders. You need also to identify the resources (people) that will be necessary to execute your projects, and to keep the Lean Six Sigma initiative alive.

Research shows that 75 percent of the problems companies face when making improvements are due to their inability to properly manage change. To make organizational improvements sustainable, companies need strong and capable change leaders who know how to enroll others and accelerate acceptance across the organization. Because of this, every successful Lean Six Sigma initiative begins by assembling key business leaders, and setting them on the right conceptual path. And it’s best at this point to hire a powerful consultant who can work with your senior leaders to truly win them over to the Lean Six Sigma philosophy and approach. Without such buy-in and support, your efforts are doomed.

Here are some specific messages you’ll want to get across to your Lean Six Sigma steering committee:

Chapter 6 covers what’s involved in identifying Lean Six Sigma projects, and we refer you there for important details. The key to know is that your ability to select the right Lean Six Sigma projects is one of the most important success factors. Therefore, in addition to the material in Chapter 6, Lean Six Sigma Champions and leaders should use the following 10 devices to pick good projects.

Device #1. Strategy Flow Down. This is a top-down approach whereby you identify improvement projects that align with your strategic objectives. To link projects, you first map your strategies from financial, customer, internal process, and learning standpoints (see the following diagram). For each strategic theme, you then establish measures and targets. Where you have performance gaps, when appropriate, you then convert those gaps into Lean Six Sigma projects.

This shows the general process of translating high-level organizational strategies into Lean Six Sigma projects.

Device #2. End-to-End Process Assessment. The objective of this type of assessment is to identify projects that are associated with your different Value Streams. Major steps in completing this assessment are:

Device #3. Financial Analysis. This type of assessment evaluates detailed financial indicators within the business and identifies performance-improvement project themes. While the tendency is to choose projects on the basis of short-term financial health, it’s advisable to look out to a 12- to 18-month period. Part of the financial assessment includes looking at assets and liabilities, and assessing how efficiently the company is managing scarce resources to achieve its objectives. Finally, you are well served to examine fixed and variable operational costs, inventory levels, product or service margins, and product or service mix—making comparisons with known industry benchmarks.

Device #4. Performance Against Plan. Here you are looking for variances in current performance against objectives, and the main way you do this is using Statistical Process Control Charts (see Chapter 21). Your main objective is to evaluate major budget deviations by studying performance metrics that are statistically in control but unacceptable (Common Causes), and performance metrics that are statistically out of control (Special Causes). Typically, high variation from budgeted performance is due to poor capability of the existing system, extraordinary circumstances, or incorrect forecasting.

Device #5. Organic Projects. This is the act of gathering project ideas from all levels of the organization. Some of these projects may not be strategic in nature but will have financial, customer satisfaction, or employee satisfaction impact. The process for this approach is to facilitate a brainstorming session with groups of employees at various levels, asking them for their ideas on broken processes and other pain points. Ideas are discussed as a group, and are clarified. They are then consolidated for further review and categorization.

Device #6. Customer Process Projects. This assessment involves identifying weaknesses in processes that interface with customers—with the objective of identifying waste and defects. This approach is especially relevant and important in service industries where customer satisfaction is directly correlated with the quality and speed of the customer-facing processes.

First, you identify the products and services for certain customers. Then map the processes that directly interact with those customers. Then identify the key performance measures that link to customer satisfaction. After this, measure your customers’ satisfaction with the products and services, and identify reasons (waste/defects) for any dissatisfaction. This gives you a list of possible Lean Six Sigma projects.

Device #7. Supply Chain Projects. This type of assessment identifies key products and services provided by outside suppliers and documents their performance. When performing a supply chain assessment, you should examine your supply chain strategy, review supply chain processes for defects and waste, and identify gaps in supplier performance versus expectation. Such an assessment should lead to many opportunities for improvement that you can pursue via Lean Six Sigma in conjunction with your suppliers.

Device #8. Innovation and Growth. The majority of projects identified by assessing your innovation and growth processes will become candidates for Design for Six Sigma, or other innovation approaches. However, the Lean Six Sigma approach is the starting point for many of these projects, especially when they’ve already been designed but just aren’t running as intended.

Your intent is to find areas where your products and services are falling short of competitors. This is your indication that something needs to change. If you can make enhancements to your processes without redesigning them, you can use Lean Six Sigma. If the needed changes require fundamental redesign, or invention, then you’ll need to employ other means.

Device #9. Customer and Product Data. Databases of customer complaints and product warranty information can provide a wealth of information for project idea generation. Start your assessment by identifying various channels of customer feedback. These can include customer satisfaction surveys, customer service center information, call center databases, and warranty and repair center information. Your next step is to analyze the data from these sources and identify problems for improvements.

Your analysis techniques and approach depend on how data are collected, classified, and stored. For example, often call center data is stored in categories by type of information. In this case, as a first step, you would complete a Pareto analysis of the information to see if certain categories are more problematic than others. Your most problematic categories, of course, would become your candidates for Lean Six Sigma projects.

Device #10. Compliance Processes. Sarbanes Oxley and other compliance requirements are intended to make sure that certain processes are documented and monitored. Related audits determine the extent to which an organization complies with legislation and maintains control over these processes. Your related assessment approach is to evaluate your regulated processes and their key metrics, looking for weaknesses. These become your opportunities for Lean Six Sigma projects.

Once project ideas are identified using these 10 mechanisms, the next step is to prioritize these ideas using certain filters or criteria. Tools that aid in this process include the Cause-and-Effect Matrix (covered in Chapter 13), and the Benefit/Effort Matrix and the Prioritization Matrix (covered in Chapter 6). These tools provide a structured way for you to determine which project ideas promise the greatest return relative to the effort required.

Once projects are prioritized as described, then you have to determine which methodology is needed. We covered what this entails in Chapter 9, and we provided a nice flow chart to assist in this. The key to remember if you are a Lean Six Sigma Champion is threefold. One, certain project ideas are “Just Do It” projects. The solution is known and you just have to implement it. Two, some projects require design or innovation. These are not Lean Six Sigma DMAIC projects. Three, all other projects having to do with operational improvement can become Lean Six Sigma projects, either implemented within a project framework over time, or through a shorter, more intensive Kaizen Event.

Your last Assess step is to create a Project Charter for each identified Lean Six Sigma project. Your job as a Lean Six Sigma Champion in this regard is to describe the project with a concise Problem and Objective statement. Also, as shown by the following example, you identify your process and its performance level, its planned time frame for completion, its expected savings, and other information.

It’s important that the Lean Six Sigma Belt and Champion sign off on the Project Charter, as well as the finance representative who is confirming that the estimated financial benefits are valid. And it’s not a bad idea for the Process Owner to sign off on this document as well. For more information on creating a Project Charter, see Chapter 9.

An enterprise project tracking solution should be developed or purchased as part of the infrastructure for Lean Six Sigma change. Such software, which we cover more in the next chapter, enables Lean Six Sigma leaders and practitioners to effectively manage their projects, review past projects, collaborate with team members, provide status updates to management, and replicate best practices across the organization.

Imagine a large company running about 2,000 Lean Six Sigma projects in a given year. A good project tracking system allows anyone (with the proper access permission) anywhere in the world to enter or retrieve real-time data by belt, region, project category, financial savings, and so on. In this sense, your project tracking system is a complete Lean Six Sigma dashboard and management tool.

This is a sample Lean Six Sigma Project Charter. This is your guiding document as a Champion or Black Belt.

The Least You Need to Know