Accelerate Digital Transformation with Lean Six Sigma
Covid has fundamentally changed consumer habits and the ways of working for organizations across sectors. Inflation and resultant price increases is forcing consumers and business to make increasingly difficult choices. The pace of change is requiring organizations to accelerate development and roll out new services and products, redeploy & reskill talent at scale, meet ever increasing customer expectations and run operations productively to control costs. This requires managing both Business Operations and Technology excellence, at scale while minimizing risk of failure.
To bring about certainty in execution in a complex and ambiguous environment, Organizations can look at leveraging synergies in two well established practices Lean Six Sigma and Digital Transformation. Companies like GE and Motorola made Six Sigma wildly popular with documented savings in billions. With the advent of cloud, big data and Agile processes, Digital transformation has taken off over the last decade.
The perspectives are based on my experience in Business Process services and how these two practices have shaped it over the last two decades.
Defining Lean Six Sigma (LSS)
As per ASQ (The American Society for Quality)(1),
“Lean Six Sigma is a fact-based, data-driven philosophy of improvement that values defect prevention over defect detection. It drives customer satisfaction and bottom-line results by reducing variation, waste, and cycle time while promoting the use of work standardization and flow, thereby creating a competitive advantage. It applies anywhere variation and waste exist, and every employee should be involved.”
LSS prescribes an improvement process known as DMAIC (Define — Measure — Analyze — Improve — Control) for improving existing processes. For developing a new product, service or process, there is a modified version called DFSS (Design for Six Sigma). The process most often used in DFSS is called DMADV (Define — Measure — Analyze — Design — Verify)(4).
Having led large business operations in services industry, and working with many LSS Black Belt and Green Belt certified experts, the results are truly amazing.
· For employees, LSS helps in taking out non-value-added activities and helps them continuously improve key metrics
· For customers, LSS delivers consistent, reliable, and quality services leading to better customer satisfactions
· For organizations, LSS improves bottom-line by reducing waste and returns. Constant focus on improvement improves innovation and competitiveness.
· LSS is also technology agnostic, with more focus on operational excellence than any particular technology
Effective LSS requires management support, strong governance and buy in from multiple stakeholders. The best part of LSS is the very structured approach, starting with Defining the problem, laying out the stakeholder map, building business case for execution and finally validating the benefits with proven financial or non-financial numbers (customer satisfaction etc.). Its highly data driven and proactively focuses on identifying and containing risks.
The strength of LSS comes from being a well-established practice with many industry trained professionals. It forces a collaborative effort from multiple stakeholders, effective communication and focus on metrics and tangible benefits. The knock on LSS has always been that it is rooted on continuous improvements ranging 3–10%, takes too long to deliver benefits and perception of being complicated.
Defining Digital Transformation
Digital is a widely used word under various contexts. It is common to hear terms like Digitization, Digital Transformation, Digitalization, Hyper Automation, Digital Business Transformation etc. used interchangeably. As per Gartner(2,3) “Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.” For this article, we are more aligned to Gartner’s Digital optimization, which is “the process of using digital technology to improve existing operating processes and business models.” Legacy modernization with cloud or moving services online or creating new app-based business are not considered.
What are the typical Digital Transformation Levers?
· RPA (Robotic Process Automation)
· Lowcode
· Intelligent Automation
· Big Data and Data Science AI/ML
· Mobile Apps
· Cloud and API
Individually each of these technologies have delivered business benefits across industries. Deeply funded technology companies though have hyped the value of their products as a panacea for all business challenges.
Why do many Digital Transformation projects fail?
While technological issues (interface changes, data changes, legacy technology etc.) do impact project implementation, the bigger cause is lack of perceived business value due to unrealistic expectations.
· Many organizations setup COE (Center of Excellence), either under Business or IT, based on tools like RPA COE, Lowcode COE, AI/ Analytics COE etc. This leads to technology defining the ways business operations is run
· Use cases are analyzed by these COEs with lens of “Will this tool fit this use case” and “Will it deliver ROI.”
· Very rarely organizations take the pain and effort to fully understand the end-to-end processes, understand the broken parts and why many tasks are performed the way they are today
· More often this leads to Fixing the Symptom and not the Root Cause. Once the euphoria of shining new tool wades, businesses start to question the real value and things go south.
Synergizing LSS and Digital Transformation
To combine the best of both worlds to execute Business Operations Transformation, an operating model can be established comprising of Transformation Office and Transformation Execution.
The Transformation Office is defined as below
· Goal is to structure the transformation including practices such as defining Business Need, developing the Business case, creating a backlog, risk and change management, value realization and communication
· Comprises of cross-functional team of Lean Six Sigma practitioners, Business subject matter experts and Digital Technology Architects
· The team looks at the problem/ need wholistically capturing As-Is, Gap Analysis, developing To-Be models, performs deep data & process analysis, develops target Business & Technology architectures, and gets necessary sign-off from Business and IT stakeholders. An overarching DMADV / DMAIC framework can be applied here
· Other best practices also include documenting best practices and knowledge articles, creating reusable assets, retrospective to learn together etc.
The Transformation Execution is defined as below
· Goal is to execute the backlog and deliver the transformation projects
· Usually comprises of multiple PODs (Product Oriented Delivery) or cross functional team for design, development, test, infrastructure and run of a program component ensuring self sufficiency
· The PODs can vary depending on the target technology solution with skillsets including Scrum Masters, Developers, UI/UX, Cloud Engineers, Business/ Technology Analysts etc.
· Agile development methodology breaks down the timelines into incremental sprints delivering to target customer
In the big picture, the Transformation Office is creating a steady stream of transformation projects that are tangible, valuable to business and realistic with Executive and other stakeholder buy-in. The Transformation Execution ensures that the projects are implemented incrementally with value realized tangibly.
The Transformation Office today has a lot of technology solutions to strategize programs. These include
· Big Data and powerful features in modern BI platforms can provide deeper insights to understand customer and process journeys to define a more refined problem statement
· Tools are available in market that record processes and automatically generate documentation capturing process level activities, variations, metrics etc.
· Visual collaboration platforms to connect, collaborate, and co-create in one space across geographical locations
· Innovation/ Transformation Portals for democratizing ideas across Business Units, managing the lifecycle of opportunities from conceptualization to value realization
With such structure and technologies at their disposal, Organizations can look at larger transformations such as
· Procure to Pay from Ontime Payments to End to End Straight Through Processing, Supplier Collaboration & Performance Management
· Contact Center from managing Service Levels (Abandon, Average Speed of Answer) to Customer Experience based on Sentiment Analytics, Voice & Chat BOTs, Digital Twin, and Channel deflections
· Retail Master Data Management to Master Data Experience for cross channel consumption
· Healthcare claims processing from processing & paying claims to better manage medical costs and improve customer interactions(6)
· Life Science Clinical Data Management from managing disparate clinical datasets to anomalies & pattern detection and faster submission of study
Overall, this provides a framework to realize higher business benefits continually while minimizing the risk of technology investments.
References
1. ASQ https://asq.org/quality-resources/six-sigma
2. Garner Glossary https://www.gartner.com/en/information-technology/glossary/digital-transformation
3. Gartner Research “Digital Business Ambition: Transform or Optimize?” https://www.gartner.com/en/documents/3753470/digital-business-ambition-transform-or-optimize-
7. Pictures https://unsplash.com
