While multiple continuous improvement methodologies are used worldwide, they all have one thing in common. They each rely on a scientific approach to problem-solving. Because of that, they offer increased customer satisfaction, lower operating costs, more engaged employees, and overall more successful organizations.
Most of these process improvement approaches have roots in the manufacturing sector but have been adapted to fit every industry, from healthcare to construction. In addition, some organizations use a hybrid approach, choosing the tools and techniques from each methodology that make the most sense for their particular situation.
This post outlines six popular continuous improvement methodologies and some resources to dig deeper into.
The Six Sigma methodology got its start at Motorola and then, famously, became a fundamental strategy at General Electric in the 1990s under CEO Jack Welch. Six Sigma relies on statistical data to help business leaders understand how well their processes operate. A process is optimized when it produces fewer than 3.4 defects per one million opportunities.
Six Sigma is usually associated with manufacturing because it helps eliminate defects and improve productivity. Consistency is the key to customer satisfaction in manufactured products. However, the core concepts and desire to produce error-free products and services apply to every industry.
The primary technique used in Six Sigma is DMAIC.
- Define: Describe and analyze the opportunity for improvement.
- Measure: Statistically describe the performance of existing processes.
- Analyze: Identify and test the root causes of problems and ensure that improvement is focused on them.
- Improve: Adjust the process by addressing the root causes of defects or delays.
- Control: Implement measures to prevent deviations from the improved process.
Getting the first step right is the key to a successful DMAIC project. During the define stage, teams often use a fishbone diagram, also known as an Ishikawa diagram, to visually understand the potential root causes of a defect. The "head" of the diagram, which looks like a fish skeleton, contains the problem definition. Each section that forms the fish's spine includes different categories that can lead to the problem. This approach helps teams narrow down and address the root cause.
As the name implies, the Lean business methodology is about eliminating waste from the production process, but it isn't simply a cost-cutting approach. Instead, Lean is all about providing maximum value to the customer, which means removing activities and resources that aren't necessary. Cost reduction is an end result of reducing waste, such as reducing defects and improving delivery to customers. Like, Six Sigma, Lean started in the manufacturing sector, but its principles and techniques are broadly applicable.
James Womack popularized the term "Lean" in his book "The Machine that Changed the World," published in 1991. It is centered on the set of philosophies, techniques, and culture developed by Toyota, which is widely regarded as the most enviable manufacturing company in the world.
The five foundational principles of Lean are:
- Identify value as defined by the customer
- Map the value stream
- Create flow
- Establish pull
- Engage in continuous improvement
Value stream mapping allows Lean leaders to identify and eliminate eight categories of waste, including:
- Over Production
- Over Processing
- Human Potential
Lean is widely known for this set of tools and techniques for engaging employees at every level in an organization to identify and solve problems. The ease of applying and learning these tools and the appeal of Lean's visual management approach contributes to its popularity.
The greatest potential with Lean comes from its use as a management system and an organizational culture, moving beyond the tools to being that full business system -- Danaher being another example of such a company, one that's based in the U.S.
Lean Six Sigma
Lean and Six Sigma are not mutually exclusive. Many organizations combine the methodologies to customize their approach to improvement. While Six Sigma focuses on reducing process variation and implementing process control, Lean eliminates waste and promotes standardization and seamless flow of work in progress. Lean Six Sigma recognizes that process improvement requires aspects of both approaches.
The Lean Six Sigma methodology is a data-driven method for improvement that prioritizes defect prevention over defect detection. It aims to improve customer satisfaction and profitability by reducing waste, variation, and cycle time, while at the same time promoting standardization and flow. Lean thinking applies across the organization, and every employee is involved.
While DMAIC still has a place in Lean Six Sigma, many organizations use an alternative improvement cycle: PDSA.
- Plan: State the problem and explore possible solutions to the root cause.
- Do: Implement solutions on an experimental basis.
- Study: Gather metrics to compare with the baseline to determine if the desired goal was met.
- Adjust: If the solution was successful, adjust the standard work to reflect the change. Otherwise, begin the process again with a new hypothesis and experiment.
Total Quality Management
Total Quality Management (TQM) has been around somewhat longer than the Six Sigma and Lean approaches. It got much attention when the US federal government started using it in the 1980s. Like the other methods, the application of TQM varies from organization to organization, but it generally rests on the following principles:
- A systemic and strategic approach is necessary to achieve long-term goals.
- Quality is seen through the eyes of the customer.
- All employees work together to achieve common goals. Effective communication is essential to ensure that everyone understands the definition of quality.
- Standard work processes are necessary to prevent variation and defects.
- Continuous improvement is necessary for competitiveness.
Agile is an improvement methodology that grew in the software development and project management arenas. It is designed to maximize resources while delivering the most significant possible impact in the least amount of time. While it is optimized for highly innovative types of work, it has been adapted for other sectors where a high degree of flexibility and adaptability is necessary to meet current and future customer needs.
Agile started in the 1990s when software development took so long that by the time the product was ready, the market need no longer existed, or the requirements were changed entirely. To address this "application development crisis," 17 thought leaders came together to produce the Agile Manifesto, which defined the 12 principles of Agile.
While it started as an approach to software development, Agile is used by almost every industry and business function. Many of the original Agile Alliance members built other popular improvement structures such as the Scrum method, Kanban, and Integrated Agile. Unlike Lean and Six Sigma, Agail gives complete freedom to the project team. It does not include prescribed improvement cycles or frameworks. As long as the team keeps to the Agile values and principles, they can move forward.
The Lean Start-up method applies the concepts behind Lean manufacturing's approach to process improvement to develop and introduce new products or businesses to the market. The principle is to pull customer or market input into the product development cycle, beginning at the ideation phase. Then, collaboration with the customer is continued until the product is fully developed and the desired business results are produced.
Eric Reis popularized the Lean Start-up method in a 2011 book called "The Lean Startup." Since then, it has become the default method that start-up advisors and incubators use to help new companies quickly produce a product/market fit.
Lean Start-up includes three essential phases:
- Customer discovery: Teams survey the market to understand if the product idea would meet customers' needs.
- Minimum Viable Product (MVP): A product's elements that include the bare minimum of functionality to satisfy the customer's need are defined.
- Ongoing iteration: A series of experiments over short intervals are engineered to achieve the defined performance goals. This continues until the optimal product-market fit is reached and the desired business results are delivered.
Each of these continuous improvement methodologies offers ideas to help any organization improve performance, satisfy customers, and achieve better business results. They all rely on controlled experimentation, widespread employee engagement, and committed leadership. Whether you select one path to follow or combine techniques to choose your own adventure, KaiNexus is here to help.