Digital Transformation is a major element of strategy for many businesses. But according to studies done by Forbes and McKinsey, most digital transformations are failing. There are many reasons for the failures - some are cultural, some are related to technology, and some are resource based. Regardless of the underlying reasons, a company with a strong Lean and/or Six Sigma program can leverage this program to improve the success of their digital transformation.
Digital Transformation Challenges
According to the Forbes and McKinsey research, the primary reasons for digital transformation failure are cultural. And just to be clear, the reason was “corporate” culture. Issues included top-down decision-making, inappropriate organizational structure alignment, lack of senior management support, and a poor understanding of digital trends and approaches. But the issues were not only cultural. There were also problems with poor process definition and control, and a lack of data and use of data management techniques. Of course, there were also challenges such as finding the right talent, acquiring the technical infrastructure – or finding the right partner to augment the infrastructure, and funding the projects to include the training of the workforce. What is clear is that digital transformation challenges are not limited by the technology. They are limited by the organizational capabilities and resources.
Lean Six Sigma Characteristics
Fortunately, Lean Six Sigma can assist to overcome these challenges. Let’s review the characteristics of Lean and Six Sigma. These methodologies, which are often combined, are problem solving approaches to drive continuous improvement. Lean emphasizes the process flow and knowledge of why the process slows down or is less than 100% effective in delivering exactly what the customer wants. The ultimate goal of Lean is to eliminate waste. Six Sigma relies on a structured problem-solving process that is grounded on data associated with the problem, process and products being studied. The problem is defined from the customer perspective with data. The problem is analyzed statistically using data. A solution is implemented, and data is again used to demonstrate it works and the situation is improved. The ultimate goal of Six Sigma is to eliminate variation and problems. In both cases, you are likely to have a trained cadre of individuals who are accustomed to using a structured process for driving customer-focused continuous improvement that relies on data. If incorporated into the digital transformation approach, these will be a tremendous advantage.
Let’s look at four principles of Lean Six Sigma that can accelerate and support your digital transformation:
Principle One: Understand Your Processes
A common approach for achieving digital transformation is to automate manual processes or even better, to replace them with technology-based systems that can perform the same functions in a fraction of the time and with a fraction of the resources. The Lean Value Stream Map and data boxes for each business process are an excellent method for documenting the existing processes to then either automate them or replace them with a system that has equivalent functionality. A problem that has often occurred when doing digital transformation is that everyone has a different idea of what the digitally transformed system should do. The Lean analysis removes that uncertainty. In addition, a Six Sigma project to find and fix problems in the existing process before it is digitally transformed will help to ensure that the new process does not start off with a fatal flaw. The process knowledge gained with Lean and Six Sigma will accelerate your ability to transform.
Principle 2: Rely on Data
Digital business systems use digital data – lots of data. When implementing a digital transformation, an organization often finds that through the use of the Internet of Things and digital portals for their customers, they are creating massive amounts of real-time data. In addition, the data mining of unstructured databases creates even more data and information. The organization can quickly reach data overload and not know how to prioritize and use the data that is generated. This creates confusion for the organization trying to implement the digital transformation. Lean and Six Sigma establish disciplines for using data to make day-to-day business and process management decisions. The data box found at each step in a Lean Value Stream Map is a great vehicle for aggregating the data and setting warning flags if the data shows the process or product is unsatisfactory. The final phase of Six Sigma, the Control phase, encourages the establishment of statistical process control charts to track process or product performance with real-time data. The use of these disciplines prepares the organization to establish and manage the business operations with data and analytics. When this has become standard practice, it is easy to use more advanced digital tools of a digital transformation to maintain that discipline.
Principle 3: Use Problem Solving Methodology
The third way in which Lean and Six Sigma can improve a digital transformation initiative is to institutionalize a problem solving methodology and continuous improvement mindset. When undergoing a transformation, there will inevitably be some unexpected situations that have a detrimental effect on business performance and customer satisfaction. If these situations are not quickly and effectively resolved, they can derail the entire transformation as both customers and employees reject the new digital processes and products. Lean and Six Sigma provide a structured method to confidently identify the root causes of problems using numeric and statistical tools. They also provide a baseline of performance against which solutions can be evaluated to ensure they have the desired effects. While everyone knows that problems happen, when there is confidence and trust in the methods used to resolve the problem, the organization maintains the momentum that will sustain them through the transformation. Without a trusted methodology, the organization often flips and flops around, trying to decide if the issue is a problem and what should be done about it. This only creates delays and confusion along with extra costs and loss of customers. Over the years, Lean and Six Sigma have established a proven track record of problem solving and continuous improvement.
Principle 4: Establish Culture of Customer Preeminence
The fourth way in which Lean and Six Sigma will assist in a digital transformation is by keeping the organization’s focus on the customer experience and customer impact. It is very easy when implementing process and technology changes to become internally focused. After all, that is what you are changing. Yet in digital industries, the customer has increased power and the customer experience is often the most important factor in determining market share. An internal focus can lead to disastrous business performance. Both Lean and Six Sigma (when implemented correctly) will start and finish their analysis with the customer experience. Lean tracks the critical customer KPIs through the process with its data boxes. The As-Is Value Stream Map quantifies the customer experience. The To-Be Value Stream Map demonstrates the customer impact of the process change. Six Sigma starts with a problem definition that is based upon what is a customer-defined Critical to Quality (CTQ) characteristic. And a Six Sigma project does not end until the project team can demonstrate that the CTQ is meeting customer expectations and is under control. By using every customer complaint as the starting point for the next Six Sigma project, the customer experience is maintained as the most significant aspect of the business operations throughout the digital transformation.
Your organization may have been using Lean and Six Sigma for years. In fact, you may have felt that you got all the benefit you could from these approaches and you then moved onto other business initiatives. But don’t abandon these when undergoing digital transformation. The principles of these methods are excellent enablers of your digital transformation and are essential elements for resolving the speed bumps you are sure to encounter. A cadre of trained and experienced Lean Six Sigma Black Belts and Green Belts are a critical element of your organization’s successful digital transformation.