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.
Summary
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.
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