Six Sigma & Innovation – Co-Exist vs. Compete An Inside LookPHILIPPINES :: MALAYSIA :: VIETNAM :: INDIA :: SINGAPORE :: INDONESIA
Learning Bites • Comparison of Six sigma & Innovation • The need for successful business • Integration of Six sigma & Innovation • Six sigma & Innovation leads to business growth • The success factor of both working together
Six Sigma vs. Innovation? Six Sigma & Innovation seem to be at crossroads!
Six Sigma & Innovation @ Crossroads! :: Case in Point “Whether the relentless emphasis on efficiency had made 3M a less creative company?” Operating margins went from 17% in 2001 to 23% in 2005. “At the company that has In first full year, capital expenditures slashed 22%, from always prided itself on $980 million to $763 million, and 11% more to a trough drawing at least 1/3rd of of $677 million in 2003 sales from products released in the past five years, today Sales, capital expenditures dropped from 6.1% in 2001 that fraction has slipped to to just 3.7% in 2003 only 1/4th .” R & D funding constant from 2001 to 2005, hovering over $1 billion a year “Innovation is a numbers game: You have to go through 5,000 to 6,000 raw ideas to find one successful business.“ “Six Sigma would ask: Why not eliminate all that waste and just come up with the right idea the first time?”
Six Sigma vs. Innovation? • Inject process efficiency • Brave undiscovered, & productivity uncertain territory Six Sigma • Do things right • Do the right thing • Low Risk Tolerance • High Risk Tolerance • Top-Down approach Innovation • Bottom-up approach • Inside-out Focus • Outside-in approach
Business Capability Model CONSTITUTES Maturity / Key Processes Consistency Workforce Capability ENABLES Process Capability PREDICTS Performance
Organizational Process / Performance Maturity Model Organization performance irrespective of industry or size shows specific pattern of maturity with distinguishing characteristics 5 Integrated Excellence 4 Innovation 4 Operational Excellence Beyond 3 Compliance 2 Compliance 1 Pre Compliance
Innovation – Types & Needs “CEO’s today face mounting pressure to innovate, yet finding ways to actually enable innovation remains a challenge for many” • Provides significant operating margin growth Business • Differentiates from rest of the pack and signifies change Model • Typically a phenomenon when successful Product/Service • Focuses on delivery model innovation / new /Market market penetration / partnerships for promotion • Not a day-to-day innovation Operational • CEO’s ranked top of priority lists* • Drives efficiency / effectiveness in products & services * - Research Study by IBM
Six Sigma and Innovation working together – How? LSS SIfT • Optimization Lean Six Sigma + Systematic Innovation for Teams • Sustainable Growth Promote and ensure strong factual basis for implementing any creative ideas Deploy a cross-functional approach to problem resolution & guide users through sensing, understanding, deciding & acting in ways to create value Must incorporate creativity into the operational process excellence initiatives! – to come up with improvement opportunities Take into account the “Business Voices” and balance them out to ensure optimal results
What are we really looking for… PRIORITY??? EFFICIENCY & INNOVATION & EFFECTIVENESS CHANGE 1 2
E&E vs. I&C – A Fairplay?! SCENARIO 1: Efficiency & Effectiveness YES Innovation: NO Undesirable & Unsustainable SCENARIO 2: Efficiency & NO YES Unsustainable & Innovation: Improbable Effectiveness SCENARIO 3: Efficiency & Effectiveness YES Innovation: YES IDEAL
Key Success Factors & In Summary… While most companies in the industry have mastered the art of teaching and implementing six sigma, integrating innovation into the scheme of things is the challenge. Some key pointers to make the process easier… An Innovation vision based on factual customer and market insights Leadership committed to perpetual innovation Alignment across the extended enterprise Organizational capabilities that make innovation habitual
Key Questions to ask yourself… Do you have a clear vision of where you want your company to be in two years? In five years? In ten years? How closely tied is this vision to the needs of your current and target customers? And is your understanding of these needs based on actual assessments or assumed information? Will this vision require innovations in your business model? In your products or services? In your markets? What will you need to do at the operational level to enable and drive these innovations? To support innovation, what changes will be required to your management approach, organizational structures, metrics and skills?
“If you do what you’ve always done, you’ll get what you always got!” - W. Edwards Deming
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