Vol. 11, No. 6
June 2009
PQ Systems
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Six Sigma and more:
Goal setting and innovation

One of the readers of last month’s column wrote me about an apparent discrepancy among the goal setting approaches of Lean, Six Sigma, and those of Dr. W. Edwards Deming. Since I suspect that issue is not uncommon, I decided to write about it this month. Here goes.

While I was at Ford, before the days of Six Sigma and Lean, we ran up against a similar discrepancy in goal setting approaches as we began to embrace the philosophy of Deming. When we first came up against points 10 and 11 of Deming’s 14 points for management, we already understood that improving quality improves productivity. We, therefore, understood those two points at one level, but did not at another. I’ll restate the relevant parts of those points here to further explain our dilemma.

Deming asked us to “Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity…Eliminate management by objective. Eliminate management by numbers, numerical goals.”

Given our new understanding of the quality/productivity relationship and Dr. Deming’s teaching about the power of the system over the power of an individual worker to make improvement, we understood his criticism. We also understood his criticism of management by objectives (MBO). MBO was, in my experience at both Ford and GM, a system whereby suboptimal goals were sent down the chain of command with neither the plans nor resources to achieve them. We mostly achieved the results by luck, by stealing resources from something with less visibility, or by “cooking the books.” While we understood why Deming was critical of these practices, eliminating them was so far afield from our culture that we were deeply perplexed. We felt that we must find an alternative way to plan to achieve results. In those days as now, achieving results was not optional.

In the midst of this struggle, Deming suggested that my wife, Carole, and I attend the 35th anniversary of the awarding of the Deming Prize as part of a study group led by Myron Tribus, Ph.D.. As I’ve said before, Myron was, perhaps, the man most responsible for helping American executives understand Deming in those early days. We went and were blessed to visit several Deming Prize-winning companies, including Toyota, as part of the trip. Because the issue was so much on our minds, everywhere we went we asked how organizations practicing Deming’s philosophy approached goal setting and planning. The answer was consistent. It was hoshin kanri.

Hoshin kanri, also called policy deployment, as we understood it, was an approach to strategic planning that was much more systemic and consensual than the goal setting practices we were used to in America. It was, of course, also based on an understanding of variation, systems, human behavior and capability, and continuous improvement that was not part of mainstream management’s world view at that time.

Much has been written about policy deployment since then, but what most struck us at that time was the overall process. Top management would set a target goal, asking essentially everyone in the organization, mostly in functional and cross-functional teams, to help explain how they could help achieve the target. A negotiation process occurred to be sure that the various plans were really workable. The results of the many plans were synthesized at the top management level and the target goal was adjusted, sometimes up and sometimes down.

Sometimes this process occurred more than once, in order to get a workable plan. Using this experience, a brief review of the literature, and a check with Frank Voehle, a trusted colleague and friend, I’ve come to believe that, like the difference between MBO and policy deployment, most of the difference found among the goal setting practices of Lean, Six Sigma, and Deming are more in the practice than in the theory. All three of those theories rest upon the same set of world views…continuous improvement is the essential goal, knowledge of system capability is critical to good planning, people who do the work know best what can be done, adequate planning and resources must precede final goal setting. The practice of top down goal setting, by itself, is not very useful. Unfortunately top down management with little, real understanding of systems, variation, or the capability of employees is still alive and well in American management.

However, there is, I suspect, consistency in goal setting that does go on. Goal setting that takes into account system capabilities and problems and opportunities both inside and outside the organization work for Lean, Six Sigma, and just good management planning. That goal setting process must, of course, include consensus-based, system-wide planning and adequate resources to get the job done. But even good goal setting is not enough. Goal setting focuses on improvement of existing products, services, and processes. New products, services, processes, structures, and even missions and values are required today. That requires innovation.

Innovation requires a different approach to planning. It still requires an assessment of what is going on and what’s likely to go on, but this aspect of planning is much less important than in the goal planning discussed above. A shared vision of what the organization wants today is what is most essential. The vision is constructed without the consideration of current capabilities. As a matter of fact, it should be considered unachievable if it is worth doing. The vision becomes a reality by segregating the steps toward achievement of our vision into three types:

  1. What we can do simply by changing our minds, what we do, and the way we do things.
  2. What we can do that will take some planning, some time, and some resources.
  3. What we don’t know how to do. It seems impossible.

You can set goals for the first two types based on the good practices discussed above. While you do them, don’t forget to keep the vision visible to everyone. Magically, as you do this some of the things you’ve identified as a type 2 step become type 1 steps and some of the things originally identified as a type 3 steps become type 2 or type 1 steps. Also, don’t become too attached to the original vision. It will naturally evolve…many times beyond what you could have initially envisioned. This approach to planning has been widely written about by Russell Ackoff, Jamshid Gharajedaghi, and Gerald Nadler. It has also been popularized by the folks at the Berkana Institute. They like to say, “Start anywhere. Follow it everywhere.”

A final word. Goal setting methods as conceived by Deming, Lean, and Six Sigma are primarily analytic processes. Innovation is primarily a creative process. While I believe both are required for long-term organizational success, they require different approaches, world views, and cultures. Some people can cross over. Others find difficulty doing so. Keeping the two efforts organizationally separate, but appreciative, may be useful. This is a complex and important issue. As always, I treasure your input. I’m at support@pqsystems.com.


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