Growing Your Business with Lean Six Sigma
The June 2006 issue of the Harvard Business Review carried an interview with Jeffery Immelt, CEO of GE. He's set about creating an organic growth target of 8% a year which is about three times the normal average. To make this happen, GE studied and benchmarked 15 businesses (including Toyota and Dell) that routinely out grow the GDP and their competitors. The result is a six-part process for explosive growth. The key word in that sentence is process.In 2003, GE's Commercial Council "began to develop this idea of growth as a process."
GE is a Process-Driven Company
When asked why organic growth should be cast as a process challenge, Immelt replied: "If...you're trying to lead transformative change, that objective has to be linked to hitting levers across all of the businesses - and it must keep that up over time. So you've got to have a process. It's the only way you get paid in the marketplace. Investors have to see that it's repeatable. I knew that if I could define a process and set the right metrics, this company could go 100 miles an hour in the right direction."
Throughout the interview, Immelt returns to the process- and measurement-driven culture of GE. While most businesses I consult with still focus on purely the people side of performance (get the right people and you get the right result), GE focuses on getting the right process and measures to drive the right result. "We're metric driven," Immelt said.
Strategy: To grow your business, focus on your process, not just your people.
Lean Six Sigma
One of the six steps in GE's growth strategy is using Lean Six Sigma to "reduce cycle times in the processes that chiefly drive customer satisfaction." In benchmarking Toyota, GE was impressed that Toyota is "a very process-driven company and the purpose of that is to delight customers and annihilate competitors."
In processes like installing a new MRI machine, GE used Lean Six Sigma to reduce cycle times from 65 days to only 15.
In Competing Against Time, authors Stauk and Hout found that doubling your speed by reducing cycle time would help you grow at three times the industry average. GE seems to be finding this as well.
Process excellence using Lean Six Sigma isn't the only step in GE's growth strategy, but it's one of the six. The other five are:
- Innovation - imagination breakthroughs
- Great Technology - best products, content and services
- Commercial Excellence - world-class sales and marketing
- Globalization - create opportunities everywhere
- Growth Leaders - develop and inspire people who know how to make GE grow
These six factors are shown in a circle without beginning or end. I often think of it as a spiral of growth. The good thing is that you can start today anywhere in the cycle, the bad news is that you're never finished. Failure to employ all of the six on a regular basis may be dangerous to your corporate health.
You can have the best processes in the world, but a lousy product won't get you very far. You need to have the best and brightest innovations as well. Immelt says of working with IDEO, an idea factory, he has to "translate what they say into terms of process and metrics."
GE also discovered that you need five key skills to create growth. So GE has established a rating system for the five key leadership factors of growth:
- External focus
- Imagination and creativity
- Deep domain expertise.
What people bring to the table is also important, but only one aspect of the overall growth strategy.
Here's My Point
Lean Six Sigma isn't the silver bullet cure for all of your ills, but it is an indispensible aspect of creating lasting success. Isn't it time you started creating deeper domain expertise in the methods and tools of Lean Six Sigma?
One-Day Lean Six Sigma Workshop
If you need help getting started, consider scheduling a One-Day Lean Six Sigma Workshop at your company. Download a course outline and pricing information here or give us a call to schedule your session.
Fill in the Blank Dashboard System
Struggling with creating dashboards and scorecards for your leadership team? Try our control chart dashboards.
Rights to reprint this article in company periodicals is freely given with the inclusion of the following tag line: "© 2008 Jay Arthur, the KnowWare® Man, (888) 468-1537, firstname.lastname@example.org."