Lean, Six Sigma

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Lean, Six Sigma AgilePutting It All Together
September 14, 2006
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About Me

• Arlen Bankston
• Director, Lean-Agile Consulting
• Six Sigma Black Belt
• Certified ScrumMaster Trainer and Agile
  Methodology Coach
• 20 Lean and Agile projects implemented over past
  five years

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Agenda Topics

1. Lean Six Sigma in 10 Minutes
2. The Case for Combination
3. CC Paces Experience
4. Discussion

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About You

• Lets take a moment to introduce ourselves
• Whats your name, company and job role?
• How familiar are you with Lean, Six Sigma, and/or
  Agile?
• What do you hope to learn from this discussion?

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Some Common Questions

• Have you ever wondered
• Am I choosing the right projects?
• Will they result in improvements my customers
  will feel?
• Do they fix the most critical issues in my
  business processes?
• Are they oriented towards the long term?
• Are they sub-optimizing locally, rather than
  improving globally?
• Why do so many of my projects lack clear focus
  and objectives?
• Why are IT projects so disconnected from the
  business processes theyre intended to support?
• Who is my customer?
• Is what my customer asks for all that I need to
  know?
• How could a Lean Six Sigma effort with clearly
  defined objectives still fail during
  implementation?

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I. Lean Six Sigma in 10 Minutes
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Process Improvement Origins

• Why Were Lean and Six Sigma Developed?
• Japanese developed many Lean techniques based
  on work by Henry Ford, Dr. W. Edwards Deming
  others to compete with U.S. Auto manufacturers
• Six Sigma was developed by Motorola to raise the
  standard of Quality to meet competitive
  pressures

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Basic Concepts of Lean

• Core Concepts
• Value What the customer is willing to pay for.
• Value Stream Actions that add value to a product
  or process.
• Flow The continuous movement of product,
  favoring single-piece flow and work cells versus
  production lines.
• Pull Replacing only material that is used and
  eliminating excessive inventory.
• Continuous Improvement A relentless elimination
  of waste on a never-ending basis.

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Lean Continuous Improvement Cycle

• Continuously improve in the pursuit of perfection

1) Specify value in the eyes of the customer
2) Identify the value stream and eliminate waste
3) Make value flow at the pull of the customer
4) Involve and empower employees
5) Continuously improve in the pursuit of
perfection
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Basic Concepts of Six Sigma

• Six Sigma Is
• A scientific method
• A disciplined approach (DMAIC)
• A management philosophy
• Focused on breakthrough improvements
• Reliant on data and correlation Yf (X1, X2,
  X3Xn)
• Sophisticated analytically, requiring complex
  training
• Driven by executive level support
• Core Concepts
• Critical to quality (CTQ) What the customer
  wants
• Defect Failing to deliver what the customer
  wants
• Process capability What your process can deliver
  vs. customer CTQ
• Variation Process stability consistency over
  time

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Basic Concepts of Six Sigma (continued)

• A 5 step approach founded on asking the right
  questions
• Define What is important to the customer?
• What are their targets and acceptable
  limitations anything else is considered
  defective
• Measure What is the frequency of defects? How
  many defects?
• Capability How is the process performing for the
  customers?
• Entitlement How good can the existing process
  be?
• Gage RR How good is the data? Is it reliable?
• Analyze Why, when and where do the defects
  occur?
• Data driven analysis to prove what the root
  causes are
• Improve How can we fix the process/critical
  defects?
• How can root causes can be addressed?
• Control How can we ensure the process remains
  fixed?
• Develop controls to ensure process improvement is
  sustained

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Lean or Six Sigma?
Convergence
Program Six Sigma Lean Thinking
Theory Reduce variation Remove waste
Application Guidelines 1. Define2. Measure3. Analyze4. Improve5. Control 1. Identify value2. Identify value stream3. Flow4. Pull5. Perfection
Focus Problem focused Flow focused
Assumptions A problem exists, figures and numbers are valued. System output improves if variation in all processes is reduced. Waste removal will improve business performance Many small improvements are better than system analysis.
Primary effect Uniform process output Reduced flow time
Secondary effects Less waste.Fast throughput.Less inventory.Fluctuation performance measures for managers.Improved quality. Less variation.Uniform output.Less inventory.New accounting system.Flow performance measure for managers.Improved quality

• Commonality of both methodologies
• Focus on the customer
• Drive toward understanding exactly what the
  customer wants
• Improve processes by eliminating/reducing things
  that prevent the process from delivering exactly
  what the customer wants
• Require continuous effort to ensure improvements
  are sustained

Which is better? Answer Who Cares?
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Agile Basics - Key Principles

• Key Agile principles are
• Focus on customer value Employ business-driven
  prioritization of features.
• Iterative Incremental Delivery Create a flow
  of value to customers by chunking feature
  delivery into small increments.
• Intense Collaboration Face-to-face
  communication via collocation, etc diversified
  roles on integrated teams.
• Self Organization Team members self-organize to
  fulfill a shared project vision.
• Continuous Improvement Teams reflect, learn and
  adapt to change work informs the plan.

• What is Customer Value?
• The right product, for the right price, at the
  right time.
• The right product is the product with exactly
  the features that the customer wants.
• The right price is the price that customer
  believes is a fair deal.
• The right time is when the customer wants it.

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Agile A Lean Execution Engine

• Agile methods can be interpreted as a Lean
  approach to IT project management and execution.

Lean Principle / Practice Agile Principle / Practice
KaizenContinuous improvement Iteration Planning Sessions Process Project Reflections
KanbanInformation radiation and project transparency Product backlogs Iteration backlogs Daily Standups Burndown charts Project and quality sliders Automated test dashboards
Setup reductionAdaptability to rapid change Automated builds Continuous integration Test-driven development Automated testing
Takt timeDelivery based on customer demand Iterative development cycles Incremental development
Work cellsCo-located resources for a given task Cross-functional teams Collaborative team environments Generalizing specialist roles Pair Programming
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Lean Execution via Agile The Mechanics

• Agile practices include
• Release Planning (1)(creates Product backlog)
• Iteration Planning (2)(creates Iteration
  backlog)
• Daily Standup
• Fixed-length iterations and small releases
• Feature Review (3)
• Process Reflection (4)

Identify top-priority items and deliver them
early and often.
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II. The Case for Combination
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Why CC Pace Combined Lean Agile

• There are many common barriers to Agile adoption
  across an enterprise
• Large, complex projects
• Many projects in flight
• Multiple projects per performer
• Rigid functional roles
• Rewards based on legacy process compliance
• Lack of IT and business alignment

• Lean concepts offered proven solutions to these
  issues
• Lean Project Portfolio Management
• Driven by Lean goals and metrics
• Minimized Work in Process (WIP)
• Lean Staffing Scheduling
• Dedicated, cross-functional teams
• Alignment by platform and value stream
• Lean Human Performance Management
• Rewards based on business results
• Support for generalizing specialist career paths

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Process Management Maturity Curve
No process measurement or control
Some breakthrough improvements
Many incremental improvements

• Continuous Improvement Culture
• Measurements drive and direct change
• Kaizen events implement changes quickly
• Performers identify and address waste within
  their own work
• Culture is focused on striving towards -- but
  never reaching -- perfection

• Lean Six Sigma Projects
• Focus on major value streams
• Address root causes of process problems
• Refine LSS metrics and support structures
• Generate value!

• Pilot Program
• Identify map core value streams and processes
• Select diverse portfolio of pilot projects
• Launch LSS pilots
• Measure adapt LSS structure appropriately
• Integrate LSS into organizational fabric

Maturity
Time
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IT and the Lean Rate of Change
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Lean at Three Levels

• Lean Enterprise
• Business alignment with and optimization of value
  streams.
• Lean IT Organization
• An IT organization that can support a Lean rate
  of change.
• Lean Project Execution
• Projects that use Agile to adapt to change, focus
  on customer needs and deliver value incrementally.

Drives
Enables
Supports
Enables
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Agiles Contributions

• Agile execution of process improvements yields
• Direct, continuously updated linkage to the
  Voice/Heart/Soul of the Customer
• Ability to handle change beyond initial process
  analyses
• Minimized risk by accelerating time-to-value
  through iterative development and incremental
  delivery
• Close coordination between Business and IT
• Focus and refinement of recommended improvements
  at the implementation level
• An ideal platform for innovation and new product
  introduction
• Support for whole-of-life product maintenance and
  continuing development

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How Agile Supports Lean Alignment
Agile Projects support true IT alignment with
value streams Lean IT Organizations support
Agile Projects.
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Lean Six Sigmas Contributions

• Lean Six Sigma provides a number of advantages to
  Agile project execution
• Directed portfolio design
• Select projects based on critical process
  constraints
• Align projects across functional silos
• Grounded project vision and clear focus
• Initial Product Backlogs
• Insight into rationale underlying requirements
• Stronger business cases
• Quantitative assessment of feature values
• Clear linkage of IT efforts to business benefits
• Means to measure success
• Key metrics identified for a particular process
• Measurement and control system in place

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Why Combine Lean Six Sigma Agile?

• Together, Lean Six Sigma and Agile
• Support incremental improvements with a process
  designed around iterative delivery
• Tighten feedback loops in process management and
  improvement efforts
• Accurately measure value generation and strongly
  link to strategic operations
• Align project portfolios with true, grounded
  business needs
• Improve execution speed of process improvement
  initiatives

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How Might a Combined Approach Work?

• Most simply
• Lean Six Sigma projects provide initial
  definition and analysis of process areas
• Tackle large, complex process issues
• Provide grounded business cases and clear focus
• Provide metrics to define success
• Agile projects are spawned in the Improve phase
• Utilize output from LSS projects to form Product
  Backlog
• Members from LSS team are involved in execution
• Adjustments are made as necessary to initial LSS
  analyses based on exploratory and production data
  influx
• Much richer interactions can be imagined as both
  techniques are adopted throughout an enterprise

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Tricky Issues

• Implementation can face many challenges
• Process perspective in IT organizations
• Roles and responsibilities of Lean/Six Sigma and
  Agile champions and performers
• Balance of analysis and execution
• Meaningful metrics for project value
• Human performance management rewarding proper
  behavior
• All of the standard Lean Six Sigma Agile
  barriers

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III. CC Paces Experience
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CC Paces Experience

• Lean Project Portfolio Management Analysis
• Lean Staffing Scheduling Analysis
• Lean New Customer Acquisition Analysis
  Improvement
• Lean Six Sigma Access Control Risk Management
  Analysis
• Lean-Agile Maturity Assessments
• Lean Six Sigma Marketing and Production Services
  Analysis
• Lean Six Sigma Enterprise Process Mapping

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IV. Discussion
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Contact Information
Arlen Bankston Director Arlen.Bankston_at_ccpace.com
PHONE 703 / 631.6600 WEB http//www.ccpace.com
MAIL 4100 Monument Corner Dr., Suite
400 Fairfax, VA 22030