How Lean Six Sigma is being used well beyond manufacturing

When I was a kid, I loved Ferrari sports cars. They were beautiful and streamlined and seemingly perfect. And yet, almost impossibly, their designs and performance would incrementally improve with each model. I guess it’s no surprise that later during my nearly two decades as an investor in private equity, I came to love a concept called Lean Six Sigma. As odd as it may sound, I saw a similar sense of beauty in the ideas of perfecting form, reducing variability, eliminating waste, and continuously seeking improvement.

Thanks to leadership by visionaries like Dr. Edwards Demming, Taiichi Ohno, and Eiji Toyoda, the manufacturing industry has embraced Lean and Six Sigma concepts since the 1970s. And because of books like The Lean Startup by Eric Ries, new sectors of the economy like the software industry, are also embracing these concepts. Business leaders are now increasingly understanding that these same principles should be extended across their functional areas, including how they think about their people. Businesses work so much better when they have team members who have the right skills, with clearly defined objectives, and the resources needed to efficiently accomplish key goals. Anything else is wasteful.

Lean Six Sigma is all about people. If you think about your organization, you will no doubt easily find wasted time and energy spent within your people processes. You will also quickly identify unaddressed skill and performance gaps within your organization. The Lean Six Sigma concepts of eliminating waste, focusing on value-add activities, and continuously identifying challenges and goals, measuring and analyzing performance, and improving processes should inform how CEOs think about how to optimize their teams. Using this framework can improve any company’s ability to expertly acquire and access specialized talent, build culture, understand performance and key skills gaps, and adopt a mindset of continually getting better while pursuing key objectives.

People matter

Every business has to actively think about continuous improvement and optimizing processes.  This doesn’t just apply to manufacturing functions, but also to sales, marketing, research and development, back-office operations, and the C-Suite. A company’s ability to understand its range of capabilities and efficiently get access to the right skills when needed is essential.

According to research from Deloitte, the manufacturing industry is contending with a skills shortage of 2.4 million workers between 2018 and 2028, and one of the top reasons is the “changing dynamics of the skill sets needed for advanced manufacturing.” An October 2020 report by the World Economic Forum found that the top barriers to the adoption of new technologies in manufacturing – a crucial component of Lean Six Sigma – are skills gaps in the local labor market, skills gaps among an organization’s leaders, and the inability to attract specialized talent. The WEF report found that these were the top barriers in a range of different industries: Digital communications and information technology, automotive, energy utilities and technologies, transportation and storage, financial services, and many others.

The WEF report notes that skills such as critical thinking, active learning, and the ability to use and monitor technology are essential. Companies have to make finding and cultivating these skills a top priority if they want their Lean Six Sigma initiatives to work as effectively as possible. To find the right people, don’t just look at traditional hiring methods. Just like Ferrari, the world is constantly evolving. The best workers today increasingly find satisfaction participating in the alternative workforce, where the right people can be brought in at the right time, with the exact skills needed. BluWave was founded to solve this need for investor-backed companies, their portfolio company leaders, and the best-in-class service providing specialists. Every day, we see profound satisfaction when we connect both the hirers and third-party specialists. When you match needs with skills, fit increases, satisfaction goes up, variability goes down, and overall outcomes improve.

Measure what matters

Business leaders have to be capable of determining which elements of their operations are performing efficiently, where the pain points and potential disruptions are, where they have team strengths, and where they have needs.

For a company to excel and be “in control,” it needs to operate like a symphony, not a string quartet. You need all the right instruments and players working well together to create beautiful music. Every company should take some time to make an open and honest appraisal of the skills they need versus the skills they have. After you’ve measured and analyzed your capabilities, form an improvement plan to train up your team where needed, get people in the right seats, and bring in diverse new team members with the exact skills you need to perform well. At the same time, most businesses don’t have unlimited time or resources to build their needs with full time internal resources. When time is urgent and/or your need relates to a specialized skill set, use experts in the alternative workforce who have unique talents and enjoy working in variable capacities.

Lean Six Sigma has been one of the most successfully deployed business frameworks over time. If you join others who are taking a more holistic approach and extend the Lean Six Sigma concepts of reducing variability, eliminating waste, and continuously improving across functional areas, your company, team, and customers will all benefit over time.

Written by Sean Mooney.