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An SBTI Success Story – Allied Signal

ALLIED SIGNALThe Allied Signal Story

Fred Poses, President and COO

 

This document summarizes an interview of Fred Poses by Mick Holly trying to understand why the Allied Signal Six Sigma deployment was so successful.

 

Question:

Can you summarize the key factors that contributed to the results you accomplished with your Six Sigma program?

Answer:

Five major themes to success of the Six Sigma program that drove 6% YOY productivity:

  1. Leadership Matters: If the senior leadership doesn’t believe this is the way to build a better company throughout the company, this won’t work.
  2. Expectations Matter: If leadership and the teams don’t have high expectations of the outcomes then the outcomes won’t matter.
  3. The Right Projects Matter: Projects should be selected on the basis they make a meaningful difference to the performance of the company.
  4. The Right Teams: Complex challenges require cross functional (AKA cross silo) teams.
  5. Recognition Matters: When teams do great things they should be recognized and encouraged to continue to use the same things that drove that performance to other areas. I use recognition and not reward. The difference between small money and big money. Reward is meaningful money. Recognition means leadership shows up and thanks them, gives them a tee shirt – “worth a million bucks”.

So often it is episodic in how people think. When I was asked to get 6% productivity and I didn’t think I could do it, I thought I had better think differently if I was to be successful. I thought Six Sigma and what it entailed was that different way we would get 6% productivity. We weren’t going to get it the old fashioned way. The past is a prelude to the future—so if you are on a path of 2% productivity you will stay on that trend unless you do something differently. We needed to change something. That change was a greater level of engagement of our people and setting them a different level of expectations, additional skills and tools to enable them to be successful, and the expectation and belief they would be successful. Without diminishing the power of the tools, tools alone will not get you there.

Question:

What 2-3 things did you get out of this deployment you did not have before?

Answer:

We did not have the expectation nor the tools to meet that expectation. Any leader can ask you to run a 4-minute mile. Without enabling the people to do what you are asking they can’t get it done. We made it with an expectation of results and we bought into the idea that if we didn’t execute well we would not get those results and if we didn’t engage on a broad scale that the cumulative results would not get us a 6% improvement on a sustainable basis.

If it is not truly believed it will not work. It will be programmatic rather than performance related. Leadership knew why we were doing it. The metric was 6% productivity, not number of projects. For example, having 27 projects but only achieving 2% productivity is not what we want. I think there are other metrics besides pure productivity—there are others that are less important and less measurable. People will first go to operational performance but I think something like the perfect order process is better. You would be surprised at how bad taking an order through to fulfillment in a company can be and how many people touch it, and how often we don’t have the right price to put on the invoice. We have $10 million of working capital sitting there because we can’t bill the customer since we can’t figure out what price to put on which product.

There is this thing about forming the right teams. So often if they are not the right teams, you don’t have the right players to enable the change to happen. We continued to pay attention. Companies get into trouble when there is a program du jour. Ours was never that—it was THE way we get 6% productivity, symbolic of getting to higher levels of performance. Power of entitlement was very powerful. Unless you know where the ultimate improvement is you can get sucked into continuous improvement at a lower level than where you need to be. In this definition of CI you never take the right steps to achieve quantum change. Take the earlier runner analogy. If I’m running a 12-minute mile and I use CI, I will get to an 11:40 mile, an 11:30 mile etc., an 11:20—I think I’m doing great! But then someone runs a 4-minute mile and it changes my paradigm.

The idea of entitlement was a powerful thought—we had a power blip (outage) at the Hopewell manufacturing facility that cost us a million dollars each time. We thought that was an act of God. SBTI challenged us and said we can do something about it—and we did. We ran a second set of power lines that was a change in thinking. Most companies are trapped with their existing thinking so they don’t see the possibilities. The danger is to have 3 green belts and 3 black belts and be happy we have a program in place as opposed to exposing everyone to the tools and getting them all engaged in applying them to get meaningful results. A lot of problems don’t need black belts to solve them. The most successful programs involve getting the right people in the room with the right expectations and giving them not a lot of time to solve the problem—then the question is how many tools do you really need to solve problems? The belts had some recognition that may have helped. At the end of the day we had to drive it deep into the org and offer people the opportunity to make a contribution.

By forming teams with a different set of skills they can make a big difference—teams matter—you’d be surprised how often people work in silos. Most real good change requires breaking of silos. This makes it more rewarding for the people as it took away the frustrations. For example, if you want to improve production you’d better have a maintenance guy on that team. The right projects with the right teams are half the battle.

Question:

What would exemplify the overall culture change?

Answer:

The ultimate observation is it moved to a way of life. It has to start with an initiative, it has to start with leadership getting behind it, it has to start with leadership setting expectations, it has to start with leadership forming these teams. The ultimate is it becomes the way we work. The successful company starts with this and moves to the way we work—teams naturally form to solve big challenges. I come back to the point it was driven because we needed performance; it wasn’t driven because we needed Six Sigma. And there was a realization that because we needed that performance there was not a single project that would get us there. We needed breadth and depth and the engagement of everyone in a constructive way to go from a push to a pull—people want to come and play. Pull was initiated by leadership expectations.

Question:

Interesting point Fred. We often find companies become consumed with one project they see as a panacea—an example might be an ERP implementation like SAP. They think that will solve all their problems—do you think this is true?

ANSWER:

It can’t be true. My observation is most SAP implementations experience major difficulties. Any ERP is a challenge and often the IT guy builds it for himself not for the customer. It may well be a good product but it won’t get us from 95% to 99% yields in our manufacturing operations.

Question:

If you were to give advice to an executive embarking on this type of cultural change what would you offer?

Answer:

Do not let the Six Sigma guy own the program. If you anoint someone head of Six Sigma they become the owner and it is the kiss of death. He reports on the success of the projects but he does not own those projects—it is a way to get performance and has to be owned by line execs.