Lean and Six Sigma for Innovation
Continuous improvement is a philosophy that stresses the need to constantly look for improvement opportunities in all dimensions of an organization. It is an enterprise-wide approach. The standard tools to achieve continuous improvement are found in Lean and Six Sigma.
The Differences Between Lean and Six Sigma
Lean focuses on the elimination of waste and redundancy through the concept of a value stream where all activities are classified as value-add or non-value-add (waste) from the customer’s perspective. Six Sigma focuses on reducing variability to increase the quality of products and to achieve high levels of customer satisfaction.
Both Lean and Six Sigma stress the need to satisfy customer expectations by eliminating waste, reducing cost and raising the level of quality while providing a consistent product or service to the market.
What Is Quality?
Quality is defined as not just quality of products or services provided for sale but also quality of all interactions with customers such as invoicing, responding to service related questions, product support, etc.
Lean and Six Sigma have a common philosophy where continuous improvement is driven by the customer’s perspective. All continuous improvement activities including elimination of waste, reduction in non-value-add effort, increase in productivity and reduced cost are undertaken to benefit customers. Understanding this fundamental concept that value is defined by the customer is critical for successful implementation of the Lean and Six Sigma philosophies.
Customer Defined Value and Value Streams
The concept of customer-defined value is manifested in the value stream map process within Lean. A well-mapped value stream identifies all activities around a process that produces some output, ultimately leading to the external exchange of products and services sold in the marketplace. The most accurate value stream maps capture the essence of why customers want or need the seller’s offerings. The ability to define customer expectations and integrate them into a value stream map focuses on value-add activities and provides the ability to leverage opportunity in markets. See Figure 1.
To be comprehensive in defining the value stream, a company must strategically link its sales force to the value stream so that customer expectations are fully captured and managed to maximize the benefit of both parties. The key to this effort is looking beyond the customer’s needs. It begins the process of understanding the customer’s expectations and needs for tomorrow, which leads to product and service innovation. This ability to forecast expectations of tomorrow results in growing customer relationships over time. It becomes the basis for staying ahead of the competition while developing high margin products and services with confidence resulting in the market adopting those new products and services. Development of a strategic plan, which links the sales force into the value stream in a proactive fashion, provides a competitive advantage to those organizations that can build such a strategy and successfully execute it. See Figure 2.
Steps to Developing Strategy
The first step to developing a sound strategy to link the sales force to the process for innovation is to formally define the typical steps in the current selling process. This might appear to be a relatively easy task making the selling process clear. There are, however, some pitfalls. What needs to be understood and concisely defined are the aspects of the selling process where the best salespeople interact with customers and prospects to help them define their needs and identify selling opportunities based on what is commonly referred to as value-added solution selling. The opportunity to apply value-added solution selling comes from a strong customer relationship where the salesperson is viewed by the customer as a true partner in the business. This level of customer relationship takes time to achieve and, typically, the best salespeople (as measured over several years) are the ones who successfully develop these types of customer relationships. Value-added solution selling can lead to customer-centric innovation when the customer needs assessment process is integrated into a value stream map.
Begin by looking closely at how those salespeople sell when the environment is conducive to selling solutions. Begin to understand how those salespeople conduct a customer needs analysis and also begin to compile information on what those customers are expressing as their needs or problems. Future needs are the wish list that customers begin to identify as the salespeople conduct a formal needs assessment. Some of these needs may be fulfilled with existing products through new applications or modifications. These applications and modifications can open the door to new markets with minimal investment. Other needs will require more extensive investments, which lead to product and service innovation, keeping ahead of the competition. An individual will also begin to understand the problems customers face. The organization may possess the capability to solve some of those problems through products and services.
Analyze the Sales Process
To thoroughly analyze and understand the sales process, conduct interviews with the best salespeople. This exercise will help identify the challenges and barriers they face on a daily basis. Accompany these salespeople in the field as they call on their best customers to better understand their approach to conducting customer needs analysis and information gathering as well as how that information gets synthesized. Focus on understanding the type of formal process (if any) the salesperson uses to dissimilate customer needs information back within the organization. How is this needs analysis information translated into potential solutions? What can be presented to the customer?
Accumulate information on the selling process in the field and begin to identify the key activities around understanding customer needs. These key activities or steps must be integrated into future sales training initiatives to focus training on critical skills that have proven to be successful for the organization.
Is there an opportunity to develop a formal consistent process for linking customer needs information back to product development, marketing and service organizations? If so, the customer linkage process should be integrated into the value stream map to provide a visual tool of how customers integrate into the internal process. This establishes a clear link to what feeds production and service operations and how customer value is defined on the front end of internal operations.
Replication of Capability
After accumulating knowledge on the selling process as it relates to customer needs assessment and solution selling, replication of that capability should be integrated into the overall selling strategy. Capturing the needs expressed by these customers and integrating this into the value stream process is fundamental to gaining maximum benefits from the value stream mapping process and for achieving competitive advantage from the Lean and Six Sigma efforts through customer-centric innovation.
Greg Evershed is the Director of Business Development, Kate Gleason College of Engineering, Rochester Institute of Technology. Contact Greg Evershed at greg.evershed (at) rit.edu.