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Leadership Development and Sustained Process Improvement Program Success. Weiyong Zhang Department of Management School of Business Virginia Commonwealth University (804) 828-3196 wzhang@vcu.edu www.business.vcu.edu IIBA – Central Virginia Chapter April 16 th 2008.

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leadership development and sustained process improvement program success

Leadership Development and Sustained Process Improvement Program Success

Weiyong Zhang

Department of Management

School of Business

Virginia Commonwealth University

(804) 828-3196



IIBA – Central Virginia Chapter

April 16th 2008

3m annual report 2002
3M Annual Report 2002

We fully integrated Six Sigma, making it part of the fabric of the company. As of year-end, more than 3,300 active Six Sigma projects were directly driving improvement in our

business units, and operating management had closed more than 1,200 projects, a big increase over the previous year.

3m annual report 2003
3M Annual Report 2003

Our continued focus on and execution of our five, integrated corporate initiatives – Six Sigma, 3M Acceleration, eProductivity, Global Sourcing Effectiveness, and Indirect

Cost Control. The initiatives increased operating income by more than $400 million on top of a benefit of more than

$500 million in 2002. The disciplined actions inherent in each of our initiatives are embedded in the everyday operations of 3M, and we expect our corporate initiatives to contribute an additional $400 million of operating income in 2004.

3m annual report 2004
3M Annual Report 2004

Six Sigma is 3M’s overarching initiative, and it continues to drive growth, reduce costs and increase cash flow in 3M businesses around the world. Since its launch four years ago, it has become deeply embedded in every function, every business and every country. Simply put, it’s now the way we work.

Today, more than 700 of our leaders around the world are dedicated to Six Sigma on a full-time basis. We already have completed more than 16,000 projects, and an additional 16,000 projects currently are under way. These include more than 400 “Six Sigma with Our Customers” projects, in which teams of employees from 3M and other companies work side by side to solve pressing problems.

3m annual report 2005
3M Annual Report 2005
  • We only found one place that mentioned Six Sigma.

The Company’s future results may be affected if the Company generates less productivity improvements than estimated. The Company utilizes various tools, such as Six Sigma, to improve operational efficiency and

productivity. There can be no assurance that all of the estimated productivity improvements will be realized.

3m annual report 2006
3M Annual Report 2006

The use of Lean Six Sigma in 3M’s manufacturing plants brought great productivity and quality benefits to 3M over the past few years. But in the euphoria of driving out waste, expectations that it would continually deliver more capacity were sometimes overestimated. There is, after all, a practical limit to the number of shifts that can be run, yield that can be obtained and line speeds that can be increased in a manufacturing plant. This overestimation led to demand

and capacity imbalances, with the largest divergence naturally emerging in those businesses with the highest growth rates.

what happened
What happened?
  • Year 2005 seems to be a turning point – it looks like two companies before and after.
  • Did 3M drop Six Sigma?
    • If so, did 3M consciously choose to drop Six Sigma?
    • Or 3M just dropped the ball?
  • Why did 3M drop Six Sigma?
    • What are the possible reasons?
    • James McNerney was the CEO of 3M from 2001 to 2005.
  • In year 2005 - 2006, 3M dropped Six Sigma.
  • Is this simply coincidence?
  • 1. Motivation
  • 2. Process improvement program
    • What is it?
    • Why?
  • 3. Process improvement program management
    • Strategic project selection
    • Project management infrastructure
  • 4. Leadership development
    • How is leadership development different from leadership?
    • Leadership development and sustained success
1 motivation
1. Motivation
  • Companies implement various types of process improvement programs (e.g., Six Sigma, Lean, Lean Sigma). Some are very successful. Others are not.
  • Question – how can we achieve process improvement program success?
  • A more important question – how can we achieve sustained process improvement program success?
2 process improvement program
2. Process Improvement Program
  • Definition: a systematic approach for improving organizational performance that consists of specific practices, tools, techniques, and terminology and is implemented as a set of process improvement projects.
why process improvement program
Why “process improvement program”?
  • Some facts
    • Various programs being implemented by many companies.
    • Each costs huge amount of money (e.g., millions of dollars).
    • Each has a specific set of practices.
    • Hence it is very difficult to learn from each other.
  • If we look at these programs as a generic set…
    • They share many commonalities in terms of how they are managed.
    • Enables cross program learning.
3 process improvement program management
3. Process Improvement Program Management
  • How process improvement programs are managed will greatly affect the success of the program.
  • Two important management tasks
    • Strategically select improvement projects
    • Establish a project Management infrastructure
3 1 strategic project selection sps
3.1. Strategic Project Selection (SPS)
  • An organization’s commitment to selecting process improvement projects based on the organization’s strategic objectives.
    • Strategic alignment
    • Voice of customer
    • Selection and prioritization
3 2 project management infrastructure pmi
3.2. Project Management Infrastructure (PMI)
  • An organization’s commitment to ensuring that process improvement projects follow a standard methodology and that project leaders are held accountable for results.
    • Standard project management methodology
    • Project leader accountability
3 3 how sps and pmi affect performance
3.3. How SPS and PMI affect Performance
  • Synergistic view
    • They enhance each other’s impact on program success.
  • Enabling view
    • PMI enables SPS.
empirical research settings
Empirical Research Settings
  • Sponsored by the University of Minnesota and a Fortune 500 company (disguised as Hightech Inc.)
  • Plant-level data from 57 suppliers (a total of 130)
    • Response rate = 43.8%
    • Multiple responses from the same supplier
      • Sales, manufacturing, and quality managers
    • Small to medium sized businesses
  • Web-based survey
  • Performance variable: Supplier operating performance
    • Cost, quality, delivery, cycle time, flexibility
  • Regression analysis
synergistic view
Synergistic View


Program Success


Unfortunately, this view is not supported by the empirical data.

enabling view
Enabling View



Program Success

The enabling view is supported by the empirical data.

what does this mean
What does this mean?
  • Firms need to establish an organization infrastructure for disciplined project management. The infrastructure is composed of accountable project leaders using structured method.
  • Such an infrastructure will promote strategic project selection.
    • Project leaders seek to lead strategic projects.
    • Structured method promotes fact-based culture. Such a culture encourages the development of process for project selection.
  • In summary, firms can use PMI as an effective implementation strategy.
    • In Six Sigma, the use of Black Belt and DMAIC is highly promoted.
what is missing
What is missing?
  • The notion that SPS and PMI lead to program success is based on an important prerequisite:
    • Top management support to process improvement program.
  • It is also assumed that a top-down approach is used in program implementation.
  • What could happen if top management turnover happens?
  • Even if top management remains stable, how can the program achieved sustained success?
    • There is always resistance to change.
    • The command and control system will not work forever.
    • We need all employees actively embrace the program.
    • We need to change the organization’s culture!

Six Sigma and the Path to Transformation

C) Governance for Transformation

  • Strategic Scorecard (especially

predictive, preventive indicators)

  • Integrated Management System
  • Leader Development/Succession
  • Educating the Board of Directors



B) Infrastructure Alignment

  • Marketing and Design
  • H.R. Policy
  • Finance
  • Information System
  • “Best Practice” exchange
  • Supply Chain


A) Project-based Improvement


  • Project Savings
  • Black Belts, Green Belts
  • Etc.
4 leadership and leadership development
4. Leadership and Leadership Development
  • Leadership: The art of motivating people to act towards achieving a common goal.
  • Leadership Development: Expand the collective capacity of organizational members to engage effectively in leadership roles and processes.

Why leadership development?

we all understand that
We all understand that…
  • Leadership plays a critical role in the success of any change program.
  • However, what is the role of leadership development in the success of process improvement programs?
  • Why should we care about leadership development?
leadership development practices
Leadership Development Practices
  • 360-degree feedback
  • Coaching
  • Mentoring
  • Networks
  • Job Assignment
  • Action Learning
we studied the following
We studied the following:
  • Whether firms view process improvement project as a key component of leadership development.
  • Whether firms select the best people to lead process improvement projects.
  • Whether firms rotate people through process improvement project leadership positions.
a simple yet useful model
A Simple yet Useful Model


Leadership Development

Program Success


what does this mean28
What does this mean?
  • Leadership development is probably the hidden secret of modern process improvement programs.
    • After all, the “content” practices of improvement programs largely remain the same over time.
    • What have changed significantly are the ways to implement the “content” practices.
    • Specifically, many companies now explicitly announce that they use process improvement program (or whatever it is called) to develop their future leaders.
      • In GE, managers without Six Sigma project experiences will not be promoted to executive level.
what has james mcnerney done differently at boeing
What has James McNerney done differently at Boeing?

We drive learning and sharing in many ways, from our Leadership Center (the flagship of our comprehensive leadership-

development approach) to our

four growth-and-productivity initiatives. Here are some examples of how our strategy of leveraging the depth and breadth of Boeing is taking root:

At the Leadership Center, Boeing

leaders present real Boeing business challenges and ask classes for help solving them. In fact, my leadership team has received—and is acting on—good ideas from several 2007 classes…

thank you
Thank You
  • Questions?