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Can a Lean Six Sigma Scorecard be the answer to strategy execution?

 

Lean Six Sigma, Sigma, Lean, Process, Assessment, BSCThe Lean Six Sigma scorecard I am proposing here has one major advantage over the Balance Scorecard (BSC) framework developed by Kaplan and Norton. My proposed scorecard process enables the establishment of causality while the one developed by Norton and Kaplan is not guaranteed.  As you maybe aware, causality is critical in strategy execution. Without causality, it is nearly impossible to measure the impact of various strategic initiatives on a company’s overall goals; therefore, it would difficult to tell if you were headed in the right direction, similar to driving in the dark without your lights on.

Although our proposed Lean Six Sigma Balanced Scorecard uses the same theoretical framework as the one developed by Kaplan and Norton, there is a distinct difference in the execution of ours versus that of Kaplan and Norton.

Here is the approach used in the execution of my proposed Lean Six Sigma Balanced Scorecard. 

 

Implementation of the Lean Six Sigma Balanced Scorecard

Clearly, this blog will not be sufficient to outline a comprehensive description of how to implement the proposed Lean Six Sigma scorecard (LSS); however, I will provide you with a summary of the proposed approach.

The table below outlines a 4-step process to implementing our proposed LSS scorecard.

Step

Activity

Description

1

Develop Corporate Strategy Map and Scorecard

The Executive team along with a trained facilitator will develop the strategy map and scorecard for the company.

2

Utilize the DMAIC framework to stabilize key processes linked to the corporate strategy map

A project team along with LSS experts will implement a LSS project with the objective to stabilize processes linked to the corporate strategy map. The project team will identify and implement other performance enhancing initiatives that support the objectives in the Lean Six Sigma framework. As part of the project, the team will also develop business unit scorecards that are linked to the corporate scorecard.

3

Implement a continuous improvement process and company-wide culture of continually improving

Performance Excellence teams will develop customized continuous improvement processes that are linked and support each of the scorecards

4

Establish causality

Once our framework is implemented, the company will measure the effectiveness of its strategies and the degree to which various performance-enhancing initiatives are positively impacting the company’s strategy.

 

Step 1-Development of a Corporate Strategy Map and Scorecard

The Executive team along with a facilitator trained in the development of a BSC will define/develop the strategic objectives across the four perspectives outlined in the “original” Balanced Scorecard framework (Financial, Customer Service, Processes, and Learning and Growth). 

One of the most effective ways is to teach executives how to develop a company strategy map by breaking them up into teams. The executives will then present the strategy map to their peers and follow by merging each of their strategy maps into a single one that everyone agrees on.  I find this “Learning by Doing” approach is particularly effective.

Once the company strategy map is developed, key performance Indicators and targets, which can be used to measure the overall effectiveness of its strategy highlighted in the corporate strategy map, will be developed. The completion of projects identified to achieve those company targets will be outlined in Step 2.

 

Step 2 - Utilize the DMAIC framework to stabilize key processes

This Step is where the proposed Lean Balanced Scorecard deviates from the original Balanced Scorecard.  It is assumed that the organization will undertake a Lean Six Sigma project that will be used to i) identify some of the requirements to meet the objectives in the scorecard, and ii) stabilize any unstable processes.

As in any Lean Six Sigma engagement, the DMAIC methodology is used.  The Define phase of the project will be used to identify which processes will support the objectives in the strategy map developed in Step 1 and scope out the project.

Once the Define stage is complete, a project team along with a LSS expert will go out and measure these processes to identify i) opportunities for improvement (primarily those that will support the objectives in the strategy map), and ii) root causes of any process instability.

Upon completion of the measurement phase, the project team and the LSS expert will conduct an assessment of the results of the measurement.  From this point, projects will be identified to meet the objectives in the corporate scorecard and stabilize the processes.

In the control phase of the DMAIC methodology, the project team and LSS expert will work with selected business units to develop their scorecard linked to the corporate scorecard.  The improvement and stabilization projects will be implemented.

 

Step 3 - Implement a continuous improvement process and company-wide culture of continually improving

The project team works with the business units to develop a continuous improvement process that is aligned with their individual scorecards.  Continuous improvement teams will monitor the scorecards and will launch performance initiatives to reverse the trend of the performance indicator within the scorecard when performance measures are not continuously meeting targets.

 

Step 4 - Establish causality

Once, the processes used to drive the objectives in the scorecard are stabilized, the company, as a whole, will start to measure the key performance indicators and targets within the scorecard.  At this point, the company will start to establish the chain of causality across the various objectives within the scorecard to determine which strategies are effective and the drivers of those strategies. Causality will enable the company to truly determine which initiatives yield the highest Return on Investment (ROI).

 

Closing Thoughts

In this article, I outlined very briefly about my proposed Balanced Lean Six Sigma scorecard.  Though more detailed explanations are required, do you think the modifications we proposed would help overcome some of the limitations in the existing balanced scorecard developed by Kaplan and Norton?

 

By Kyle Toppazzini

 

Want to Learn how we helped an organization save millions of

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Valuable Resources

The following URLs provide great additional information on Lean 6 Sigma

Toppazzini and Lee Consulting Lean 6 Sigma Consulting  at -Lean Six Sigma Consulting

Linkedin Six Sigma Group at http://www.linkedin.com/groups?home=&gid=37987&trk=anet_ug_hm
ISixSigma web site at www.isixsigma.com
ASQ web site at www.asq.org
 

 

 

 

 

 

 

 

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