Lean, Six Sigma & Agile: Putting It All Together

1. Lean, Six Sigma & Agile:Putting It All Together September 14, 2006

2. Arlen Bankston Director, Lean-Agile Consulting Six Sigma Black Belt Certified ScrumMaster Trainer and Agile Methodology Coach 20 Lean and Agile projects implemented over past five years About Me

3. Agenda Topics • Lean & Six Sigma in 10 Minutes • The Case for Combination • CC Pace’s Experience • Discussion

4. About You Let’s take a moment to introduce ourselves: • What’s your name, company and job role? • How familiar are you with Lean, Six Sigma, and/or Agile? • What do you hope to learn from this discussion?

5. Some Common Questions… Have you ever wondered… • Am I choosing the “right” projects? • Will they result in improvements my customers will feel? • Do they fix the most critical issues in my business processes? • Are they oriented towards the long term? • Are they sub-optimizing locally, rather than improving globally? • Why do so many of my projects lack clear focus and objectives? • Why are IT projects so disconnected from the business processes they’re intended to support? • Who is my “customer?” • Is what my “customer” asks for all that I need to know? • How could a Lean Six Sigma effort with clearly defined objectives still fail during implementation?

6. I. Lean & Six Sigma in 10 Minutes

7. Process Improvement Origins Why Were Lean and Six Sigma Developed? • Japanese developed many “Lean” techniques based on work by Henry Ford, Dr. W. Edwards Deming & others to compete with U.S. Auto manufacturers • Six Sigma was developed by Motorola to raise the standard of “Quality” to meet competitive pressures

8. Basic Concepts of Lean Core Concepts: • Value: What the customer is willing to pay for. • Value Stream: Actions that add value to a product or process. • Flow: The continuous movement of product, favoring single-piece flow and work cells versus production lines. • Pull: Replacing only material that is used and eliminating excessive inventory. • Continuous Improvement: A relentless elimination of waste on a never-ending basis.

9. Lean Continuous Improvement Cycle Continuously improve in the pursuit of perfection 1) Specify value in the eyes of the customer 2) Identify the value stream and eliminate waste 3) Make value flow at the “pull” of the customer 4) Involve and empower employees 5) Continuously improve in the pursuit of perfection

10. Basic Concepts of Six Sigma Six Sigma Is: • A scientificmethod • A disciplined approach (DMAIC) • A management philosophy • Focused on breakthrough improvements • Reliant on data and correlation: Y=f (X1, X2, X3…Xn) • Sophisticated analytically, requiring complex training • Driven by executive level support Core Concepts: • Critical to quality (CTQ): What the customer wants • Defect: Failing to deliver what the customer wants • Process capability: What your process can deliver vs. customer CTQ • Variation: Process stability & consistency over time

11. Basic Concepts of Six Sigma (continued) A 5 step approach founded on asking the right questions: • Define: What is important to the customer? • What are their targets and acceptable limitations; anything else is considered defective • Measure: What is the frequency of defects? How many defects? • Capability: How is the process performing for the customers? • Entitlement: How good can the existing process be? • Gage R&R: How good is the data? Is it reliable? • Analyze: Why, when and where do the defects occur? • Data driven analysis to prove what the root causes are • Improve: How can we fix the process/critical defects? • How can root causes can be addressed? • Control: How can we ensure the process remains fixed? • Develop controls to ensure process improvement is sustained

12. Lean Six Sigma Lean or Six Sigma? Convergence: Commonality of both methodologies: • Focus on the customer • Drive toward understanding exactly what the customer wants • Improve processes by eliminating/reducing things that prevent the process from delivering exactly what the customer wants • Require continuous effort to ensure improvements are sustained Which is better? Answer: Who Cares?

13. Agile Basics - Key Principles Key Agile principles are: Focus on customer value – Employ business-driven prioritization of features. Iterative & Incremental Delivery –Create a flow of value to customers by “chunking” feature delivery into small increments. Intense Collaboration – Face-to-face communication via collocation, etc; diversified roles on integrated teams. Self Organization – Team members self-organize to fulfill a shared project vision. Continuous Improvement – Teams reflect, learn and adapt to change; work informs the plan. • What is Customer Value? • The right product, for the right price, at the right time. “The right product” is the product with exactly the features that the customer wants. “The right price” is the price that customer believes is a fair deal. “The right time” is when the customer wants it.

14. Agile: A Lean Execution Engine Agile methods can be interpreted as a Lean approach to IT project management and execution.

15. Lean Execution via Agile: The Mechanics Agile practices include: • Release Planning (1)(creates Product backlog) • Iteration Planning (2)(creates Iteration backlog) • Daily Standup • Fixed-length iterations and small releases • Feature Review (3) • Process Reflection (4) Identify top-priority items and deliver them early and often.

16. II. The Case for Combination

17. Why CC Pace Combined Lean & Agile There are many common barriers to Agile adoption across an enterprise: • Large, complex projects • Many projects in flight • Multiple projects per performer • Rigid functional roles • Rewards based on legacy process compliance • Lack of IT and business alignment Lean concepts offered proven solutions to these issues: Lean Project Portfolio Management • Driven by Lean goals and metrics • Minimized Work in Process (WIP) Lean Staffing & Scheduling • Dedicated, cross-functional teams • Alignment by platform and value stream Lean Human Performance Management • Rewards based on business results • Support for generalizing specialist career paths

18. Process Management Maturity Curve No process measurement or control Some breakthrough improvements Many incremental improvements • Continuous Improvement Culture • Measurements drive and direct change • Kaizen events implement changes quickly • Performers identify and address waste within their own work • Culture is focused on striving towards -- but never reaching -- perfection • Lean Six Sigma Projects • Focus on major value streams • Address root causes of process problems • Refine LSS metrics and support structures • Generate value! • Pilot Program • Identify & map core value streams and processes • Select diverse portfolio of pilot projects • Launch LSS pilots • Measure & adapt LSS structure appropriately • Integrate LSS into organizational fabric Maturity Time

19. IT and the Lean Rate of Change

20. Lean at Three Levels • Lean Enterprise • Business alignment with and optimization of value streams. • Lean IT Organization • An IT organization that can support a Lean rate of change. • Lean Project Execution • Projects that use Agile to adapt to change, focus on customer needs and deliver value incrementally. Drives Enables Supports Enables

21. Agile’s Contributions Agile execution of process improvements yields: • Direct, continuously updated linkage to the Voice/Heart/Soul of the Customer • Ability to handle change beyond initial process analyses • Minimized risk by accelerating time-to-value through iterative development and incremental delivery • Close coordination between Business and IT • Focus and refinement of recommended improvements at the implementation level • An ideal platform for innovation and new product introduction • Support for whole-of-life product maintenance and continuing development

22. How Agile Supports Lean Alignment Agile Projects support true IT alignment with value streams; Lean IT Organizations support Agile Projects.

23. Lean Six Sigma’s Contributions Lean Six Sigma provides a number of advantages to Agile project execution: • Directed portfolio design • Select projects based on critical process constraints • Align projects across functional silos • Grounded project vision and clear focus • Initial Product Backlogs • Insight into rationale underlying requirements • Stronger business cases • Quantitative assessment of feature values • Clear linkage of IT efforts to business benefits • Means to measure success • Key metrics identified for a particular process • Measurement and control system in place

24. Why Combine Lean Six Sigma & Agile? Together, Lean Six Sigma and Agile: • Support incremental improvements with a process designed around iterative delivery • Tighten feedback loops in process management and improvement efforts • Accurately measure value generation and strongly link to strategic operations • Align project portfolios with true, grounded business needs • Improve execution speed of process improvement initiatives

25. How Might a Combined Approach Work? Most simply: • Lean Six Sigma projects provide initial definition and analysis of process areas • Tackle large, complex process issues • Provide grounded business cases and clear focus • Provide metrics to define success • Agile projects are spawned in the “Improve” phase • Utilize output from LSS projects to form Product Backlog • Members from LSS team are involved in execution • Adjustments are made as necessary to initial LSS analyses based on exploratory and production data influx • Much richer interactions can be imagined as both techniques are adopted throughout an enterprise…

26. Tricky Issues Implementation can face many challenges: • Process perspective in IT organizations • Roles and responsibilities of Lean/Six Sigma and Agile champions and performers • Balance of analysis and execution • Meaningful metrics for project value • Human performance management rewarding proper behavior • All of the standard Lean Six Sigma & Agile barriers…

27. III. CC Pace’s Experience

28. CC Pace’s Experience • Lean Project Portfolio Management Analysis • Lean Staffing & Scheduling Analysis • Lean New Customer Acquisition Analysis & Improvement • Lean Six Sigma Access Control Risk Management Analysis • Lean-Agile Maturity Assessments • Lean Six Sigma Marketing and Production Services Analysis • Lean Six Sigma Enterprise Process Mapping

29. IV. Discussion

30. Contact Information Arlen Bankston Director Arlen.Bankston@ccpace.com PHONE: 703 / 631.6600 WEB: http://www.ccpace.com MAIL: 4100 Monument Corner Dr., Suite 400 Fairfax, VA 22030