Exploring the role of Lean Six Sigma in organisational design

Cristian Matei, PhD in Organisational Design and Lean Six Sigma Master Black Belt, Advanced Thinking 

The Lean Six Sigma methodology has a key role in facilitating organizational design.

According to the University of Southampton, organisational design is defined as “the process of aligning the structure of an organisation with its objectives, with the ultimate aim of improving efficiency and effectiveness”.

For the purposes of this post, it comprises three distinct and chronological phases: design, execute, and improve.

The process begins with the design – or redesign – of an entire company, the elements which make it up and the links between them. It’s otherwise known as business transformation, business process re-engineering or business process management.

At the highest level, it’s about redesigning the organizational architecture, starting with identifying the relevant stakeholders and business processes and, from there, designing a business process-based organisational structure including KPIs, design objectives and other settings. Conversely, lower-level design involves process mapping, and the organizational structure of the designed process itself, including aspects such as resource allocation and risk management.

Importantly, the scope of this organisational design – of the entire company and all its composite elements – should be viewed as a single project. And every element that’s designed here should then be implemented in the “execute” phase and improved whenever needed later.

Introducing Lean Six Sigma

This next phase is about more than just execution. It’s also important to collect data based on the KPIs identified in the “design” phase and monitor that data, using dashboards for graphical and statistical analysis. That way, if a special cause or non-conformity is identified, i.e., an element that doesn’t perform according to how it was designed, it can be passed for “containment and correction”.

Imagine you have a broken water pipe. Containment will stop the leak, but the pipe will need to be replaced to allow water back into the system – that’s the correction. However, “containment and correction” won’t find the root cause of the non-conformity. This, and eliminating it to prevent it recurring, is done in the “improve” phase, where corrective and preventive action is taken.

In the ‘improve’ phase, Lean Six Sigma enables the improvement of existing products, processes and services with fewer defects and, in turn, with fewer special causes and non-conformities.

It offers a powerful combination of two methodologies: the waste-reducing mentality of Lean and the defect and variance reduction focus of Six Sigma. Its primary focus is to reduce waste by minimizing variability in business processes and creating a continuous flow between each step; enabling businesses to solve problems faster, reduce process inefficiencies and boost productivity.

However, while Lean Six Sigma is a methodology, it’s also a business philosophy, a metric, and a collection of tools. It’s effectively an improvement toolbox.

Building on a foundation

There are many tools in Lean Six Sigma which should be used in the initial “design” phase, not dissimilar to designing a building: the scope of the project and the design of the entire company is the floorplan of the whole building. Lean Six Sigma refines and details the initial design in each room of that building – each room being an element of the company.

But it’s essential that the “design” phase provides a foundation for the Lean Six Sigma programme. There is a high rate of failure among Lean Six Sigma programmes, the main reason being a lack of foundation to build on. This means that no Lean Sigma Six programmes should begin until that foundation – the fundamental design and architecture of the company – is in place.

Imagine 50 Lean Sigma Six projects running at the same time within a company’s project portfolio. Each project requires KPIs, the voice of the customer and various business processes to be identified and mapped. The overall standardization that comes from designing a stable framework is key to running aligned and simplified Lean Sigma Six projects in an integrated portfolio.

Improving until entitlement

Several Lean Six Sigma tools are used in the “execute” phase. Collecting data, monitoring and dashboarding are all Lean Six Sigma tools, for example. Essentially, applying Lean Six Sigma thinking at a company level is another way to describe an organisation’s design.

And, in the “improve” phase, the Lean Six Sigma methodology is applied to each element of the company, improving them until reaching the process entitlement. It involves starting with the “before” and increasing the Six Sigma capability – reducing the defect, decreasing the cost and increasing performance until reaching the desired “after”.

As a methodology, a philosophy, a metric and a toolbox, Lean Six Sigma is a vital part of organizational design. With the right framework, or foundation, in place it enables businesses to design and then realise the performance they most want from their company and all its composite elements.