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Summary Operational Excellence Book Notes
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Notes for all chapters (except chapter 13 with the case studies) for the book required for the class "Operational Excellence".
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Summary Operational Excellence - Book: Lean Six Sigma for Services and Healthcare (Mast et al, 2016) - (6314M0238Y) - Master Business Administration 2021-2022, UvA
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Lean Six Sigma for Services and HealthcareCHAPTER 1: The business and economic background of Lean Six Sigma
Lean Six Sigma ≠ business strategy, "it is a framework for organizing improvement activities"
● "Generic, ready-made approaches cannot be strategic by definition"
● Focus on processes, "all work that is done routinely"
○ "Number of operations that turn input into output"
○ Cost of poor quality: "Quality problems cost the organizations a lot of money"
● Goal: Minimize the hidden factory
Hidden factory: "The quality and efficiency issues", "often invisible on flowcharts and process
descriptions"
"Recurring problems make for good Lean Six Sigma projects. Lean Six Sigma brings understanding of the
root cause(s) of the problem, and provides a definitive and optimal solution"
● "Lean Six Sigma projects optimize processes, eliminate waste, and provide a quantitative basis
for staffing and line balancing"
● Also tackles problems that are perceived as problematic by customers
● LSS "provides a management structure and methodology that turn systematic improvements of
routine operations into a routine operation itself"
Direct benefits: Customer satisfaction and cost advantages
● "LSS projects improve efficiency and quality, thus increasing value for customers while
simultaneously reducing costs"
● "The gains of the unbelievable increases in quality and efficiency have gone almost entirely to
consumers: there have been only few businesses that managed to convert them into sustainable
higher profits"
○ Improvements on quality and efficiency can be converted into CAs and sources of
sustainable profitability
● Price erosion: "When most companies achieve the same improvement in their operations,
principles of competition and market ensure that prices decrease by the same amount as costs,
leaving industry with the same profit margins, and feeding spilling over gains to consumers"
● Competitive convergence: When companies start "copying each other's moves and best
practices" so they end up looking more alike
○ "This type of competition is destructive for companies participating in it"
○ Avoided by using 'competitive strategy': "effective methodology for delivering the
improvements that the business strategy dictates as essential"
"Continuous improvement, flexibility, and the ability to adapt to new circumstances and opportunities
have become crucial competences in a highly dynamic and quickly evolving economy"
● "What is needed in addition are the organizational structures and facilities needed to carry out
improvements effectively"
Values of LSS:
● Continuous innovation and improvement
● Focus on the customer
● Data-driven decisions
● Focus on the vital issues that determine performance
"Strategy is all about making clear choices. Strategies are necessary to deal with trade-offs"
Competitive position can be obtained by: 1) cost leadership, 2) product differentiation, 3) focus (on
niches)
"LSS builds skills in data based management… projects automatically build a system of process and
performance metrics, thus providing a basis for a management information system"
● "Company-wide continuous improvement"
, ● Change in culture: "LSS companies nurture an innovative and experimental attitude in their
workforce and management"
CHAPTER 2: Organizational structure for LSS
Distinction:
● "Quality planning consists of the determination of what customers want and the development of
the products and processes which are required to comply with these needs"
● "Quality control consists of the on-line and real time monitoring of production or service delivery,
the detection of irregularities, and the reaction to those irregularities"
○ "Reactive in nature and deals particularly with… sporadic problems"
● Quality improvement " is the organized and systematic pursued improvement to increase quality
and efficiency to unprecedented levels" (breakthroughs)
○ Off-line affair that deals with chronic problems and has a project-by-project nature
○ "The reactive and opportunistic approach of control is completely different from
improvement, which searches for improvement opportunities systematically"
Improvements are "run by people with intimate and detailed understanding of the process and problem
at hand" so "projects are mostly executed by people from the line organization"
Structure of the team:
● 1+ Black Belts and/or Green Belts from middle management, who are effective (and trained)
project leaders
● Several Yellow Belts who work as advisors and may be called up to collect data
● Champion who is the product owner and responsible for reviewing and the process that the
project aims to improve
○ "The program director is ultimately accountable for the LSS initiative, and he should
map out the strategic direction"
○ "Program managers do the day-to-day administration of LSS" and do the "planning and
resource management"
■ They are also responsible for "the adjustment of the program's course, reacting
to problems and complications"
Decentralized approach to improvement as the BB and GB are dispersed over the organization
● Danger: There's "no integration of activities, and efforts are wasted on issues that are not of
strategic importance"
Master BB are experienced BB and "act as LSS experts". They deliver training and support projects
Project timelines, roles and responsibilities
Project Potential projects, BBs/GGs are Program management is leading,
identification suggested guided by input from across the
(Define) organization
Project proposal Potential projects are elaborated BB or GB
(Define)
Project selection Project's objective is established; BB, Program management and
(contracting) GB selected Champions
(Define)
Project (MAIC) Diagnosis plus immediate BB, GB, team members. Supervision:
improvements Champion
Discharge BB gives project ownership back to
Champion
Benefit realization Implementation of pending Program management, Champion
improvements and benefit tracking
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