Problem solving

PROBLEM SOLVING

Icon Private Equity Fund

January 2009

CONTENTS

Executive Summary

Analyzing Inefficiencies

Extracting Information and Getting to the Roots of the Problem

Finding Solutions

Ideas Selection and Evaluation

Planning Results and Consequences

Improving ProcessesImproving Processes

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PROBLEM SOLVING PROCESSTracing a Problem to Its Origins

1. Problem Finding

2 Fact Finding7 Sell Idea

8. Action1. Problem finding- 5Whys and So What, Check List2. Fact Finding- 5Whys and So What, Check List3. Problem definition- Cause & Effect, Drill Down, Affinity Diagrams, Flow Chart2. Fact Finding7. Sell Idea Cause & Effect, Drill Down, Affinity Diagrams, Flow Chart- Root Cause Analysis4. Idea finding- Brainstorming, Concept Fan5. Selection & Evaluation- Decision Trees, Paired Comparison Analysis and Grid Analysis

6 Thi ki H t C t/B fit A l i

3. Problem Definition6. Planning

- 6 Thinking Hats, Cost/Benefit Analysis6. Planning- Space, Cash, Helpers/people, Equipment, Materials, Expertise,Systems- FMEA, Risk Analysis7. Sell Idea

4. Idea finding5. Selection & Evaluation 8. Action

You can apply Root Cause Analysis to almost any situation. Determining how far to go in your investigation requires good judgment and common sense Theoretically you could continue to trace root causes back to the Stone Age but the effort would serve no useful purpose

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common sense. Theoretically, you could continue to trace root causes back to the Stone Age, but the effort would serve no useful purpose. Be careful to understand when you’ve found a significant cause that can, in fact, be changed.

ROOT CAUSE ANALYSISTracing a Problem to Its Origins

You can use many tools to support your Root Cause Analysis process. Cause and Effect Diagrams and 5 Whys are integral to the process it lf hil FMEA d K i h l i i i th d f R t C A l i i th f t

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itself, while FMEA and Kaizen help minimize the need for Root Cause Analysis in the future.

As an analytical tool, Root Cause Analysis is an essential way to perform a comprehensive, system-wide review of significant problems as well as the events and factors leading to them.

FAILURE MODE AND EFFECTS ANALYSIS Spotting problems before a solution is implemented

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SIX SIGMAImproving quality systematically

The DMAIC FrameworkThe DMAIC FrameworkThe tools are applied within a simple framework known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows:

D Define the goals of the improvement activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI ormarket share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be toreduce the defect level, and increase throughput. Apply data mining methods to identify potential improvement opportunities.

M Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Beginby determining the current baseline. Use exploratory and descriptive data analysis to help you understand the data.

A Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal. Applystatistical tools to guide the analysis.g y

I Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning andmanagement tools to implement the new approach. Use statistical methods to validate the improvement.

C Control the new system. Institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, MRP(Manufacturing Resource Planning) budgets operating instructions and other management systems You may wish to utilize systems such as ISO(Manufacturing Resource Planning), budgets, operating instructions and other management systems. You may wish to utilize systems such as ISO9000 to assure that documentation is correct.

Although the approach is simple, it is by no means easy. However, the results justify the effort expended. Research has shown that firms thatsuccessfully implement Six Sigma perform better in virtually every business category, including return on sales, return on investment, employmentgrowth, and share price increase.

Si Si f i i lit ( d th f d i t ) b h l i i ti d d t d i b tt

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Six Sigma focuses on improving quality (and therefore reducing waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value as well as quality, Six Sigma identifies and eliminates costs which provide no value to customers.

SOFT SYSTEMS METHODOLOGYUnderstanding Very Complex Issues

Step 1: Explore the Problematical Situation

Create what Checkland calls a "rich picture" of what's happening. This is, in effect, a mind map. It shows the main individuals, groups, organizations, relationships,cultures, politics, and processes involved in the situation. Also, try to identify the different perspectives, or "worldviews," that different groups have of the situation. Then,, p , p , y y p p , , g p ,among these individuals or groups, identify the "client" who wants an improvement in the situation, the "practitioner" who is carrying out the SSM-based investigation,and the stakeholders who would be affected by an improvement in the situation.

Step 2: Create Purposeful Activity ModelsIdentify the "purposeful activities" being carried out by people involved in the situation. These are things that they're doing, as well as the actions they're taking toimprove the problematical situation. Make note of which activities belong to which worldview. Then, create a "root definition" of each activity. This is a more sophisticateddescription of the basic idea, and it contains enough detail to stimulate an in-depth discussion later on.Checkland proposes two tools for developing the root definition. The first is called PQR: P stands for "What?" Q stands for "How?" R stands for "Why?"The other tool is CATWOE. Use this to further improve the root definition by thinking about the following:Checkland recommends reviewing these in the light of "three E's":Efficacy – Ways to monitor if the transformation is, in fact, creating the intended outcome.Efficiency – Ways to monitor if the benefits of the transformation are greater than the cost (in time, effort, and money) of creating them.Eff ti W t id tif if th i di id l t f ti l t ib t t hi h l l l t lEffectiveness – Ways to identify if the individual transformation also contributes to higher-level or longer-term goals.

Step 3: Discuss the Problematic SituationDiscuss in detail each purposeful activity model. Your goal is to find ways to improve the problematic situation. Some of the following questions may help:- Does each part of the model truly represent what happens in reality?- Do the dependencies and relationships between activities in the model also exist in reality?-Is each activity efficacious efficient and effective?Is each activity efficacious, efficient, and effective?-- Who performs each activity? Who else could do it?- How is each activity done? How else could it be done?- When and where is each activity done? When or where else could it be done?

Having created a list of possible improvements, you may want to create purposeful activity models for each one. Following the process for doing so helps ensure thatyou've considered all of the various worldviews involved, which is necessary for the improvement to have a realistic chance of being implemented.y , y p g p

Step 4: Define "Actions to Improve“The group doing the SSM-based analysis of the problematical situation now has to agree on which actions it thinks will improve the situation, and the group must definethose actions in enough detail to create an implementation plan.Remember, because people have different worldviews, there won't necessarily be agreement on which actions to take to improve the situation. However, everyoneinvolved should reach what Checkland describes as an "accommodation" or compromise, so that they agree on practical options that meet the three E's – efficacy,

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efficiency, and effectiveness.

AVOIDING LOGICAL FALLACIESWhat They Are, and How to Avoid Them

For an argument to be valid or logical, the premise statements must provide full support for the conclusion. They do this in one of two ways:Using Deductive reasoning – starting with premises of a general nature, you reach a specific conclusion. Example: Premise 1: Trucan Supply decided that to minimize redundancy costs,

it would limit its layoffs to the New York facility only. Premise 2: Tom received a lay-off notice.Conclusion: Tom works at the New York facility.

Using Inductive reasoning – from premises that are specific, you reach a generalized conclusion. Example: Premise 1: April promotions over the last five years have increased sales by15%, on average. Premise 2: Over this period, summer promotions have not produced any measurable increase in sales.Conclusion: To increase sales, it is better to have this year's promotion in April rather than in the summer.

Common FallaciesAppeals to Authority – this is where you rely on an "expert" source to form the basis of your argument. In that passage the apparently expert sources is "a famous academic." Mentioningan academic conj res e pert a thorit and rigoro s research backing res lts And sing a real name o ld be e en stronger When o 're on the looko t for fallacies it‘s important toan academic conjures expert authority and rigorous research backing results. And using a real name would be even stronger. When you're on the lookout for fallacies, it‘s important toremember that name-dropping is not sufficient evidence to support the argument.

False Inductions – often called "non sequitur" for the Latin translation "it does not follow." This fallacy gets you to infer a causal relationship where none is evident. Just because somethinghappened before something else does not mean there is a logical, causal link between the two. Showing the pleasant images may or may not be linked to the company's improvedperformance. There are a number of other factors that could have been involved. Whether or not the pleasant images had an impact is not demonstrated in the passage at all.

The Reification Fallacy this type of fallacy relies on taking a hypothesis or potential theory and presenting it is as a known truth Here while there is much evidence that employeeThe Reification Fallacy – this type of fallacy relies on taking a hypothesis or potential theory and presenting it is as a known truth. Here, while there is much evidence that employeemotivation improves individual performance, this is still just a theory. There are many other factors that contribute to performance improvement. It is incorrect to conclude that increasedmotivation must result in increased productivity.

The Slippery Slope – this is an argument that relies on thinking that "the worst that can happen" will actually come true. Somehow the direst consequence will result if a certain action istaken or change is implemented.

The Bandwagon Fallacy here someone is led to believe in an idea or proposition simply because it's popular or has lots of support The fact that lots of people agree with somethingThe Bandwagon Fallacy – here, someone is led to believe in an idea or proposition simply because it s popular or has lots of support. The fact that lots of people agree with somethingdoesn't make it true or right.

Closely associated with the bandwagon fallacy is an Appeal to Tradition fallacy. Here the argument centers on something that has always been done or is a widely accepted practice. Forinstance, "We've always hired the CEO from among the ranks. If we look outside there will be too much dissention and discord."

The False Dichotomy Fallacy – making an "either or" argument. To create this logical fallacy you provide only two options and force a choice. In fact, neither choice may be the best, butthe argument makes it appear that the favored option is the only feasible onethe argument makes it appear that the favored option is the only feasible one.

The Straw Man Fallacy – this is a technique where a false argument is created and then refuted. The counter argument then is believed to be true. By deliberately misrepresenting anopposing position and then knocking it down, you falsely build your own position.

Observational Selection – this happens when you draw attention to the positive aspects of an idea and ignore the negatives. You are trying to confirm your belief by providing only half thestory.

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The Statistics of Small Numbers fallacy is a similar concept. Here you take one observation and use it to draw a general conclusion. "I would never use Gaudi Brothers to supply ourpaper products. My wife's company used them and they short-shipped products and back-ordered them." In fact, this opinion is based on one bad experience, and doesn't necessarily meanthe company is unreliable. Perhaps the purchasing company was late submitting orders, or late paying their invoices. These would contribute to less than stellar customer service on thepart of Gaudi Brothers.

CONTENTS

Executive Summary



Finding Solutions




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FLOW CHARTS Understanding and Communicating How a Process Works

To draw the flow chart, brainstorm process tasks, and list them in the order theyoccur. Ask questions such as "What really happens next in the process?" and"Does a decision need to be made before the next step?" or “What approvals arerequired before moving on to the next task?"

Start the flow chart by drawing the elongated circle shape, and labeling it “Start”.

Then move to the first action or question, and draw a rectangle or diamondappropriately. Write the action or question down, and draw an arrow from the startsymbol to this shape.

Work through your whole process, showing actions and decisions appropriately inthe order the occ r and linking these together sing arro s to sho the flo of thethe order they occur, and linking these together using arrows to show the flow of theprocess. Where a decision needs to be made, draw arrows leaving the decisiondiamond for each possible outcome, and label them with the outcome. Andremember to show the end of the process using an elongated circle labeled“Finish”.

Finally, challenge your flow chart. Work from step to step asking yourself if youhave correctly represented the sequence of actions and decisions involved in theprocess. And then (if you’re looking to improve the process) look at the stepsidentified and think about whether work is duplicated, whether other steps should beinvolved, and whether the right people are doing the right jobs.

Flow charts are simple diagrams that map out a process so that it can easily be communicated to other people.

T d fl h t b i t th t k d d i i d d i d it th d i d

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To draw a flowchart, brainstorm the tasks and decisions made during a process, and write them down in order.

Then map these out in flow chart format using appropriate symbols for the start and end of a process, for actions to be taken and for decisions to be made.

Finally, challenge your flow chart to make sure that it’s an accurate representation of the process, and that that it represents the most efficient way of doing the job.

SWIM LANE DIAGRAMSMapping and improving the processes in your organization

1. Determine what you aim to accomplish:What business process do you want to analyze?Is it operational, strategic, functional, etc…?What organization units are involved and what level of detail do you want to analyze these to spotWhat organization units are involved and what level of detail do you want to analyze these to spotinefficiencies?

2. Clarify the processes you are focusing on:A process is defined for this purpose as a series of tasks that have a specific end result, such as hiring a staffmember, producing a product, acquiring a new customer.For each process you are analyzing, what is the end result?

3. Identify all participants in the processes you are analyzing:These include all the organization units participating in the processes, and anyone who provides inputs orreceives outputs from it. Depending on the level of detail you have chosen, these may be by departments,teams or individual people; or even a computer system that performs certain parts of the process.Which organization units participate?Where do the inputs to the process come from?Who receives the output of the process?Who receives the output of the process?

4. Now it’s time to start creating the diagram:List the participants in the far left column of the diagram.Assign each of these participants to a horizontal band (swim lane). It is helpful to assign the swim lanes insequence, with the first column assigned to the participant who provides the first input. (For customer facingprocesses, this is often the customer.)

5. List the step or activities required at each stage of the process:Follow through the process sequentially.Remember you are mapping how the process is currently being done – not how you think it should be done.The key to creating a useful diagram is to keep it as simple as possible. Try not to include too many loop backs(unless you are focusing on exceptions) – and keep the process mapping moving forward.

6. Analyze the diagram for potential areas of improvement:y g p pAre there any gaps or steps missing?Is there duplication?Are there overlaps, where several people or teams perform the same task or activity?Are there activities that add no value?

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Rummler – Brache diagrams are useful tool for identifying sources of inefficiency within, and between, processes and organization units. By using structured pictures to show how processes achieve their aims, you can see at a glance who is responsible for what, and whether there are potential areas for improvement in the process.

BOTTLENECKSFixing Unbalanced Processes

There are two main types of bottlenecks:

1. Short-term bottlenecks – These are caused by temporary problems. A good example is when key team members become ill or go on vacation. Noone else is qualified to take over their projects, which causes a backlog in their work until they return.

2. Long-term bottlenecks – These occur all the time. An example would be when a company's month-end reporting process is delayed every month,because one person has to complete a series of time-consuming tasks – and he can't even start until he has the final month-end figures.because one person has to complete a series of time consuming tasks and he can t even start until he has the final month end figures.

Here are some other signs of bottlenecks:• Long wait times – For example, your work is delayed because you're waiting for a product, a report, or more information. Or materials spend time

waiting between steps of a business or manufacturing process.• Backlogged work – There's too much work piled up at one end, and not enough at the other end.

High stress le els• High stress levels.

Two tools are useful in helping you identify bottlenecks:1. Flow Charts2. Five Whys

How to Unblock Bottlenecks

You have two basic options for unblocking your bottleneck:1. Increase the efficiency of the bottleneck step.2. Decrease input to the bottleneck step.

Bottlenecks can cause major problems for any company, and identifying their root causes is critical. Look for the typical signs of bottlenecks – such as backlogged work waiting (by people materials or paperwork) and high stress relating to a task or process To

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bottlenecks – such as backlogged work, waiting (by people, materials, or paperwork), and high stress relating to a task or process. To make sure you identify the root cause (and not just one of the effects), use a Flow Chart or the Five Whys technique.

CONTENTS

Executive Summary



Finding Solutions




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BRAINSTORMINGGenerating many radical and useful ideas

Brainstorming is particularly useful when you need to break out of stale, established patterns of thinking, so that you can develop new ways of looking at things. This can bewhen you need to develop new opportunities, where you want to improve the service that you offer, or when existing approaches just aren't giving you the results you want.when you need to develop new opportunities, where you want to improve the service that you offer, or when existing approaches just aren t giving you the results you want.

Individual Brainstorming

When you brainstorm on your own you will tend to produce a wider range of ideas than with group brainstorming - you do not have to worry about other people's egos oropinions, and can therefore be more freely creative. You may not, however, develop ideas as effectively as you do not have the experience of a group to help you.When Brainstorming on your own, it can be helpful to use Mind Maps to arrange and develop ideas. A particularly useful way of doing this is to use computer-based mindmapping tools - at the bottom of this page you can sign up for our free course on computer-based creative problem solving, which teaches you how to do this.app g too s at t e botto o t s page you ca s g up o ou ee cou se o co pute based c eat e p ob e so g, c teac es you o to do t s

To run a group brainstorming session effectively, do the following:

Define the problem you want solved clearly, and lay out any criteria to be met;Keep the session focused on the problem;Ensure that no one criticizes or evaluates ideas during the session. Criticism introduces an element of risk for group members when putting forward an idea. This stiflesg g p p gcreativity and cripples the free running nature of a good brainstorming session;Encourage an enthusiastic, uncritical attitude among members of the group. Try to get everyone to contribute and develop ideas, including the quietest members of thegroup;Let people have fun brainstorming. Encourage them to come up with as many ideas as possible, from solidly practical ones to wildly impractical ones. Welcome creativity;Ensure that no train of thought is followed for too long;Encourage people to develop other people's ideas, or to use other ideas to create new ones ; andAppoint one person to note down ideas that come out of the session. A good way of doing this is to use a flip chart. This should be studied and evaluated after the session.pp p g y g p

Brainstorming is a great way of generating radical ideas. During the brainstorming process there is no criticism of ideas, as free rein is given to people's creativity (criticism and judgment cramp creativity ) This often makes group brainstorming sessions enjoyable

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given to people's creativity (criticism and judgment cramp creativity.) This often makes group brainstorming sessions enjoyable experiences, which are great for bringing team members together.

5 WHYS & SO WHAT?Quickly Getting to the Root of a Problem

5 Whys Example:Following is an example of the 5 Whys analysis as an effective problem-solving technique:1. Why is our client, Hinson Corp., unhappy? Because we did not deliver our services when we said we would.2. Why were we unable to meet the agreed-upon timeline or schedule for delivery? The job took much longer than we thoughtit would.3. Why did it take so much longer? Because we underestimated the complexity of the job.4. Why did we underestimate the complexity of the job? Because we made a quick estimate of the time needed to complete it,4. Why did we underestimate the complexity of the job? Because we made a quick estimate of the time needed to complete it,and did not list the individual stages needed to complete the project.5. Why didn't we do this? Because we were running behind on other projects. We clearly need to review our time estimationand specification procedures.

The 5 Whys technique is a simple technique that can help you quickly get to the root of a problem. But that is all it is, and the more complexthings get the more likel it is to lead o do n a false trailthings get, the more likely it is to lead you down a false trail.

So What Example:Appreciation is a technique used by military planners, so we will take a military example:

Fact: It rained heavily last night

So What?- The ground will be wetSo What?So What?- It will turn into mud quicklySo What?- If many troops and vehicles pass over the same ground, movement will be progressively slower and more difficult as the ground getsmuddier and more difficult.So What?

Wh ibl ti k t d d Oth i t t t b h l th l

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- Where possible, stick to paved roads. Otherwise expect movement to be much slower than normal.

While it would be possible to reach this conclusion without the use of a formal technique, Appreciation provides a framework within whichyou can extract information quickly, effectively and reliably

CATWOEUnderstanding the different elements that contribute to a problem

Customers Who are they, and how does the issue affect them?

ActorsWho is involved in the situation? Who will be involved in implementing solutions? And what will impact their success?

Transformation Process What processes or systems are affected by the issue?

World ViewWhat is the big picture? And what are the wider impacts of World Viewthe issue?

OwnerWho owns the process or situation you are investigating? And what role will they play in the solution?And what role will they play in the solution?

Environmental ConstraintsWhat are the constraints and limitations that will impact the solution and its success?

By analyzing the CATWOE factors (Customers, Actors, Transformation process, World view, Owner, Environmental constraints) that are influencing an issue of concern you keep your perspective broad and are able to see the issue from many angles This is a great tool to

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influencing an issue of concern, you keep your perspective broad and are able to see the issue from many angles. This is a great tool to keep in mind, especially when you first start thinking about a problem, or try to come up with a solution.

CHECK LIST & AIDES MEMOIRE

How to Use the Tool:

An Aide Memoire (Memory aid) is a structured list of points or headings that should be considered when solving a particular problem. Ittends to be specific to the type of problem being faced.

A good aide memoire or checklist can be a very powerful planning tool, as it will contain a great deal of the experience of the people whodeveloped it. If you use a good aide memoire effectively, you can be reasonably confident that you will have considered all relevant factors.developed it. If you use a good aide memoire effectively, you can be reasonably confident that you will have considered all relevant factors.Often this makes the difference between carrying out a task effectively and making a mess of it, particularly when you are under pressure.

Aides Memoire are routinely used in areas as diverse as computer systems analysis, construction of financial proposals and militaryplanning.

Developing an Aide Memoire:If you are solving a common problem, then a good aide memoire may already exist for it. If you cannot find a good pre-prepared one, thenyou may have to develop it for yourself. This is worthwhile where you need to plan a number of similar jobs.

Developing an aide memoire is an iterative process: first you start by producing what you think is a definitive list of points or headings thatshould be considered. Use this to plan the job. After the job is complete, review the list, and see if there are any additional points thatshould be included. Every time an unforeseen problem arises on a project, ask yourself whether you need to prompt yourself on it on yourlist.

As your aide memoire improves, so will the quality of your planning.

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CAUSE & EFFECT DIAGRAMS 1Identifying the Likely Causes of Problems

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Cause & Effect analysis (or Fishbone Analysis) provides a structured way to help you think through all possible causes of a problem. This helps you to carry out a thorough analysis of a situation.

CAUSE & EFFECT DIAGRAMS 2Identifying the Likely Causes of Problems

How to Use the Tool:

Follow these steps to solve a problem with a Cause and Effect Diagram:1. Identify the problem:Write down the exact problem you face in detail. Where appropriate identify who is involved, what the problem is, and when and where itoccurs. Write the problem in a box on the left hand side of a large sheet of paper. Draw a line across the paper horizontally from the box.This arrangement, looking like the head and spine of a fish, gives you space to develop ideas.This arrangement, looking like the head and spine of a fish, gives you space to develop ideas.

2. Work out the major factors involved:Next identify the factors that may contribute to the problem. Draw lines off the spine for each factor, and label it. These may be peopleinvolved with the problem, systems, equipment, materials, external forces, etc. Try to draw out as many possible factors as possible. If youare trying to solve the problem as part of a group, then this may be a good time for some brainstorming.

Using the 'Fish bone' analogy, the factors you find can be though of as the bones of the fish.

3. Identify possible causes:For each of the factors you considered in stage 2, brainstorm possible causes of the problem that may be related to the factor. Show theseas smaller lines coming off the 'bones' of the fish. Where a cause is large or complex, then it may be best to break the it down into sub-causes. Show these as lines coming off each cause line.

4. Analyze your diagram:By this stage you should have a diagram showing all the possible causes of your problem. Depending on the complexity and importance ofthe problem, you can now investigate the most likely causes further. This may involve setting up investigations, carrying out surveys, etc.These will be designed to test whether your assessments are correctThese will be designed to test whether your assessments are correct.

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CONTENTS

Executive Summary



Finding Solutions




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AFFINITY DIAGRAMSOrganizing Ideas Into Common Themes

Affinity diagrams are great tools for assimilating and understanding large amounts of information. When you work through the process of creating relationships and working backward from detailed information to broad themes, you get an insight you would not otherwise find. The next time you are confronting a large amount of information or number of ideas and you feel overwhelmed at first glance use the

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The next time you are confronting a large amount of information or number of ideas and you feel overwhelmed at first glance, use the affinity diagram approach to discover all the hidden linkages. When you cannot see the forest for the trees, an affinity diagram may be exactly what you need to get back in focus.

Drill DownBreaking Problems Down Into Manageable Parts

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'Drill Down' helps you to break a large and complex problem down into its component parts, so that you can develop plans to deal with these parts. It also shows you which points you need to research in more detail

CONCEPT FAN 1Widening the Search for Solutions

To start a Concept Fan, draw a circle in the middle of a large piece of paper. Write the problem you are trying to solve into it. To the right of it radiate lines representing possible solutions to the problem.

It may be that the ideas you have are impractical or do not really solve the problem. If this is the case, take a 'step back' for a broader view of the problem

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of the problem.

Do this by drawing a circle to the left of the first circle, and write the broader definition into this new circle. Link it with an arrow to show that it comes from the first circle

CONCEPT FAN 2Widening the Search for Solutions

The Concept Fan is a useful technique for widening the search for solutions when you have rejected all obvious approaches. It gives you a clear framework within which you can take 'one step back' to get a broader view of a problem. To start a concept fan, write the problem in the middle of a piece of paper. Write possible solutions to this problem on lines radiating from this circle. If no idea is good enough, redefine the problem more broadly. Write this broader definition in a circle to the left of the first one. Draw an arrow from the initial

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problem definition to the new one to show the linkage between the problems. Then radiate possible solutions from this broader definition.

Keep on expanding and redefining the problem until you have a useful solution.

ROOT CAUSE ANALYSIS 1Tracing a Problem to Its Origins

Root Cause Analysis (RCA) is a popular and often-used technique that helps people answer the question of why the problem occurred inthe first place.

Root Cause Analysis seeks to identify the origin of a problem. It uses a specific set of steps, with associated tools, to find theprimary cause of the problem, so that you can:1. Determine what happened.2. Determine why it happened.2. Determine why it happened.3. Figure out what to do to reduce the likelihood that it will happen again.RCA assumes that systems and events are interrelated. An action in one area triggers an action in another, and another, and so on. Bytracing back these actions, you can discover where the problem started and how it grew into the symptom you're now facing.

You'll usually find three basic types of causes:1 Ph sical ca ses Tangible material items failed in some a (for e ample a car's brakes stopped orking)1. Physical causes – Tangible, material items failed in some way (for example, a car's brakes stopped working).2. Human causes – People did something wrong… or did not doing something that was needed. Human causes typically leadto physical causes (for example, no one filled the brake fluid, which led to the brakes failing).3. Organizational causes – A system, process, or policy that people use to make decisions or do their work is faulty (forexample, no one person was responsible for vehicle maintenance, and everyone assumed someone else had filled the brake fluid).

Root Cause Analysis looks at all three types of causes. It involves investigating the patterns of negative effects, finding hidden flaws in thesystem, and discovering specific actions that contributed to the problem. This often means that RCA reveals more than one root cause.

You can apply Root Cause Analysis to almost any situation. Determining how far to go in your investigation requires good judgment and common sense Theoretically you could continue to trace root causes back to the Stone Age but the effort would serve no useful purpose

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common sense. Theoretically, you could continue to trace root causes back to the Stone Age, but the effort would serve no useful purpose. Be careful to understand when you’ve found a significant cause that can, in fact, be changed.


Root Cause Analysis has five identifiable steps.

Step One: Define the Problem• What do you see happening?

Wh t th ifi t ?• What are the specific symptoms?

Step Two: Collect Data• What proof do you have that the problem exists?• How long has the problem existed?• What is the impact of the problem?You need to analyze a situation fully before you can move on to look at factors that contributed to the problem. To maximize the effectiveness of your Root Cause Analysis, get togethere er one e perts and front line staff ho nderstands the sit ation People ho are most familiar ith the problem can help lead o to a better nderstanding of the iss eseveryone – experts and front line staff – who understands the situation. People who are most familiar with the problem can help lead you to a better understanding of the issues.

A helpful tool at this stage is CATWOE. With this process, you look at the same situation from different perspectives: the Customers, the people (Actors) who implement the solutions, theTransformation process that's affected, the World view, the process Owner, and Environmental constraints.

Step Three: Identify Possible Causal Factors• What sequence of events leads to the problem?

What conditions allow the problem to occur?• What conditions allow the problem to occur?• What other problems surround the occurrence of the central problem?During this stage, identify as many causal factors as possible. Too often, people identify one or two factors and then stop, but that's not sufficient. With RCA, you don't want to simply treatthe most obvious causes – you want to dig deeper.

Use these tools to help identify causal factors:• Appreciation – Use the facts and ask "So what?" to determine all the possible consequences of a fact.• 5 Whys Ask "Why?" until you get to the root of the problem• 5 Whys – Ask Why? until you get to the root of the problem.• Drill Down – Break down a problem into small, detailed parts to better understand the big picture.• Cause and Effect Diagrams – Create a chart of all of the possible causal factors, to see where the trouble may have begun.

Step Four: Identify the Root Cause(s)• Why does the causal factor exist?• What is the real reason the problem occurred?Use the same tools you used to identify the causal factors (in Step Three) to look at the roots of each factor These tools are designed to encourage you to dig deeper at each level ofUse the same tools you used to identify the causal factors (in Step Three) to look at the roots of each factor. These tools are designed to encourage you to dig deeper at each level ofcause and effect.

Step Five: Recommend and Implement Solutions• What can you do to prevent the problem from happening again?• How will the solution be implemented?• Who will be responsible for it?• What are the risks of implementing the solution?

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• What are the risks of implementing the solution?Analyze your cause-and-effect process, and identify the changes needed for various systems. It's also important that you plan ahead to predict the effects of your solution. This way, youcan spot potential failures before they happen.


You can use many tools to support your Root Cause Analysis process. Cause and Effect Diagrams and 5 Whys are integral to the process it lf hil FMEA d K i h l i i i th d f R t C A l i i th f t

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itself, while FMEA and Kaizen help minimize the need for Root Cause Analysis in the future.

As an analytical tool, Root Cause Analysis is an essential way to perform a comprehensive, system-wide review of significant problems as well as the events and factors leading to them.

CONTENTS

Executive Summary



Finding Solutions




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SIX THINKING HATS & COST BENEFIT ANALYSIS

SIX THINKING HATS

White Hat:With thi thi ki h t f th d t il bl L k t th i f ti

COST BENEFIT ANALYSIS

You may have been intensely creative in generating solutions to a problem, andi i l ti f th b t il bl Thi l ti till t bWith this thinking hat you focus on the data available. Look at the information

you have, and see what you can learn from it. Look for gaps in your knowledge,and either try to fill them or take account of them. This is where you analyze pasttrends, and try to extrapolate from historical data.

Red Hat:'Wearing' the red hat, you look at problems using intuition, gut reaction, and

ti Al t t thi k h th l ill t ti ll T t

rigorous in your selection of the best one available. This solution may still not beworth implementing, as you may invest a lot of time and money in solving a problemthat is not worthy of this effort.

Cost Benefit Analysis or CBA is a relatively simple and widely used technique fordeciding whether to make a change. As its name suggests, to use the techniquesimply add up the value of the benefits of a course of action, and subtract the costs

i t d ith itemotion. Also try to think how other people will react emotionally. Try tounderstand the responses of people who do not fully know your reasoning.

Black Hat:Using black hat thinking, look at all the bad points of the decision. Look at itcautiously and defensively. Try to see why it might not work. This is importantbecause it highlights the weak points in a plan. It allows you to eliminate them,

lt th ti l t t th Bl k H t thi ki

associated with it.

Costs are either one-off, or may be ongoing. Benefits are most often received overtime. We build this effect of time into our analysis by calculating a payback period.This is the time it takes for the benefits of a change to repay its costs. Manycompanies look for payback over a specified period of time - e.g. three years.

I it i l f t b fit l i i i d t i l fi i l t dalter them, or prepare contingency plans to counter them. Black Hat thinkinghelps to make your plans 'tougher' and more resilient. It can also help you to spotfatal flaws and risks before you embark on a course of action. Black Hat thinkingis one of the real benefits of this technique, as many successful people get soused to thinking positively that often they cannot see problems in advance. Thisleaves them under-prepared for difficulties.

Y ll H t

In its simple form, cost-benefit analysis is carried out using only financial costs andfinancial benefits. For example, a simple cost/benefit analysis of a road schemewould measure the cost of building the road, and subtract this from the economicbenefit of improving transport links. It would not measure either the cost ofenvironmental damage or the benefit of quicker and easier travel to work.

A more sophisticated approach to cost/benefit measurement models is to try to put afi i l l i t ibl t d b fit Thi b hi hl bj ti i fYellow Hat:

The yellow hat helps you to think positively. It is the optimistic viewpoint thathelps you to see all the benefits of the decision and the value in it. Yellow Hatthinking helps you to keep going when everything looks gloomy and difficult.

Green Hat:The Green Hat stands for creativity. This is where you can develop creativesol tions to a problem It is a free heeling a of thinking in hich there is little

financial value on intangible costs and benefits. This can be highly subjective - is, forexample, a historic water meadow worth $25,000, or is it worth $500,000 because ifits environmental importance? What is the value of stress-free travel to work in themorning?

These are all questions that people have to answer, and answers that people have todefend.

solutions to a problem. It is a freewheeling way of thinking, in which there is littlecriticism of ideas. A whole range of creativity tools can help you here.

Blue Hat:The Blue Hat stands for process control. This is the hat worn by people chairingmeetings. When running into difficulties because ideas are running dry, they maydirect activity into Green Hat thinking. When contingency plans are needed, theywill ask for Black Hat thinking etc

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will ask for Black Hat thinking, etc.

Decision Tree AnalysisChoosing Between Options by Projecting Likely Outcomes

Drawing a Decision TreeStarting from the new decision squares on your diagram, draw outlines representing the options that you could select. From the circlesdraw lines representing possible outcomes. Again make a brief noteon the line saying what it means. Keep on doing this until you havedrawn out as many of the possible outcomes and decisions as youcan see leading on from the original decisions.

Evaluating Your Decision TreeNext look at each circle (representing an uncertainty point) andestimate the probability of each outcome. If you use percentages, thetotal must come to 100% at each circle. If you use fractions, thesemust add up to 1. If you have data on past events you may be able tomake rigorous estimates of the probabilities. Otherwise write downyour best guess

Calculating Tree ValuesStart on the right hand side of the decision tree, and work backtowards the left. As you complete a set of calculations on a node(decision square or uncertainty circle), all you need to do is to recordthe result. You can ignore all the calculations that lead to that resultfrom then on.

Calculating The Value of Uncertain Outcome NodesWhere you are calculating the value of uncertain outcomes (circles onthe diagram), do this by multiplying the value of the outcomes by theirprobability. The total for that node of the tree is the total of thesevalues.

Calculating The Value of Decision NodesWhen you are evaluating a decision node, write down the cost ofeach option along each decision line. Then subtract the cost from theoutcome value that you have already calculated. This will give you avalue that represents the benefit of that decision.

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Paired Comparison AnalysisWorking Out the Relative Importance of Different Options

Follow these steps to use the technique:

List the options you will compare. Assign a letter to each option.Mark the options as row and column headings on the worksheet.Note that the cells on the table where you will be comparing an option with itself have beenblocked out - there will never be a difference in these cells!The cells on the table where you will be duplicating a comparison are also blocked out.Within the remaining cells compare the option in the row with the one in the column. For eachcell, decide which of the two options is more important. Write down the letter of the moreimportant option in the cell, and score the difference in importance from 0 (no difference) to 3important option in the cell, and score the difference in importance from 0 (no difference) to 3(major difference).Finally, consolidate the results by adding up the total of all the values for each of the options.You may want to convert these values into a percentage of the total score.

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Paired Comparison Analysis is a good way of weighing up the relative importance of different courses of action. It is useful where priorities are not clear, or are competing in importance.

Grid AnalysisMaking a Choice Where Many Factors Must be Balanced

The first step is to list your options and then the factors that are important formaking the decision. Lay the options out on the worksheet table, with options asthe row labels, and factors as the column headings.

Example:A windsurfing enthusiast is about to replace his car. He needs one that not onlycarries a board and sails, but also that will be good for business travel. He has

l l d t d t N h fi d i d f ll th thiNext work out the relative importance of the factors in your decision. Show theseas numbers. These values may be obvious. If they are not, then use a techniquesuch as Paired Comparison Analysis to estimate them.

The next step is to work your way across your table, scoring each option for eachof the important factors in your decision. Score each option from 0 (poor) to 3( d) N t th t d t h t h diff t f h ti

always loved open-topped sports cars. No car he can find is good for all three things.His options are:

An SUV/4x4, hard topped vehicleA comfortable 'family car‘A station wagon/estate carA sports car

(very good). Note that you do not have to have a different score for each option -if none of them are good for a particular factor in your decision, then all optionsshould score 0.

Now multiply each of your scores by the values for your relative importance. Thiswill give them the correct overall weight in your decision.

Fi ll dd th i ht d f ti Th ti th t th

Criteria that he wants to consider are:CostAbility to carry a sail board at normal driving speedAbility to store sails and equipment securelyComfort over long distancesFun!Ni l k d b ild lit tFinally add up these weighted scores for your options. The option that scores the

highest wins!

Example Grid Analysis Showing Weighted Assessment of How Each Type of Car Satisfies Each Factor

Factors: Cost Board Storage Comfort Fun Look Total

Nice look and build quality to car

Factors: Cost Board Storage Comfort Fun Look Total

Weights: 4 5 1 2 3 4

Sports Car 4 0 0 2 9 12 27

SUV/4x4 0 15 2 4 3 4 28

Family Car 8 10 1 6 0 0 25

Station Wagon 8 15 3 6 0 4 36

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Grid Analysis is the simplest form of Multiple Criteria Decision Analysis (MCDA), also known as Multiple Criteria Decision Aid or Multiple Criteria Decision Management (MCDM). Sophisticated MCDA is involves highly complex modeling of different potential scenarios andadvanced mathematics.

CONTENTS

Executive Summary



Finding Solutions




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Impact AnalysisIdentifying the full consequences of change

To conduct an effective Impact Analysis, use the following steps: Impact Analysis – Major Areas Affected. Check List

Prepare for Impact Analysis:The first step is to gather a good team, with access to the right information sources.

Brainstorm Major Areas Affected:Now brainstorm the major areas affected by the decision or project, and think aboutwhom or what it might affect. Sidebar shows a number of different approaches that

A. Organizational Approach:- Impacts on different departments;- Impacts on different business processes;- Impacts on different customer groups; and- Impacts on different groups of people.

g ppmay be useful as starting points for identifying the areas that apply to you.

Identify All Areas:For each of the major areas identified, brainstorm all of the different elements thatcould be affected. For example, if you're looking at departments, list all of thedepartments in your organization. If you're looking at processes, map out the businessprocesses you operate starting with the process the customer experiences then

B. McKinsey 7Ss Approach:Using the popular "McKinsey 7Ss" approach to thinking about the things that areimportant to an organization:- Strategy- Structure- Systems- Shared Valuesprocesses you operate, starting with the process the customer experiences, then

moving on to the business processes that support this.

Evaluate Impacts:Having listed all of the groups of people and everything that will be affected in anappropriate level of detail, the next step is to work through these lists identifying andlisting the possible negative and positive impacts of the decision, and making an

- Shared Values- Skills- Styles- Staff

C. Tools-Based Approach:

estimate of the size of the impact and the consequences of the decision.

Manage the Consequences:If you're using Impact Analysis as part of the decision making process, you need toweigh whether you want to go ahead with the project or decision proposed. You'llneed to ask yourself whether it's worth going ahead with the project given thenegative consequences it will cause and given the cost of managing those negative

There’s a lot of overlap here between Impact Analysis and some of the other tools weexplain, particularly Risk Analysis and Stakeholder Analysis.

negative consequences it will cause and given the cost of managing those negativeconsequences.If you're managing a project which has already been given the go-ahead, you'll needto think about things like:- the actions you'll need to take to manage or mitigate these consequences;- how you'll prepare the people affected so that they'll understand and (ideally)support change rather than fighting against it; and

the contingency strategy needed to manage the situation should the negative

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- the contingency strategy needed to manage the situation should the negativeconsequences arise.

RISK ANALYSIS & RISK MANAGEMENTEvaluating and Managing the Risks You Facei k b bilit f t t f trisk = probability of event x cost of event

Step 1. Identify Threats:Th fi t t f i k l i i t id tif th t f i Th t b

Step 3. Managing Risk:O h k d t th l f i k f t t t l k t fThe first stage of a risk analysis is to identify threats facing you. Threats may be:

Human - from individuals or organizations, illness, death, etc.Operational - from disruption to supplies and operations, loss of access to essentialassets, failures in distribution, etc.Reputational - from loss of business partner or employee confidence, or damage toreputation in the market.

Once you have worked out the value of risks you face, you can start to look at ways ofmanaging them. When you are doing this, it is important to choose cost effectiveapproaches - in most cases, there is no point in spending more to eliminating a riskthan the cost of the event if it occurs. Often, it may be better to accept the risk than touse excessive resources to eliminate it.

Risk may be managed in a number of ways:pProcedural - from failures of accountability, internal systems and controls,organization, fraud, etc.Project - risks of cost over-runs, jobs taking too long, of insufficient product or servicequality, etc.Financial - from business failure, stock market, interest rates, unemployment, etc.Technical - from advances in technology, technical failure, etc.Natural - threats from weather natural disaster accident disease etc

y g y

By using existing assets:Here existing resources can be used to counter risk. This may involve improvementsto existing methods and systems, changes in responsibilities, improvements toaccountability and internal controls, etc.By contingency planning:You may decide to accept a risk but choose to develop a plan to minimize its effects ifNatural - threats from weather, natural disaster, accident, disease, etc.

Political - from changes in tax regimes, public opinion, government policy, foreigninfluence, etc.Others - Porter's Five Forces analysis may help you identify other risks.

One way of trying to capture them all is to use a number of different approaches:

You may decide to accept a risk, but choose to develop a plan to minimize its effects ifit happens. A good contingency plan will allow you to take action immediately, with theminimum of project control if you find yourself in a crisis management situation.Contingency plans also form a key part of Business Continuity Planning (BCP) orBusiness Continuity management (BCM).By investing in new resources:Your risk analysis should give you the basis for deciding whether to bring in additional

Firstly, run through a list such as the one above, to see if any applySecondly, think through the systems, organizations or structures you operate, andanalyze risks to any part of thoseSee if you can see any vulnerabilities within these systems or structuresAsk other people, who might have different perspectives

resources to counter the risk. This can also include insuring the risk: Here you paysomeone else to carry part of the risk - this is particularly important where the risk isso great as to threaten your or your organization's solvency.

Step 4. Reviews:Once you have carried out a risk analysis and management exercise, it may be worthcarrying out regular reviews. These might involve formal reviews of the risk analysis,

Step 2. Estimate Risk:Once you have identified the threats you face, the next step is to work out the

likelihood of the threat being realized and to assess its impact.

One approach to this is to make your best estimate of the probability of the eventoccurring, and to multiply this by the amount it will cost you to set things right if ithappens This gives you a value for the risk

carrying out regular reviews. These might involve formal reviews of the risk analysis,or may involve testing systems and plans appropriately.

Risk analysis allows you to examine the risks that you or your organizationface. It is based on a structured approach to thinking through threats, followedby an evaluation of the probability and cost of events occurring.

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happens. This gives you a value for the risk.Risk analysis forms the basis for risk management and crisis prevention. Herethe emphasis is on cost effectiveness. Risk management involves adapting theuse of existing resources, contingency planning and good use of newresources.

FAILURE MODE AND EFFECTS ANALYSIS 1 Spotting problems before a solution is implemented

Understanding FMEAWh thi b dl it’ t ith hi d i ht “W h ld h k

Step Six: For each potential failure in the system, rank Severity, Occurrence andD t ti i th f ll i lWhen things go badly wrong, it’s easy to say with hindsight, “We should have known

that would happen”. And with a little foresight, perhaps, problems could have beenavoided if only someone had asked “What Could Go Wrong?”When using FMEA, you start by looking in detail at the proposed solution (see the tipbox below) and then you identify systematically all of the points where it could fail.Once these potential failures have been identified, you rate the potentialconsequences of each according to:

Detection using the following scales:Severity - how critical is the failure?5 – Very High (huge losses that threaten company viability)4 – High (large losses, company is still operable)3 – Low (losses exist, can be remedied)2 – Minor (loss is minimal, quite insignificant)1 – Low (no effect)q g

•Severity – how critical is the failure?•Occurrence – how likely is the failure to happen?•Detection – how easy will it be to detect the failure?

Step One: Identify the solution, system or process you’re looking at and, ifappropriate, the main issue you want to investigate. List the critical elements, in alogical (for example chronological) order

( )

Occurrence – how likely is the failure to happen?5 – Very High (must be addressed immediately, will happen very often)4 – High (will cause frequent issues, will happen often)3 – Low (will cause sporadic issues, will happen occasionally)2 – Minor (issue will be few and far between, will happen quite infrequently)1 Low (issues unlikely not likely to ever happen)logical (for example, chronological) order.

Step Two: Develop a flow chart to map the solution or process, and the interactionsbetween its various parts.

Step Three: see chart below for FMEA Matrix template. Use this template to workthrough each element in this process in turn.

1 – Low (issues unlikely, not likely to ever happen)

Detection – how easy will it be to detect the failure?5 – Very Difficult4 – Difficult3 – Somewhat Easy2 – Easy

Step Four: For each element in the process, use brainstorming or carry out a riskanalysis to identify the potential failures that may occur. Enter the ways that thesolution or process can fail in the Failure Mode column of the FMEA Matrix.

Step Five: For each potential failure, identify the consequences of the failure.

1 – Very Easy

Step Seven: Calculate the Risk Priority Number (RPN) for each of the modes andeffects by multiplying the 3 ratings (Severity x Occurrence x Detection).

Step Eight: Now you are ready to brainstorm action plans and makerecommendations to counter the potential threats you uncovered. This step is bestrecommendations to counter the potential threats you uncovered. This step is bestcompleted in phases starting with the modes and effects that have the highest RPN –in other words, those that represent the greatest threat.

Tip 1:When using FMEA, it can often be best to draw expert team members from a wide variety of functions, so that you can look at the proposed solution from different angles. The purpose of FMEA is to uncover and assess potential failures, therefore the more thorough the investigation, the more useful the analysis.

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angles. The purpose of FMEA is to uncover and assess potential failures, therefore the more thorough the investigation, the more useful the analysis.

Tip 2:There are a range of tools that you can use to map out the solution you want to examine, and the best tool to use will depend on the type of solution you're looking at. Among the tools you may want to consider using are Flow Charts, Swim Lane Diagrams, Systems Diagrams, or Value Chain Analysis.

FAILURE MODE AND EFFECTS ANALYSIS Spotting problems before a solution is implemented

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CONTENTS

Executive Summary



Finding Solutions




38

Systems Diagrams Causal Loop Diagrams or CLDs

How to use the tool:Relationships between factors:At the heart of the use of system diagrams is the idea of linking factors to show a relationship betweenthem. The S shows that the factors move in the Same way. The O shows that the relationship works in theopposite way.

Feedback Loops:Feedback is an important concept in the use of system diagrams - in very many cases changing one factorwill impact on another factor, which will then affect the first. Feedback will either reduce the impact of thechange, or will amplify it.

Balancing Loops:Where feedback reduces the impact of a change, we call this a Balancing Loop. The small circular arrow inthe middle of the loop. This shows which way round the loop is running. In complex diagrams with manyloops, this arrow will be labeled and will identify loops.

Reinforcing loops:Where feedback increases the impact of a change, we call this a Reinforcing Loop.

External Factors: We show an external factor as a labeled relationship arrow pointing to the appropriatepart of the system diagram.• Natural - weather, natural resources, disease, environmental change, etc.• Technological - new technologies, changes in technology, etc.• Human - psychological, emotional, ambitions, expectations, etc.• Political - ideology, corruption, effectiveness, interest, etc.• Social - values, social inertia, traditions, philosophies, etc.

You should now be able to analyze: • Financial - state of the economy, capital available, etc.• Etc.

Gaps / Restrictions:Note that it is very important to get the gap definition correct for your model.

Delay:I h t it ill l t k ti t i t t d t id d i l t

You should now be able to analyze:

How factors are related, and how one factor will change when another changesHow factors may feed back in either balancing loops or reinforcing loopsHow external factors impact on the systemHow gaps operate

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In a human system it will occur as people take time to communicate, get used to new ideas, and implementchange. The double slash on the line shows that some form of delay is slowing the change of the relatedfactor.

How delay affects the systemAll the complexities of a system

SIX SIGMA 1Improving quality systematically

The DMAIC FrameworkThe DMAIC FrameworkThe tools are applied within a simple framework known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows:

D Define the goals of the improvement activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI ormarket share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be toreduce the defect level, and increase throughput. Apply data mining methods to identify potential improvement opportunities.

M Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Beginby determining the current baseline. Use exploratory and descriptive data analysis to help you understand the data.

A Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal. Applystatistical tools to guide the analysis.g y

I Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning andmanagement tools to implement the new approach. Use statistical methods to validate the improvement.

C Control the new system. Institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, MRP(Manufacturing Resource Planning) budgets operating instructions and other management systems You may wish to utilize systems such as ISO(Manufacturing Resource Planning), budgets, operating instructions and other management systems. You may wish to utilize systems such as ISO9000 to assure that documentation is correct.

Although the approach is simple, it is by no means easy. However, the results justify the effort expended. Research has shown that firms thatsuccessfully implement Six Sigma perform better in virtually every business category, including return on sales, return on investment, employmentgrowth, and share price increase.

Si Si f i i lit ( d th f d i t ) b h l i i ti d d t d i b tt

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Six Sigma focuses on improving quality (and therefore reducing waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value as well as quality, Six Sigma identifies and eliminates costs which provide no value to customers.

SIX SIGMA 2: SIPOCMaking Sure Your Change Process Serves Everyone

Step 1: List Major Elements of the ProcessWhen building a SIPOC diagram begin in the middle with the overall processWhen building a SIPOC diagram, begin in the middle, with the overall processyou're examining, because this is the part of the operation over which you havethe greatest control. Identify the major steps of your current process. In simpleterms, how does your process take inputs, and turn them into outputs? Writethese in the flow chart template on the worksheet.

St 2 Id tif O t tStep 2: Identify OutputsWhat are the outputs that result from the process? What products does yourprocess create? Work with your team to list everything your process produceson the way to your customer.

Step 3: Define CustomerspWho are the internal and external customers who receive and use youroutputs? Brainstorm all of these, and consider checking this against a client list,perhaps extracted from your accounts receivable system.

Step 4: Determine InputsWhat inputs or raw materials are necessary to perform the process? Inputs canWhat inputs or raw materials are necessary to perform the process? Inputs caninclude people, as well as information, necessary conditions, and supplies.

Step 5: List SuppliersWho are the suppliers of your inputs? You've identified the necessary rawmaterials, now determine where they come from. Consider checking youranalysis against, for example, your accounts payable system to make sure yourlist is complete.

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SIPOC Diagrams show the relationships between Suppliers, Inputs, Processes, Outputs, and Customers (and sometimes Customer requirements). Unlike normal process flow charts, they explicitly bring Suppliers, Inputs, Outputs and Customers into the analysis process, making sure that changes to the process take into account all of these.

WRITING A PROCEDUREMaking sure things are done without mistakes and omissions

When do you need procedure when a How Do You Write a Procedure?process:

1. Is lengthy (example: year-end inventory).2. Is complex (example: benefits

administration).3. Is routine, but it's essential that everyone

strictly follows rules (example: payroll).

Step One: Gather InformationTalk with content experts as well as others who hold key information – long-time staff members, stakeholders,

technical staff, and people who will use the procedure.

Take lots of notes, and then sit down with the information and sort it out. As the procedure writer, you want a clearunderstanding of what's going on in as much detail as possible. From there, cut down the information to whaty ( p p y )

4. Demands consistency (example: handlinga refund request).

5. Involves documentation (example:disciplining a staff member).

6. Involves significant change (example:installing a new computer system).

7 Has serious consequences if done wrong

g g g pthe end-user really needs to best understand the process.

Step Two: Start Writing• Write actions out in the order in which they happen. Start with the first action, and end with the last action.• Avoid too many words. Just be specific enough to communicate clearly.� Example: "Add to the Cancellations tab on the spreadsheet" rather than "Supplement the

existing records on the spreadsheet with these new ones "7. Has serious consequences if done wrong(example: safety guidelines).

AND!:• Similar questions are asked repeatedly.• People seem confused.• There are too many ways that people

existing records on the spreadsheet with these new ones.• Use the active voice.� Example: "Place the file in the administrator's inbox" rather than "The file should then be placed

in the administrator's inbox."• Use lists and bullets.• Don't be too brief, or you may give up clarity.• Explain your assumptions, and make sure your assumptions are valid.

interpret the procedure.

Here are some questions to consider:• Do users have enough information to

complete the action?• Is there enough information to guide users

in using good professional judgment?

• Use jargon and slang carefully.• Write at an appropriate reading level.

Step Three: Assess Design Elements• Flowchart – This shows a process as a diagram. Using a series of symbols and arrows to indicate flow and

action, you can outline a process and make it easy to follow. Be sure you don't complicate your chart with toomany unfamiliar symbols or too much text. If you need to, break it into a series of smaller flowcharts.in using good professional judgment?

• Is the level of detail appropriate for thesubject?

• Is the level of detail appropriate forreaders?

• How comfortable are readers with thesubject?

many unfamiliar symbols or too much text. If you need to, break it into a series of smaller flowcharts.• Play script – This looks like a script for a play with different characters. In this case, though, you list the

different staff members with different responsibilities. Scripts can be especially useful when more than oneperson is involved in a process.

• Question and answer – Match common procedural questions with their correct answers. This is a usefulformat when procedures are confusing or when there are lots of variations. It also helps address "what if"issues.Matrix (Schedule) This table connects one variable with another Where the variables connect the cell

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• Matrix (Schedule) – This table connects one variable with another. Where the variables connect, the cellshows the appropriate action. Matrix tables are really good for reference purposes, because they eliminate theneed for constant searching. You can use them for many applications, including knowing what tasks to carryout and when, helping users make decisions, and knowing what forms or reports to use.

Technology

Problem solving