Using a Lean Six Sigma approach to drive innovation George Byrne, Dave Lubowe and Amy Blitz A combination of two time-tested programs for achieving operational excellence in major US companies is helping leaders discover innovation opportunities and promote a company-wide culture with an inclination toward innovation. Called a lean Six Sigma approach or sometimes just Six Sigma, such a program, if focused not just on efficiency but also on growth, can serve as a foundation for innovation throughout an organization. Simply put, such a lean Six Sigma program is not just about doing things better, it is a way of doing better things. Used effectively it can enhance innovations in products, services, markets and even a company’s underlying business model, as well as improve operations. Recently consultants from the IBM Operations Strategy Consulting Practice and the IBM Institute for Business Value analyzed the innovation records of several leading companies that have implemented operations strategies based on lean Six Sigma management techniques. Using this approach, the companies have established disciplined working environments focused on customer needs, detailed data analysis and facts, not theories. Over the past five years, some companies have achieved impressive results. For example, at Caterpillar Inc., stagnant revenue growth prompted the company to undertake a massive transformation in January 2001. Note that Caterpillar launched its initiative before the term ‘‘lean Six Sigma’’ came into common use and continues to refer to the methodology as ‘‘Six Sigma.’’ Guided by this method, the company developed a strategic vision that outlined a roadmap for change based on fact-based analysis. Caterpillar’s ongoing initiative also led to product innovations, such as its phenomenally successful low-emissions diesel engine, and to redesigned processes, including a streamlined supply chain. By 2005, revenues had grown by 80 percent. An analysis of Caterpillar and other companies that used lean Six Sigma programs to achieve broad-based innovation and superior financial performance identified several distinguishing characteristics of their approaches that set them apart from those with a traditional operational improvement mindset. Successful innovators had: B An innovation vision based on factual customer and market insights. Leaders crafted a compelling vision based on a keen understanding of market demands and their own capabilities. Their objectives were explicit and few in number to enable focus. B Leadership committed to perpetual innovation. CEOs and business unit leaders played active, enthusiastic roles. They were clearly committed to making an indelible organizational change, not just launching another initiative. B Alignment across the extended enterprise. The strategic innovation vision was used as a unifying force to align efforts in disparate business units and influence supplier and customer relationships. DOI 10.1108/10878570710734480 VOL. 35 NO. 2 2007, pp. 5-10, Q Emerald Group Publishing Limited, ISSN 1087-8572 j STRATEGY & LEADERSHIP j PAGE 5 George Byrne is the Americas Group Lean Six Sigma Leader for IBM Global Business Services (george.byrne@ us.ibm.com). Dave Lubowe is the Global and Americas Operations Strategy Leader for IBM Global Business Services (dave.lubowe@ us.ibm.com). Amy Blitz is the Strategy and Change Leader at the IBM Institute for Business Value (ablitz@us.ibm.com).