Using a Lean Six Sigma approach to drive innovation

Purpose – This article describes the five‐year success of a lean Six Sigma approach to improving operations that is also a way of doing better things – innovating in products, services, markets and even a company's underlying business model. Design/methodology/approach – Consultants from IBM's Operations Strategy group and from the Institute for Business Value analyzed the innovation records of several leading companies that have implemented operations strategies based on Lean Six Sigma management techniques. Findings – They found that lean Six Sigma initiatives also led to product innovations, such as Caterpillar's phenomenally successful low‐emissions diesel engine, and also to redesigned processes, including a streamlined supply chain. After five years, by 2005, revenues at Caterpillar had grown by 80 percent. Research limitations/implications – A case study of Caterpillar illustrates the points of the lean sigma six approach. Practical implications – For more than five years, industry leaders have used company‐wide lean Six Sigma programs to create an organizational climate in which innovation becomes instinctive, and, consequently, they have surfaced major innovation opportunities that have revitalized their businesses. Originality/value – Identifies several distinguishing characteristics that set successful approaches apart from those with a traditional operational improvement mindset. Successful innovators have: an innovation vision based on factual customer and market insights; leadership committed to perpetual innovation; alignment across the extended enterprise; organizational capabilities that made innovation habitual.