Can Business Process Variability Be a Good Thing?

At least once a month I see an on-line discussion that starts with someone taking the position that companies who focus on operational excellence using six-sigma or lean techniques are doomed because they can’t possibly be innovative at the same time. There seem to be several assumptions in this argument: (1) all companies must innovate in order to compete, (2) innovation in operations management somehow doesn’t count, (3) application of six-sigma or lean in one area of the business means that you can’t innovate elsewhere, and (4) innovation is inherently incompatible with six-sigma or lean. As you can probably guess, I don’t agree with all of those assumptions, and I’ve written about this previously in the context of design and product development processes (see Innovative Design vs. Lean Product Development).

I’d like to explore this a little further. We can quibble about definitions, but let’s assume that six-sigma is about reducing variability and lean is about eliminating waste. In the world of business processes, strict application of these techniques would mean strict adherence to standard processes, measuring the performance of these processes, and continuously improving them by finding and eliminating sources of variability and non-value-added activities. Should lean and six-sigma be universally applied to all business processes? Can some variability and “waste” actually be good for the business?

I think it is. Look, if you care about the result, and you need the result to be predictable and consistent, then you need a process. Innovation, however, isn’t predictable, by definition, and I can’t imagine constraining creativity with a process. If you’re not open to consider different ways of doing things, then you’re not going to be very good at anticipating or responding to disruptive changes in the market or competitive environment. You’ll be constrained by the current process and business model. Continuous improvement is good and necessary, but sometimes you have to throw out the old to make room for something new and better. There are many, many examples of businesses that became irrelevant because they focused entirely on improving a process that proved to be outdated and inflexible. The businesses that thrive are the ones who balance process improvement with process innovation.

Where does process innovation come from? Often it comes from people who are modifying existing processes to meet their needs, perhaps without any authorization. Instead of stamping out variability and enforcing conformity, we should be trying to understand why these changes are being made and why the existing process isn’t working. I’m not saying that we should allow everyone to do whatever they please, but we should recognize that innovation requires experimentation, and that means allowing for differences and variability.