Lean Six Sigma is a Fraud for Engineering Consultancies

Where I work, we use Lean Six Sigma. LSS is a formal method for tracing work flows and processes in order to find inefficiencies. It's a total fraud for our organization. We do not measure the cost of implementation and overstate our results to upper management so that it looks like a success. Because our managers have been forced to use it, there is no effort to find the true value of LSS and our middle managers must report only good news. In short, LSS encourages organizational corruption. It's like being part of Mao's government during the Great Leap Forward. We even get cute little emails from our upper management talking about LSS success stories. Since I work with some of the LSS teams and am privy to our financial information, I can see right through the propaganda.

I'm waiting for the one that reads "Once more, glorious People's Committee on LSS meets Five Year Plan production targets!"

We make money on labor. LSS requires us to take people off of direct projects and put them on overhead to become full time LSS "black belts". If our LSS effort was ever to break even, we would have to release a commensurate number of people currently working full time on overhead. That has not, will not and cannot happen. It is mathematically provable that LSS will always be a money loser for us.

I was doing a little research on the net and all I could find while searching on "Lean Six Sigma Fraud", "Lean Six Sigma Failure" and so on were endless websites from consultants who will help you implement LSS. I think that tells you everything you need to know about LSS.

Update: I found the Wikipedia article on the Great Leap Forward (linked above) and I've edited one particular paragraph I found eerily similar to our situation. It's pure poetry. Just like Edgar Allen Poe's work.

Despite these process improvement innovations, the business climate in 2006 was very favourable and the profit promised to be good. Unfortunately, the amount of labour diverted to LSS meant that much of the business was left to rot unperformed in some areas. Although actual work output was reduced, local officials, under tremendous pressure from the central authorities to report record profits in response to the new innovations, competed with each other to announce increasingly exaggerated results. These exaggerated results were used as a basis for determining the amount of funding to be taken by the State to supply other efforts. This left barely enough for the actual operations costs of the organization, and in some areas, financial starvation set in. During 2006 we continued to be a substantial net exporter of profits, despite the widespread financial famine experienced in the workforce, as upper management sought to maintain face and convince the outside world of the success of their plans.

For more posts on capitalism, visit (what else?) this week's Carnival of the Capitalists.

Update 2: Dennis Howlett (owner of the world's smallest blog :-) ) asked, "Can you say more about how LSS encourages the kind of corruption you're alluding to please? What is the fatal flaw and how is performance as measured in your company out of whack with what the financial results show?"

LSS was chosen without regards to what we do. As a consultancy, the technical aspects of each job are different as are the maturity levels of the projects we are working on. Sometimes we work on equipment installations, sometimes we work on policy IPTs, sometimes it's basic research and so on. LSS relies on repetitive actions to achieve increases in efficiency. In our case, the only repetitive actions come in administrative support.

Given the state of the art in administrative support, just how much more efficiency can you squeeze out of it? And what happens when you do? In order for LSS to break even, you'll have to fire as many administrative personnel as you have LSS black belts and then get rid of some more to account for the time your green belts are now devoting to tasks unrelated to the customer. What are you going to do, have your assistants answer three phones at once? Have intelligent agent software make purchases for you?

The fatal flaw in LSS is the addition of people onto overhead in the form of black belts and green belts. If there was no such increase in overhead staff, we could have done a quick survey of the situation, junked the whole idea and kept on going with what we do. Instead, we now have full-time bureaucratic positions for LSS slurping down the profits, returning next to nothing with the standard resistance to firing them.

In short, they are a recurring cost, they produce almost nothing and they are hard to get rid of. Rather than be the only middle manager who reports that their LSS team has yet to yield results, we lie about it. Hence, corruption.

Perhaps the saddest part of all is that our LSS black belts are all really good people. It's not like they're trying to hide their results or puff themselves up. They're all doing their best with a technique totally ill-suited to our work.

Thanks for the question.

Update 3: Dennis has a larger site. Here it is.