Mark: Welcome to unsuitable on Rea Radio, the unique financial services and business advisory show that challenges your old-school business practices and the traditional business suit culture. On the show, you’ll hear from industry professionals who will challenge you to think beyond the suit and tie. We’re offering you meaningful, modern solutions to help you enhance your company’s growth. I’m your host, Mark Van Benschoten.
Business leaders are always looking for ways to minimize waste and improve efficiency throughout their organizations, but they don’t always know where to start. Our guest today is Chris Liebtag, a Lean Six Sigma Black Belt and Lean Gold Practitioner. Chris uses Lean Six Sigma to help companies identify bottlenecks and become more efficient and effective. Today, Chris is going to talk about ways you can adopt these same concepts to achieve measurable results in your business. Welcome to unsuitable, Chris.
Chris: Thank you, Mark. Happy to be here.
Mark: As we were talking before we started, everybody says that you have the voice for this and I would also say you have the face for this.
Chris: I knew that was coming. If you didn’t say it, I was ready with it anyway because I’ve heard that a couple of times. I’m fortunate in that regard, but yeah, it extends only to the voice.
Mark: You should do these. You should host this.
Chris: Are you looking for a way out?
Mark: No, not really, but you do have a nice voice if I can say that to another man.
Chris: I think you just did, so I think we’re OK.
Mark: Appreciate that. We’re talking about Lean Six Sigma and Black Belt. In my capacity, I’ve heard that in a manufacturing setting, but that’s not where you’re applying it. Can you describe a little where you’re applying your services?
Chris: Absolutely, I think that’s a great place to start. Your familiarity with it in the manufacturing circle is spot on. Lean Six Sigma, as a discipline, that’s where it got its start, in manufacturing. It’s used in manufacturing every single day, quite successfully. It’s been one of the reasons why we’ve had this resurgence, this resharing of a lot of our manufacturing capabilities. Then in the late 90’s is when it really came out of manufacturing. It took a leap into other industries: information technology, banking, health care, construction, not-for-profits, and even in professional services. A majority of the consulting work that I do and that we do as a firm in regards to Lean Six Sigma is actually with back offices or with professional services firms.
Mark: Again, I’ve worked with you for a number of years. I kind of know what you do, but it just astounds me because I always think about measuring defects and measuring cycle times. How do you apply that to the back office setting?
Chris: Well, it’s interesting, of course. Being in our profession, in public accounting, we push a fair number of paper around and most enterprises do. Even in a manufacturer, in their back office, there’s a significant amount of paper. It’s almost like a hidden factory. That’s what it’s referred to as. The same types of concepts, the metrics, the cycle times, the response times, your deliverables, they can all be mapped over to the office environment and you can measure your turnaround times on a deliverable such as an invoice, for example. How many days after the order are you finally getting that invoice out to that client or to that customer or accounts payable? When you do get that invoice, how long does it take for you to then turn that back around and send it? Are you getting late fees? That type of environment. We look at those things and we’re able to measure the time it takes for a variety of different office tasks and equate them quite readily like you would on the manufacturing floor.
Mark: That’s very exciting. I like that term, “the hidden factory.”
Chris: Yeah, it works. A lot of people understand it that way, too, because you are producing something in an office environment. You just don’t always see it.
Mark: Correct. It kind of brings, “I can relate. We have deliverables. I receive this invoice. I need to process it. What was my time? Obviously, quicker is better, so I need to do it and move it efficiently down the process because I’m just one part of the whole process.”
Chris: Yeah, we’re very lucky that way. Although the terminology at times sounds a lot like a manufacturing environment, the concepts, the theories, the principles, they are able to go anywhere. They’re applicable to an office environment or to any industry, which is really the strength of the Lean Six Sigma discipline.
Mark: Do other people struggle with, “Oh, this applies to manufacturing. I’m an administrative person. This has no bearing on me”? People struggle with that?
Chris: Yeah, they do. It’s typically because of presentation. If you were to hear that term or hear some of the terminology associated with it, you would think manufacturing and, “What I’m doing is not making something. I’m not producing a product.” I’m a service-provider, so what I do is a bit more intangible. It’s my job and my responsibility as a consultant to bridge that gap. Put it in terms and phrases that our clients would understand and appreciate and equate it to what they do every day. The discipline allows for that.
Fortunately, those principles and techniques, they’re going to apply universally. For instance, if you look into Lean Six Sigma and you investigate it, you understand that one of the basic tenants, particularly to Lean, is understanding and driving client value. What kind of enterprise isn’t concerned with that? Every enterprise is.
Mark: Correct.
Chris: If you start there with the basics, then you can build out to whatever the particular industry is. Even our own profession. We can draw very strong similarities to the principles and techniques and that helps the adoption.
Mark: Would this have applicability to a not-for-profit, an exempt organization?
Chris: Every bit. Again, when we talked about that conversation of the hidden factory, yes. Not-for-profit organizations, they run the gamut. You could be talking about a utility or you could be talking about someone who is the local YMCA, if you will. They all have a department that has to process things for people and they can all use these concepts to become more effective organizations. I’m working with one right now, as a matter-of-fact, in their payroll. It’s, “How do we do this more timely, more effectively, for our workforce?”
Mark: I’m just thinking about our FQHC clients, our not-for-profit health centers. Getting people processed quicker, which they get to see the physician quicker, they get treatment quicker. I think there are benefits there.
Chris: Yeah, in the health care sector, this has really hit home on a number of large organizations and some smaller ones, too. It’s that patient-centric care is what you’ll hear. That’s very much of like client value. What does the patient value? They value professional interaction. They certainly don’t value long waiting room times. It even goes into how is our workplace? How is our environment organized so that the medical professionals can move around and not bump into things and make for a better patient experience?
Mark: In Lean Six Sigma, there’s also an aspect of quality, not just quicker, correct?
Chris: Yeah, and that’s more of the Six Sigma component. That’s your quality initiative. What can we do to become more consistent as an organization? Whenever you have a lot of variation in your process, if you have two people doing the same job and they do it differently, you could have different outcomes and your quality can suffer as a result. Six Sigma really focuses on, how can we elevate the quality of our work by becoming more consistent and then where is it specifically in the process that we focus on quality? So many organizations focus on quality, throughout their process to be sure, but deliberately at the very backend. Right before that product goes out the door, before the client sees it-
Mark: That’s when they’re checking quality?
Chris: Absolutely. “We can’t let the client see. We have to catch it at the end.” The concepts behind Six Sigma are moving the quality operation to the front of the process. The higher the quality you start with, the greater the quality product or service you’ll always produce.
Mark: Makes sense. Just thinking about us issuing financial statements. We always have this final proof where we’re supposed to catch everything, and you’re telling me we’ve got it ass backwards and it needs to be up front.
Chris: As you’ll attest, we do catch things on the backend, but you have to look at the root cause. Why are we catching them back there? Isn’t it too late? We’ve already done all the work on the financials, so now we have to go through and rework that and that hurts our profitability and could even lead to delays in delivery.
Mark: Client satisfaction.
Chris: Every bit.
Mark: How do we move that to the front? What would we do to move that to the front?
Chris: It depends on what we’re catching, obviously. What we’re looking for: what types of errors? Are they simple transposition errors? Are they formatting issues, which you’ll currently see?
Mark: Grammar.
Chris: Exactly. Whose responsibility is that? We trace that back to the people who are interfacing with the financials right from the get go. Maybe it’s a matter of using consistent terminologies and templating or maybe it’s a matter of making sure that each one of us that’s interacting with those financials has to do a quality check before passing it along to the next person. That way you catch those things right away.
Mark: “I don’t have time. I should have spent more time reviewing this, but I’ll just let the next guy catch it, or the next individual catch it.”
Chris: Right. With spelling errors, to your point, “That’s administrative. I’ll let someone who’s administrative spend their time doing that.” What they don’t realize is days could pass and more work accumulates and then ultimately it’s going to come back to them anyway. Even though those type of mistakes are caught, it still needs to be another set of eyes on it after that administrative person make the correction.
Mark: Great point. Great point. Now you’ve got me scared.
Chris: Well.
Mark: In another administrative aspect, we’re looking for quality, we’re looking for making sure we do things efficiently, like processing a sales invoice or a sales order, could that fit into these situations?
Chris: I think every bit. Many organizations will invoice after the work is already completed. Now, it’s not a new phenomenon that you should try to invoice as quickly as possible, but most companies are set up and organizations are set up internally for there to be a very fairly-large, elaborate process to make sure they capture all the time and all of the work and materials that have gone into that invoice. That invoice has to go up the food chain and be checked and rechecked before it finally goes out.
All of that is necessary at a certain level, but it’s looking at it from a macro point-of-view. Why should it take that long? Is it that most of the companies we’re transacting with, most of the vendors, we have to mail the invoice? Can we do it electronically? Can we enter into some sort of an agreement where we are invoicing much more on a consistent basis as opposed to a one-time deal? There’s a lot of things we can think about, but the invoicing process is a fascinating one in that many organizations wait sometimes months before getting paid for the service that’s been completed and the client’s already on to the next thing.
Mark: Just thinking about that, being an accountant, they’ve already paid the payroll, they’ve paid the rent, the company’s already out-of-pocket, they’re just waiting to convert that into their cash and the longer you wait, the most expensive it becomes.
Chris: Right, so using this type of approach, even though you think, “Well, this Lean Six Sigma type of concept is going to be process-oriented, it might not have a direct application,” but it does to cash flow. You made allusions to it earlier. Time is money. The quicker you can reduce these cycle times, the quicker you’ll end up getting paid.
Mark: As we say, “Cash is king.” Right? Got to convert it to cash.
Chris: They do. If you’re running your business, if you’re trying to grow your business, it’s hard to grow it without it.
Mark: Sure. It’s tough to make payroll with receivables. People just don’t want that. They want a paycheck.
Chris: Imagine that, yes. They do, even for the overall client experience. In fact, if you’re able to interact with your clients differently, they might appreciate a slightly-different invoicing strategy than the one you’ve been accustomed to.
Mark: That’s a great point. Go to them and say, “Hey, we’re going to invoice weekly. It’s going to be electronic.”
Chris: Every bit. You know their business cycles as well as they do. Maybe there’s a timing aspect at which they would pay you much timelier if you did deliver that invoice on the first instead of the 25th, whatever the case might be. Yeah, it’s understanding what your client values and then delivering your service accordingly.
Mark: Very, very interesting. Is there any push-back you get from employees as you go in there and you’re working with leadership? Management is like, “Okay, we’re going through this process.” Anybody push back on you?
Chris: Absolutely. It does happen. There are a couple of things I want to say that. The first point that they’ll push back on is when you say the word “efficiency initiative” or “change initiative” or “improvement initiative.” Some people go to a very dark place very quickly and think, “Well, my job’s at risk.” This is just an opportunity for the company to reduce overhead. That may happen, but I’m very fortunate to say that never have I worked with one client where we have reduced the workforce because of the initiative we undertook. It’s to generate additional capacity for the existing workforce so that they can do more things and do them better. There is some resistance there.
Where I also encounter some resistance is, believe it or not, in the leadership or in the management because it’s fine for the work force to change, but when that change ripples all the way up, and now senior leadership has to change, it’s sometimes unexpected. These are professionals that have worked their whole career very successfully to get to where they are doing things the way they’ve always done them. Why should they change when ultimately it’s for everyone’s benefit and the organization’s benefit to do so. I have gotten some push-back there.
Mark: It’s interesting that people that are hiring you, in theory, are the ones pushing back.
Chris: Yeah, and yet if you don’t have the proper buy-in or the proper understanding of the process and what it can do for you and your company, you will ultimately get the push-back. The discovery process for me, the scoping process, is very important to be able to have those conversations with our clients to let them know what they can expect. They do have to be ready for change. They have to be open to it for all the right reasons. The tone at the top is incredibly important for this initiative, like it is for everything. If the senior leadership isn’t behind it, it’s just not going to go very far. You might get some good, positive results in the first year, but then it will die out once the workforce sees that the leadership hasn’t bought in.
Mark: Just a flavor of the month and we’ll move on.
Chris: Exactly. Early on in my career doing this, I did see that once or twice and that taught some valuable lessons of I would rather the client not go through with it than to invest the time and the energy and the money to take their workforce through something which ultimately isn’t going to have the desired effect.
Mark: Is this a one-and-done? You do it one time, you solve it all, or do you have to revisit it?
Chris: There are two philosophies with that. Yes, in my capacity as a consultant, sometimes I’m only brought in for one singular project. With Lean Six Sigma, one of the other basic tenants, I said client value is one, continuous improvement is the other. Obviously, the old adage, “Rome wasn’t built in a day,” well, nor was your company and we can’t deconstruct a process that’s been there for maybe twenty years and build it back up again air-tight in just one consulting session. This is something you may have to look at on an annual basis and revisit it. Plus, the economic landscape’s always changing. You need to be more responsive to your clients and to the environment.
Mark: Technology’s changing.
Chris: Every bit. You should revisit your procedures, your policies, your internal processes much more frequently, at least annually.
Mark: Do you think this could be a component of some sort of structured-learning objective, like at Rea Academy, where they’re going through these concepts?
Chris: I’m happy to say here at the firm, we’ve put several people through training. I’m not the only individual who is certified in the discipline of Lean Six Sigma here. We have a full eight people, now nine, I now believe, that have a Lean Six Sigma certification. It’s a lower level of certification. It means more of an introductory knowledge and they don’t do quite the project consulting that I do, but by the same measure, they understand the concepts and they’re able to use that in their practice every day.
Mark: That’s good. That’s exciting stuff. Do you enjoy it?
Chris: I do. It has a lot of benefits to a potential client or company that wants to go through it. One of those is workforce empowerment. When you get to see the workforce get really excited about changing things that they’ve always wanted changed, but never quite knew how to change them, that’s when it’s impactful.
The monetary benefit’s fantastic, too. When you see the impact to the company’s bottom-line, it could be substantial. That’s always rewarding. It’s with the workforce. When they feel that sense of, “I can now make changes to things that I’ve been struggling with.” It’s little things. It’s not always big things, but the little things add up and they make a big difference.
Mark: It must be exciting to see. Not to be a negative guy, but anything ever not go well out there consulting?
Chris: It has, and I’ve said as much when we were talking about a senior leadership buy-in. I have worked with a client that made a sizable financial commitment and a commitment of time and resources can be substantial also. To have gone through all the motions and then right after implementation say, “You know what? I guess I didn’t really want to change all that much,” and see the initiative peter out and not go very far is disappointing.
I’ve had some conversations with the workforce of that client a couple years down the road and they confirmed as much. They were excited to go through it. It’s a once-in-a-lifetime opportunity to be able to make the type of change that you’re talking about, because very few people deliberately set up their processes as, “Well, this is the optimum way to do it.” It doesn’t happen accidentally. It’s a good way and companies are successful, but we want to get to the better way. When the workforce sees that, they can rally behind that. To have that pulled away a year down the road is disappointing.
Mark: It’s not just the direct cost, the indirect cost of employee morale, what are we doing, questioning leadership. I just see a lot of negatives in that. You’ve stated before, if people aren’t going to follow through, you’d rather see that they not even take the first step.
Chris: Absolutely. It’s a lot of education you need to go through. If you’re willing to, what we call, embrace this discipline, because it’s more of a cultural phenomenon at that point. You can really help engender your workforce with a sense of ownership and accountability, but if you’re not, at the top, going to be accountable to the process yourself and be in full support of it, you’re going to end up doing more harm than good. Because like you said, they’ll think it’s just the flavor of the week, and they’re not going to buy into any initiative you try.
Mark: The next one down the road, you just shot yourself in the foot for any initiative coming down.
Chris: I think that way, yes.
Mark: Interesting. Chris, before we wrap up, there’s a question that we ask every guest. If you could have one super power, what would it be?
Chris: Wow, there are a lot of good superpowers out there. I guess it would be the ability to read someone’s mind. It would make my life a lot easier if I could understand what they were thinking and if they were onboard with what we’re talking about or if they have some sort of ulterior motive, not to say that anyone ever has ulterior motives, but it certainly would be nice to get a picture of what they’re thinking before you commit to something.
Mark: It would probably speed up a lot of conversations.
Chris: I wouldn’t have to have some, I imagine. I’d know exactly what they’re thinking.
Mark: Correct. Right. That’s our show. Thank you for sharing your expertise with us today, Chris. If you want to learn more about Lean Six Sigma and how it can help your organization, visit www.reacpa.com/podcast. Don’t forget to check us out on iTunes or SoundCloud, where you can subscribe, rate, and leave a comment. Thank you for listening to unsuitable on Rea Radio. Until next time, I’m Mark Van Benschoten encouraging you to loosen up your tie and think outside the box.
