Peter Pande on Six Sigma Success: Don't Get Mired in the Details

May 4, 2007
Engineers and technical professionals often fail to ask the "right" questions.

Pharmaceutical Manufacturing spoke with Six Sigma guru Peter Pande about its application in the drug industry. His book, “The Six Sigma Leader” was recently published by McGraw-Hill (visit our web site for a chapter extract). In particular, he was questioned about its use in drug development and R&D, where antipathy appears to be building up against Six Sigma. He suggests that some drug company managers may be trying to fit square pegs into round holes instead of looking at the broader issues that can make Six Sigma work in any area, from discovery and R&D to supply chain management.

PM – Is Six Sigma passé? It’s often lampooned in Dilbert cartoons. Why is this happening?

PP – Any methodology can be misapplied. If you take the misapplications or “failures” and say, that’s what Six Sigma is all about, then everything will be a failure because nothing works perfectly every time. It’s like seeing a broken down car and then saying that all cars are broken down…There’s a little bit of that problem.

But there is an oversimplification of what Six Sigma is. A lot of the mistakes occur when people overly narrow the definition of Six Sigma and try to fit it within a certain set of tools that just don’t apply to the broader array of business issue. It’s like saying, “Six Sigma is a hammer but I have some screws here” – it won’t make sense. That really is where there needs to be a better broadening of the perspective, so that people don’t get locked into thinking, “I’m only doing Six Sigma if I’m doing X.”

PM – Aberdeen conducted a survey recently (copy available on that indicates that most companies that “think” they’re implementing Six Sigma, in fact, aren’t. What is your reaction?

PP – I agree with the Aberdeen report’s summary statement that a lot of companies that say they’re doing Six Sigma aren’t doing it very well. But the first recommendation that’s listed in that digest, about applying DPMO methodology to all business activities, is not a good idea. It’s unproductive because there are plenty of activities in a business where that type of measure is just not relevant, or not the best to evaluate how it’s working.

But that’s an example of how people narrow Six Sigma. People say “you’re not doing Six Sigma if you’re not doing DPMO.” A lot of folks in the pharmaceutical industry see that notion and are legitimately scared by it. That’s where the Dilbert stuff comes in; it’s easy to see why people say, “this isn’t for me.”

From a leadership perspective, you have to look at the breadth of how you’re making improvement and change happen in a business. That’s where you see that the companies that have been most successful doing Six Sigma – and they may not even call it that – are applying a broader array of tools. A key component is that they are using a more effective prioritization process to determine: “What are the things we should be working on?” “How do we integrate them into our operations more effectively?” and “How do we use a broader tool set?” Companies that have done this have had huge success.

PM – How should a group, team or company that is new to Six Sigma focus their efforts initially?

PP – First, you must clarify why you want to do Six Sigma, and what you even mean by Six Sigma. It really means different things in different businesses. For us, it means how to achieve results and to drive change using a variety of methods and tools, but not necessarily limited within some narrow band. Businesses and leaders must define for themselves what’s critical, what the goals and objectives should be.

That’s the first step. Then you must evaluate the most compelling opportunities to apply it to. Have a long- term view to how you’ll integrate it with how your business is managed and led.

Often leaders initiate problem-solving efforts not by defining a problem but by giving everyone a solution. The beginning of the process is supposed to look at the problem, and what we think is happening, not to validate the problem. That’s a management thing that needs to change rather than a tool set.

PM – Six Sigma needs top-down support but there may be organizations where management is oblivious. If projects are done, can this be bottom up driven?

PP – Sure, Becton Dickinson launched its Six Sigma efforts that way. It was mid-management led, applied first in distribution and customer databases. If you look at an ‘05 or ‘06 annual report, the chairman touts Six Sigma as the key to some financial successes. It can definitely begin at that level.

Sometimes it’s easier to do it that way. If you have a leadership group or individual group with the bad habit of dictating the solution, it’s better to operate under the radar screen.

PM – Have you consulted for pharma companies?

PP – I’ve had more work with medical devices than pharma, but I have done some consulting for pharma. I’ve had conversations with folks on how to apply Six Sigma processes. It’s not easy because the business issues aren’t easy. It’s especially hard if you view it as one-size-fits-all.

PM – Can it be applied to R&D?

PP – Yes definitely, but you would need to adjust your definition, and apply it differently to different aspects of R&D. Certainly, in a raw basic research and basic discovery mode, it’s very different from the process of tracking a promising product through the pipeline, from clinical to approval.

In some sub-processes, classic Six Sigma wouldn’t apply, but it would apply to others. It must be tailored to the circumstance.

What’s often misunderstood about Six Sigma is the fact that there are some principles bandied about as being integral to Six Sigma that are wrong, for example, "It’s all about reducing variation [or defects]" or "It’s all about data."

In a lot of cases, the last thing you want to do is to eliminate variation. An example that’s relevant is to go down the pipeline from pharma to the physician level. If variation is bad everywhere, then every doctor would handle every patient the same way.

This is where Six Sigma’s manufacturing legacy gets in the way. If I’m making 10,000 printed circuit boards, I want all of them to work and to meet tolerances every time. But if I’m providing a service with different customers/circumstances from one to the other, or applying different tests, I want to be consistent, but I need to be able to adapt what I’m doing to fit the individual circumstance and situation. In these cases, data are not as helpful as facts. Here is where there is a lot of misinterpretation about Six Sigma.

If we do a small-scale clinical trial with as few as 20 patients, and one patient responds differently to the drug than the rest, you can’t run that test on a larger patient group. You’re going to have to look at the specific facts and understand what went wrong with that patient’s situation. That is what I call taking a Six Sigma analysis to solving the problem. I’m using facts to understand what happened.

PM – Are there lessons from Research & Development in other industries?

PP – There are quite a few. Depends on what aspect of R&D you’re talking about.

For example, an effort to streamline a process (some people call it Lean, but I see it as part of Six Sigma).

In the review and pipeline management of a product or series of products, one might ask themselves where there are approvals, reviews or checkpoints in place that are really only being done because they’ve always been done that way. Are they adding value? If not, then you can streamline the cost and cycle time of the development process by asking fact-based questions about how the review and checkpoints are being applied.

Or maybe we need to do them more rigorously. Maybe we’ve been doing some of those reviews earlier in the development process, but we’ve been using them just as a rubber stamp, rather than using them to check whether or not we’re on the path to doing something that can actually be manufactured.

You can start to look at differences between a successful vs. an unsuccessful situation. Focus on facts, rather than big numbers. There are a lot of cases where it can be applied, but you have to take each aspect of the R&D operation and analyze which dimensions of Six Sigma can apply and which situations it will work for.

Using a huge can of paint and a huge brush won’t work. You can’t just drop Six Sigma lock, stock and barrel into R&D, but you can apply the principles, thought processes and questioning. If you get smart about testing your habits against a smarter way of asking questions, it has huge benefits.

PM – Everyone in pharma is now struggling with how to apply various principles, such as Lean, OEE, Six Sigma to improve their operations. How can they be meshed? Should people be thinking of “Lean Six Sigma?” What’s the best way to move toward operational excellence?

PP – For us (at Pivotal Resources), the key is change leadership, looking at how you enable an organization and its people and leaders to be effective at selecting, executing and sustaining the changes, adaptations and improvements that are critical to the business. There are many ways to get from Point A to Point B, but there’s usually a best path, depending on where you’re going. In some cases, something is happening but you don’t know why. Then you need to ferret out the root cause, which requires a certain type of analysis, that can be aided by certain types of tools.

Another situation is where there may be one problem or an array of problems that are taking a lot of time and money. Lean and Six Sigma are labels that are artificially tied to different arrays of tools. To decide which is the right one is less important than deciding which problems are key, and which sets of tools would be most effective in resolving them. We’re back to the hammer and screw analogy. Starting out, you may not be sure which tools are the right ones. Then you delve in to define the problem or opportunity more clearly and figure out which tools will work.

They can all have applicability. The smart thing is to be conscious of what type of issue or opportunity you’re working with and to become more capable of then picking the right tool out of the box.

PM – Does your consulting group combine elements of all these practices?

PP – All the time. Each is a little bit different and requires a slightly different skill set. Getting everyone to become proficient in all these things can take some time. Not everyone has aptitude for every type of tool, particularly when you’re looking at design and creative types of things. Some people are very analytical, others are highly creative. Usually, you want a mix of both. But some types of tools will require more of one than the other. You don’t want to take a bunch of analytical types and say “You’re going to redesign our clinical trials process” because they probably won’t think outside the box.

That’s part of the leadership becoming conscious of the breadth of methods that are essential to get the most return out of our change investment and to know how to apply the right tools and the right people to the situation.

PM – How did you get into consulting and what made you focus on Six Sigma?

PP – I got into this business by accident. I had been working in PR and marketing and then was hired by a company that did management development back in the early 1980s. I started doing work with clients, they wanted everyone to get hands into their processes. I did decision making, problem prevention and root cause analysis-type work, which then segued into quality processes, and found that I had an aptitude for helping people understand their problems. Six Sigma was really the next phase of evolution for us.

I think a lot of the things that are part of Six Sigma are things that we were trying to focus on even back in the early ‘90s. We were brought in to support GE’s efforts when they launched Six Sigma in 1995-96. We were one of the firms that were developing training, teaching execs, black belts and green belts. A lot of the work we did was with GE Capital, which is a financial services business.

The complaint you hear from R&D folks – that “this is all just for manufacturing” – we had to confront early on. That’s one of the reasons why our business has been successful in putting a broader perspective on Six Sigma, than what I think a lot of people do, which is to get bogged down in all the tools.

PM – Do you have an engineering background?

PP – Don’t have an engineering background, but I’ve worked with a lot of engineers. I have an MBA. A lot of what we do is about asking questions, and sometimes the less you know the smarter you are at asking questions.

PM – Can advanced technological knowledge actually be an impediment to asking the right questions?

PP – Engineers are taught how to solve problems, but they also feel that they’re supposed to have answers, and this sometimes happens with executives, too. When you think you’re supposed to have the answers, sometimes you don’t step back and ask yourself whether you’re asking the right questions.

I can remember when I was working with a consumer products company, a cleaning products company, quite a while ago. I was working at their R&D facility, and one of the researchers was having some problems with some of the tests they were running, where they were using comparative analysis methodologies that are part of Six Sigma. I looked at the data that she was discussing with a colleague, which wasn’t real technical. I looked at what was and wasn’t happening. I told the technical research specialist that these problems might have suggested a problem with the dirt that was being used for product testing. She insisted, “No, you don’t understand.”

I asked her to go a bit further and ask a few more questions. Ten minutes later, she comes over and says “You’re right. There’s something going on with this dirt.” Obviously she had much more technical background than I did, but by looking at the problem more objectively she could see the answer. I have had this happen with a lot of folks with technical backgrounds, where they forget to apply a more scientific method approach to their day-to-day issues.

PM – Pharma isn’t yet customer-focused. How important is the customer to a successful project?

PP – Very important, but the customer often is a pretty poor source of information about what he or she needs. If you were to talk to me about drugs, I don’t take any today, so I would make stuff up, and if you took my input as relevant you’d get in trouble.

The challenge for any business, including pharma, is to look for a variety of ways to understand what customer needs are. In pharma, you have layers of customers: physicians, hospitals, purchasing groups, patients, patient families and caregivers. You have to look at each customer independently to set the right priorities, but at the same time manage business needs for shareholders. It’s challenging, and the whole customer dynamic is the most head-spinning part of the whole equation.

I do think that many businesses don’t pay enough attention to it, oversimplify it and then wonder why customers aren’t happy. They might have done surveys. But, what's so funny about these debates is that underlying the Six Sigma thought process is the scientific method. Instead of saying, “I’ve got the facts,” you say, “I’ve got some of the facts but from them, I have to develop a hypothesis.”

For instance, if nurses say X about a tablet distribution process, they give you data not for a conclusion but a hypothesis. Then you test the hypothesis and dig deeper to get more data to validate the hypothesis.

When people say Six Sigma doesn’t apply to scientific endeavor, that’s totally missing the mark. But it doesn’t apply the same way in every endeavor.

PM – Do you know of any cases where a drug company is applying Six Sigma to drug development?

PP – We were doing some preliminary work with a pharma company recently. They had been doing research around the whole industry. The conclusion they reached is that there is a lot more talk than action. They’re walking around the car and haven’t taken a test drive yet. That’s what I’d expect. There’s still a lack of understanding of how it is to be applied differently and in different aspects, to R&D. It’s not like taking a big block of granite and dropping it into a tank.

Change leadership is a robust thing that involves leadership, understanding of processes, execution and people. You need to look at each dimension and decide which has the most opportunity and which set of tools will be the best approach. The difficulty of fitting the problem and the tools together is causing a lot of grief.

PM – How long did it take to synthesize the Change Leadership approach?

PP – A lot of this we already had from previous work. These were outlined in “The Six Sigma Way,” my first book. We spent nine months developing components.

The leaders of organizations that are doing Six Sigma, it’s like Six Sigma has been better than TQM because leaders have handed out medicine. In TQM, leaders told their staff to dispense the medicine. But the leaders haven’t taken the medicine yet. That’s the problem.

The other problem is that the labels get to be non-value adding and create a lot of angst and misinterpretation. We’re stepping back and saying “it’s not about solving certain types of problems, but your ability to adapt and respond as an organization.” It takes a much more robust view of the business.

PM – What is a realistic goal for value-added work?

PP – Let’s use another criteria. The Aberdeen study found that few companies achieved the desired quality level. Anyone who goes into Six Sigma expecting to reach Six Sigma levels has lost their sanity. The goal is to get to a higher level of performance, fewer defects, faster cycle time, etc.

You can’t set a good number for value-added activities because so much depends on the nature of the process. The definition of value-adding is value added to the end user. In the pharma industry, the whole development process is managed by or beholden to what from a classic customer value perspective is non-value adding.

Of all the activities in your business, which ones need to operate as quickly and efficiently as possible? By prioritizing those, you can streamline your activity. Then the goal is to get as lean as you can. You won’t be totally lean because there will always be activities in the process for the benefit of regulatory compliance or business self-interest or employees, such as safety. Those are all non-value-adding to the end-customer, but still very important.

PM – Are there role models from any industry? Whose style should be emulated and studied?

PP – Jim McNerney (Boeing) is an example. And look at Steve Jobs (Apple), in terms of getting tuned into the customer, and having done it over a long period of time and learning from previous mistakes.

A lot of execs have a period of success, but lose it when the environment changes. Just because you’ve been successful doesn’t mean it goes on forever. When things change, the key is adapting. Even for someone with a record of being successful... success breeds failure.

Andy Grove of Intel is another model, if for nothing else than because he wrote [the book], “Only the Paranoid Survive.”

About the Author

Agnes Shanley | Editor in Chief