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The difference between DMAIC, DMADV, and Innovation Management

Posted by Paul Hobcraft on Apr 10, 2017 7:00:00 AM

Now many of you might not be any the wiser on what DMAIC and DMADV might mean, unless you have had some exposure to Six Sigma.

They are two models commonly used by business executives that take you through a logical progression, that is more project specific in focus but with a different objective to follow for a completion of a project. They are applied differently and here I will attempt to make the difference clear.

But first, what is Six Sigma?

Six Sigma is to the business world a methodical way to identify and reduce errors and increase quality. It focuses on constant improvement, gaining increasing quality control and eliminating variability. It grew initially in the manufacturing environment but is applied to processes, services and many other part of the business, way beyond manufacturing. It underpinned the call for operational excellence and has been rapidly absorbed as a core capability into many businesses. It has become a bedrock of driving efficiency and effectiveness, with companies like Motorola being a pioneer, and it gained in popularity when GE fully embraced it.

Are Six Sigma and Innovation in direct conflict?

As we often default back into driving out inefficiency, we can forget we are driving out randomness, serendipity, allowing time to make surprising discoveries that might lead to very different ways of thinking about a business. We need a good balance between Six Sigma and Innovation if we want to change our thinking in radically new ways to grow the business.

Today, it is very popular to suggest organizations work in a “dual” organizational mode to create a ‘healthy’ tension between exploitation and exploration. Six Sigma is generally associated with exploitation, as it is constantly focusing upon incremental improvement, of optimizing the process, whereas Innovation is usually associated with exploration, the more random, often haphazard ways of discovering concepts, that can be turned into new business models, products or services.

3M became an interesting point regarding tension between Six Sigma and Innovation. James McNerney, former CEO, rolled out Six Sigma after taking over 3M. The stock market rewarded his initiative but many felt that the company began losing its innovative touch. The basic question started to be raised:

“Can Six Sigma and Innovation co-exist in an organization?"

After a difficult and stalled growth period 3M reverted to its higher emphasis on innovation yet maintained its equal focus on Six Sigma. It dialled it back from extracting savings as the dominant force, the expected panacea and recognized it can be a more balanced critical component in the development of new technologies, products and services but the end yardstick then became how could it compliment innovation to be used to carry it through to the marketplace?

The inherent tension between Six Sigma and Innovation

Six Sigma aims to take any uncertainities (variability) out of a process while innovation by definition induces uncertainities.  However, Six Sigma and Innovation are both essential for an organization yet they really do have one CRUCIAL difference, in that Six Sigma impacts the bottom line while Innovation grows the top line. Six Sigma looks for incremental improvement, in logical steps, with a preoccupation on cost and the (growing) obsession on efficiency in the individual process steps, often at the expense of end-to-end processes designed around customer events. Innovation comes at this cost / value relationship in a different way. I like this:

Value attracts customers, Quality earns respect, and Innovation differentiates your product from the competition”

It needs all three to be in place to attract the clientele and building customer loyalty. Companies need to work on finding the right balance between Six Sigma as a process methodology, and Innovation needing guidelines, not just rigorous statistical methods, to explore unsure territory, and spot emerging patterns. Each can complement but at the right time, place and application. We need to understand the balance on what we want to achieve.

There's a consistent danger of building a discipline of process management (stage gate even) that can strangle new ideas which come from those “light-bulb” moments of brilliance. Exploitation, constantly building on a firm’s existing knowledge crowds out exploration.

A few years back I was admonishing a very large computer firm who was very publically drawing attention to the 7,000 trained Six Sigma employees, but remained totally quiet on those trained in innovation. I was questioning their lack of balance or commitments to giving both Six Sigma and Innovation equal sharing rights. They were in the “race to the bottom” in stripping out costs in a highly competitive market but had become exclusively focused on cost saving and not future value adding needs.

What we need are individuals at all key points in a company who can exhibit both 'A' thinking and 'B' thinking, according to time and need. This is very difficult without a very careful consideration of the real between Six Sigma and Innovation.  We cannot make money without innovating for growth, and we cannot save money by not having efficient processes. We need both.

GE CEO Jeff Immelt commented a while back:

"I look at Six Sigma as a foundation on which you can build more innovation. I don't think every manager can do both [Six Sigma and innovation], but I don't need every manager to do both.”

We also need the ability to gain competitive advantage from cost and efficiency gains but this has its limits. Once a firm's competitors are adopting the same practices, it is difficult to have competitive advantage in the longer term. Companies need other advantages, such as new innovation. The difficulty is that innovation is only recently moving from an art to a science and for many companies this is a difficult, often frustrating interim period, failing to establish a clearer innovation management system.

Six Sigma is designed to inject more efficiency and productivity into a company's systems. It focuses the organization on operational excellence and on "doing things right." By its very nature, Six Sigma fosters a very low tolerance for risk because risk increases variation.

Where a corporate culture is dominated by Six Sigma management theory, then it will be primarily inclined toward inwardly focused, continuous improvement types of innovation activity -- process, customer service, systems, operations, and so on. The objective is small, incremental innovations but they can equally add up over time.

A culture that fosters disruptive innovation is going to be more entrepreneurial, more outwardly focused on new markets, technologies, and business models. The objective is to find big new growth platforms that add significant chunks of revenue and profit.

The conclusion is: we need both for “organic growth” but we need to be crystal clear on the differences, and hence why I spent some time here.

Getting back to these two critical and common models within the Six Sigma program

DMAIC is a systematic Six Sigma process used to perfect business processes already in place

DMADV is the systematic Six Sigma process used to create and perfect brand new products and services

In both, the first three steps might seem to be the same, yet they have differences, it is the last two steps, the fourth and fifth steps that you need to be clear, when choosing which method to use.

DMAIC stands for Define, Measure, Analyze, Improve and Control

DMADV stands for Define, Measure, Analyze, Design and Verify

 

dmaic_process_flow.png dmadv_process_flow.png
D- address the identification of specific processes to be examined ( internal and external) in deliverables D- address customer needs in relationship to a product or service by defining the project goals and customer deliverables
M- record data and use metrics to track effectiveness and evaluate efficiencies and determine current performance M- involve the use of different data collection points to measure customer needs, response to product, or review of services and establish the specifications critical to quality-aspects, including risks and needed capabilities.
A- utilize critical thinking skills to review data and clarify goals, the root causes of the defects and then readjust and re-establish control A – utilize metrics to evaluate areas where product or service can be better aligned to customer goals and needs, consider options to meet customer needs to then select best design for your process
I – create changes in business processes geared toward improvement in production costs to improve the process by eliminating the defects D – overlap the improvement of business processes that streamline corporate goals to best meet client and customer needs and then design the process to meet the needs. Conduct initial testing of the design
C – build a system of checks and adjustments for ongoing improvement in production process to establish and control future process and performance V – build a system of pilot- tests and models to check that customer specifications are being met through on-going improvements. Implement and monitor new system

 

Each is looking for concrete information that shows areas that need improvement or new approaches. DMAIC is used for existing, not performing adequately, whereas DMADV is for either not yet in existence, or exists but does not meet the levels of customer specification. Both still are data intensive and based on hard facts. DMAIC typically defines a business process and how applicable it is, whereas DMADV defines the needs of the customer as they relate to a (defined) product or service.

DMAIC measures current performance of a process while DMADV measures customer specification and needs. You have to verify a number of simulation tests to verify efficacy for DMADV.

Finally DMADV can be used to design the product or process. Also if you had gone the DMAIC route but a process improvement did not meet expectations or simply fails then you need to apply DMADV.

A simple illustration

A company wants to reduce the error rates in its processing. More than likely, it needs to improve existing processes, so it goes the DMAIC route. But, if it wants to move from manual paperwork to a computerized process it needs to design a new process, then DMADV would be part of the thinking that needs to be applied. Or if it needs repairing or improved think DMAIC, if it is beyond repair, needs replacing or requires something new, think DMADV.

So let us bring this back to exploitation and exploration

By bringing DMADV into the exploration part of innovation you can provide a more disciplined way to work through a new product or service. I do not want to get into DFSS, the design for Six Sigma here but it is encouraging project teams to invent and innovate in products, services and processes.

Again a rule of thumb, the difference of DMAIC is its focus on issues of today (exploitation) and DMADV can focus more on the issues of tomorrow (exploration) and helps in the design thinking process. You should consider the DMADV process within your innovation development process as it can add a level of rigour.

So Six Sigma and Innovation can go hand in hand. Of course Six Sigma is more about decreasing variability whereas innovation is on achieving improvements by increasing (customer) value.

Six Sigma groups can help innovation groups to identify better ways of measuring potential of different ideas that focus on the joint need of building better Value, Quality and Innovation

Summary

Six Sigma is a well-defined process, with highly trained, deeply committed facilitators but this philosophy and culture can make it difficult for innovation to grow. Six Sigma is more focused on being reductive and convergent, eliminating as quickly as possible choices. Innovation works in the opposite way. It leverages and encourages creative thought and constantly explores divergence to keep considering possibilities and potential of much that is unknown.

Cutting costs and waste, eliminating unproductive steps usually attracts more funding and are often faster to compete, whereas innovation presents uncertain value, is more risky and for this reason harder to gain broader acceptance.

Appreciating the difference between DMAIC, a more popular method used in Six Sigma projects and especially DMADV around our innovation thinking gives clear difference. Break them down between exploitation (improve process) and exploration (design new process) and recognizing innovators are encouraged to test, learn, evolve and iterate towards the customer needs, we do have a potential partnership here, between Six Sigma and Innovation.

So, know the difference between DMAIC and DMADV, as it might help you sell more new innovation into all those efficiency and effectiveness groups, often outnumbering the innovator.

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Topics: Methods & Frameworks

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