A Publication of WTVP

Lean, Six Sigma and other operational excellence initiatives have become incredibly popular in recent decades (and for good reason). But this quest has a dark side—it can stifle innovation. Here are five ways not to let it.

Dell. 3M. Motorola. General Electric. They are just a few of the organizations that have embraced Lean and Six Sigma over the past couple of decades. And no wonder. There’s something so appealing, so elegant, about the concept that drives these systems: Take what we already know, replicate it, improve it and repeat. It’s so easy a robot could do it—and that’s precisely the problem.

Very soon, the tasks that Lean and Six Sigma have helped operationalize will be handled primarily by robots and smart machines. And that’s a good thing. Nothing beats a robot in terms of efficiency and perfection. But here’s the real question: How good is your company at doing all the things robots can’t do well—such as innovate?

As you’ve no doubt heard, the only real competitive advantage these days is the ability to learn and innovate. That means your organization must be okay with risk—and the screw-ups, missteps, and waste that inevitably accompany it. The problem, of course, is that an organization steeped in the lore of Lean and Six Sigma naturally views them as sins to stamp out.

So do we abandon the quest for operational excellence? Well, no. We must allow Lean or Six Sigma or whatever operational excellence system we follow to coexist peacefully with a deep desire to learn and try new things, even when the outcome is unknown. Yes, it’s a paradox. But it’s one that must be hardwired into the fabric of an organization through a learning culture, because learning is the fundamental process that underlies both operational excellence and innovation.

Lean and Six Sigma just need to happen in the context of a hybrid business model, one that also prioritizes the need for innovation while keeping in play the best aspects of operational excellence—for example, its focus on relentless, constant improvement. If you want to survive the coming Digital Age of Machines (a.k.a. the 21st century), you must create a learning environment with these five key elements:

Give employees permission to try and fail. Perhaps the most popular reasons Lean and Six Sigma are used by companies are to increase efficiency and reduce costs. However, when you worship efficiency, you also can handcuff learning and innovation. Employees must be given conditional permission to fail within proscribed financial tolerances, with the knowledge that they won’t be punished for their mistakes so long as they learn.

Bridgewater Associates, the biggest and one of the most successful hedge funds in the world, is passionate about the power of mistakes. Bridgewater actually encourages employees to get excited about their mistakes because each error that employees learn from will make them better faster. Employees are instructed not to feel bad about their mistakes or failed experiments, or those of others. Learning from mistakes, being honest about personal weaknesses, and stress-testing one’s thinking, the company believes, is a reliable strategy for long-term success.

Shift leadership toward “coaching-ship.” The “knowing and telling” that can make up leadership under Six Sigma-style systems can stifle independent thinking. If you want an adaptable learning (thinking) organization, you need to humanize your management models, and that requires many leaders and companies to fundamentally change their attitudes and behaviors toward employees. This paradigm shift from “command and control” leaders to developmental coaching is pivotal to creating a culture where employees are not fearful of making mistakes and feel safe enough to try. Humility, empathy, emotional intelligence, and self-management are required leadership capabilities for today’s companies. These qualities nurture the very human capabilities that are at the root of adaptation and innovation: the ability to ideate, create, emotionally engage, and learn in conditions of uncertainty, ambiguity, and rapid change.

Allow the best ideas to rise to the top. In an idea meritocracy, the best ideas win out regardless of the position held by the thinker-upper. Innovation and creativity are what matter, not hierarchy. Google has successfully built an idea meritocracy to drive innovation and experimentation—in other words, trying new things. To support this culture, pay level is irrelevant in decision making, and so is experience or tenure—unless the experience provides data used to frame good arguments. In fact, Eric Schmidt, Google’s chairman, stated in the book How Google Works that Google employees are told not to listen to “HiPPOs,” or the “Highest Paid Person’s Opinion” just because of their position.

Make candor with a duty to dissent the gold standard. Operational excellence can lead to command-and-control, hierarchy-based cultures. Unfortunately, these cultures have a tendency to stifle dissent and limit learning.

At Google, employees have a duty to dissent. This means that relative rookies can—and do—raise objections and present alternate ideas when they disagree with their bosses. A similar duty to dissent can be found at UPS, which has an employee-centric culture of “constructive dissatisfaction,” meaning that everyone has the duty to find ways to improve. Candor and permission to speak freely without fear of punishment are critical to becoming an innovative organization. This is evidenced at Google, Bridgewater Associates, Pixar Animation, and W.L. Gore & Associates.

Teach employees how to overcome their weaknesses. We cannot learn when we constantly seek to be right, actively avoid the risk of making mistakes, or ignore those who disagree with us. Employees must work around these human tendencies in order to become better thinkers, learners, and in turn, innovators.

We are sub-optimal learners. In order to learn, we have to be open-minded and be willing to constantly stress-test our beliefs against data and we need to really listen to people who disagree with us. In other words, we have to be willing to be wrong! Overcoming the strength of our ego-defense system requires management of our emotions and quieting our egos. We need to decouple our beliefs (not values) from our egos. We are not our ideas. Yes, in order to optimize the ‘good’ things our human brains can do, we must overcome the “bad” aspects of our humanness. That requires a learning culture and the rigorous daily use of best thinking, listening and collaborating processes.

Ultimately, Lean and Six Sigma systems thrive on eradicating variance. Innovation, on the other hand, thrives on variance. Reconciling that difference along with the different tolerances for failure can be achieved under an umbrella learning culture.

I believe that technology advances will commoditize operational excellence, making innovation the key organic growth strategic differentiator. That means the organization of the future has to be both operationally excellent and innovative. That is made easier with a learning culture.

Edward D. Hess is a professor of business administration and Batten Executive-in-Residence at the University of Virginia’s Darden School of Business and the author of 11 books, including Learn or Die: Using Science to Build a Leading-Edge Learning Organization. For more information, visit