Lean Six Sigma; Follow the Data, Not Your Beliefs

Kaoru Ishikawa, one of the gurus of quality and the creator of the fishbone diagram once said, "Make a habit of discussing a problem on the basis of the data and respecting the facts shown by them."  Here?s a great example of why.

Twenty-five years ago, the law firm of Seyfarth Shaw was brought on to be corporate council focusing on U.S. and Canadian real estate for the convenience store chain, 7-Eleven, Inc.   They won a competitive bid process and are paid a flat rate for each store opened.

As with many corporations, 7-Eleven wants to grow.  They've set out to increase their footprint to 10,000 U.S. and Canadian stores by 2019 and to double that by 2027.  But there was a problem.  An internal metric showed that "deal fall-through rates" were as high as 25 percent, and that the culprit was that one in four stores pursued lacked a complete real estate deal.

Starting out, the low hanging fruit was obvious - one third of the company's legal spending was on real estate matters.  So, an e-billing system was implemented in 2015 to help reduce labor costs.  This is when following the data trumped conventional thinking.  Even though there was a hiring freeze, an analysis of current processes (the data) indicated that money could be saved by hiring two new in-house real estate lawyers, one to focus on new store openings and construction issues, and the other to focus on real estate litigation.

The resulting output of the team's application of modified Lean Six Sigma principles created a business process redesign that offered greater consistency in store contracts, thereby improving the ability to more quickly spot issues that result in dead deals, like zoning restrictions.  The law firm then trained over 100 7-Eleven real estate representatives on the new process and pertinent legal issues to keep deals from languishing in the pipeline.  In the end, the deal fall-through rate fell from 25 percent to about 1 percent and transactional outside council spending fell 68 percent (2016 to 2017), both achieved while increasing volume 19 percent.

I've personally experienced similar breakthrough results by following the data instead of conventional thinking.  By applying the principles of Lean in my own business, I was able to increase sales over 20% and profit by 18 percent by adding staff.