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Six Sigma News Makers
UNDERSTANDING SIX SIGMA: IT'S NOT A STRATEGY
October 11, 2002
John Lopez-Ona, President and CEO of Six Sigma Qualtec
American Banker
To the Editor:
We read with great interest Chris Costanzo's page 1 article in the Aug. 28 issue, "Celebrated Six Sigma Has Its Critics, Too." As a leading provider of Six Sigma services, we wanted to let you know that we agree with many of the points raised while still maintaining a strong belief in the effectiveness of Six Sigma.
This seeming contradiction is possible because we see Six Sigma as a tremendously powerful set of tools that is sometimes applied inappropriately. In the worst cases, some are even trying to elevate Six Sigma to a business strategy - which is like trying to draw architectural plans with a hammer.
It takes superior performance for a company to be successful; choosing to base that performance on a system is a strategy.
A performance-management system targets specific performance measures, in the form of business results; correlates customer/market requirements to those targeted results; and relates the organization’s capabilities to those requirements.
Such a system uses performance-improvement tools to allow the organization to meet the customer requirements. Six Sigma is such a tool. It is neither a strategy nor an organizational improvement.
Further, there are problem-solving methods in addition to Six Sigma that can be more effective in finding a solution.
Six Sigma means deployment of the DMAIC problem-solving methodology [define, measure, analyze, improve, control]. What it does is this:
If the strategy is set, customer needs have been defined and processes are established, Six Sigma will measure your compliance.
If you are not in compliance it will help you define the reasons and will measure compliance again after you attempt corrective actions.
But saying that Six Sigma is neither a strategy nor a performance-management system does not mean that it isn't applicable to a business such as U.S. Bancorp [which figured prominently in the August article]. That would lose sight of the fact that a properly-aligned performance-improvement effort - based upon data and rigorous methodical analysis in the hands of knowledgeable personnel - is one of the most effective problem-solving methods available to any company.
Contrary to the impression left by the article, the Six Sigma methodology does not require that every process to be mapped. Nor does it require that every procedure undergo statistical scrutiny. In fact, we believe it specifically tells you not to do those things.
Don't let someone use Six Sigma as an excuse to map and achieve Six Sigma performance for every process. You are right that those who espouse Six Sigma this way are trying to exert inappropriate control. DMAIC does not set strategies, define customer requirements, establish processes, or ready an organization for change.
Prior to implementing Six Sigma, you should ask what business results are being targeted. Is the company’s objective long-term growth or short-term profitability? To implement Six Sigma correctly, you would have to understand those target results - but Six Sigma itself does not define those strategies.
Returning to the U.S. Bancorp example, are the five objectives it has set for its retail customers what they really want? If so, what level of performance is acceptable for each objective, and how should it be measured? What is an "accurate statement"? Do customers really want ATMs available at all times? What is a "quick response?" Tools such as Voice of the Customer and Policy Deployment do help companies answer those questions - but Six Sigma does not.
Next it would be imperative to understand the processes that support the elements defined as "critical to the customer." These should be mapped, and their capabilities established. But by no means should all of the company’s processes receive such scrutiny - just those that support the elements critical to satisfying the customer and thus to the achievement of targeted business results.
Once these processes are mapped, it would be important to understand how they are performing relative to the customer requirements. If reacting "quickly" is defined as 24-hour response, what are the elements that contribute to response times, and what is the actual response time? Analyzing such matters requires experience in process management - but once again, this is not Six Sigma.
Finally, after setting target results, determining the customer needs, and measuring process capability, the Six Sigma problem-solving methodology applies. If response requirements are 24 hours but the average is 36 hours, the question becomes "why?" Or if the average is 20 hours but in 35% of the cases the response time is over 24 hours, the question becomes "why?" Now you have a nail; now you pull out your hammer.
Other organizational issues are introduced when DMAIC uncovers where the problem lies. What happens when an organization is faced with looking at reasons it has hidden from view and doesn't want to face? Now we find ourselves back out of DMAIC and into change-management issues, where there is yet another set of management tools.
John Lopez-Ona
President and CEO
Six Sigma Qualtec
Tempe, AZ
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