Idea 39 - Six Sigma
Martial
arts mixes with the Greek alphabet and a US electronics maker in a defects
control discipline that has won many thousands of corporate converts - Six
Sigma. It was designed to reduce. Defects and shorten cycle times, something it
does very effectively, but today its sponsors are promoting it as a fully
integrated management system.
Six Sigma was developed in the 1980s by electronics and
communications firm Motorola. It was part of that company's response to
devastating competition from foreign - read 'Japanese' - manufacturers. Sales
were taking a hammering and there was a rising tide of complaints from the
field sales force about warranty claims. As Motorola tells the story, the
senior sales vice president looked the chief executive in the eye and said:
'Our quality stinks.' The two of them agreed on a goal of tenfold quality
improvement over the next ten years.
The job of making that happen fell to Bill Smith, an
engineer and scientist in Motorola's communications division. He drew together
a variety of existing methodologies, largely from Japanese practices, and in
1986 introduced the concept of Six Sigma. It was, the company said, 'a new
method for standardizing the way defects are counted, with Six Sigma being near
perfection'. As it has evolved, its aim is to achieve total customer
satisfaction by delivering products on time, without defects or excessive
failures in service.
Sigma is the Greek letter's', its lower-case form written,
ironically enough, as if it were the number 6 bowing to the east. In
statistical shorthand, sigma is used to represent standard deviation, a measure
of how wildly a set of numbers deviate from their 'mean' or average. If the
mean is an index of quality, reducing the standard deviation will reduce the
Number of products that fall wildly below it.
To qualify for Six Sigma status, a process must produce no
more than 3.4 defective parts per million (which supposedly represents a sigma
of 6). The methodology for changing processes that need incremental improvement
is summed up by the acronym DMAIC, which represents the important steps in the
process:
Define
the problem, to determine what has to improve.
Measure
the current state against the desired state.
Analyze
the root cause of the gap between them.
Improve
the process, by brainstorming, selecting and implementing the best solution.
Control
the long-term sustainability of the improvements by establishing monitoring
mechanisms, accountabilities and work tools.
To design new processes or products that will conform to Six
Sigma quality, there is the DMADV methodology - define, measure, analyze,
design, verify. This can also be used if an existing process is performing so
poorly that it needs more than incremental change.
Belted up
Employees have to be trained and certified to implement Six Sigma, which has
spawned a sub-industry of trainers and certifiers. Competing with them is the
company's own Motorola University, which offers at-source Six Sigma training
and consulting services. Maintaining the Japanese flavor, certification means
becoming a green belt or black belt, something that requires on-the-job
experience as well as time in the classroom. Green belts are the foot soldiers
of the process improvement teams, and black belts - whose Motorola University
course currently costs over $13,000 - are the NCOs. Black belts who demonstrate
'impact and experience' over some time may be elevated to master black belt
status. They tackle the most complex improvement projects, and they coach black
and green belters.
Six Sigma has had its share of bad press, and some technical
purists say that its results can be distorted. Its supporters retort that it
may embody some imprecision, but that this is to miss the point. It works, they
say, with benefits that include greatly reduced costs and waste, faster cycle
times and improved customer satisfaction. Because the way to do it is specified
in such detail, it is easy, though not quick, to implement. Yet, with its
culture of customer- centeredness and fact-based analytics, it is clearly more
than just a toolbox for manufacturing. Motorola thinks so too. By the early
1990s Six Sigma was already being used in non-manufacturing industries such as
financial services, high-tech and transport. In 2002, Motorola wheeled out a
new version of Six Sigma that went way beyond the factory floor, calling it 'an
overarching high performance system that executes business strategy'. This new
Six Sigma –Six Sigma 2.0, if you like - stipulates the following four steps:
Ø
Align executives to the right objectives and
targets, by creating a balanced scorecard of strategic goals, metrics and
initiative. These will identify improvements that will have most effect on the
bottom line.
Ø
Mobilize improvement teams, using the DMAIC
method.
Ø
Accelerate results - change is best accomplished
in sprints rather than marathons.
Ø
Govern sustained improvement, and share best
practices with those parts of the organization that can benefit.
In this way, Motorola claims, companies can grow market
share, improve customer retention, develop new products and services,
accelerate innovation and manage changing customer requirements.
Overstretching
a good idea some have expressed scepticism about this latest
development along the Six Sigma time line. They fear that a good idea might
damage its reputation - and so prevent its adoption - by making exaggerated
claims about what it can realistically achieve. Much the same happened to
business process reengineering towards the end of the 1990s.
One of those who worries that this may be happening to Six
Sigma is Dr Michael Hammer who, as one of the founders of business process
reengineering, should know what he is talking about. 'A Six Sigma train wreck
... would be a tragedy for all the companies who could in fact benefit from a
rational and measured application of this valuable technique,' he has said.
To avoid disaster, Hammer advised that practitioners should
develop a balanced perspective on Six Sigma, recognizing that it is not the
universal answer to all business problems. It is, he said, just one tool among
many, very useful for a particular set of problems.
Reference: 50 Management Ideas You Really Need to Know
Book by Edward Russell-Walling
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