Last month, we discussed how Six Sigma can be employed during the development of a corporate performance management (CPM) dashboard. CPM is a Gartner term for what others, including the Meta Group, Hyperion and Cognos, refer to as business performance management. In the arena of customer relationship management (CRM), Patricia Seybold has employed the term customer flight deck. In the corporate strategy arena, balanced scorecard heads the class. Each is an important concept and framework whose successful implementation is contingent on the same premise – the effective translation of data minutia into actionable key performance metrics.

Six Sigma provides an effective road map and disciplined framework to support the objective outlined above. In the specific instance of employing Six Sigma for corporate performance management, it provides a framework to ensure that the CPM dashboard: meets the needs of the user community (VOC – voice of customer), integrates essential requirements (CTQ – critical to quality), and contributes to the bottom line (BCA – business-case analysis).

Before diving further into the Six Sigma lagoon of acronyms, Greek symbols and methodologies, it is essential to review of some of Six Sigma's basic concepts.

Defining Six Sigma

Six Sigma has evolved over the last decade in tandem with a full spectrum of definitions of what it is: a metric for performance measurement, an ambitious level set for customer satisfaction, a toolbox of management practices and statistical techniques, and a problem-solving methodology focused on reducing defects and increasing profitability.

Even early adopters of Six Sigma have offered multiple interpretations of its definition and use. For example, Honeywell has adopted an overall Six Sigma Plus strategy "to accelerate improvements in all processes, products and services, and reduce the cost of poor quality by eliminating waste and reducing defects and variations." At 3M, Six Sigma is employed as "both an initiative and methodology for pursuing breakthrough process improvement and reducing inherent variability ... focused on customer-driven expectations." GE, perhaps Six Sigma's most prolific proponent, identifies Six Sigma as "a highly disciplined process that helps us focus on developing and delivering near-perfect products and services ... Six Sigma has changed the DNA at GE – it is the way we work."

The bottom line is that Six Sigma is designed to build quality results into your products, processes and services regardless of your point of departure. Whether your view is narrow (metric-based) or broad (company-wide), Six Sigma is:

  • A metric representing an aggressive company-wide performance goal of 3.4 defects per million opportunities (3.4 DPMO) for each product, service or process delivered.
  • A quality management and statistical toolbox that leverages a plethora of analysis and optimization techniques to reduce defects and improve process quality. This includes failure modes and effects analysis – FMEA, root cause analysis, design of experiments – DOE, simulation, quality control charts, etc.
  • A structured problem-solving methodology that can be applied to any continuous (or discrete) process. Performance measures in cost and quality can be improved by the application of process management, quality engineering and statistical tools to eliminate root causes of defects. Improving existing processes leverages the five phases of the DMAIC (design, measure, analyze, improve, control) model while the design of new products/processes follows the DMADV (define, measure, analyze, design, validate) model (see Six Sigma Methodologies).
  • A company-wide culture designed to marshal enterprise-wide resources to focus on achieving near perfect performance and meet or exceed customer expectations. Other facets include aggressive goal-setting, a divide-and-conquer approach and business results validation.

In sum, these components are related and unified in their focus on improving profitability, performance and customer satisfaction. Six Sigma metrics, methodology, toolbox and culture each encourage and reinforce the same modified behavior ­ stop, look and ask the right questions. Continuous analysis and improvement are at the heart of the new operational mantra that Six Sigma inspires and supports.

Six Sigma Methodologies

Typically, when people reference Six Sigma, they are referring to the Six Sigma Improvement approach and DMAIC methodology. However, it is important to realize that in addition to Six Sigma "plain," there exist two other flavors – Six Sigma Design (also known as Design for Six Sigma – DFSS) and Six Sigma Process Management. Six Sigma Improvement focuses on improving existing processes and products that are not meeting customer expectations, while Six Sigma Design focuses on developing new products and processes. Six Sigma Process Management works processes (rather than an individual process) from end to end in order to maximize overall effectiveness and is typically used for transactional systems.

Six Sigma Improvement follows the DMAIC process:

  • Define – define, identify and prioritize project goals and customer deliverables.
  • Measure – measure process to determine current performance.
  • Analyze – analyze and determine root cause(s) of defects,
  • Improve – improve process by eliminating root causes of defects.
  • Control – control future process performance.

We'll elaborate on these processes in greater detail in future issues because they are at the very heart of CPM dashboard development.
Six Sigma Design follows the DMADV process. One of the major differences (vs. DMAIC) is that no preexisting baseline is available as a barometer for improvement. Consequently, the process/product design is optimized to meet customer needs leveraging CTQ factors from the measure phase. (GE has now enhanced this process by adding an optimization phase – the new acronym is now DMADOV.) Another popular variation is DMEDI promoted by PricewaterhouseCoopers.

Now that we've covered some basics, next month we'll explore the roles of the martial arts characters – with their green and black belts – populating the Six Sigma world.

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