Basics of Six Sigma – The Problem Solving Strategy Y = f(X)

Reward and Reinforcement:

Reward and reinforcement may be one of the hardest parts of successfully

institutionalizing a six sigma program. Black belts and green belts must have positive
career paths, in order to encourage the best candidates to commit to the extensive
training and development required. Especially now that black belt skills are in
demand, it is important to recognize the accomplishments of black belts by tangible
and intangible means.

It is also important that green and black belts experience the rewards of achieving
significant savings for the company. At the same time, other team members must be
recognized for their contribution to performance improvements. To only reward black
belts for improvements that a team achieves creates resentment and isolates the
black belts from the team.

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)
Organizational Roadblocks
An in-depth description of organization structures is not provided here. The purpose of this discussion is to focus on some potential problems and/or roadblocks related to
existing structures and cultures.

Flat Organizations
In flat organizations decision making is forced to lower organizational levels. Therefore, the decisions can be erratic and inconsistent. This statement is certainly dependent
upon who makes the decision at any given point in time. There are fewer decision levels; therefore, the loss of key people can have a negative impact on these
organizations. Resources may be so sparse that the culture can become extremely dependent upon the values of single individuals (such as the owner or CEO).
Tall (Vertical) Organizations
In a vertical organization, the lower levels have their decisions reviewed by the individuals above them. This also means that communications are not as rapid. Additionally,
it can take much more time and effort to have people respond to certain directives. As jobs are added to handle the details of decision making, more layers of
management are created. Sometimes, these levels become impediments. Decisions are made slowly. Vertical, feedback is frequently filtered. Upper management is often
out of the loop on localized quality or customer issues. Some of these problems can fester into major issues.
The vertical organizational culture can become too bureaucratic. Management attention can be directed at who gets the corner office or whose desk is bigger instead of
servicing the customer or becoming more efficient.
Functional Organizations
The people in functional organizations can become very specialized in their field of expertise. Well rounded individuals may be difficult to find. Coordination of projects or
problems can be more difficult than in a flat organization. There is a danger that sub-organizational values and shared assumptions may become too inbred.
Product Organizations
In a product organization, there can be a duplication of selected services. Individuals may lack overall corporate focus since they are concerned with a smaller piece of the
pie. Although segments of the company are better directed at meeting competitor challenges, they can also compete against each other for company resources and
consumer markets.
Geographic Organizations
This arrangement presents similar problems as encountered with functional organizations. Additionally, many undesirable nationalistic or regional cultural features may
arise.
Matrix Organizations
In matrix organizations, a specialist can report to two or more people, violating the one boss rule. It is often difficult for the specialist to decide which superior to respond
to first. It is somewhat important not to upset the manager who evaluates performance and awards merit raises.
The biggest problems with organizational culture in a matrix organization can be competing values and occupational subcultures.
Team Based Organizations
The entire employee selection process is much more stringent for a team based structure. Additionally, management time is directed at employee training and support. An
organization that is experiencing severe short-term threats should not undertake this rather lengthy organizational rollout.
There are also threats to all levels of management, particularly middle management. The loss of some of these individuals would mean a tremendous loss in job knowledge
and expertise. A multitude of teams can spawn a multitude of occupational subcultures. There can also be a loss of clarity in business goals based on the numerous
communication channels.

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)
Cross Functional Collaboration
In traditional, functionally designed organizations, segments of vital activities are captive within and across many departments.
For any customer order, each department has the responsibility to process its part of the order as efficiently and as effectively
as possible. Various department heads are responsible for the activities within their department, which allows for good
management controls and procedures, but no one owns the overall process and the results.
Functional departments develop strong functional mindsets and will approach problems differently than other functional units.
It is difficult when departments speak different “languages,” or have conflicting goals. The functional specialists will tend to
focus on departmental matters and the immediate superior’s goals, not the customer or the industry. This describes the
creation of a silo mindset. An example of such a conflict occurs when manufacturing is trying to meet the end of the month
shipments, but quality is holding the shipments because of nonconforming product.
Galbraith (1995) describes cross functional efforts as a lateral coordination effort. Departments or functions at the same level
(lateral) should be grouped together to produce the required output. The units are all interdependent of each other, if the firm
is to succeed.
Following tips for improving subsystem integration:
Rules and procedures: everyone understands what to do
• Hierarchical referral: coordination problems go to a common superior
• Planning: objectives and targets are known by everyone
• Direct contact among managers: face-to-face contact among managers
• Liaison roles: cross trading of personnel to work in each other’s units
• Task forces and teams: people from different units on task forces
• Matrix organization: create a matrix structure for specific projects
A multitude of six sigma writers and trainers have stressed the importance of cross functional collaboration in the achievement
of six sigma objectives. This concept is also worthwhile for many other aspects of organizational improvement and rapid
customer response.

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)
Organizational Change
Business and technological changes have accelerated at an alarming rate. The world is becoming smaller, and
companies in today's environment must face global competitors in their own backyards. Customer expectations
of products and services are also increasing at the same exponential rate. What was delightful to the customer
yesterday, is now expected. A company must improve its products to meet the customers’ new expectations and
must perpetually improve operations, processes, costs, cycle time, technology, productivity, etc. In times of
change, everyone is involved in the change effort. Most managers and process owners are expected to be change
agents. The change agent role is not limited to the top leaders of the corporation.
The Change Process
The classical model for a change process consists of three phases: unfreezing, movement, and refreezing.
• Unfreezing: To the change agent, the first phase means unfreezing the existing behaviour patterns and
practices of the work group. This is where resistance to new programs appears and must be dealt with.
• Movement: The next step would be to move the people or practices to a new arrangement. This could be
accomplished through training or technology.
• Refreezing: At the proper moment in time (with the skills, technology, or practices in place) the process,
including the people, are refrozen. This is where the company wants to be. A process, procedure or
department is now aligned for optimum organizational effectiveness.
The acceleration of change in the world can be described as being in “permanent whitewater.” As soon as a
program is completed, it is time to change again. That is, unfreeze the process, move in a new direction, refreeze,
pause, and start again.

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The Fundamentals of Six Sigma – Cost of Poor Quality (COPQ) (Continued)

Typical Quality Cost Report

Advantages of a Quality Cost System

• Provides a manageable entity and a single overview of quality

• Aligns quality and company goals
• Provides a problem prioritization system and a means of measuring change
• Provides a way to distribute controllable quality costs for maximum profit
• Improves the effective use of resources
• Provides emphasis for doing the job right every time
• Helps to establish new product processes

Limitations of a Quality Cost System

• Quality cost measurement does not solve quality problems

• Quality cost reports do not suggest specific actions
• Quality costs are susceptible to short-term mismanagement
• It is often difficult to match effort and accomplishments
• Important costs may be omitted from quality cost reports
• Inappropriate costs may be included in quality cost reports
• Many quality costs are susceptible to measurement errors

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The Fundamentals of Six Sigma – Cost of Poor Quality (COPQ) (Continued)

Typical Quality Cost Report

Advantages of a Quality Cost System

• Provides a manageable entity and a single overview of quality

• Aligns quality and company goals
• Provides a problem prioritization system and a means of measuring change
• Provides a way to distribute controllable quality costs for maximum profit
• Improves the effective use of resources
• Provides emphasis for doing the job right every time
• Helps to establish new product processes

Limitations of a Quality Cost System

• Quality cost measurement does not solve quality problems

• Quality cost reports do not suggest specific actions
• Quality costs are susceptible to short-term mismanagement
• It is often difficult to match effort and accomplishments
• Important costs may be omitted from quality cost reports
• Inappropriate costs may be included in quality cost reports
• Many quality costs are susceptible to measurement errors

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)

Types of Organizational Change:

Organizations generally undergo change in four major areas: strategy, technology,

structure, and personnel.

• Strategic changes occur when the company shifts its direction and resources
toward new businesses or markets.

• Technological changes occur when the company decides that automation or

modernization of key processes are essential for overall competitiveness.

• Structural changes occur when the company undergoes a management delayering

process, or goes from a functional structure to a product structure.

• Changing the attitudes and behaviours of company personnel is often undertaken

through organizational development techniques

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)
Linking Projects to Organizational Goals
Embarking on a six sigma initiative begins with a management decision to embrace a change that says
“There’s a better way to run our organization.”
The readiness assessment includes a review of the following areas:
Assess the outlook and future path of the business:
• Is the strategy course clear for the company?
• Can we meet our financial and growth goals?
• Does our organization respond effectively to new circumstances?
Evaluate the current organizational performance:
• What are our current overall business results?
• How effectively do we meet customer requirements?
• How effectively are we operating?
Review the capacity for systems change and improvement:
• How effective are we in managing system changes?
• How well are our cross functional processes managed?
• Are our current efforts in conflict with six sigma?
The above assessment will go a long way towards deciding if current efforts are sufficient or whether the timing is
appropriate to undertake a six sigma effort. Six sigma can be applied as a targeted approach. A number of so-
called six sigma companies have improvement techniques and teams in place, and only assign black belt
assistance as needed.

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)
As described in the table, the recommended strategies dependent upon the current performance
levels are:

For a company with Low performance, the company should Concentrate on basics, Use problem
solving teams and Apply cost management and should not focus on Empowerment, Benchmarking and
Strategic planning.

For a company with Medium performance, the company should Set goals and monitor them, Use
process simplification, Use department improvement teams & Get middle management involved.

For a company with High performance, the company should Benchmark other firms, Empower
employees, Communicate strategic plans & Continuously improve.

The above discussion tells us that a pure six sigma approach achieves the best results if implemented
by high performance organizations. Medium and low performance companies should consider some
building block steps in order to take advantage of the “low hanging fruit” that can be picked with these
more basic techniques.

A decision on six sigma might be negative if the following conditions exist:

• The company already has an effective improvement effort in place
• Current changes are already overwhelming the company's resources
• The potential gains aren’t sufficient to finance the necessary investments

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Basics of Six Sigma – The Problem Solving Strategy Y = f(X)

For deployment of Six Sigma projects there are a considerable number of options,
dependent upon the goals and objectives of the organization. Considerations include:

• Focus on project cost savings

• Focus on customer satisfaction deliverables
• Focus on processes
• Focus on problems
• Focus on a targeted location
• Focus on design
• Focus on supplier processes

The typical methodology that is often followed for six sigma projects is either Define
– Measure – Analyze – Improve – Control or some variation of this approach. This
assumes that a problem facing a key business concern can be clearly defined and that
it can be addressed by data measurement and or other statistical improvement
techniques.

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