What is Six Sigma?

Six Sigma aims for virtually error free business performance

The Six Sigma standard of 3.4 problems per million

opportunities is a response to the increasing expectations
of customers and the increased complexity of modern
products and processes.

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• A Japanese firm took over a Motorola Quasar
television factory in the 1970’s and soon was
producing TVs with 1/20th of the defects as
had been done under Motorola management.

• It took unit the mid 1980’s for Motorola to

figure out how to do about it themselves.

• In 1988 Motorola won the Malcolm Baldridge

quality award in 1988 (and the world
discovered their secret.)
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Quality, defined traditionally, is a conformance to
internal standards or requirements, and has little to
do with Six Sigma.

Six Sigma is about helping the organization to make

more money by improving customer value and
efficiency

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Quality comes in two flavors-
- potential quality
- actual quality

Potential quality is the known maximum

possible value added per unit of input.

Actual quality is the current value added

per unit of input.

The difference between potential and

actual quality is waste.

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By applying the scientific method over a period
of years you will develop a deep
understanding of what makes your customer
and your business tick.

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In Six Sigma organizations the result is that political
influence is minimized and a “show me the data”
attitude prevails.

Leads us to come to the conclusion:

Most of what you know is wrong!

(about what you think is happening in your business)

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 Just Do it!
The Six Sigma organization needs to decide
when enough information has been obtained
concerning a problem to warrant taking a
particular course of action

Six Sigma leadership is very hardnosed when is

comes to spending the shareholders dollars.

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Once a level of confidence is achieved,
management must direct the Black Belt to
move from –
Analysis Phase to the Improve Phase
or from -
Improve Phase to the Control Phase

Projects are closed and resources moved to new

projects as quickly as possible.

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More information isn't always better

There are usually a half dozen or so

measurements that really matter

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 The Dark Side
• Some parts of the organization don’t lend
themselves to scientific rigor.
• For example, R&D involves a good deal of
creative thinking.
• Cutting edge research is necessarily trial and
error and requires a high tolerance for failure.
• Secondly, some companies obsess on Six
Sigma to the exclusion of other important
aspects of the business.
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Some of the most important things are
unmeasured and immeasurable.

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Six Sigma organizations proactively embrace
change by explicitly incorporating change into
their management systems.

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“Don't spend money on things that
customers don’t care about.”

Ben Shapiro HBS

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 Change Agents
Change is difficult, disruptive, expensive and a
major cause of error.

There are four times when change most readily

can be made by the leader

1. When the leader is new on the job

2. Receives new training
3. Has new technology
4. Outside pressure demands change
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 Change Agents
• Official Change Agent (Champions)
• Sponsors - senior leaders with authority
• Advocates - initiates the process by convincing
sponsors
• Informal Change Agents - very important, but
cannot make the change happen on their own.

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 Steps to Implementation
1. Senior leadership is committed
2. Rigorous systems are developed for data
3. Training needs are assessed and addressed
4. Framework for continuous improvement is
developed
5. Processes are chosen by management &
others intimate with the process
6. Projects are conducted
(simple but not easy) 16
 Leadership

Needs to come from the CEO

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 Expected Returns
Company with 1000 ee’s
Master Black Belts: 1
Black Belts: 10
Projects: 50-70 (5-7 per Black Belt)
Estimated saving: $9 Million to 14.6 million
(i.e. $14,580 savings per ee)

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Six Sigma is all about non-routine activity:

Improve
Increase
Eliminate
Breakthrough

Challenging to do in any environment, nearly

impossible in an enterprise focused on routine
assignments.
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 Significant Stakeholder Groups
• Key customers
• Shareholders or other owners
• Senior leadership
• Middle management
• Six Sigma change agents
• The general employee population
• Suppliers

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2/3 of managers are overloaded by information in their
jobs.
TQM implantations fail mostly due to faulty infrastructure.
In order to assess the needs of an organizations culture is
by focus groups and written questionnaire.
The typical time that green belts actually spend on a
project in a given year is 80-90%.

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 The Big “Y’
In six sigma work results are known as “Ys” and root causes
are known as “Xs”.
Six sigma’s roots are technical and its originators generally
came from engineering and scientific backgrounds. the
transfer function is the way the “Xs” are converted to “Ys”:
Y = f(X)
There can be many levels of dashboards encountered
between the top level Y (called the Big “Y”) and the root
cause X’s.
Intermediate results are sometimes called Little Ys”
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Six sigma seeks to reduce mistakes by a factor of 10
every 2 years

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 What are some learning models?

DMAIC
PDCA
The first steps in these models are definitional
It is not possible to create a learning model
without defining the goal of the model

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 Attributes of Good Metrics 8 Steps
Performance Measurement Model:
Step 1: Performance Category – sources include our
strategic vision, core competencies or mission statement.
Step 2: Performance Goal – an operational definition of the
performance category and provides a target.
Step 3: Performance Indicator – critical measures only,
sweep aside irrelevant measures.
Step 4: Elements of Measure – what is actually measured.

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Attributes of Good Metrics 8 Steps
• Step 5: Parameters – external considerations that
affect measurement.
• Step 6: Means of Measurement – how-to action
statement that ties together the preceding steps.
• Step 7: Notional Metrics – Allows everyone to agree
on how the gathered info will be applied to
measuring performance.
• Step 8: Specific Metrics – What the data mean or
how the affect the organization.

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Benchmarking:

Method for developing requirements and setting goals.

Measure your performance against that of best in class

companies (may be your competitors, maybe not).

Is this good?

Who does Tiger Woods benchmark?

Tom Brady? Steve Jobs?
You?
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Why benchmarking can fail:

Lots of reasons in the text-

(sets artificial boundaries)

Most important- focus on metrics and not

processes (means that the process can change)

Learning from others and not developing new

internal improved approaches. 31