Diamond Finance Consulting

Best Practices from the Executive Suite

By Dick Smith and Jerry Blakeslee with Richard Koonce John Wiley & Sons, 2002 $29.95

The quality improvement philosophy known as Six Sigma came into vogue in the mid-1990s, when it was successfully applied at AlliedSignal, General Electric and Motorola. GE CEO Jack Welch boasted that Six Sigma has become part of GE'S DNA. In their book Strategic Six Sigma, authors Dick Smith and Jerry Blakeslee (with writer Richard Koonce) analyze how firms have applied the Six Sigma approach not only to manufacturing processes but also to research, customer service and other functions.

Smith and Blakeslee, both partners in PricewaterhouseCoopers Consulting's Center of Excellence for Six Sigma Services, define Six Sigma as a process that measures "how well a business process, product or service is meeting the requirements of the marketplace." If a company figures out how to quantify the occurrence of defects, it can work toward reducing the number. "Six Sigma has come to mean falling to meet a customer requirement only 3.4 times out of a million opportunities," say Smith and Blakeslee.

The push to adopt Six Sigma principles comes from the top--typically a CEO or other top executive. Implementing Six Sigma often requires assistance from outside specialists.

But the push to integrate Six Sigma into the corporate culture must come from within. Here are some steps to take:

* Build a committed leadership team. The Six Sigma approach needs to have a strong contingent of boosters throughout all levels of the organization.

* Integrate principles into the organization's strategic planning process. One of the key improvements Six Sigma brings is focusing organizational planning on results, which minimizes the outbreak of turf wars. "Business leaders become personally involved in generating annual key improvement goals and an active portfolio to achieve these goals," the authors write.

* Ensure that the company is passionate about staying in touch with customers. This means developing a disciplined approach to tracking customer satisfaction. "Customer intelligence should not be anecdotal, because the critical customer requirements must be quantitatively known and measurable," say Smith and Blakeslee.

* Design, organize and run the organization using a business process framework. The authors say this means viewing an organization not as a set of silos, but rather "a family of interrelated processes."

* Develop quantifiable measures, then demand results.

* Establish a system of incentives and accountability. This requires the involvement of HR to rework job descriptions, provide training and facilitate communication between workgroups.

* Staff the Six Sigma initiative appropriately. The authors say companies with successful Six Sigma programs dedicate 2 percent to 3 percent of their workforce to full-time positions driving Six Sigma improvements.

"Make Six Sigma leadership and skills training an integral part of your company's leadership development programs and succession planning efforts," the authors recommend.

In addition to handling the critical recruiting and compensation functions, HR must take a leadership role in training and knowledge sharing. "Training programs need to be continuously updated and refreshed," say Smith and Blakeslee, "to remain relevant and aligned to the business."

To receive Diamond Finance regularly, send an email to info@diamondfinance.info or go to subscribe
Copyright © 2008 Diamond Finance - Last modified: 11/23/08