Wednesday, January 29, 2014

Six Sigma Critical Success Factors

“You can’t manage what you can’t measure.”
This axiom, while intuitive for most managers and business professionals, is often not applied to the Six Sigma management process itself. For Six Sigma or any other management initiative to yield the advertised results, many factors must be considered, aligned, measured and acted upon. Having been involved with Six Sigma since its beginnings at Motorola and later as a consultant to GE as well as dozens of other companies, I have been in a position to experience a variety of cultures and management systems and their linkage to quantitative results. While there are tremendous differences in management styles and priorities from company to company, one thing is clear: The organizations that focused on continuously measuring and driving management behaviors, including aligning initiatives and priorities, yield a much higher return on their programs than those who leave it to chance.
Consider the cost savings most often discussed in the annual reports of the best Six Sigma companies. They are usually discussing savings in a range of 2 – 3% of sales per year. At 3% of sales this adds as much as 10% per year to operating margin. Motorola reported, through their Six Sigma briefings, that savings for a 10-year period from 1985 to 1995 were $11 billion. GE in 1999 reported $2 billion in savings attributable to Six Sigma, and in their 2001 annual report discussed the completion of over 6,000 Six Sigma projects probably yielding over $3 billion in savings by conservative estimates.
Other organizations that have adopted Six Sigma have experienced far lesser amounts of financial success and organizational “buy in”. Many have Six Sigma savings in the range of 0.5% to 1.0% of sales (far less than the benchmarks mentioned above). There have even been cases where entire Six Sigma programs have been scrapped after significant investment due to low returns. How is this possible? Review of these failures and shortfalls has generally concluded that the lack of attention to the Critical Success Factors, for a sustained period of time, created a management vacuum around the program. Thus, the reactive culture that Six Sigma normally ferrets out through attention to data driven analysis returned and overcame the Six Sigma initiative. It’s human nature to revert to the old way (the comfortable way) of doing things when under stress.
The positive results don’t come easy and are driven by many factors besides management alignment. Without the statistics, the Black Belts, the projects, and the training, none of these results can be realized. But equally, the lack of alignment between people, strategy, customers and processes can quickly derail the best-intentioned initiative and quickly divert the attention of management.
Critical Success Factors and Focus
During most Six Sigma Executive and Champion training events some discussion of Critical Success Factors takes place. These discussions vary greatly in depth of coverage but usually include a variety of content on, Executive Engagement, Management Involvement, Communications, Resources, Projects, Discipline and Consequences.
Each one of these Critical Success Factors may be broken down into sub-factors to further define the actions, measurements, roles, responsibilities and behaviors that each slice of the organization must demonstrate to assure success and get significant results.
Let’s examine a few Critical Success Factors and their associated sub-factors a little more closely and for clarification.

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