“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.
Critical Success Factor – Executive Engagement
Critical Success Factor – Communications
Critical Success Factor – Projects
The documentation of these Critical Success Factors and their sub-factors is merely a first step in the process of assuring their implementation and making them a permanent part of a company’s culture and operating system. There is also the issue of assuring their effectiveness and use by the appropriate members of the target organization. Traditional methods of monitoring management behaviors have been largely subjective. There are systems that use Scorecards with red, yellow and green indicators. Still others that simply use check lists. It has occurred to many of us involved in Six Sigma that a better and more quantitative method for measuring, aligning and closing gaps in management performance and behavior are needed. Especially considering that Six Sigma requires fact and data based decision making and performance enhancement.
The Power of Alignment
A good friend and author George Labovitz introduced me to the concept of Organizational Alignment several years ago. In his book, The Power of Alignment (John Wiley & Sons, 1998), he presents a compelling case for the need for Organizational Alignment and highlights 30 years of research connecting alignment to success.
The basis of his alignment concept is to collect a large sample of data from the various layers of an organization based around a series of factors and sub-factors. The data is objective in that instead of asking people how they “think they are doing with their own work,” you ask employees and management how the organization is doing with its work around a set of specific statements. That data is referenced to a quantitative scale (0-7 for example) and the sub-factors are defined in such a way that the responses may be “drilled,” demographically sorted, summarized and analyzed.
When this data is statistically analyzed and displayed many strengths, weaknesses and gaps can be visually displayed. Because George was a fighter pilot for the United States Air Force he likes to look at things from the perspective of a “target.” Applying this to management alignment, his preferred display was one that plotted a “numerical gap analysis” on a radar type of chart. The closer that the scores are toward the middle of the target, the tighter the alignment and the higher the probability of success. The United States Navy and Federal Express, to mention a couple of companies, have used the concept successfully.
Application to Six Sigma
While using this tool several years ago it seemed that this would be a great application and tool to measure, monitor and improve both the alignment and behaviors of an organization implementing Six Sigma. In “troubleshooting” issues with a Six Sigma deployment, imagine if you had a database with responses from hundreds or even thousands of employees. Imagine if you had statistical data that showed you that “Black Belts were adequately trained in all appropriate skills”, “Senior Management was engaged” but “Champions were not.” Then you could sort by Division or Plant to see if the behaviors were Company wide or isolated. This example illustrates how an organization could effectively drive very pointed actions over time using this concept.
With the proliferation of web based tools, measuring, managing and improving with data has become easier and much more efficient. If your organization, large or small, has a Six Sigma program in place, you should be measuring your return on investment (ROI) and determining whether or not it is achieving the benchmark levels mentioned at the beginning of this article. If it’s not, consider what your Six Sigma Critical Success Factors are, and ask how you are doing against them. Further, ask how you are measuring them and using them to drive optimization. I guarantee that if you are not getting benchmark results from your Six Sigma process, the definition, management and optimization of the Critical Success Factors are the place to look.