Six Sigma promises a path for a firm’s long-term success. However, a company cannot really have this Six Sigma journey without the road running through the marketing department. It is through the deployment into marketing that Six Sigma evolves into a strategic process. The synergy between “good marketing” and “good Six Sigma” creates a holistic strategy for a Six Sigma practitioner.
Often, marketing is one of the last functions to which firms apply Six Sigma methods. One of the reasons for this delay has been the difficulty in applying Six Sigma principles to marketing. Six Sigma has always required some adaptations to fit in new functions. However, with marketing and business development, these changes are more fundamental. The adaptations needed to use the method in marketing, while challenging, ultimately help Six Sigma to become a strategic driver for the organization – a means of function integration and new business development, as well as the global basis of continuous improvement.
Making Four Adaptations
The application of Six Sigma to marketing involves changing the method’s basic function. In particular, companies using Six Sigma in marketing must make four key adaptations:
- Focusing on customer value
- Providing a competitive view
- Emphasisizing communications
- Designing in change
All four of these adaptations enrich the Six Sigma approach – not only in its application to marketing, but also as it is used throughout the organization. In fact, these adaptations make Six Sigma the guiding principle for the growth-oriented firm.
Focusing on Customer Value
Customer value has always been the keynote to quality, although it has sometimes been deemphasized in favor of product consistency, exceeding product specifications and cost reduction. These three key objectives of Six Sigma still remain, but the true value of them lies in the underlying enhancement of customer value. The key insight from marketing is the refocus of quality efforts on the needs and desires of existing and potential customers.
Traditionally, when building a quality function deployment (QFD), the “first house of quality” reflects the connection between the marketplace and the business improvement. In the past, practitioners may have thought of the first house of quality in the same way as the other relationships (houses), representing processes and outcomes that form the QFD. However, with marketing, that first house of quality is far more complicated; it relates the total value up and down the supply chain. In the business-to-business environment, this supply chain has linkage running from basic material producers all the way to the ultimate users.
The supply or value chain involves all forms of value-generating functions within the firm and beyond it. Probably the most critical of the value findings is the diversity of customer needs and desires. There is no simple statement of value. Whether the value is computed normatively, based on economics, or measured as a perceived utility, those values are dispersed. The market has multiple sets of values, always providing the basis of opportunity. The Six Sigma deployment must reflect that diversity by building strength and flexibility into the products and services that the firm offers. This opportunity is often captured by the concept of market segments, where each segment represents a group of potential customers with differing values.
The Competitive Environment
Differences in market value are evident in the existence of competing products. If all customer values were the same, only a single highest-valued product would be in the marketplace. The existence of competitors indicates those differences.
Six Sigma activities traditionally have been internally focused. Quality in the Six Sigma realm is usually defined by performance compared to specifications, but not typically against market competition. Once an organization enters the marketplace, however, it faces the competitive environment, and quality becomes a competitive element rather than an objective ideal. Customers purchase multiple products and different customers prefer different vendors, even among those vendors that practice Six Sigma. Different competitors appear to be able to each “exceed the expectations” of different customers. Each may be offering quality in a different form, in different levels of performance and in consistency. This is particularly important to understand when new products are introduced.
Competition, however, focuses not only on the product’s physical characteristics, but also on both services and image. Branding is a real phenomenon. Quality, in this regard, is a perception as well as a process. The firm’s image, in terms of its brand, reflects its “position” – that is, its competitive characteristics, including price, brand and product performance. This position is as much a quality issue as is product performance and consistency. The concept of positioning is obtained from marketing. Positioning provides the external metrics for defining quality and performance in the competitive environment. The goal here is to build, improve and maintain competitive advantage. That advantage is then based on Six Sigma principles.
Quality is not merely what quality does – it is also what people think quality is. That perception is obtained through communications. Without communications, customers do not know what your product is, nor what your quality is. The value of quality comes from not only how it affects the process and the products, but also how it affects the firm and product image. Communication is critical.
Black Belts may have trouble with this concept, but from a marketing perspective, “All truths are perceptions.” While this may be an overstatement, the reverse must be accepted, in that without the perception of high quality, quality itself has far less value in the marketplace.
Driving and Enabling Change
With marketing comes a focus on new products and market development. Marketing is the basis by which a firm’s business grows, either through organic development based on existing products and markets, or through radically new businesses. Marketing, in this way, is the “change agent” for the firm.
Quality applied to marketing must likewise accept the change environment. While there is nothing within Six Sigma that limits it to achieving small, singular improvements, the methodology tends to favor incremential progress. Six Sigma has generally favored applications to established processes and, therefore, established products and customers.
Marketing, on the other hand, must favor growth and change. It is the basis for the flourishing of firms, if not their very survival. There is an accepted truism in business that “90 percent of new business comes from existing customers.” While that may be the case, in the long run the survival of the firm comes from its new products and markets. That 10 percent of new customers and applications builds quickly and often represents the totality of the earnings of a firm within a few years.
The consequence of the need for change leads Six Sigma into the task of building in quality. That is, organizations need to refocus their Six Sigma efforts onto the inclusion of quality in the design of products and marketing activities, rather than imposing quality on products and services. Quality itself becomes the product, targeted at providing customer value and enhancing outcomes.
Toward a Strategic Six Sigma
The integration of the four principles described here into the Six Sigma process greatly reinforces its strategic role. Not only does Six Sigma continue to provide the improvement environment for practitioners, but it also can lead to the improvement of the entire business. Making these adjustments helps to converge Six Sigma’s tools for process improvement with the strategic tools of business development. This combination greatly expands the scope of Six Sigma and the responsibilities of its practitioners.