Archive for the ‘Leading Six Sigma’ Category

How to Give a Great Presentation

Thursday, October 1st, 2009

The Purpose of a Presentation

Unlike a meeting where all in attendance are expected to contribute and participate, a presentation involves a speaker who is trying to communicate with an audience.  There are two common reasons why a person might want to address an audience:

  1. To inform or educate them.  This is the purpose of business presentations, training classes, technical reports, and so on.  The speaker discusses, explains, describes events or ideas or teaches the audience how to do something.  This type of presentation often involves audio-visual aids such as charts, graphs, recordings, video presentations or computer presentations.  Success is defined by an audience leaving with more knowledge than they had when they arrived.
  1. To convince or persuade them.  The audience may have an understanding of a particular topic but lack the desire to change.  The speaker’s goal is to get the audience to take a certain type of action.  In these presentations the speaker may seek to generate an emotional response rather than communicating factual data.  Success is accomplished when the action is taken.

An old saw on speaking states that there are three steps involved in a presentation, 1) tell them what you’re going to tell them, 2) tell them, 3) tell them what you told them.  The effective speaker understands that he or she must provide the audience with a compelling reason for attending the presentation.  Thus, the focus of preparation should be the audience, not the speaker.  The beginning of the presentation should summarize the content of the presentation and explain why the audience should be interested.  The body of the presentation should present the information in a way that is clear, entertaining, and concise.  The ending should review the major points of the presentation and solicit the desired audience response (e.g., ask the audience to provide resources for a project).

Preparing the Presentation

Many speakers find it difficult to organize their presentations.  Here are a few guidelines that the author has found helpful.

  1. Prepare a list of every topic you want to cover.  Don’t be selective or critical at this point, write down everything that comes to mind.  When you have finished, take some time off, then do it again.
  2. Cull the list to those select few ideas that are most important.  You should try to keep the list of major ideas down to three or less.  Where possible, group the remaining points as subtopics under the key ideas.  Eliminate the rest.
  3. Number your points.  The numbers help the listener understand and remember the points.  Numbers set the point apart and help with retention.  For example, “there are three reasons why we should proceed: first, lower cost; second, higher quality; and third, improved customer satisfaction.”  However, keep the number of items small; a speaker who announces “I have fifteen items to discuss” will frighten the audience.
  4. Organize the presentation’s ideas. Some speech experts recommend the “buildup” approach: good ideas first, better ideas next, best points last.
  5. Analyze each major point.  Tell the audience why the point is important to them.  Make the presentation relevant and entertaining.

Visual Aids

A visual aid in a speech is a pictorial used by a speaker to convey an idea.  Well designed visual aids add power to a presentation by showing the idea more clearly and easily than words alone.  Whereas only 10% of presented material is retained from a verbal presentation after 3 days, 65% is retained when the verbal presentation is accompanied by a visual aid. ASQ reports that poor quality visuals generate more negative comment from conference attendees than any other item.  The visual aid must be easy for everyone to see.  Small type which cannot be read from the back row of the room defeats the purpose of the visual aid.  There should be good contrast between the text and the background color.  Visuals should have text that is large enough to see easily from the worst seat in the house.  The speaker must also reevaluate the visuals when the room size changes.  A presentation that is perfectly acceptable to a group of 30 may be completely inadequate for a group of 300.

Color plays an important role in the design of effective visuals, if used properly.  However, the improper use of color can make visuals ugly.  Most computer software for preparing presentations comes with preset color schemes.  Unless you have some skill and training in designing visuals, it is recommended that you use one of the schemes or contact a graphic artist.

Here are a few rules recommended by ASQ for effective visual aids:

  • Never read the slide!
  • Each visual should address only one idea.
  • Only the most important points should be the subject of a visual.
  • The visual should be in landscape format.
  • The maximum viewing distance should be less than 8 times the height of the projected image.
  • The original artwork should be readable from a distance 8 times the height of the original; e.g., a 8” x 10” visual should be readable from 64” away.
  • Use no more than 5 lines on a single visual with 7 or fewer words per line.  Ideally, 20 words maximum per visual.
  • Bar charts should have no more than 5 vertical columns.
  • Tables should have no more than 4-6 columns.
  • Graphs should have only 2-3 curves.
  • Lines on charts or in tables should be heavy.
  • Avoid sub-bullet points whenever possible.  Use “build slides” instead.
  • Show each slide for 1.5 minutes maximum, e.g., 10 slides for a 15 minute presentation.
  • Put a black slide on the screen when you want to divert attention back to yourself. (Hint: Pressing the “B” key while showing a Power Point slide will toggle between the slide and a black screen.)
  • Spacing between words should be approximately the width of the letter “n.”
  • Spacing between lines should be 75% of the height of the letters, or double-spaced.
  • Use sans-serif fonts (e.g., H) instead of serif-fonts (e.g., H).
  • Use both upper case and lower case letters.
  • Avoid italics.  Use bold lettering for emphasis.
  • Maintain consistency in type size and fonts.  The minimum letter height should be at least 1/25 the height of artwork (approximately 24 point type).  Labels on graphics should be at least 1/50 the size of the artwork.
  • Never use hand-written or typed slides.
  • Maintain at least a 1” margin on all sides.
  • Recommended background colors (white lettering): deep blue, deep green, deep maroon or black.  Use yellow lettering for highlighting text.

Position and Movement

When using visual aids it is sometimes necessary to darken the room.  However, the speaker should never be in the dark  The visual presentation supports the speaker, it should not be allowed to replace him.  The speaker must always be the most important object in the room.  If the lights must be lowered, arrange to have a small light on yourself, such as a podium light.
When using visual aids a right-handed speaker usually stands to the left of the visual and directs the attention of the audience to the material.  If using a pointer the speaker may stand to either side.  Never stand in front of the material you are presenting to the audience.  Direct the eye of the viewer to the particular portion of the visual that you are emphasizing, don’t just wave at the visual in a random manner.  Layout the visual so that the viewer’s eye moves in a natural flow from topic to topic.
Speak to the audience, not to the screen.  Always face the audience.  A microphone may make your speech audible when you face away from the audience, but it is still bad form to turn your back on the audience.

Charts, Graphs and Data Presentation

Line and bar graphs are an effective way to convey numerical data at a glance.  People understand things they see more quickly than things they hear.  The eye is more effective in gathering and storing information than the ear.  Auditory stimuli is presented and processed sequentially, one word at a time.  Visual information is presented simultaneously.  This is part of the reason why visuals are so effective at displaying patterns.
Business and industry are number-driven entities.   Much of the information presented in meetings is numerical.  Many, perhaps most decisions rely on numbers.  The effective use of graphs makes numbers easier to assimilate and understand.  In most cases, one of three types of graph can be used: line graph, bar graph, and scatter plot.  There are endless refinements on these basic three, e.g., multiple lines, grouped or stacked bars, stratified scatter plots.  Line graphs are most often used to display time-series data (care must be taken to standardize time-series data, e.g., using constant dollars to correct for inflation).  Bar charts are used most often to compare different items or classifications to one another.   Scatter plots examine the association between two variables.
Regardless of the type of graph being used, it is important that the graphic have integrity, i.e., it must accurately portray the data.  In his book The Visual Display of Quantitative Information Tufte lists six principles that enhance graphical integrity:

  1. The representation of numbers, as physically measured on the surface of the graphic itself, should be directly proportional to the numerical quantities represented.
  2. Clear, detailed and thorough labeling should be used to defeat graphical distortion and ambiguity.  Write out explanations of the data on the graphic itself. Label important events in the data.
  3. Show data variation, not design variation.
  4. In time-series displays of money, deflated and standardized units are nearly always better than nominal money units.
  5. The number of information carrying (variable) dimensions depicted should not exceed the number of dimensions in the data.
  6. Graphics must not quote data out of context.
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American Kaizen

Monday, September 28th, 2009

In the 1980s it was much in fashion to compare America to Japan. One of the key differences between the two nation’s approaches was that Japanese were much more likely to embrace a strategy of gradual, continuous improvement. Americans more-or-less lurched forward. We would start out with a sizable lead in some area, then wait until it was clear that we’d fallen behind. At that point we would rally the troops and quickly implement a set of innovations that would once again put us in the lead. Then the cycle would repeat itself.

An example of this was Sputnik. The USSR surprised the world, including the USA, by being the first nation to put a satellite in orbit. I was only 9 at the time but I distinctly remember people in the neighborhood looking skyward with telescopes and binoculars to catch a nighttime glimpse of the small, man made orb passing overhead. It captured mankind’s imagination. And it demonstrated clearly that America had fallen behind.

The American response was to dramatically increase spending in science and mathematics education, defense, and space research. President John F. Kennedy declared a national goal of landing a man on the moon and returning him safely to earth. The improvement project was on. And, of course, it worked. To be sure, the space program as well as education in math and science continued, but improvement never again reached the rates of the 1960s.

In 1986, Masaaki Imai established the Kaizen Institute to help Western companies introduce kaizen concepts, systems and tools. That same year, he published his book on Japanese management, Kaizen: The Key to Japan’s Competitive Success. This best-selling book has since been translated into 14 languages. Kaizen means ongoing improvement involving everybody, without spending much money. It occupies a space between innovation and maintaining the status-quo (see Figure 1.) In an interview 11 years later Imai said “Many companies still have not fully embraced the kaizen concept.”

Kaizen

Kaizen

Figure 1-Kaizen

Kaizen is widely used in Japanese firms. Toyota is known to use the approach to engage its entire workforce in the ongoing quest for improvement. Most of the improvements wrought by Kaizen are small, but they add up. American firms pay lip service to improvement, but they failed to embrace Kaizen for well over a decade. This lack of interest in Kaizen in America could well have been due to America’s lack of interest in improvement that was “ongoing,” we want things fast! Enter the “Kaizen Blitz.”

Kaizen Event

The Kaizen Blitz, more commonly known as a Kaizen Event, is usually a five day affair that addresses a particular issue. The Lean Six Sigma Kaizen event usually follows the Define-Measure-Analyze-Improve-Control (DMAIC) format. The issues that are addressed are usually those identified during an initial Lean deployment to a value stream. The Lean team creates a value stream that is as lean as possible for the moment, then identifies obstacles to moving closer to one piece flow. These obstacles, such as long changeover times, quality defects, equipment limitations, etc. are targets for Kaizen Events. The Kaizen Event combines several well-known improvement approaches into one:

  • Workout. GE’s workout was designed to identify quick ways to streamline a process. The Kaizen event follows what amounts to a Lean “workout” in the sense that obvious improvements in flow have already been made. However, a first step in a Kaizen event is to list other obvious ways to improve the process. These improvement activities are made immediately or assigned to an individual or group.
  • Just-do projects. These are improvements where it is obvious what needs to change, but it takes time and resources to make the changes.
  • Six Sigma projects. These are improvements where the desired goals are known, but the means of accomplishing these goals are unclear. The Six Sigma skill set of a Black Belt or Green Belt is needed to link the goal (Y) to the root causes that will accomplish it (Xs) via a transfer function (Y=f(x).)

What’s missing here is the original idea of Kaizen: gradual, continuous improvement. Still, I’m all for improvement any way I can get it. And in America the Kaizen event has caught on in a big way.

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Getting Your First Six Sigma Gig

Monday, September 21st, 2009

Since I started teaching students online a year ago I’ve encountered something new: students trying to get into Six Sigma for the first time. This obviously wasn’t a problem when I was training clients whose employers were getting them trained specifically to use the approach in their organizations. I write this for those of you who are trained in Lean Six Sigma and are in the situation that you are not working for an employer who gives you the chance to practice your newly acquired skills.

Newly trained Six Sigma Belts without experience face a situation similar to that of newly graduated college students. This site contains some great tips on writing a resume when you have no experience.

However, nearly all of you have a big advantage: you have a lot of job experience. And much of your experience is closely related to Six Sigma. Many of you have led project teams, quality improvement teams, or other work teams. This is, of course, a big part of Six Sigma work. Play it up in your resumes!

You can also try finding projects where you can enhance your resumes by actually applying what you’re learning in your training. I’ve done pro bono work for community hospitals and charities such as Goodwill and Red Cross. Some of my self-study students are working with their physicians offices to reduce errors and improve efficiency. Others are working with church groups to help improve attendance at churches or church events, lower costs, or improve the satisfaction of those who attend. My guess is that few churches wouldn’t be interested in Six Sigma projects to increase collections!

The most important thing to realize is that you have an extremely useful skill set. Be bold and confident when you approach your prospective “client” for a project. Six Sigma has been proclaimed by management guru Jack Welch as the most significant management innovation in the past quarter century. You’re learning about an approach that few know and nearly everyone can benefit from. You’ll be surprised at how much fun it can be, and how productive. Finally, this stuff really works! You’ll soon find that your skills are soon in more and more demand. After all, the supply of processes that need to be improved is infinite!

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Selecting Winning Projects

Wednesday, September 16th, 2009

Software helps select the best projects.

In a previous column I discussed how Six Sigma projects should be selected using the theory of constraints (TOC). After attempting to do so, most discover yet another constraint: money. In most organizations there are more opportunities for improvement than one can afford to pursue. If it isn’t money, some other resource will be in short supply, such as talent. And as if that weren’t bad enough, the task is further complicated by uncertainty of the payoff from the projects and their probability of success.

An exciting computer software product known as Crystal Ball Pro by Decisioneering makes it possible to select winning projects by factoring in all of the relevant factors. It does so by simulating various scenarios thousands of times, then choosing those that perform best.

For example, the research and development group of a major public utility has identified eight possible Six Sigma projects. A net present value analysis has computed:

  • The expected revenue for each project, if it’s successful
  • Its estimated probability of success
  • Its required initial investment

Using these figures, the finance manager has computed the expected return and the expected profit for each project. Unfortunately, the available budget is only $2 million, and selecting all projects would require a total initial investment of $2.8 million. Thus, the objective is to determine which projects will maximize the total expected profit while staying within the budget limitation. Complicating this decision is the fact that both the expected revenue and success rates are highly uncertain. Figure 1 shows a spreadsheet model for this problem.

Figure 1: Project Selection Spreadsheet

The decision variables in column H are binary; that is, they can only assume the values zero (do not fund the project) and one (fund the project.) The assumption variables are in the “Expected Revenue” and “Success Rate” columns. Crystal Ball Pro will use simulation to evaluate a range of values for these two columns. The total profit, shown in cell G19, is a forecast variable whose values depend on the assumption and decision variables. The idea is to find the combination of projects (determined by the decision variables) that maximize total profit, taking into account the variation in expected revenue and the probability of success.

The project selection spreadsheet isn’t quite good enough given that the number of possible sets of projects is too large to identify by trial-and-error. Crystal Ball Pro can help here too. It includes a
program, called OptQuest, which will perform a search to find the optimal package of projects (see Figure 2).

Figure 2: Progress Toward a Solution

The best solution OptQuest found (in a search that I limited to 10 minutes) is to fund all projects except 3 and 5 (see Figure 3). The expected net profit is $1.54 million. Note that the distribution of total profit includes a number of scenarios that would result in a net loss. This occurs because OptQuest was asked to find the solution that maximized expected (average) total profit, but it can limit searches to profitable software solutions too.

Figure 3: Results
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Project Selection – Getting a good one!

Thursday, September 3rd, 2009

Bersbach Consulting LLC provides Six Sigma training coaching and support across Arizona, including the Tucson, Phoenix, Scottsdale, and Glendale areas. At this time we would like to thank our friends and clients for their support. If you have landed here looking for our Six Sigma training, coaching or support services in Tucson, then please follow this Six Sigma Training link.


Project selection is critical to project success.  To insure you have the right project let me give you nine areas that you should think about and if any you do not have then I’d find another that has all nine as they ALL are important.

  1. Project Sponsorship – The project needs a High Level individual that is committed to seeing this project completed. Not just interested but a real need for him/her to see success.
  2. Benefits – You need to make sure you have well defined and measurable benefits agreed upon by you your team and your sponsor.
  3. Available Resources – You do not have a crystal ball so at this point you will not know all the resources that you will use but you do have an idea of some of the resource that it will take. Make sure that they will be available during the project when you need them.
  4. Scope in terms of your (the black belt) effort – Do you have the time to do the project and will it return a big enough benefit for your level of expertise.  This is really asking will it take to much of your time and you will need other Black Belt help or is it something that is a “go do project” that really does not need your Six Sigma Expertise to accomplish.
  5. Deliverables – Have the things that you need to accomplish well defined. This is not the benefits but the things you have to put in place to get the benefits. Think of this as the vision of the state you are trying to achieve.
  6. Time to Complete defined – Usually for a Black Belt project it should take more than 3 months but less than 12. Like some else said if the project is to big, break into pieces and make your first project one piece. BUT avoid making the problem a “Job”. You have to complete hand off and move on.
  7. Team – Do you have a true cross functional team? What I mean is do you have someone from every function that works the process you are trying to improve.
  8. Project Charter – This is where you have the project well defined. As mentioned by other if you do not have this you will not succeed.
  9. Approach Value – Like the Scope in terms of your effort ask yourself if this project really needs a Six Sigma approach to solve? Or can a group just go do it. Usually if the project has been suggested by someone who understands Six Sigma it will be and will need the DMAIC process to solve. But I have projects given to me to “Clean the lab”. In reality they just did not have time themselves to clean it. So hire someone to do that for less than you make and you use your talents on a project fitting them.

Well I hope that is help.

Good luck! Let me know if I can help any more.

Peter Bersbach

If your business is located anywhere in the World including the US, Tucson, Oro Valley , Oracle, Phoenix, Glendale, and Scottsdale, Marana, Green Valley Arizona or beyond and you would like to learn more about our Six Sigma training, coaching and support services please call  Bersbach Consulting LLC at 1-520-829-0090  Now!

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Six Sigma, Lean, and Lean Six Sigma

Monday, August 24th, 2009

Which process improvement approach is right for you and your needs?

People sometimes ask me to explain the difference between lean production and six sigma. The question is usually phrased something like, “Should I use six sigma or lean production methods to improve my operations?” Before I tell you my answer, let me provide a brief background on these different approaches to process improvement.

Lean production is based on the Toyota Production System and usually includes the elements shown in Figure 1. When properly implemented, a lean production system can dramatically improve productivity (by as much as 95 percent when compared with traditional batch-and-queue production systems).

Figure 1: Elements of Lean Production

Lean production dates back to the post-World War II era in Japan. It was developed by Taiichi Ohno, a Toyota production executive, in response to a number of problems that plagued Japanese industry. The main problem was that of high-variety production, required to serve the domestic Japanese market. Mass-production techniques, which were developed by Henry Ford to economically produce long runs of identical products, were ill-suited to Toyota’s situation. The lean approach (the term “lean” was coined in the early 1990s by MIT researchers) systematically minimizes waste–called muda–in the value stream. Muda includes all types of defective work, not just defective products. Wasted time, motion and materials are also muda.

OK, so how does this relate to six sigma? To make a valid comparison, we need a new definition of quality itself. By defining quality in terms of value rather than in terms of defects, we can see that six sigma quality involves a search for ways to reduce muda . I propose the following definition for six sigma:

  • A general approach to reducing muda in any environment
  • A collection of simple and sophisticated methods for analyzing complex cause-and-effect relationships
  • A means of discovering opportunities for improvement

The lean approach offers a set of solutions to muda in a high-variety production environment. Six sigma applies to the problems addressed by lean but also seeks to solve other problems common to production. However, because both six sigma and lean address the problem of muda, there is a great deal of overlap. The approaches should be viewed as complements to one another. Some examples of this synergism are shown in Table 1.

Table 1: The Synergy of Six Sigma and Lean Production

If you’re facing a situation where lean solutions can be used (e.g., high-variety production), you shouldn’t hesitate to implement lean: It offers proven solutions to known problems. Six sigma methods will help you with lean, and they will help you continue to improve when it’s time to move into administrative and other nonproduction areas.

Lean Six Sigma

A quick review of the above should make it clear that there is a natural affinity between Lean and Six Sigma. This has been incorporated into a single approach to business improvement: lean six sigma. Lean Six Sigma takes parts of Lean and parts of Six Sigma and puts them together in a single, integrated approach to achieving process excellence. Organizations can move from Lean or Six Sigma to Lean Six Sigma, or they can simply introduce Lean Six Sigma from the outset. If an organization is just starting the journey to excellence, I recommend the following:

  1. Begin with Lean. Identify value streams for the most important product families and move these as closely as practical to one piece flow based on pull systems.
  2. Examine the improved value streams to determine where obstacles exist to moving closer to one piece flow. These obstacles will generally be caused by excessive setup or changeover times, information flow issues, excessive variation, and other forms of muda.
    • Decide how best to deal with each obstacle on an issue-by-issue basis. Some can be remedied by “just do” projects, others by Kaizen events, others by routine continuous improvement activities, and still others by applying Lean Six Sigma

Of course, for most organizations conducting these improvement activities will require a complete transformation in the culture of the organization. But that’s the topic for another post!

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How Six Sigma Can Help With Marketing

Monday, August 17th, 2009

Marketing is a process. Six Sigma is an approach for achieving process excellence. It will help you improve the marketing process by providing tools & techniques for identifying what the marketing process is, including suppliers, inputs, process steps, outputs, and customers. Six Sigma helps you understand the need to determine who owns the process and helps the process owner determine how to improve it. It provides a framework for improving all aspects of this process. It does much more as well. I recommend you enroll and take a week to look around the training site. If it looks like a good value to you, stay in the course and become a Certified Six Sigma Black Belt or Green Belt.

The converse is also true, marketing can help Six Sigma. Both marketing and Six Sigma focus on customers. Marketing is a management discipline dedicated to understanding customer demands, how to design products meet them, and how to let potential customers know what’s available. In Six Sigma training for Black Belts and Green Belts we teach a number of tools that are borrowed directly from marketing, such as the analytic hierarchical process, quality function deployment and Pugh matrices. Master Blacks use conjoint analysis, a quasi-designed experiment approach to measuring customer importance weights. Design for Six Sigma is all about integrating the design process across marketing, engineering, and production to better meet implicit and explicit customer demands.

Beyond the technical tools, when Six Sigma or Lean Six Sigma is well done it begins with understanding what customers are solving for, then helping them achieve their goals by improving the processes you use to provide them with service. This is truly an integration of marketing and Six Sigma.

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Quality, Costs, and Six Sigma

Monday, August 10th, 2009

Six sigma isn’t just about quality for quality’s sake.

Your employer, Peerless Systems, acquired Acme International for its technology. But your leaders want more than just Acme’s technology; they also want Acme to be successful in its own right. But Acme has problems. Acme, it seems, is still operated as a traditional three-sigma company. Peerless has long since moved to six sigma and beyond, and you played an important role in making that happen. Your new challenge is to lead Acme from three sigma to six sigma. It’s what you’ve been waiting for your entire career–welcome to senior leadership!

You bring your staff together to establish a baseline. Bob, the vice-president of marketing, says, “We’re losing customers due to poor quality, and our competitors are killing us on price.”

Ann, your director of quality, is next. “When Bob told us about the quality problems, we increased inspection and testing, ” she says. “Field failures dropped, but (of course) costs increased.”

Figure 1: Cost and Value of Quality

Lorraine, vice-president of finance, shows Figure 1. “My staff and I believe that the customer places a certain value on quality,” she states. “At first, our quality was too low, and the customer wouldn’t buy our products. When we improved our quality, we also increased our costs, but the customer wouldn’t pay the higher prices we had to charge. We’ve found that profitability is maximized when total cost of poor quality is about 25 percent of sales. The problem is that there is very little profit, even at that cost level.”

This all has a familiar ring to you. You know that the typical three-sigma company spends about 25 percent of each sales dollar on the cost of poor quality. Before starting the six sigma journey, Peerless was in similar shape. You’ve prepared the slide shown in Figure 2 to illustrate the difference between three-sigma and six-sigma quality for your staff.

Figure 2: Three Sigma Profits
vs. Six Sigma Profits


“Right now, our business is only capable of operating at a level equivalent to about three-sigma quality,” you explain. “Trying to get better quality out of our existing systems only adds costs. We must develop new systems that deliver better quality and lower costs simultaneously. We need six sigma systems.”

You go on to describe the differences between six sigma systems and three sigma systems, and the importance of six sigma to Acme. You tell them that six sigma is not a destination, but a journey of continuous improvement. Of course, Acme won’t go from three sigma to six sigma in one big jump. Instead, overall performance will move from three sigma to four sigma, then to five sigma and so on as people are trained and systems redesigned and improved. Figure 3 illustrates the expected progress toward six sigma.

Figure 3: The Journey to Six Sigma

You summarize by telling your staff that six sigma is not about quality for the sake of quality; it is about providing better value to customers, investors and employees. Paraphrasing the Chinese philosopher Lao-tzu, you announce, “Six sigma is a journey of a thousand miles. Creating a roadmap that links customer satisfaction, quality and costs is the first step.”

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How to Integrate Six Sigma and Innovation

Monday, August 3rd, 2009

To make your customers truly happy, you must go beyond six sigma.

Some people, including me, believe that garden variety six sigma doesn’t go far enough. In fact, even zero defects falls short. Defining quality as only the lack of nonconforming product reflects a limited view of quality. Of course, that was never Motorola’s intent when it invented the Six Sigma program. However, the misinterpretation prevails.

Progressive people in the six sigma camp move beyond defining quality in terms of defects and defectives. This group looks for critical-to-quality (CTQ) characteristics in a product or service. CTQ features are those that customers expect and consider explicitly when evaluating product or service quality. A product or service that doesn’t provide the CTQ features that customers expect suffers lower customer satisfaction. But even this definition isn’t enough. The problem is illustrated by the Kano model of customer satisfaction (see Figure).

Garden variety six sigma only addresses two-thirds of the Kano model: Basic Quality features and Expected Quality features. When six sigma addresses nonconformances and defects, it’s focusing on the Basic Quality curve in the Kano model. When these items are handled perfectly, the result is a customer who is not dissatisfied. This is certainly important, but “not dissatisfied” is hardly a rousing endorsement of a product or service.

Six sigma activities that seek to identify CTQ characteristics address the portion of the Kano model on and below the line labeled “Expected Quality.” If all CTQ characteristics are properly produced, the result will be a satisfied customer. Important, of course, but is it enough to simply satisfy the customer?

Even perfection in these areas won’t ensure that the organization remains viable in the long term. The Competitive Pressure curve on the Kano model indicates that market forces will make today’s expected quality features tomorrow’s basic quality features. Long-term success requires the customer to be excited by unexpected innovations provided by a company’s products and services: Continued survival requires that your organization continuously innovate. Innovation is the result of creative activity, not of analysis. Creativity can’t be achieved “by the numbers.” In fact, excessive attention to a rigorous process such as six sigma actually detracts from creativity. The creative organization is one that exhibits variability, resource redundancy, quirky design and slack. It’s vital that the organization keep the Six Sigma Management Paradox in mind: To attain six sigma performance, we must minimize process variability, slack and redundancy by building variability, slack and redundancy into our organizations.

The key is to keep human enterprises and processes separate. You can encourage creativity in your company if you:

  • Celebrate failure. Most innovations fail to produce the hoped-for progress. Management must not only tolerate valiant efforts that fail, but they must also make it clear that such efforts are valued.
  • Create quality time. Set aside a specified block of time each day or each week for creative activity. During this quality time, people aren’t allowed to spend time on routine work; they must focus instead on how they can improve products, processes or service. When I owned Quality America a number of years ago, I designated the last hour of each day “Quality Hour.” I believe that Quality Hour helped us more than double our sales without the need for additional personnel, not a bad return on investment for an investment equal to 12.5 percent of payroll!
  • Reduce procedure protocols . Although process control and quality control bring better products at lower costs, these control systems also inhibit experimentation and innovation. Quality professionals should study existing systems to determine how little control is absolutely necessary to protect the customer and the brand.
  • Mass DOE education. Statistical design of experiments (DOE) is a complex and advanced subject area. But it is possible to develop easy-to-use DOE systems that everyone can use. For example, quality engineers can develop spreadsheets that allow employees to easily evaluate two-level experiments for three or four factors simultaneously. By working with information systems departments, we can help everyone get access to the data they need to determine which areas require improvement and to monitor the results of their experiments.
  • Utilize undesigned experiments. Despite the fact that DOE is the method of choice, we can learn a lot from ad hoc changes to processes. By allowing people to experiment without getting permission, we increase variability and increase the chance that we’ll learn something. We must establish guidelines to protect the customer and to protect the employee from reprisal should things not go as hoped.

These ideas can work in practice. Send me e-mail to let me know what suggestions you have for helping organizations become more innovative. If I get a sufficient number of responses, I will print them in a future column.

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Why Six Sigma is an All-Or-None Proposition

Monday, July 27th, 2009

A “toe in the water” approach won’t always tell you if six sigma will work.

Recently some prospective clients asked me for a demonstration project to help them determine if six sigma would be a good idea at their company. I advised them against it. Such a demonstration only shows management’s lack of commitment to the success of six sigma. Although philosophical issues are important, there are more concrete problems with such “toe in the water” projects. In particular, major quality improvements can sometimes yield little or no bottom-line cost impact. The result of such projects is to convince management that six sigma adds cost without adding value. This belief is, of course, totally wrong. But it’s also a logical result of the demonstration approach itself.

For example, Sam was a six sigma enthusiast. He’d studied its use at several major companies and was convinced that it would save his company, which we’ll call Acme, millions of dollars. The hype had also caught the attention of the senior leadership at Sam’s company. But before diving headlong into six sigma, they wanted Sam to conduct a demonstration project to see if the savings reported by the press could actually be obtained at Acme.

The company’s main product was a complex assembly, which Acme sold to a large aerospace customer. The assembly- manufacturing process was in statistical control and producing an average of 10 defects per assembly. With management’s support, Sam documented the cost of noncompliance to be about $1,000 per assembly. After months of diligent effort, Sam’s six sigma team was able to redesign the process. To their delight, they were able to reduce the number of defects per assembly by a full 50 percent, from 10 defects per assembly to five.

Management was also interested in the project. But the accounting department had carefully monitored the costs for the assemblies, and to everyone’s surprise, accounting found only a minuscule 0.7-percent cost savings.

Based on these results, leadership’s conclusion was simple: Quality doesn’t pay. The company won’t pursue six sigma any further.

Did accounting make a mistake? In a word, no. The problem arose because Sam measured quality as defects. The truth is that most costs are incurred because of defectives rather than because of defects. (Thanks to Mikel Harry of the Six Sigma Academy for this insight.) A defective is a unit of product or service that contains one or more defects. Whether a unit contains one defect or several is irrelevant. Customers generally react to defective units by returning them for warranty repair, refunds or other options. Internally, defective units must be identified through costly inspection and then routed through equally costly rework processes, or else scrapped entirely. A unit with one defect costs nearly as much as one with several.

Mathematically, the Poisson distribution describes the relationship between defects and defectives. The equation for the Poisson distribution is

In the equation, x represents the number of defects in the sample, and P(x) means the probability of finding x defects. For example, P(1) is the probability of finding one defect. The symbol μ is the average number of defects per unit of product or service. For Sam’s project, the average assembly had 10 defects before six sigma was applied, so μ = 10. The efforts of the six sigma team reduced the average number of defects per assembly to 5, for a 50 percent improvement in quality.

Let’s plug these numbers into the equation and see what happens. Because we are interested in the probability of an assembly being defect-free, we want to know P(0) for each of the two quality levels. Before six sigma, with μ = 10 we get

In other words, there were virtually no defect-free circuit assemblies before applying six sigma methodologies. After applying six sigma, the probability of getting a defect-free assembly at Acme was

Thus, a 50-percent improvement in the quality level as measured in defects produces only a 0.7-percent improvement in the number of defect-free circuit assemblies. A complete graph of this relationship is shown in Figure 1.

Figure 1-Quality Improvement vs. Cost Savings

The real cost-reduction benefits only start to appear when quality reaches very high levels. This relationship explains the commonly observed phenomenon of quality programs not paying off in the short term. Only when companies stick with it long enough to begin to approach six sigma quality levels do they get the desired results. Too often, “toe in the water” projects scare companies out of the pool before they even start to swim.

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