Farhatullah-DiscussionCase4

StrategicSixSigma.pdf

Home >Business & Finance homework help >Operations Management homework help >Farhatullah-DiscussionCase4

Focus Take-Aways

Rating (10 is best)

Overall Applicability Innovation Style

To purchase individual Abstracts, personal subscriptions or corporate solutions, visit our Web site at www.getAbstract.com or call us at our U.S. offi ce (954-359-4070) or Switzerland offi ce (+41-41-367-5151). getAbstract is an Internet-based knowledge rating service and publisher of book Abstracts. getAbstract maintains complete editorial responsibility for all parts of this Abstract. The respective copyrights of authors and publishers are acknowledged. All rights reserved. No part of this abstract may be reproduced or transmitted in any form or by any means, electronic, photocopying, or otherwise, without prior written permission of getAbstract Ltd (Switzerland).

Strategic Six Sigma

Best Practices From The Executive Suite

by Dick Smith and Jerry Blakeslee with Richard Koonce

303 pages

Leadership

Strategy

Sales & Marketing

Corporate Finance

Human Resources

Technology

Production & Logistics

Small Business

Economics & Politics

Industries & Regions

Career Development

Personal Finance

Self Improvement

Ideas & Trends

• Most companies adopt Six Sigma to improve operational performance.

• Many companies undertaking Six Sigma are unaware of its strategic implications.

• Corporations like GE, Dow Chemical and Lockheed Martin have recognized the

strategic power of the Six Sigma methodology.

• As corporate leaders experience the transforming power of Six Sigma, they frequently

move to expand it throughout their organizations.

• In order to reap the full benefi ts of Six Sigma, it should be integrated into the strategic

planning process.

• Strategic Six Sigma drives organizational change and aligns all aspects of a business

with the overriding goal of exceeding customer expectations.

• Within this framework, Strategic Six Sigma encourages executives to view business

units as interdependent processes designed to serve customers, not as silos.

• Strategic Six Sigma requires strong and committed support from the top.

• It’s not uncommon to encounter organizational resistance to Six Sigma.

• Strategic Six Sigma is a full-time, ongoing initiative.

9 10 9 9

This document is restricted to the personal use of Sherrica Dean ([email protected])

LoginContext[cu=3871551,asp=4749,subs=2,free=0,lo=en,co=US] 2018-01-21 19:01:21 CET

Relevance

What You Will Learn

In this Abstract you will learn: 1) How Six Sigma can be used to improve business

strategy in the same way that it’s used to better operational performance; 2) How to apply

Six Sigma to your company on both an operational and strategic basis, and 3) Specifi c

techniques for use in integrating Six Sigma methodology into your strategic planning.

Recommendation

Dick Smith, Jerry Blakeslee and Richard Koonce demonstrate that the Six Sigma

methodology can and should be applied to the highest levels of strategic planning. The

authors illustrate how the rigors of Six Sigma can improve your performance in terms

of overall strategy, growth and customer satisfaction in the same way that it streamlines

operations on a production fl oor. getAbstract.com strongly recommends this book to

business leaders, executives and managers, all of whom will benefi t from its hands-on

advice for integrating the tenets of Six Sigma into corporate strategy.

Abstract

The Sixth Business Sense

In the mid-1980s, in the bustling manufacturing days of the Motorola Company, an idea

was born. It was a new notion of how to cut costs, improve processes and accelerate

product cycles. The new methodology that arose from this thinking, which relied on sta-

tistical measures of quality improvement, has become known across the business world

by the phrase, Six Sigma. Six Sigma helps companies streamline the operational aspects

of their businesses and improve their bottom lines. Today, however, business leaders are

employing Six Sigma as a high-order leadership tool that enables them to:

• Formulate new business strategies or implement existing ones;

• Respond to increasingly challenging consumer expectations;

• Facilitate mergers & acquisitions;

• Promote the adoption and implementation of e-business ventures;

• Accelerate revenue growth;

• Drive innovation;

• Push systemic and sustainable culture change;

• Manage fi nancial reporting and business risk.

Six Sigma has evolved into a vehicle for transforming organizations through the deploy-

ment and implementation of corporate strategies. Former General Electric icon Jack Welch,

for example, states that Six Sigma has “changed the DNA” of GE. Honeywell CEO Larry

Bossidy credited Six Sigma with increasing productivity by six percent per year “forever.”

With such powerful advocates in the corporate domain, small wonder the true strategic

power of Six Sigma is now being fully appreciated.

Performance Improvement

The events of September 11, 2001, will cost global companies in excess of $150 billion.

Hundreds of companies were forced to declare Chapter 11 bankruptcy. Experts say that a

“Many years ago,

legendary man-

agement consul-

tant and author

Peter Drucker

remarked that the

purpose of busi-

ness is to create a

satisfi ed customer.

By adopting Stra-

tegic Six Sigma

practices and prin-

ciples within your

organization, you

can do exactly that

— and create

robust quality sys-

tems in the pro-

cess.”

This document is restricted to the personal use of Sherrica Dean ([email protected])

LoginContext[cu=3871551,asp=4749,subs=2,free=0,lo=en,co=US] 2018-01-21 19:01:21 CET

quality system failure in the U.S. intelligence system was partly to blame for the tragedy.

There are many other examples of quality failures and their associated risks and costs.

Consider the Chernobyl nuclear disaster. According to the Ukrainian Health Ministry,

that disaster is now responsible for taking some 125,000 lives and striking 3.5 million

people ill. Closer to home, the Challenger space shuttle disaster and the Bridgestone/

Firestone/Ford tire failures illustrate the unacceptable costs of letting quality slip. Today,

failure is not an option.

The key to maximizing performance and avoiding quality setbacks is the creation of

an effective quality system — an enterprise-wide framework of carefully managed pro-

cesses designed to ensure that the consumer’s demands are met and that the profi tability

of the business is preserved. Such systems must provide for accurate performance mea-

surement, a task that is accomplished by applying Strategic Six Sigma principles and

practices. There are four basic steps:

1. Measuring the conformance of the enterprise to customer requirements;

2. Establishing processes that will reduce variations that lead to failures in conforming

to customer requirements;

3. Developing new products and services designed to better meet customer and market

requirements;

4. Repeating steps 1-3 continuously.

You can use Six Sigma to improve performance incrementally and improve quality,

or to enhance and integrate the strategic approaches that lead to corporate success.

It is this strategic implementation of Six Sigma that will be increasingly critical to

corporate achievement in coming years. Strategic Six Sigma can support globaliza-

tion, M&A activity, e-business planning and development, supply chain re-design,

enhanced customer relationship management, management of emerging technologies

and much more.

The Rocky Road To Six Sigma

To ensure that your company actually reaps the benefi ts that Six Sigma can provide,

you must get beyond the transactional level in your implementation. The transactional

level encompasses all the spaces in which everyday work is accomplished: the systems,

technologies, interactions, exchanges, transactions, processes and management practices

through which your business is conducted. Of course, you’ll need to pay a considerable

amount of attention to the transactional aspects of your company. But enhanced Six

Sigma implementation goes further.

While companies can derive substantial productivity increases through careful atten-

tion to their transactional processes, applying Six Sigma to the transformational level,

which includes culture, strategy, leadership, mission statements and vision, can re-create

an entire company. The gains that can be achieved at this level far exceed incremental

improvements available at the operational level. Experience has shown that deployment

of the Six Sigma initiative is the key to success. Toward that end, you should:

1. Build a committed leadership team. Six Sigma can’t depend on just one person. It

takes a strong community of leaders at all levels within an organization to drive ini-

tiatives forward. Failure to create this guiding coalition for change is likely to derail

even the most sincere effort.

“Six Sigma is

about delivering

value to share-

holders. It is all

about driving

results.”

“The senior lead-

ership team must

own, measure and

improve the lead-

ership processes

in any company.”

“It needs the

heartfelt involve-

ment of a dedi-

cated cadre of Six

Sigma leaders

both to champion

Six Sigma im-

provement targets

and to break down

organizational

resistance and

roadblocks to their

achievement.”

This document is restricted to the personal use of Sherrica Dean ([email protected])

LoginContext[cu=3871551,asp=4749,subs=2,free=0,lo=en,co=US] 2018-01-21 19:01:21 CET

2. Merge Six Sigma with strategic planning. An organization’s strategic planning

and deployment must be integrated with Six Sigma. Even today, many companies

have a haphazard commitment to strategic planning. Frankly, turf wars and confl ict-

ing agendas among the senior executive teams of many companies make strategic

planning a political football. Introducing Six Sigma into the planning process can

enhance its clarity and direction.

3. Encourage a passion for communicating with customers. It is important to take a

consistent, disciplined approach toward your communication with customers. Cus-

tomer intelligence should not be anecdotal. Critical customer requirements must be

known and quantitatively measurable.

4. Re-design the business along a process framework. Don’t fall into the trap of view-

ing your business as a series of independent silos or functions. You must bridge the

gap between existing business activities and view them as a family of interrelated

processes that must be synchronized and aligned to support overall enterprise goals.

5. Develop quantifi able measures and demand tangible results. You have to agree on the

metrics that will determine whether you’re headed in the right direction.

6. Establish incentives and reward performance. Metrics only measure where you are

now. By themselves, they cannot change where you’re going. Incentives and rewards

are important in actually changing the behaviors of individual workers, as they

embrace new values and attitudes such as team-based projects.

7. Recognize the need for full-time commitment. Many companies fail with Six Sigma

because they don’t fully staff the project with the right internal leaders to effectively

implement and manage Six Sigma processes over time. You need to dedicate the best

possible individuals to the mission of transformational change.

Overcoming Organizational Resistance

Larry Bossidy of Honeywell and Jack Welch of GE both experienced resistance to Six

Sigma implementation within their organizations, so don’t be surprised if it happens to you,

too. Welch resorted to outright arm twisting, insisting that without certain levels of training

no one would be considered for a management job. Bossidy adopted similar standards.

Welch experienced pushback from employees when trying to integrate Six Sigma thinking

into daily business activities. The level of resistance became apparent when Welch asked

senior GE managers to send their most promising employees to Black Belt school — the

highest level of Six Sigma training. No one wanted to give up the best managers; all senior-

level executives had their own goals to meet and wanted to retain their brightest people.

Welch estimates that less than half of the early Black Belt candidates were really the best

and the brightest — the others were basically stand-ins. Only persistent and emphatic pres-

sure from the very top — in GE’s case from Welch himself — can overcome pushback.

Of course, not every company has a Jack Welch to propel it along. For the rest of us, the

best tool for toppling organizational resistance is a committed team of leaders who can

establish a sense of urgency that cascades through the ranks of the organization. Start by

generating some short-term project success stories that buttress Six Sigma thinking.

Six Sigma Strategy

Six Sigma has a powerful impact on the strategic level when companies merge it into

their strategic planning and rollout function. This ambitious undertaking involves align-

“There’s no way

we can overstate

the importance of

leaders building

strong employee

commitment to

Strategic Six

Sigma at every

level.”

“A growing number

of companies

today are begin-

ning to realize the

full, strategic impli-

cations of Six

Sigma, especially

as an engine to

accelerate corpo-

rate strategy and

organizational

transformation.”

“Some companies,

including GE, Hon-

eywell and Ray-

theon, are already

taking a strategic

approach to their

use of Six Sigma,

using it to integrate

their business

strategies and to

support the

achievement of

near-term as well

as longer-term

business objec-

tives.”

This document is restricted to the personal use of Sherrica Dean ([email protected])

LoginContext[cu=3871551,asp=4749,subs=2,free=0,lo=en,co=US] 2018-01-21 19:01:21 CET

ing the core business processes with the needs of markets and customers, systematically

eliminating defects from existing products and services, designing new processes, and

implementing a new infrastructure and leadership system. If you think of Six Sigma not

merely as a process improvement system, but also as a catalyst for change, you’ll have a

better perspective of its strategic implications. Among its strategic benefi ts:

• Defi nition of Key Performance Metrics. Six Sigma will help the organization defi ne

both the core enterprise issues it faces and the key performance metrics that will

measure the organization’s success.

• Prioritizing Specifi c Improvement Projects. Most business leaders say, “This Six

Sigma thing has to pay its own way.” Some projects, the proverbial low-hanging

fruit, involve quick results and immediate payoffs. Others are more long-term. One

step is critical: assigning specifi c fi nancial goals to each Six Sigma project that an

organization undertakes.

• Aligning the company leadership with the projects at hand. You’ll need deployment

champions in place who can help bust through organizational roadblocks and bottle-

necks at the divisional and regional levels. One of the keys to Six Sigma success is

rapid deployment of Six Sigma professionals throughout the organization.

• Enhancing communication with customers and the marketplace. Many companies

fail to understand their customers because they assume they already do. Others don’t

distinguish between short-term and long-term customer satisfaction. Still others have

good data, but don’t share the data within the organization, keeping it bottled up in

silos where it is ineffective.

A successful Strategic Six Sigma implementation can create a fi nely honed organiza-

tional machine whose core businesses are so aligned to the marketplace that they con-

sistently meet or exceed customer expectations. Six Sigma becomes not so much a

destination as a continual road leading to successful results, as companies build an ongo-

ing business process framework to sustain the Strategic Six Sigma momentum.

About The Authors

Dick Smith is the Partner-in-Charge of IBM Business Consulting Services Six Sigma

Center of Excellence. He has over a dozen years experience in consulting on strategy,

change management, and process consulting. Jerry Blakeslee was one of the architects of

the IBM Business Consulting Services Six Sigma approach and serves as a Partner in the

Six Sigma Center of Excellence, providing Six Sigma business transformation services

to a broad range of organizations. Richard Koonce, the author of three previous books,

is a senior contract consultant to IBM Business Consulting Services and a nationally

recognized expert on job and workplace trends.

Buzz-Words

Black belt / Strategic Six Sigma / Transactional / Transformational

“As organizations

everywhere are

forced to do more

with less, to trim

costs while grow-

ing profi ts, and to

move quickly in

new business

directions, Strate-

gic Six Sigma

thinking and best

practices will play

a growing role.”

“Strategic Six

Sigma is a vehicle

to help you a-

chieve your busi-

ness destiny. It will

forever transform

your company,

your customers,

your people and

your processes.”

This document is restricted to the personal use of Sherrica Dean ([email protected])

LoginContext[cu=3871551,asp=4749,subs=2,free=0,lo=en,co=US] 2018-01-21 19:01:21 CET