Six Sigma and Business Acumen

A common mantra in Six Sigma is to “make decisions based on data”. This is a flawed strategy that probably comes from Six Sigma’s dependence on statistical experts instead of business experts. A Six Sigma Black Belt or Master Black Belt is only as good as their business leadership skills. This is why a form test for Six Sigma certification will not work. A form test cannot measure leadership skills or business acumen. You need the full package to be effective. This is why so many Six Sigma initiatives fail. There is too much emphasis on math skills and not enough on business acumen and leadership.

Good business decisions take both data and business acumen. Data by itself can tell you what is happening, if you have measured the right things. Business acumen will enable you to measure the right things and help you to understand the “why” behind the data. Business leadership is used to lead change.
There is also the question of significance. Data can tell you statistical significance, but business acumen is required to understand practical significance. For example, a process change can produce a statistical significant shift in a product or service that is insignificant to the customer or business from a practical point of view.

To continue to be relevant to the business world, Six Sigma will have to become more business acumen and leadership focused.

You Are What You Expect

What you expect from others becomes the minimum you will accept from others.

There are certain aspects of human nature that are predictable and usable by marketers. These behaviors occur whether we are aware of them or not. One of these is shopper/customer expectation behavior. When we tell a sales person what we expect, we are really telling them the minimum acceptable performance required for us to buy. In Six Sigma this becomes a critical to quality concern.

Whether you are in sales, Six Sigma or a relationship, knowing the expectations of the other party allows you to know the minimum level of performance expected. People who operate at or below this expected level are probably going to fail.

If you what to succeed in business and have quality relationships, exceeding expectations should be your goal. In life, we cannot always control our circumstances, but we can always control our effort.

What you expect from yourself becomes the maximum effort you will put forth.

A few years back, when the Orlando Magic played the Houston Rockets for the NBA championship, the series was a blow out. The Magic had a great season and talked consistently about “playing for the championship”. They accomplished that goal, which seemed to be the target of their season. The problem is that they played poorly in the championship series and were embarrassed by being swept. They met their expectations and could go no further.

This is another one of those unconscious behaviors mentioned above. When you set expectations for yourself, you have also set a target for your effort. This is why you should not set your expectations too low, or unreasonably high. Goal setting is a progressive thing. The healthy pattern is to set expectations that you know will change once you reach them. The satisfied person is also a stationary or static person. Becoming satisfied will stop your forward momentum.

Look at it from the good, better, best approach. If you believe that “good” is good enough, you are a minimalist and failure will plague you. If you think in the better category, that just makes you average, and though you have a somewhat higher probability of success, true excellence escapes you. When you think in the best category, you have the highest probability of success and excellence comes to define your efforts.

Content vs Context

Whether you are involved in a Six Sigma Project or just talking with friends we are bombarded with information that has two components.  These are content and context. One is raw information about the “what” and the other is supporting information about the “why”.

Here is an example. A young man from Philadelphia shot and killed another man about a year ago.  This is content. The fact that he did this, as a soldier, in a fire fight in Afghanistan is context.  Content, as mentioned above, gives you the raw information and context helps you interpret the content.

When you grasp the importance of the relationship between content and context, you also begin to understand why listening skills are so important. As content information reaches your brain, contextual data is telling you how to interpret it.  As good listener will be critically analyzing the information to determine its believability, relative importance, the deliverer’s purpose, the meaning behind the words and what information is missing.

Marketers use contextual information to try to spin your interpretation of content information on everything from products and services to politics. Knowledge that this is happening and dealing with it appropriately is key to your personal success. Do you remember the Ivory Soap by line that stated that their soap was “99 % Pure”?  This is context without content. The question you should ask is 99% pure what?

In a Six Sigma project, contextual data is critical to drilling down to root causes. For example, simply pointing out that there is an increase in the defect rate of a manufacturing process is the content. Finding out that the defect rate spikes on the midnight shift when it is raining is the context. The drill down process can be represented mathematically as y=f(x)+f(x)+f(x)… . The progression from f(x) to f(x) is accomplished through the use of contextual information.

In sales, content information might be described as what product or service a shopper wants to purchase. Contextual information would be the shopper’s story, their buying motivation, budget and important product or service requirements. What this means is that as a business, you differentiate yourself from your competitors by way of context. The shopper can get the “what” from other sources. Context determines why they should get the product or service from you.

How is Your Vision?

How detailed is your vision? I’m not talking about whether or not you need glasses, but whether or not you have enough detailed information to make good decisions.

This is an issue with both business and personal decisions.  It is, in fact, why so many business process improvement initiatives fail. Six Sigma process improvement projects are meant to address this issue for businesses, but you also need a personal strategy to avoid falling prey to poor resolution (lack of detail) How many times have you decided on an action only to find that a critical, missing, detail undermined your success?  .

The problem is our reliance on two dimensional, discrete, thinking. Pass/Fail, Yes/No, Democrat/Republican, etc. Two dimensional thinking allows you to be 100% right or 100% wrong, but never partially right

A more continuous way of thinking will lead to better detail and better decisions. As detail increases, so does our ability to see problems in their true colors (resolution). What you will find is that you will move from the “what”(pass/fail), to the “why” (causal relationships).

Consider this analogy of moving from low resolution to high resolution.

At 50 miles of altitude, if you fired at a target on the ground and missed by one degree, you would miss the target by 38 miles.

At 10 miles of altitude, if you fired at a target on the ground and missed by one degree, you would miss the target by 1.74 miles.

At 5 miles of altitude, if you fired at a target on the ground and missed by one degree, you would miss the target by 2300 feet (a little less than ½ mile).

At 1000 feet of altitude, if you fired at a target and missed by one degree, you would miss the target by 3 feet.

More Detail = More Resolution = Higher Accuracy = Improved Performance

Lean Six Sigma Customer Focus

We hear all the time that we must be customer focused, but what does that mean? Let me give you the short answer.  First, you have to know who your customers are.  Second, you need to know the needs and desires of your customers. And third, you need to have a plan to meet those needs and desires.

The first mistake we typically make is to worry about who is supposed to be providing a product or service to us.  It is totally counter productive to look at your job from the prospective of who you are a customer to.  To see yourself as the customer. This is a selfish perspective that will sub-optimize your performance. Believe it or not, it will make your job harder.

You can only improve business processes by reversing the direction of your vision. You must look instead at who your customers are.  Being customer focused is at the core of every successful business and relationship. Being inwardly focused is at the core of every business failure and personal failure.

A customer is anyone to whom you provide a product or service. Basically, customers come in two flavors. Internal and external.  We typically know who our external customers are, because that is the orientation of our thinking. At the same time, though, we typically lose site of who our internal customers are.  Internal customers are those we work with.  The person in the next cubicle or another department.

To start the process of becoming customer focused, create a list of who you think your customers are (include your family and significant others). Don’t worry about being wrong, just base it upon your opinion.  Next to each customer, list what product or service you provide them.

When ready, show your listing to your customers and ask them to rate your performance.  If they are honest, you probably won’t have too many surprises. At the same time, you will probably not like what you hear. We generally know how good or bad of job we are doing.  Don’t be defensive. Just like beauty is in the eyes of the beholder, quality is in the eyes of the customer.

Once this is done, answer the following questions.

If taking care of my customer’s needs (instead of my own), in a timely and appropriate manner, became the focus of my work, what would change about my work (what would I do differently)?

If this happened, how would you measure how successful your day was?

How would your perception of “what is a good day” and “what is a bad day” change?

The profound fact here is that if everyone were to take care of their customer’s needs (internal and external), than everyone’s needs would be met. No one would feel as if they were not given appropriate support. It becomes a seamless circle where no one gets left out.

To ensure that you get what you need, you have to first ensure that your customer’s get what they need.

Designing a Business

I have been starting up a new business division in our company.  Nationwide Parts Distributors has been an inside sales business with connections dating back to 1992.  Now with the advent of Automotive Electronic Solutions, we are also a remanufacturer.

This is a completely different business model for Nationwide Parts Distributors.  We designed the work flow, defined the core competencies for each position, set up infrastructure, hired employees, and opened for business.  The ROI for the business turned out to be less than one month.

We did all of this in a new business format and performed well enough to maintain the highest possible rating with the Better Business Bureau. This is remarkable in that we avoided the typical start-up quality issues of a new business venture.

We are now in our third month of operation and have raised enough working capital to begin the process of purchasing the building we are operating in.  This will increase our valuation in the market place and reduces our monthly cost of operation.

It has been hard work managing  the changing design of the organization as we went through a steep growth curve. Even with a flexible, lean, organizational design, we have doubled the number of employees in the new business to accommodate the increase in throughput that our customers demand.

I am very proud of the team of professionals that work here at Nationwide Parts Distributors and Automotive Electronic Solutions. Their belief in the vision, and commitment to achieving it, has made it all possible.

Listening Strategies

We spend our lives being taught how to read, how to write, and how to speak. We generally have very little training on how to listen. This is big problem since listening is a top-level skill in a world where the spoken word is so important.
To understand the skills involved with listening, we need first to understand that our minds provide us with 128 bandwidth window to the universe. Any information from the outside world must enter through this window. The problem is that part of that bandwidth is used up with process functions things like I’m hot, I’m cold, I’m hungry, I need to go to the restroom. Do you remember how hard it is to pay attention to someone when you have to go to the restroom really bad?
The remaining bandwidth is used up with all of your other senses. What you see, what you smell, what you feel with your fingers. The practice of good listening involves moving these other senses to a subordinate mind function so that they are out of the way of incoming sound.
Good listening is not a simple function, although it is instinctual. Our ancestors on the savannah thousands of years ago relied on listening skills to survive. Movement in the brush could mean dinner had arrived or you were about to become dinner.
This began to change as language functions developed. The change was specific to what was being listened for: movement in the brush or fundamental language components or both. When you consider that language components also include the evaluation of emotion, the complexity of listening becomes evident. It is no longer just what is said, but how it is said.
The importance of contextual information, such as emotion, can be seen in the modern day court room. Lawyers and judges are relying more and more on reading court room transcripts to evaluate what was said and make life changing decisions. The problem is manifested in what is lost in a transcript. A transcript cannot tell you anything about tone of voice, voice inflection or emotion. To understand this problem, consider how many ways that you can say the words “shut up” and how the meaning changes with how you say it.
Listening involves several sub processes. There is the physical aspect of hearing, which is a physical process of sound waves hitting the ear drum. Listening also involves the processing of language and critically analyzing the received information. Lastly it involves formulating action. This can be a verbal response or maybe even a mechanical response such as “fight or flight”.
There are four basic listening strategies. These are “not listening”, “listening for reinforcement”, “listening with the intent to reply” and “listening with the intent to understand”.
The first strategy is “not listening”. Not listening is the process of tuning out sound coming into your brain. This is the most used listening strategy in humans. It involves tuning out one noise source in favor of another. An example might be listening to someone speak while sitting in the food court of your local shopping mall. You are selectively tuning out the noise coming from other people around you in order to selectively hear the voice of the person that you are communicating with. Not listening may seem to be a bad thing, it is actually essential to communication.
The next strategy is “listening for reinforcement”. This involves listening with little to no critical analysis. This is how you listen when you are being told what you want to hear. An example might be listening to political opinion or spin makers. Sometimes this is a listening strategy we apply when we are sitting in church. Its overriding characteristic is the lack of critical analysis. In other words, this strategy’s weakness is it failure to challenge the information that is coming into your brain in order to interpret its correctness or truthfulness. Does this sound familiar in your culture?
The third listening strategy is “listening with the intent to reply”. This is how you listen when you are emotional or in an interesting discussion. We utilize this strategy anytime we feel that what we want to say is more important than what anybody around is saying. An example of this type of listening skill would be a situation where you are arguing or you are listening defensively. You wind up subordinating the words of the people speaking to you in favor of the words you are formulating in your mind. The critical analysis applied here is not applied to the words you hear. It is applied instead to the words you want to say. This makes it very difficult to accurately get the other person’s meaning. Have you heard a person ask a question and receive an answer to a completely different question? If so, you probably witnessed someone listening with intent to reply instead of with the intent to understand.
The fourth listening strategy is “listening with the intent to understand”. Specifically, this is listening with the intent to understand more than the spoken words. This is how you listen when you watch television. Visualize how you feel when you are watching a program you are interested in on television and right at the moment that you are paying the most attention someone comes in and begins to speak to you. How does that make you feel? It probably makes you feel uncomfortable, stressed and maybe even angry.
This listening strategy involves listening between the words for meaning, truthfulness and motive. When using this strategy you are able to critically analyze the information coming into your mind. This allows you to get the speakers story, to fully understand their angle, their motivation and what their true needs and wants might be. In consultative sales for example, this type of listening is critical. You have to understand what the shopper needs, what they are afraid of, and what their potential objections are. Without this information, the sales person is not likely to close the sale.
The point to this discussion is this. Just like our ancestors on the savannah needed good listening skills to survive, we too must have good listen skills to survive. The specific strategy may have changed over the past millions of years, but the results of poor listening have not. Our ancestors might get killed by a predator if they listened poorly, we on the other hand will be used up by lies, missed opportunities and a general failure to recognize the predators in our culture.
I cannot finish this discussion without giving you a couple of ways to improve your listening skills. Here is a practice strategy that works for me. I practice evaluating what listening strategy I am using anytime I am involved in communication with another human being. Once determined, I will consciously switch to listening with the intent to understand. The idea is to understand the person speaking to me at a deeper level than they understand me. That places me in a more informed and powerful position than the other person. It also means that I am in a better position to help that person, explain my opinion or defend myself.
Another practice strategy is to go to a social function and learn as much about the people you talk to as possible, while reveling as little as possible about yourself. This exercise involves asking open ended questions that get others to talking while you listen with the intent to understand. People like to talk about themselves and you can learn a great deal about someone both by what they say and what they don’t say.
My last point. Do not misunderstand my motivation in writing this piece. The object is not to become a person who uses words to subvert others, to become a predator. Instead it comes from my desire to make a contribution to the culture in which I live. Imagine how the world would change if everyone began listening with the intent to understand.

Collecting Data

Collecting data for analysis is more than a statistical process. All of the math in the world will not compensate for not understanding the behavior of the process you are trying to measure.  Not everything is settled in numbers.  Some things will be discovered in context.  For example, “We really have problems when it is raining.”

 As a result, data collection plans embody four qualities of collected data that are essential to optimize its usefulness. These qualities have to do with the data’s ability to represent the process’ performance.

 

  • There must be sufficient data to see the process’ behavior.
  • The data must be relevant.
  • The data must be representative of the process’ normal operating conditions.
  • The data must be contextual.

 

Sufficient

There must be sufficient observations to see patterns of variation and shifting central tendency in the process’ output. As part of building a data collection plan, the team will seek to understand the process’ history so that all expected sources of variation are captured.

Consideration must also be give to the size of the performance gap that the team is trying to measure. As the size of the gap gets smaller, the number of samples needed to measure the gap, with statistical confidence, increases.

 Relevant

 The data must be relevant to the problem that is being investigated. For example, if a process associated with back injuries is being analyzed, data regarding the availability of safety glasses will likely not be relevant. The central question or objective behind the data collection plan will be to point to what data needs collected.

 The data must also be relevant to an important business metric. Since data collection is an expensive process, the project team should give due diligence to verifying the relevance of the data that they want to collect. The buy-in of stakeholders and process owners will waver if they discover that the team’s focus has drifted away from the central core of the project.

 Representative

 The data must represent the entire range of actual operating conditions of the process. For example, if checkout cycle times are being studied, data must representative of all levels of customer loading.

 Operating conditions can include a multitude of factors. Some examples are the time of day, sales or promotions, experience of employees, changes in process inputs, and so forth. The smart project team will brainstorm a list of the potential factors that must be considered when building the data collection plan.

 Contextual

 Contextual information pertains to conditions that surround, but are not part of, the process and can affect its performance. By collecting this information, we add relevance to the data. For example, if the checkout cycle time was longer than usual on a given day, you may also wish to know how many cashiers were on duty, what the customers were buying, and weather conditions. This sheds light on how the process behaves under various conditions.

 Summary

 To keep cost down and improve the story telling ability of data, a comprehensive data collection plan will be needed. Process owner participation will improve the quality of the plan. Owners of peripheral processes will also make a valuable contribution since they are not directly involved in the process improvement effort (forest or trees effect).

Variation Analysis

Variation

 First, remember that not all variation is bad. Planned variation, like that in an experiment, is a process improvement strategy. Unplanned variation, on the other hand, is nearly always bad.

 Two types of variation concern a process improvement team. These are common cause and special cause variation. All processes will have common cause variation. This variation is a normal part of the process (noise). It demonstrates the process’ true capability. Special cause variation on the other hand is not normal to the process. It is the result of exceptions in the process’ environment or inputs.

In a process improvement project, the first step is to eliminate special causes of variation and the second is to reduce common cause variation. Eliminating special causes of variation brings the process into a state of control and exposes the sources of common cause variation.

 Common Cause Variation

 Common cause variation is intrinsic to the process. It is random in nature and has predictable magnitude. Process noise is another name for it. An example would be the variation in your travel time to work everyday, with the absence of accidental, mechanical, or weather-related delays. When a process is expressing only common cause variation, its true capability for satisfying the customer is discernable. In this circumstance, the process is in control. Note that being in statistical control does not mean that the process is meeting customer expectations. The process could be precisely inaccurate.

 Continuing with the travel time example above, one source of common cause variation would be the typical ebb and flow of traffic on your route to work. Remember from the Define Phase that Y = f(x1 + x2 + … + xn). In the example, Y is the travel time and each x is an input that contributes to travel time; examples of x might include time of day or the day of week.

 Special Cause variation

 Special cause variation is the variation that is not a normal part of process noise. When special cause variation is present, it means that something about the process has changed. Special cause variation has a specific, identifiable cause. An example of special cause variation would be the effect of an accident or a mechanical problem on your travel time to work.

 Special cause variation is the first focus of process improvement efforts. When special cause variation exists, it is not possible to determine the process’ true capability to satisfy the customer. This is due to the effect that special cause variation has on inferences about central tendency (average) and standard deviation (spread in the data).

 Statisticians have developed specific control chart tests that describe the presence, timing, and behavior of various special cause variation components. These tests point out the impact of variation on the process’ output.

 Standard Deviation

 Process improvement teams use statistics to describe datasets and to make predictions about the future based on past events. Two important data characteristics used in descriptive statistics are standard deviation and central tendency (average, mean).

 Standard deviation is the measure of the dispersion or spread of a dataset. It is one of the more important parameters in statistical analysis. There are different ways to measure this parameter. Some of these are:

 Range: This is the difference between the largest and the smallest observation in a dataset. The range has a variety of uses, including the calculation of control chart control limits. In a normally distributed dataset, with no special cause variation, the range divided by six is an estimate of standard deviation. This is because 99 percent of the observations in a normally distributed dataset, with no special cause variation, fall within ±3 standard deviations from the mean. If the presence of special cause variation is unknown, divide the range by four. Th