Six Sigma Fits all Sizes: A lesson about how to apply the approach in a smaller service company
The following account was related to the author by Jennifer Chu, who previously worked in the marketing department of an American-based company that sells educational material and services in Hong Kong and other Asian countries. She first began working with Six Sigma at the end of 2000.
"At the end of 2000 I met the president of ABC company. He arrived late one afternoon on a beautiful Pacific island for Six Sigma Champion Training. During the conversation, I asked the president why the president decided to implement Six Sigma. The president's answer surprised me: "We need a robust and systematic tool to select and train future vice presidents for our company. Personally I donít know that much about Six Sigma, but what Iíve read so far was about focusing on customer needs, managing and improving processes, changing the companyís culture, encouraging people and, last but not least, making money. This is exactly the job of our managers."
Stimulated by the presidentís motivation, I began a two-day Champion Training that the entire Executive Board attended, including pre-nominated Black Belts with initial ideas about their process improvement projects. After two days we had a good understanding of the Six Sigma methodology, well-defined projects, highly motivated sponsors, and Black Belts who were keen to spend all their time on robust/ systematic process improvement.
Why Six Sigma?
As a Black Belt, my first project was to focus on decreasing the drop out rate of their members, the subscriber division of ABC companyís services. A year later, the author have gained his first experiences with Six Sigma, my new role as a Black Belt, and performing process improvement projects.
Looking back, here are some thoughts:
Six Sigma is first seen as our Executive development program. Our top level management is rather senior and there is a gap between our top management and local department heads. We need to develop several executives/vps in 5 years to fill this gap.
Most of our local department heads are specialists in their own line business but lack knowledge about other functions. For example, before I became a Black Belt I spent 8 years in marketing and have stayed there since joining the company. The job description of a Black Belt requires us to work on crossfunctional projects for at least the first 2 to 3 years. This requires not only leadership and communication ability, but also multifunctional disciplines. It enables Black Belts to familiarize themselves with other areas of our business.
Second, Six Sigma is used as a systematic approach to enhance our companyís strength. One of our key strengths is to respond quickly to sales/market issues. However, by responding quickly we sometimes only solved the surface problem. This means the same problem may reoccur in the same or other areas. The systematic approach of Six Sigma using tools based on processes and statistics gets to the facts, digs out the real root causes, speaks with real data and leaves no room for rumors or assumptions.
Third, Six Sigma increases net earnings. It is our company's goal to maintain our current targeted profit margins every year. This is tough work since the growth comes from three aspects: new markets, new products and "new processes". Both new markets and new products supply great opportunities for further revenue growth, however history teaches us that expecting to enter a new market every year is not realistic, nor is launching a new product every year. Six Sigma enables us to improve our processes continuously, save more, and reach our financial goals.
"Personally I don't know that much about Six Sigma, but what I've read so far was about focusing on customer needs, managing and improving processes, changing the company's culture, encouraging people and, last but not least, making money. This is exactly the job of our managers."
Most first round Black Belt projects focus on customer requirements and all Six Sigma projects are clearly related to the companyís success with well-defined business cases. This is one of the success factors of Six Sigma.
As noted earlier, my first project was to decrease the drop out rate of our Members.
First, I reviewed the data we had received with my team: The drop-out rate in our other Asian offices was 25 percent, and we were told the rate was 42 percent in Hong Kong. After further study we discovered that the real drop-off rate in Hong Kong was 32 percent. This difference demonstrates the importance of measurement methods. So, my first lesson was to be sure to get the right data in a consistent manner. If not, you will get lost and may draw wrong conclusions based on misleading data.
Second, after performing the SIPOC (Supplier-Input-Process-Output-Customer,) the high-level process map, the team found that our Members (our customers) were receiving unfriendly renewal notice letters (outputs). These letters were printed in black-and-white and were written in a bureaucratic tone. Our company prided itself on being a marketing-oriented company, but we found that we did not apply the marketing concept into other sides of our business.
This issue was added to the agenda of a focus group meeting of our Members who had dropped their memberships. The groupís first reaction toward changing this policy was very positive, so we created a new notice letter. This time, the letter was colorful and friendly. The new letter has significantly reduced the drop out rate of this process once it sent out.
As mentioned earlier, one of our purposes for implementing Six Sigma was to stimulate Black Belts to move beyond leave their specialty (i.e. Marketing) area and learn about other businesses in the company. In my case, I not only gained knowledge about our Service department, but also I could apply my specialty in the Service area.
Payment methods brought us to the analyze phase of Six Sigma. At first we were unable to collect renewal fees from members with outdated financial data. After analyzing this data further, we found that these were customers who usually paid cash upfront. Since we offer both cash and installment payment methods, we did not have their updated data at renewal time. This finding led us to create a new renewal program that allowed us not only to solve the problem but also to collect more renewal fee income.
After one year as a fulltime Black Belt in the organization, I returned to managing the Marketing department again but also remained a Black Belt. I lead my staff in the Six Sigma way, urging them to go out to the field and talk to prospects Ė the customers and sales people. The insights they have gained are much more valuable than what they achieve sitting in a cubical. The statistical tools I learned have also helped me to analyze some complicated sales problems quickly and interactively. I know now to look for the root causes, not just the symptoms of the problem, and search for a fundamental solution.
Most important, I had the chance to work with team members from various departments and different backgrounds. As a Black Belt, you do not directly gain power from your team members. You need to transfer your power to the team and motivate them to spend extra time and effort on the project apart from their already busy workload. This has become the best exercise for me to cultivate my leadership ability.