It is just as important to know when and why you shouldn’t.
You should not implement Six Sigma in your company if your senior management is not fully convinced of its business worth. Unless the entire management team is not only accepting of its goals, but actively involved in helping to achieve them, Six Sigma will not succeed. Six Sigma doesn’t only change the way products are produced; a successful implementation significantly impacts the way a firm thinks about doing business. For a lot of companies, that kind of radical change can be scary, particularly for front-line workers who see business process initiatives as nothing more than a move to downsize them.
Why projects fail
Six Sigma projects fail because senior management isn’t truly committed to doing what needs to be done for them to succeed. And it can’t be mere lip-service commitment. When that happens, the initiative becomes a training exercise personified by poorly conceived, poorly supported and randomly implemented projects, rather than an effort to drive strategic results with properly supported projects based on relevant business cases. Training a cadre of Six Sigma practitioners can be expensive. A big expense with no focus on results yields little to no returns.
But if the focus and commitment is there, starting at the highest levels of the organization, Six Sigma can have a tremendous impact on the way your company does business in a relatively short period of time. The most sensitive variable in the equation may not be the cost or the time, but the return on the investment (ROI) itself.
ROI can be broken into hard and soft savings, with hard savings being those that are more easily traceable to actual cash. Reduced waste or headcount reductions are hard savings. Soft savings are those that are less “bankable,” such as cycle time improvements.
Hard savings calculations are easier to compute. If you’ve reduced waste by 25 percent, you can easily figure out how much your company has saved in reduced time and materials used. By contrast, figuring out the benefits from soft savings can be far more difficult. How do you calculate the savings from developing a streamlined method for performing an accounting chore, or from instituting new procedures that listen and respond to the voice of your customers more quickly and accurately—an improvement that keeps them from going across the street to your competitor? These soft savings are far tougher to calculate, but if you don’t factor them into your bottom line, you disregard a significant source of benefits that shows the true value of your implementation.
Being tasked with a Six Sigma deployment that isn’t fully supported by management presents its own set of challenges. If you find yourself in that position, scale back your expenses and identify several projects capable of quickly producing clearly definable results. Enlist the support of as many senior managers as you can. By driving results on those projects while maintaining low expenses, you can ensure a higher ROI that can be marketed internally to gain the senior support needed to ensure success of a larger expenditure.
Enlist support
Another way to win the support of senior management is to enlist your chief financial officer and your finance team as partners and co-owners of the deployment rather than simply as scorekeepers. If they understand the value of and have a stake in the results, they are far more likely to act as both key validators of your project’s worth as well as influencers.
You may be convinced of Six Sigma’s worth, but unless you can convince the executive suite, you’re not going to achieve full value. Getting senior management on your side by involving them in key activities and showing them the positive impact Six Sigma can have on the way you do business, will give you the leverage you need to proceed and truly make a difference.
John Lopez-Ona, [email protected], is president of the consulting company Six Sigma Qualtec.
