Thursday, January 5, 2017

Six Sigma-An Application of scientific methods to business processes

Six Sigma is an application of the scientific method to the design and operation of management systems and business processes which enables employees to deliver greatest value to customers and

The scientific method works as follows:

  1. Observe some important aspect of the market place or your business
  2. Develop a tentative explanation or hypothesis consistent with your business
  3. Based on your hypothesis make predictions
  4. Test your predictions by conducting experiments or making further careful observations. Record your observations. Modify your hypothesis based on new facts. If variation exist, use statistical tools to help you separate signal from noise.
  5. Repeat steps 3 and 4 until there are no discrepancies between hypothesis and the results from expectations or observations. 
By applying the scientific method over a period of years you will develop a deep understanding of what makes your customer and your business tick.

The Six Sigma philosophy focuses the attention of everyone on the stakeholders for whom the enterprise exists. It is a cause-and-effect mentality. Well-designed management systems and business processes operated by happy employees cause customers and owners to be satisfied or delighted. Of course, none of is what they already do. What distinguishes the traditional approach from Six Sigma is the degree of rigor.

Action oriented approach

Six Sigma organizations are not academic institutions. They compete in the fast-paced world of business and they don't have the luxury of taking years to study all aspects of a problem before deciding on a course of action. A valuable skill for the leader of a Six Sigma enterprise, or for the sponsor of a Six Sigma  project, is to decide when enough information has been obtained to warrant taking a particular course of action and moving on. Six Sigma leadership is very hard-nosed when it comes to spending the shareholder's money and project research tends to be tightly focused on delivering information useful for management decision-making. Once a level of confidence is achieved, management must direct the Black Belt to move the project from the Analyze phase to the Improve phase, or from the  Improve phase to the Control phase. Projects are closed and resources moved to new projects as quickly as possible.
    Six Sigma organizations are not infallible, they  make their share of mistakes and miss some opportunities they might have found had they taken time to explore more possibilities. Still, they make fewer mistakes that their traditional counterparts and scholarly research has shown that they perform significantly better in long run.

Focus on a few things that matter most

Six Sigma activities focus on the few things that matter most to three key constituencies:
  • Customers, 
  • Shareholders, and 
  • Employees
The primary focus is on customers, but shareholder interests are not far behind. The requirements of these two groups are determined using scientific methods, of course. But the science of identifying what people want is not fully mature, so the data are supplemented with a great deal of personal contact at all levels of the organization. Employees requirements are also aggressively sought. Well-treated employees stay longer and do a better job.