Communications consultant Stephen Manallack* looks at the technique and philosophy of the Six Sigma process to build a customer focused culture…

Since the first step of Six Sigma is to identify what is value for customers, implementing it should take emotion and guesswork out of your decision making.

This view is reflected by Glenn Abercrombie, an Australian who has become a Six Sigma leader at global financial services giant, AXA. "By eliminating all the emotive statements people tend to attach to problems, you can create a statistical solution and turn that into a practical reality," he says.

Abercrombie is a "master black belt" and his aim is to do himself out of a job; his view is that your Six Sigma specialist should identify the problem, design and implement a solution and then get out.

How do you implement Six Sigma?
Step one is getting the Six Sigma expertise right at the top of the enterprise, and you will need access to pretty substantial budgets to follow this process. For example, it seems that everywhere the Six Sigma process really begins with the hiring of consultants. Either that, or a combination of consultants and training of your senior people, but both ways involve high costs, at least initially.

The most famous advocate of this approach is Jack Welch, The legendary former CEO of GE. The first step at GE was to train executives to "master black belt" stage. In the second year, GE trained lots of "green belts" people at the workplace level who carried process change through. Interestingly, GE proved that Six Sigma was not just for manufacturing, also applying it with success to GE Capital.

In the first year, Six Sigma saved GE $170 million for a $200 million investment; in year two savings were $700 million for a $400 million investment.

Demonstrating how far the "top down" commitment to Six Sigma needs to be, P O Mak, the head of General Electric in China, recently told an Australian audience that in the days Jack Welch led GE, managers were told that if they did not sign up for Six Sigma training they could "kiss goodbye" to promotion.

In Australia, sixth ranking banking and finance company, Suncorp Metway, started on the Six Sigma path by sending senior executives to the Six Sigma Academy in Arizona. Now it claims to be "way ahead" of other banks in customer satisfaction due to Six Sigma. Says John Mulcahy, CEO, Suncorp Metway, "It's more than a process. It's a way of understanding the needs and voice of customers." The bank has 60 black belts and 200 green belts delivering 120 projects.

What are the results for Suncorp? A decrease in the amount of time waiting in line, faster credit approvals via one phone call and tighter commercial lending practices; all customer focused.

Step two is to define what customers want and what processes will deliver that for them. This then creates a benchmark for measurement of existing processes and defects become obvious.

In step two it is vital to involve staff because the person "on the shop floor" often knows both the problem and the solution. But it takes some training at this stage to get senior management capable of getting this feedback, as well as training workplace staff to "green belt" status. This staff involvement might be in the form of Six Sigma teams, creating their own program.

As described by the Six Sigma Academy in the USA: "Focus on eliminating non-value activities from processes (manufacturing or services) by applying a robust set of performance change tools, and emphasise excellence in operations to deliver superior customer service".

Step three is measurement; the number of defects happening per unit. This applies to services and to manufacturing. Putting these measurement processes in place can be costly, and it is vital to make sure all staff understand what's going on; otherwise Six Sigma can create hostility.

But in step three the focus has to remain on the customer. As Abercrombie says, "It is important to get data from the customers' perspective, measuring every process and collecting statistical data about the process."

In step three this can drill down as far as measuring customer satisfaction, even in terms of how long does it take a worker to answer the phone and resolve customer queries.

Step four is analysis of all the new data being collected, identifying the difference between "perfection" and your process, with an aim to continuously reduce the variation between the two.

But there is a warning here - the dean of the Rotman School of Management at the University of Toronto, Roger L Martin, has said, "Firms have adopted Six Sigma programmes to improve the quality of their manufacturing processes, but those initiatives haven not made employees feel that their work is more meaningful." Others see Six Sigma as a creative process that can be inclusive.

Step five is improvement, with the implementation of changes so that processes and results improve. This is best driven by a combination of your top sigma practitioners (black belt) and people in the workplace teams. This step is also a major cost area of Six Sigma, but as AXA's Abercrombie points out: "They should translate customer voice into process, have good analytical skills, be able to collect the right data from a variety of sources, and have a good appreciation of how to assess risk and perform cost-benefit analysis."

Step six is ongoing control, putting in place monitoring of future variations. This step also has input into new product and service design, so that the experience and data collected here is applied to new developments too.

Birlasoft, one of India's leading commercial houses, with equity participation by GE Capital, uses the technique in its governance framework to increase efficiency, reduce costs and improve customer satisfaction. Monthly defects have decreased from 11 per cent to 3 per cent.

A Birlasoft executive points out, "Six Sigma methodology have been used extensively to design new processes and upgrade the current ones as required in this continuous assessment." Birlasoft has development centres in India, the US and Australia.

In the US, the Chief Executive Officer of Dow Chemical, William Savropoulos, is a Six Sigma fan, "Six Sigma is elevating our company to entirely new levels of operational performance".

So, what is Six Sigma? It claims to be a technique and philosophy that grew out of Total Quality Management and aims to eliminate waste and improve performance, using statistical analysis and a customer focused culture. The Greek letter sigma is used in maths to denote standard deviation from the mean.

It has been used to challenge traditional thinking on economies of scale, instead using lean systems to produce shorter runs, allowing the company greater flexibility to change with the market.

Six Sigma aims to analyse and change processes to reduce defects in service delivery. To reach Six Sigma status, an organisation must aim for only 3.4 defects per million opportunities. Getting there involves training management to various levels of sigma: called black, green and master black belts.

Other companies to use Six Sigma include financial institutions such as JP Morgan, Citibank, American Express as well as Australia's Suncorp. It has spread through Boeing, DuPont, Caterpillar and Telstra.

Telstra, for example, claims it has direct savings of around $300 million in over three years and has trained 20 per cent of staff in the approach.

"By eliminating all the emotive statements people tend to attach to problems, you can create a statistical solution and turn that into a practical reality," Telstra's Abercrombie says.

*The author, a member of the committee of management of the Australia India Business Council, is a communications consultant, trainer and author of You Can Communicate (Pearson 2002).