Dr. Tony Bendell, Professor of Quality and Reliability Management, University ofLeicester, U.K. Ted Marra, President, Marra Quality Inc. Jonathan Severance, Associate, Marra Quality Inc.

● In recent years, major US corpora-tions have publicised the economicand quality benefits obtained byadopting aggressive ‘six sigma’ quali-ty improvement programs. Largefirms such as General Electric havesaved literally billions of dollars andimproved process output quality byapplying this methodology. We feelthat it is time to revisit six sigma sothat it can be used in a new, more bal-anced and effective way. We considerthis new approach – which we callCustomer Focused Six Sigma – to con-stitute the next step in the applicationof quality methodologies. And we feelit is time for many organisations totake that step.

Six sigma in a nutshell Fundamentally, six sigma representsthe implementation of a measure-

ment-based strategy that focuses onidentifying and improving the mostcritical-to-quality processes and prod-uct features. Armed with a toolkit ofstatistical and quality improvementtools, teams within organisationsanalyse, map, reengineer, and estab-lish metrics for all kinds of processesfrom product design to manufactur-ing to delivery, support, and adminis-trative processes.

It is often the case that simplifyingprocesses has a two-fold positiveresult: waste (hence cost) to the firm isreduced while the quality of processoutcomes is increased, as measured bydefect counts based on the previouslyestablished metrics. Ultimately, cus-tomer satisfaction is increased viahigher product/service quality andbetter value.

The EFQM Business Excellence

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The six sigma quality

methodology has had an

impressive track record,

especially in the United States.

But the evidence is mounting

that six sigma is ready now for

an evolutionary step toward

what our authors call

“Customer Focused Six

Sigma”. This provocative

article explains why.

Customer Focused

Six Sigma

Model complements six sigma becausethey both emphasize measurement ofresults. Six sigma indirectly affects allEFQM criteria while its most significantimpact is on the process criterion.

So what’s wrong with that? Well,nothing, really. It has been successfulat reducing cost and waste. GeneralElectric reports that six sigma projectsresult in an average return on invest-ment (ROI) within the first year andon a recurring basis of 3:1. But wemaintain that, in practice, six sigmahas been applied principally to reducewaste and cost within existing busi-ness processes. For example, at the SixSigma Summit Conference held inLondon in April 2001, many organi-sations indicated that their manage-ment teams are pursuing six sigmasolely for the sake of cost reduction -that the focus has now become toonarrow and is not addressing thebroader and more strategic needs ofthe business.

Once cost and waste have beensqueezed from processes, a key ques-tion arises: can six sigma be applied insome broader context? An alternativeformulation of this question reducesto: you are building your widgets well,but are you building the right wid-gets? Can we use six sigma in a waythat addresses, as stated in the Sum-

mit, “the broader and more strategicneeds of the business”?

Toward a new way of thinkingIn a real sense, six sigma is the ulti-mate expression of “left brain” think-ing: analytical, de-compositional, pre-cise, measurable, but inward looking.And as the old expression reads, it ispossible to miss the forest through thetrees. This is particularly possiblewhen the driving force for six sigmaprojects is cost reduction and ROI.

We maintain that a more balancedapproach is now called for. Thisapproach integrates an appropriate

degree of “right brain” thinking intothe system: holistic, synthetic, out-ward looking, but also measurable.You might call it a “whole brain”approach or toolkit for qualityimprovement. Because the key aspectof this evolutionary step is lookingoutward (at your customers) we call itCustomer Focused Six Sigma.

“Show me the money”Lest the reader think this is some kindof “feel good” approach that does notaddress economic realities, kindly con-sider how for-profit firms make theirmoney from continuing operations.Our model for viewing value creation(refer to Figure 1) is simple enough:first of all, your profit is what is leftover after all costs are subtracted fromyour revenue. Looking forward (in amore strategic way), consider twosources of customers: existing onesand new or prospective ones.

Each set of customers offers opportu-

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■ Profit = Gross Revenue – Cost [P = GR – C] ■ Gross Revenue = Revenue from retained customers [Rretained]

■ P = Rretained + Rnew - C

Additional domains forCustomer Focused Six Sigma

Traditional domain for cost-drivensix sigma improvement efforts

Fig. 1 ■ Simple math for isolating targets for six sigma

In a real sense, six sigma is the ultimate

expression of “left brain” thinking:

analytical, de-compositional, precise,

measurable, but inward looking. ➲

nities and challenges. From the perspec-tive of creating value, we know it ismuch less expensive to retain an existingcustomer than to acquire a new one. Dowe adequately consider our existing cus-tomers when we plan our so-calledinternal process improvements?

Just as a strategic marketer and

finance person considers anticipatedflows of cash resulting from a new ini-tiative, we need to look at the poten-tial sources of value creation arisingfrom our ability to be more responsiveto emerging markets and potentialcustomers.

We submit that, while six sigma has

been applied to the cost side of the equa-tion with some success, it can also beused in the context of an overarching,customer focus strategy – one thataddresses the “top line” or revenue of thefirm. This leads us to look at the under-lying sources of value creation.

What you see depends on whereyou sit.Not all problems are perceived andweighted equally by all parties. It real-ly does depend on your relationship,both structurally (customer versussupplier, etc.) and qualitatively (thehealth of the relationship).

In a traditional six sigma approach,it would not be unusual to develop astandard problem Pareto chart, asshown in Figure 2, which is based ona real company in the telecoms indus-try. In the chart, the highest frequen-cy of problem occurrence is from theDelivery process. But this Paretoanalysis was based on an internalreview of the process.

Compare this result with anotherPareto chart shown in Figure 3, whichshows how the customers view the sit-uation. Note the shift in perspective!No longer are delivery issues the mostsignificant – instead it is sales issues.Underneath these sales issues areproblems such as not returning tele-phone calls, not following through onpromises, and not meeting require-ments. These types of problemsinvolve personal working relation-ships and can be very difficult torecover from.

What is the underlying difference ininterpretation? The internal processPareto was based on problem frequen-

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CUSTOMER FOCUSED SIX SIGMA

➲

ProblemFrequency(%)

Process AreaSales Service Admin InstallationDelivery

34.6

19.716.6

11.46.4

50

45

40

35

30

25

20

15

10

5

0

Fig. 2 ■ Relative impact of process failures in telecomm company(internal process view)

Risk ofCustomerDefection(%)

Process AreaSales Service Admin InstallationDelivery

20

17.5

15

12.5

10

7.5

5

2.5

0

Fig. 3 ■ Relative impact of process failures in telecomm company(customer view)

7.5

18

6.5

11.1

4.3

cies, collected largely from process met-rics. The customer defection Pareto wasbased on a perceptual study that imput-ed the relative importance of transac-tional features using statistical analysis.Assuming the fundamental validity ofthe measurement approaches, one mustbe led to the conclusion that investing inthe delivery process would have a rela-tively lower impact on customer satis-faction, while investing in the salesprocesses and procedures would likelyhave a dramatic effect on customer sat-isfaction.

Moreover, problem experience, espe-cially of a recurring nature, leads toshortened periods of loyalty, reducedwillingness to purchase or consider otherproducts or services you offer, along withmore negative references. Severe issues,as viewed by the customer, magnify thesituation, heightening the risk of disen-gagement. So which processes wouldyou improve first?

What about your organisation?We believe that you should start look-ing for six sigma opportunities begin-ning with the customer interfaceprocess (work from the outside in).Once you have identified a problem-atic interface, “drill” down to deter-mine the causes – first looking at yourinternal and external suppliers/busi-ness partners and their performance incontributing or not to the interfaceissue. Continue to drill down to thecore processes – your product or ser-vice design, development, and pro-duction processes, research and devel-opment (R&D), or others.

The goal of your improvementprocess should be to add value at eachstep back through the organisationand through the suppliers/businesspartners to the interface. This resultsin a “win-win” scenario as you simpli-fy and improve efficiency of your ownprocesses, while at the same time

become more responsive to your cus-tomers, principally through reducedcycle times and lower costs to them.This process is depicted in Figure 4.

As you design your improvementeffort, consider these principles: ● Use a “customer impact

statement” to help identify andselect your six sigma project (seethe nine questions to consider inthe sidebar).

● Set a six sigma stretch goal toimprove customer satisfaction,loyalty and value while reducingcost. Make certain you areaddressing all six sources of value –process, people, product, service,technology and support. Here wedefine value as any tangible orintangible benefit that thecustomer perceives thecompetition as either unwilling orunable to provide. It is thereforean immediate source of

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Sales Process Delivery Installation Repair Service/Maintenance

System Design Training Technical Support

Internal suppliers or support serviceorganisations and processes

External suppliersor business partnersorganisations andprocesses

Core processes

PATH TO ROOTCAUSE,CORRECTIVEACTION AND PROCESSIMPROVEMENT

Fig. 4 ■ Interface map and path to root cause and value creation

PATH

TO

VALUE

CREATION

➲

differentiation. ● Focus on meeting the “basics” as

perfectly as possible. The basicsare those needs that the customerexpects you to deliver in aroutinely flawless (near zerodefect) manner.

● Always try to make it easier foryour customer to do business withyou and make your organisationmore responsive. Concerningresponsiveness, many organisationshave shown that focusing onreducing cycle times drives fargreater innovation than focus onquality or cost.

In conclusionCustomer Focused Six Sigma is meant tobreathe new life into a very successfulapproach, but one that may be growing

tired and becoming out-of-touch withthe strategic needs of your organisation.

As shown in Figure 5, CustomerFocused Six Sigma represents a balancedview of the organisation within the con-text of its key stakeholders, mostnotably its customers! In this model,value is created more readily for the cus-tomers because the customers’ issues,concerns, and economic objectives aretaken into account up-front.

In a way Customer Focused SixSigma also represents a “coming home”to the time-honoured principle,expressed so strongly in the EFQMModel, of customer focus. We believethat such an evolution enhances theapplicability of six sigma, ties it evenmore closely to EFQM, and effectivelyprovides a signpost for organisations atany stage in the quality journey. ●

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CUSTOMER FOCUSED SIX SIGMANINE QUESTIONS TO HELPINCORPORATE CUSTOMER FOCUSINTO YOUR SIX SIGMA PROJECT

1 ■ Is there an identifiable, external (orinternal) customer issue (requirement,expectation, dissatisfaction) that isdriving this project? If so, what is it?How was it identified?

2 ■ Given your understanding of thekey drivers of customer satisfactionand loyalty, which ones you believe willbe most positively impacted by thisproject?

3 ■ Describe the benefits you anticipatethe customer will realise from thiseffort. Do you believe it will representa true “value-add” to the customer oris it just meeting a minimumrequirement (“basic need”)?

4 ■ Describe the benefits you anticipatethe organisation will realise from thiseffort (e.g., cost reduction, productivityimprovement, others).

5 ■ What processes will need to beexamined in light of your customerdata?

6 ■ Are there any people knowledge,skills or behaviour issues involved? If so,describe.

7 ■ How will you know if the customeris better satisfied or loyal than before?

8 ■ What EFQM criteria or sub-criteriaare positively affected by yourinitiative?

9 ■ What organisational goals, keybusiness objectives and/or strategieswill be positively impacted as a result ofsuccessful completion of this six sigmaproject?

Balance

Competitive advantageCost

reductionIncreased economicvalue of customers

Value to theOrganisation

Value to theCustomer

Increased number ofpositive references

Increased revenueand profitability

Increased period ofloyalty

Fig. 5 ■ Balance is the key to Customer Focused Six Sigma

➲