The joy of Six

Since its birth 20 years ago, Six Sigma has become one of the most widely used quality management tools in the world but remains a relatively new phenomenon in the Middle East. With many regional chief executives finally starting to apply the methodology, CEO Middle East trades blows with the master black belts to find out what they could do for your business
The joy of Six
By Administrator
Thu 30 Nov 2006 08:00 AM

In 1980s America, as Reagan strived to bring an end to the Cold War while ET phoned home, a management tool was born that completely revolutionised the way executives from all over the world ran their businesses. Now celebrating its 20th anniversary, Six Sigma (as it became known) continues to be the strategy of choice among market leaders across a multitude of sectors and is slowly but surely establishing itself in the Middle East.

But with so many other management tools now at your disposal and development capital within companies as scarce as ever, is the school of thought still relevant to your business and still worth investing in?

According to Hassan Tavakoli, vice president of Motorola in the Middle East and Africa, “everyone should use Six Sigma, it is a simple methodology that helps improve the quality of your products, reduce costs and reduce cycle time.” And, having played a major role in the development of Six Sigma, Tavakoli certainly knows a thing or two about the system.

In the beginning

“It all started in 1986 in a Motorola meeting near Chicago,” he recalls. “Everybody in the company was making statements about how great we were and how a fantastic year was about to start.

Then one of our officers stood up in front of 500 people and said ‘our product quality sucks. Lets not fool ourselves in terms of the quality of our products we have issues’, and that was the beginning of a change in the way our company was run.” The company then applied a new statistical management system to its manufacturing department to measure and reduce the number of defects made during the manufacturing process.

Three years later, Tavakoli applied the same quality control method to Motorola’s finance department, helping to significantly shorten the cycle time between the end of a quarter, and the release of the company’s results. In the years that followed, Six Sigma was developed into a widely accepted system that is reported to have saved Motorola over US $17 billion to date and has been adopted by businesses the world over, including General Electric, AXA Insurance and Honeywell International.

The basics

In simple terms, Six Sigma is a data-driven measure of quality that aims to bring continual improvement to a particular business process.

Since Sigma measures how far a process deviates from perfection, statistics are used to show how a process is performing and, to achieve Six Sigma, it must not produce more than 3.4 defects per million opportunities.

An opportunity is defined as a chance for non-conformance or not meeting the required specifications or demands of the customer. Most Six Sigma models are built around the ‘DMAIC’ process of Defining what is important in a particular process, Measuring its performance, Analysing what is going wrong, Improving the performance and then striving to guarantee consistent quality by Controlling the performance.

“In this continuous process, you attempt to eliminate opportunities that defects could occur by shortening the cycle each time you go through the DMAIC cycle,” explains Tavakoli. “The cycle should become smaller and smaller with less steps taken in every process resulting in less opportunities for defects or errors to occur, bringing a more efficient approach from A to Z”. Six Sigma expertise is measured in martial arts-style coloured ‘belts’ with beginners rated as white belts while those classified as full-time trainers are awarded master black belt status.

The benefits

While the ideology of the system may sound appealing in theory however, what are the actual advantages of Six Sigma to your business? For Andrea Rossi, CEO of AXA Insurance Gulf and a Six Sigma master black belt, the beauty of Six Sigma is that it enables you to tune directly into the demands of your customers. “The problem with most organisations is that they are organised functionally and so everyone works in silence. A customer isn’t organised functionally and so when they interact with the company, they cut across the organisation, across three or four functions and that’s where the real issue is — you have to ensure that every time the customer interacts, they get the same level of service,” he says.

“This is why Six Sigma is so strong because it allows you to map down all your processes, link them to your customer requirements, see the business overall and realign your business to the most important thing, its customers.”

Rossi also believes Six Sigma is a far superior method of problem solving than what he calls “fire-fighting”. “Whatever industry you’re in, we have a tendency of fire-fighting, or jumping to solutions to fix something in the moment, in the short-term but it doesn’t usually stick, so you are doing something with no added value at all.” With Six Sigma, by moving through the DMAIC process, Rossi claims you can establish carefully thought out, long-term solutions to company defects both large and small.

Of course, most chief executives wouldn’t even consider bringing in a new management system without the promise of saving money. According to Tavakoli however, this is something easily achieved with Six Sigma deployment. “A product launch may cost US $100 million, so how can we take 10% off that?” he says. “This could definitely become a Six Sigma project, as long as you define where you are and where you want to be, and strive for continual quality improvement.”

The pitfalls

Admittedly, as with any business strategy, there are arguments against adopting a Six Sigma methodology. Some chief executives we spoke to in recent weeks dismissed it as a tool that clouds the fact that running a business is about people, not statistics.

Rossi highlights other often-voiced misconceptions such as the view that Six Sigma should only be applied to the manufacturing industry because it is “statistical, involves measuring and talks about yields”.

There is also the fact that, as Six Sigma cuts across the entire corporation, it can take away authority from senior level management which can lead to disapproval from the CEO or the executive committee. With master black belt consultants commanding a fairly competitive salary, there is also the issue of having to shell out significant amounts of capital on two or three new employees, or on staff training, without witnessing immediate results.

Getting involved

Although Tavakoli admits that Six Sigma is nowhere near as popular in the Middle East as it is in Europe and North America, his own Motorola University (in Dubai) is attracting businesses from across the region to its Six Sigma training courses. Tavakoli also claims a number of local government agencies are showing an interest in the management school of thought.

As well as Motorola University, there are a number of consultancy groups offering Six Sigma training in the region, including Wipro — a global provider of technology-driven business solutions. According to Sathish Chandran, a senior Six Sigma consultant for Wipro, there are a number of things to be wary of if you are considering applying a Six Sigma strategy. Chandran believes companies should rule out the application of the methodology if:

1. You are a start-up company as you will still be dealing with teething issues and increasing your company headcount.

2. There is instability or random behaviour in your business, such as sudden failures, as you do not have total control over the company.

3. If you don’t have the resources to bring two or three full-time Six Sigma master black belt trainers into your corporate structure.

The key to successful Six Sigma is that the chief executive and the board are passionate and committed to its success, according to Rossi. “Of all the companies that apply Six Sigma, probably only about 20% are successful. The reason for failure is because of a lack of leadership commitment — CEOs and executive committees don’t believe in it,” he says.

“When I worked for GE, Jack Welch (formal global CEO) would spend 55 minutes of a one-hour meeting talking about Six Sigma.” Rossi highlights the importance of selecting a respected company member who is “second in command to the chief executive” to embark on Six Sigma training and ultimately lead its implementation across the business. Describing the

methodology as “a full proof tool”, Tavakoli — one of the founding fathers of Six Sigma — asks the question “can you afford not to adopt it?”

But while the many benefits of the quality improvement method are obvious, adopting the strategy is not a move to be taken lightly.

For every successful global enterprise like GE or Motorola, there is a company that has sacrificed vast amounts of resources on training and development, only to fail in its quest for continual improvement due to a lack of commitment or drive.

Consider what the methodology could do for your business and maybe you could join the never ending quest for quality improvement.

“A product launch may cost US $100 million, so how can we take 10% off that? This could definitely become a Six Sigma project.” - Hassan Tavakoli, vice president of Motorola in the Middle East
“When I worked for GE, Jack Welch (former global CEO) would spend 55 minutes of a one-hour meeting talking about Six Sigma.” - Andrea Rossi, CEO of AXA Insurance Gulf
Your say: Are you the six sigma Chief Executive?

While Motorola’s Hassan Tavakoli claims there is a huge interest in Six Sigma in the region, our executive survey would suggest that there is still a lack awareness among many of the top CEOs in the Middle East.

Of the business leaders we questioned from a range of sectors spanning the region we found that 27% had never heard of the quality management tool, while only 20% admitted to using it in their business. Quality management is clearly becoming an increasingly important issue in the region, with 53% stating they use either Six Sigma or their own tailor-made system. Here’s a sample of what some of the CEOs we spoke to had to say:

Paras Dhamecha

CEO Elite Jets

“We haven’t explored the possibility as our processes aren’t wide enough. Regionally it seems most people have concentrated on processes related to ISO rather than Six Sigma.”

Stephane Rejasse

Managing Director Fujitsu-Siemens ME

“I’ve heard of Six Sigma but I don’t use it and don’t intend to do so as I don’t have time or previous experience of it.”

Assem Hamzeh

Managing director ChoCo’a

“I haven’t looked at deploying it in our organisation yet but we will probably consider it going forward once we get a better understanding of the benefits of this process for SMEs.”

Marc Dardenne

Vice President Ritz-Carlton (Dubai)

“I’m aware of Six Sigma but we have our own quality management tools that have been developed successfully over the years and have helped us win the Malcolm Bridge award in the US and the Dubai Quality Gold Award.”

Omar Hijazi

CEO Tejari

“We’ve embarked on a quality management process that’s most applicable to our business and customers and we’re currently awaiting ISO certification.”

Adel Danish

Chairman and CEO Exceed

“We have 52 certified Six Sigma employees, three of them being black belts and I think we have another three in the process of becoming black belts. It’s a way of life and a way of building great companies.”

Nanette Fairley

Managing Director

Innovative HR solutions

“I can see many benefits of it for large organisations. I think each organisation needs to assess whether such a tool is a good fit to support their strategy.”

Eirvin Knox

CEO Abu Dhabi Commercial Bank

“It’s not used in my bank and I have no direct experience with it but we do have our own program that addresses many of the elements covered by Six Sigma.”

Where to go

Held four times a year in Dubai, Motorola’s Six Sigma green belt course is an intensive, hands-on introduction to the methodology for executives across the Middle East. Attracting interest from India to Egypt, the five-day course covers all the ground necessary for an employee to return to their company and implement a Six Sigma mentality. The course, that costs US $3245 per person, accommodates 20 people and helps each student to solve a particular problem from within their organisation. For more details contact Motorola’s project coordinator Loana Lacob on +9714 308 1238, or visit:

www.motorola.com/mu

Six situations: when six sigma fails

1. Lack of visible senior leader sponsorship

When leaders do not consistently demonstrate their sponsorship and commitment, Six Sigma can fall short of expectations

2. Lack of alignment to a clear organisational strategy

Experience shows that Six Sigma implementation is likely to fail if it is not directly linked to the organisational strategy

3. Lack of performance tracking and accountability

Six Sigma efforts will fail if projects are not managed and tracked aggressively, and the people involved are not held accountable for results

4. Failure to link projects to bottom-line impact

Six Sigma is hailed for its impact so if projects are executed without clear financial results, leaders will be disappointed with the efforts

5. Insufficient or ineffective allocation of human resources

When organisations do not take a structured approach to how they allocate resources to support Six Sigma efforts, it will probably fail

6. Over emphasis on a rigid approach and technical tools

Six Sigma can fail if an organisation places too much emphasis on the mechanics and technical aspects of the methodology

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