What Is Lean Six Sigma, and Why Should Strategic Account Managers Care? Part 1
This week I am running part one of a piece we originally wrote for a selling industry magazine.
It is well done and you’ll enjoy it. Part II will be published next week.
Michael J. Webb
May 21, 2008
By Michael J. Webb
The answer to the twofold question in the title of this article is simple. Lean Six Sigma is a management method now used in most major manufacturing companies and many large service organizations to improve their performance, and you should care about it because they do. Lean Six Sigma is the lens through which many of your customers look at what they do. So it only makes sense for you to look at what they do—and what you do—through that lens too.
In fact, at a well-attended conference on Six Sigma in sales and marketing in Las Vegas not long ago, an executive from Sun Microsystems mentioned that Bank of America said words to the effect of, “If you can’t send along Black Belts [Six Sigma experts] with your sales team, and don’t call on us.”
Few customers take such an extreme approach. Yet many now talk the language of Six Sigma and use its methods to define measure, analyze, improve, and control the things they do, make, and deliver to their customers. In doing so, they apply these methods to their internal processes and to their interactions with vendors.
This article won’t explain Six Sigma in much depth. There are already good sources for that information, and I’ll mention a few later. In any event, I have found that sales professionals typically take to Six Sigma like ducks to, well . . . duck season. The reasons for this include the arcane jargon and statistical concepts that some Six Sigma experts can’t get away from, but also what might be termed sales resistance on the part of salespeople.
So I’m going to explain Six Sigma briefly, then show how sales and marketing executives have used the methodology to do some things that every strategic account manager (SAM) wants to do: make sales more consultative, solve customers’ problems, manage salespeople more effectively, and learn and deliver what customers really want.
In fact, first I’ll show just a bit about how Six Sigma works in sales.
Six Sigma in Action
In the early 2000s, business forms manufacturer Standard Register had to find ways to remain relevant in the age of desktop publishing and print-on-demand technologies. As a $1 billion plus company, Standard Register sells to industry leaders, who are major users of forms and of cost-saving technologies—a potentially lethal combination for this vendor.
Yet the company found these customers were often confused by the many options they faced for creating, storing, routing, and archiving forms. Meanwhile, although many customers perceived it as a commodity supplier, Standard Register possessed deep expertise in workflow, paper flow, and cost management in this area. Perhaps the company could reposition itself in the rapidly changing forms industry by offering that expertise to customers.
That’s where Six Sigma came in, under CEO Jonathan Ward, who is a champion of the methodology. The company learned that customers often lacked knowledge about their own processes, workflows, and costs. So, the sales team worked with Standard Register’s Six Sigma experts and used their tools to elevate their customers’ forms needs, flows, and costs.
This enabled the sales team to gain access to C-level executives and to make the case for more transformative measures than the next forms purchase. For instance, Standard Register offered on-site “concierge” services to help customers choose between desktop printers, on-site or off-site print centers, and other options to minimize waste, reduce costs, and ensure the right level of quality. With this effort, Standard Register actually increased its margins while saving individual customers from 20% to 70% of their costs.
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Lean and Six Sigma in Essence
Six Sigma is essentially a method of quality improvement, which is also known as process improvement. As you may know, over the past thirty years what might be termed a quality revolution swept through large manufacturing organizations? Under the rubric of Total Quality Management (TQM), kaisen, quality circles, and other labels, quality improvement and process improvement transformed operating practices and procedures in companies such as Toyota, Motorola, 3M, and hundreds of others.
Six Sigma, currently the most sophisticated iteration of process improvement, was developed by Motorola, enhanced at Allied Signal, and made famous at General Electric under Jack Welch. It has also been used to improve performance at hundreds of other companies.
In practice, Six Sigma is generally implemented after applying another method called Lean. Lean grew out of lean manufacturing as developed by Toyota and documented in the 1990 book The Machine That Changed the World: The Story of Lean Production by James P. Womack and Daniel T. Jones. You “lean” a process by ridding it of all waste, which means anything that doesn’t add value for the customer.
The basic Lean principles are value, value stream, flow, pull, and perfection. In applying these principles, you identify what constitutes value for the customer; define the value stream, that is, the activities that create value; make the value stream flow faster by ridding it of waste and redundancy; let customers pull the product as they need it; and constantly strive toward perfection. After you Lean a process and make it as value-oriented and waste-free as possible, you can apply Six Sigma to it to raise the level of quality and further improve performance. Indeed, this widely practiced approach is known as Lean Six Sigma.
Okay, what is Six Sigma itself? It’s a technical measure of quality that I won’t get into here. It’s Greek. Literally. But the basic method rests on five core principles:
- Creating Value for Customers: A company exists to create—and sell—something of value to customers; that’s the North Star that must guide all our activities.
- Managing on Data and Facts: We need measurements, data, and facts on what we’re doing and the results we’re getting before we make decisions; otherwise, we’re operating on opinion and politics.
- Analyzing Cause and Effect: A problem occurs for a reason; if we find the cause of a problem and eliminate it, then we’ve solved the problem.
- Minimizing Waste, Errors, and Defects: Like a watch or a car, a business process should have all the parts it requires, and do everything it’s supposed to do—and nothing else; if we rid the process of useless activities and eliminate or at least minimize mistakes, the process will run correctly and produce the intended results.
- Create Collaboration: All process improvement methods recognize that business activities and functions are interconnected and that they all have to work together for any of them to succeed.
These essential tenets may seem like Problem Solving 101 or even like management bromides. Yet they are anything but in the hands of Six Sigma experts, known as “belts,” [see sidebar “Belts, Not Suspenders”] or anyone who is serious about fact-based management.
That is really the essence of Six Sigma: fact-based management. Six Sigma is based on the scientific method as embodied in the five steps of a Six Sigma project. Those five steps are to define the problem, measure the relevant activities and results, analyze the data collected in the measure step, improve the activities, based on that analysis, and control for the results you want to achieve. The five steps are called DMAIC (de may’ ik) and they bring scientific rigor to what might look like Problem Solving 101.
SIDEBAR: Belts, Not Suspenders
Six Sigma experts are managers and professionals who have had formal training in, and practical experience with, Six Sigma methods and tools. They have worked on formal Six Sigma projects, which follow a specific sequence as noted in the accompanying article.
- Black Belts have had a certain level of formal training in Six Sigma methods and tools and have completed at least one formal Six Sigma project
- Master Black Belts oversee Black Belts and have additional Six Sigma training and experience
- Green Belts have some formal training, but work in operating or support departments
- Yellow Belts have light training and some familiarity with the method
In Six Sigma companies—those that use the method as their basic management framework—Black Belts and Master Black Belts work full time on Six Sigma projects. In these projects, they apply the methodology to solve specific problems in operating and support departments, including, most recently, sales and marketing.
Michael J. Webb
May 20, 2008