GE Top-down Six Sigma Implementation Explained
Posted: 05/12/2011 12:00:00 AM EDT
Rohit Khanna, Chief Operations Officer of GE Capital, Global Banking Group, tells us how Lean Six Sigma builds consistency in business processes. He also explains why Six Sigma must become part of the corporate culture and how after two decades it will continue to evolve.
PEX Network: Could you please explain how the deployment of lean Six Sigma can keep you ahead of competition?
Rohit Khanna: As global markets become more tightly integrated, competition in business will continue to intensify. With information available at the click of a button, customer expectations are going up too: they want their products and services faster, cheaper and better. This is where Lean Six Sigma helps us – it provides a structured approach to drive customer satisfaction and bottom-line results by reducing variation and waste. In fact, the focus in Six Sigma on variation – and not averages – enables us to understand and optimize every customer touch point. Experience shows that this makes value creation an enterprise-wide process – increasing speed to market, improving the quality of products and services, and significantly reducing cost – and becomes a competitive advantage.
At another level, Six Sigma also builds consistency in business processes that deliver quality that is world-class as also in line with customer expectations. Such a ‘repeatable and reliable’ performance is critical to success in the modern age with advances in social media and its increased customer power. I believe that, leveraged well, this also presents a clear branding and customer acquisition opportunity for companies with better promise-to-delivery records, beyond customer stickiness.
Another noteworthy competitive advantage of deploying Lean Six Sigma is its capacity to develop leadership. Quality-focused organizations inculcate a disciplined approach to problem-solving in employees, along with a focus on enhancing change acceptance. This creates a culture that is ideal for a pipeline of great thinking leaders.
PEX Network: Creating a corporate culture to motivate employees comes from the top, but how can you get effective buy-in on the benefits of six sigma from employees?
Rohit Khanna: I think it is important to recognize that to begin with, like any change, employees will be resistant to Six Sigma, until they understand its usage and associated benefits. They may see it as the ‘flavor of the month’ and try to stay under the radar, expecting it to blow away soon. Hence right at its inception, the company’s leadership must be committed to the adoption of Six Sigma and provide it strong sponsorship. In my experience, managements’ buy in and a strong top down approach has had significant success and over time, the case becomes stronger with execution of successive improvements.
For example, in the early days at GE there was very strong communication around how the company could tap huge market share opportunities and significantly save costs by getting rid of a ship-and-fix mentality. "Six Sigma is all that matters” was a message that one could just not miss, intensely reinforced by senior leaders walking the talk by embracing Six Sigma themselves, championing projects, visibly celebrating early successes etc.
Over time, Six Sigma must become part of the culture too. This means all employees need to get trained, involved and passionate about Six Sigma, not restricted to an initiative involving some people running projects in some remote corner of the organization. Instead, Six Sigma must become a way of life and ingrained into how the company works.
PEX Network: What are some of the yet to be explored untapped opportunities in Six Sigma that have yet to be explored?
Rohit Khanna: Six Sigma can be a great program for all parts of the organization that have repetitive internal processes at one end; and complex new product development on the other. We have seen it being actively deployed in varied functions and industries over the last 15 years. In fact, though it originally started in Manufacturing, the Services industry has benefited immensely from its application in banking, hotels, healthcare and other related industries.
The potential for Six Sigma to drive customer satisfaction and income is immense as we speak. Some areas where I believe companies can do more: firstly share the Six Sigma experience with smaller customers who may not have the wherewithal or commitment to afford a standalone implementation – very similar to At the Customer, For the Customer initiatives GE has successfully run. An extension of the idea could be in Supply Chains where again Six Sigma can be used to optimize performance.
We also need a better understanding of the balance between process excellence and innovation. An indiscriminate Six Sigma deployment can damage the creativity levels in a company in the long-term, resulting instead in bureaucracy and tendency to over analyze. Done well, I see significant opportunity in a more proactive approach with focus on designing for Six Sigma vs merely using it for incremental improvements.
PEX Network: Going forward how do you see Six Sigma evolving over the next decade?
Rohit Khanna: Six Sigma has been around for over two decades now with varying achievement levels in deployment across companies. Some organizations have reported huge success, while many have not been as successful. At some pioneering companies, the program has continuously evolved: initial deployments have the statistical tools focused to reduce cost, followed by delivering customer delight by killing variation. In the last 5 years the combination of lean and six sigma has seen increased use, mostly to improve speed to market at a lower cost. Naturally different organizations are at different levels of the deployment cycle.
Over the next few years, I believe companies will continue to utilize the rigor and discipline of Six Sigma to deliver customer impact but the tools used are likely to evolve. We may see companies trying to find the right tool for the problem as against trying to fit Six Sigma, or more specifically its statistical tools, to every problem. One area I would want Six Sigma to be successfully utilized is in growth and innovation where traditionally limited success can be countered with more forward-looking tool selection. Some change may also get driven by advances in information availability and bridging of the digital divide in terms of how data is collected, organized and interpreted.
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