Delivering Customer Value through Six Sigma

Six Sigma and Customer Experience

Reg Goeke
Contributor: Reg Goeke
Posted: 03/29/2010


I just returned from a terrific conference on Lean Six Sigma & Process Improvement for Customer Experience in Miami where I gained some new insights into the evolution of Lean Six Sigma. Readers of this column know that Six Sigma IQ/IQPC and Market Value Solutions (MVS) recently partnered in conducting a global survey of best practices in Business Process Excellence, and a few of the preliminary results were discussed at the conference. Most notably, several of the conference presenters provided examples from their own companies that highlighted survey findings, and others provided insights that will help in the interpretation of those findings. Two of the more interesting discussions centered on process improvement linkages to strategy and process improvement impacts on culture.

Business Process Improvement for Culture Change

The Global BPE (Business Process Excellence) survey tended to confirm the hypothesis that Business Process Excellence initiatives have been evolving from an emphasis on defect reduction (mid-1980s), through an emphasis on cost reduction (1990s), to an emphasis on revenue generation and market share (twenty-first century). Among the survey respondents, only 11 percent are still focused on defects, 30 percent are still focused on costs, and 6 percent have shifted to emphasize market share and revenues. Although that’s still a relatively small percentage, the conference attendees certainly indicated that revenue generation is increasingly the focus for process improvement initiatives of the future. It’s also interesting to note that some 34 percent are placing increased emphasis on customer outcomes (either satisfaction or perceived value), whether as part of a shift toward revenue generation, or out of concern that they don’t end up cutting the wrong costs.

One conference attendee expressed interest in the 19 percent who indicated that the primary purpose of their BPE initiatives was to change the corporate culture. The follow-up discussion led to a consensus that, in all likelihood, the underlying goal of "culture change" was to bring order out of chaos — to impose the data-driven discipline of Lean, Six Sigma, and other process improvement initiatives upon the overall culture of the organization. And that may well be the case — the survey itself was not designed to address that question. But, after conference presentations from Xerox, Blue Cross Blue Shield of Florida, and Shaw Industries, another hypothesis emerged. Perhaps the culture change being sought by those who were using BPE for that purpose was one of breaking down functional silos within the organization.

For example, although the three presentations I just mentioned each brought unique and valuable perspectives to those in attendance, the one thing they shared in common was the use of value stream mapping to identify and solve problems. And, because each of these organizations understand that a value stream is comprised of all the processes, activities, decisions, and inspection points necessary to deliver value to the end user, they correctly observed that all functional areas within the organization had to be involved in the actual mapping of the value streams. By the end of the conference, one of the attendees insightfully noted that, perhaps, this was the sort of culture change those 19 percent of respondents were trying to achieve — to break down those functional silos across the organization by forcing them to see and experience their interdependence.

Process Improvement Linkages to Strategy

A second survey finding of importance was that companies whose process improvement initiatives were directly and explicitly linked to their competitive marketing strategies were nearly twice as likely to report successful BPE deployments.

It should also come as no surprise that BPE initiatives that are linked to competitive business strategies are far more likely to use the Voice of the Customer (VOC) or the Voice of the Market (VOM) to identify and prioritize those initiatives. Yet, only 41 percent of all survey respondents reported that their BPE initiatives were explicitly linked to strategies. This means that about 60 percent of the time, BPE initiatives are being conducted on an ad hoc basis, probably attempting to grease the wheel that is squeaking the loudest. Small wonder that these initiatives are only successful about half the time!

The conference presentation from Key Energy shed additional light on this survey finding. Kristi Windberg, a Continuous Improvement Manager at Key Energy, observed that many companies develop their strategy "upside-down" — beginning with the Strategic Plan, then developing the Business Plan, selecting Key Processes for focus, and then bringing in the Voice of the Customer (VOC). At Key Energy, they now start with the VOC, then develop their Strategic and Business Plans, and finally flow that out into the analysis of key business processes for targeted improvements. As Kristi put it so well, "If we provide value, they will value us."

Conference Participants Focused on Voice of the Customer

From conference presentations to panel discussions to roundtables to networking breaks — the focus throughout was upon collecting and using the Voice of the Customer more effectively for Business Process Excellence. In the parlance of Six Sigma Marketing, the topical areas clustered around the tools and components of a modified DMAIC:

  • Define: Issues associated with whose voice is most important and what products or services should they be asking about. Some interesting discussions resulted from a presentation by Wachovia/Wells Fargo pertaining to market segmentation, and why segmentation is important for process improvement initiatives that are driven by the VOC. One of the more humorous perspectives on the VOC came from a representative of JEA, an electric utility company, who noted that the engineers in their company still tend to refer to customers as "service points."
  • Measure: Issues of what to ask and how to ask it were addressed. The folks from ING provided a helpful list of "does" and "don’ts" regarding questionnaire construction, and the importance of clear ownership and objectives. A presentation from Northwestern Memorial Hospital addressed the timingof measurements in terms of the overall customer experience.
  • Analyze: Lots of discussion about a variety of analytical techniques, but the key issues centered on independent and dependent variables in the analysis. Recognizing that the ultimate dependent variable is business performance, the challenge lies in identifying the best "intermediate" dependent variable — one that is actually predictive of business performance. Examples included:
    • Overall satisfaction
    • Overall customer experience
    • Net Promoter Score
    • Customer Value

Which intermediate dependent variable has proven to be the best predictor of business performance in your industry? How do you know?

Discussion regarding independent variables centered on actionability. Our position on that has been expressed in previous columns.

  • Improve: As might be expected at a Lean Six Sigma conference, there were many examples associated with improvements. As might also be expected, those improvements focused largely on process— the fifth "P" of the Marketing function in Six Sigma Marketing. But, after reflecting on the importance of linkages to strategy, there was group consensus on the importance of improvements addressing people (training) and products or services (NPI or DFSS).
  • Control: One of the interesting insights to emerge from the conference was that nearly everyone has some form of transactional VOC measurement system, but most are using this system inappropriately. Transactional VOC systems are best used to monitor the effects of process improvements, not to prioritize them in the first place. And, even in the monitoring, they need to be proactive rather than reactive.

Finally, the Global BPE survey revealed significant differences in BPE deployment across industries. Many of the conference attendees expressed a desire for an opportunity to compare their company’s deployment with that of others in their industry. If you have a similar interest, leave a comment, or contact Genna Weiss, the Senior Editor of this web site, or me, directly.

Reg Goeke
Contributor: Reg Goeke
Posted: 03/29/2010

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