White Paper Using Crprate Screcards Regaining Cmpetitive Advantage frm Perfrmance Imprvement Initiatives SIX SIGMA QUALTEC
WHITE PAPER Using Crprate Screcards t Regain Cmpetitive Advantage frm Perfrmance Imprvement Initiatives An Executive Briefing The Six Sigma Cntext Mst majr cmpanies nw rutinely and regularly undertake perfrmance imprvement initiatives using Six Sigma r ther pwerful methdlgies designed t translate better perfrmance int slid business and financial results. As a result, such prgrams n lnger cnfer the cmpetitive advantages they nce did. They have becme, in effect, simply a requirement fr staying in the game. T regain cmpetitive advantage frm imprvement prgrams, cmpanies must tie them t crprate bjectives by tightly integrating business screcards with the imprvement prject selectin prcess, the prject tracking system, and prject reprting systems. This white paper is intended t explain why and hw. Effective implementatin f a Six Sigma prgram is in and f itself a difficult challenge. Nevertheless, the bar has risen even higher in tday s envirnment where the ubiquity f Six Sigma initiatives has prduced cmpetitive parity. T utpace cmpetitrs, yur cmpany must nt simply have a Six Sigma prgram but a better Six Sigma prgram. Hw? By cntinuusly aligning yur prcess imprvement effrts with yur cmpany s gals, bjectives, and strategies. In fact, recent experience indicates that prject selectin in Six Sigma prgrams has shifted frm managers and prcess wners t executives, which indicates an increasing recgnitin that prcess imprvement initiatives shuld be tightly tied t crprate strategy. A cmplete integratin f business screcards, the prject selectin prcess, and the prject tracking and reprting systems prvides significant advantages. Such integratin can help yu: Maximize ROI frm yur Six Sigma prgrams Maximize the impact f Six Sigma fr yur custmers Maximize crprate visibility and acceptance f yur Six Sigma prgram Mst imprtantly, integratin enables yu t fully leverage the rich stre f knwledge yu have accumulated frm yur perfrmance imprvement initiatives and put it t wrk fr yur cmpetitive advantage.
Using Crprate Screcards t Regain Cmpetitive Advantage frm Perfrmance Imprvement Initiatives The Business Screcard A business screcard, designed t translate an rganizatin s missin and business strategies int perfrmance measures and perating bjectives, is the linchpin f an integrated apprach t taking yur Six Sigma prgram t the next level. Althugh the balanced screcard (Figure 1) is the mst familiar such screcard, ther kinds may serve just as well s lng as they prvide the fllwing: Weighted perfrmance measures against key fcus areas A cmmunicatin system designed t create a sense f urgency A fcus n accuntability in key areas A timely scring system t drive respnse Acceptance f the screcard thrughut the rganizatin A single scring system fr the entire rganizatin Visible tls that can be mnitred thrughut the rganizatin Aligning Imprvement with Custmers The screcard aligns the impact f imprvement prgrams directly t the needs f custmers, defined as bth internal and external entities and stakehlders. Figure 1 shws a typical balanced screcard representing fur different custmer grups, each with its wn needs its wn vice t which executive leadership must listen and respnd. Financial custmers might include sharehlders, capital investment grups, r anyne with a financial stake in the cmpany. Internal business prcesses are the vice f the business the things that must be dne well. Learning and grwth encmpasses the vice f the emplyee, the knwledge and skills emplyees must have t change and imprve. And the actual custmer is the ne t whm yu deliver yur prducts r services. Figure 1: A typical balanced screcard
WHITE PAPER Aligning Imprvement with Custmers (cnt.) Yu build a business screcard by aligning business prcesses with custmer needs. In the case f the Balanced Screcard, fr example, yu wuld develp a set f apprpriate bjectives, measures, targets, and initiatives fr each custmer grup. The prcess f building such a screcard is cmplex and the details wn t be dealt with here. In general, hwever, the task is t: Determine custmers needs and values Identify the critical success factrs fr fulfilling thse needs Tie critical success factrs t yur bjectives Determine the measures f success fr thse bjectives Identify the key business prcesses that cntribute t thse measure f success Determine the key metrics fr thse key prcesses The metrics fr key prcesses shuld be leading indicatrs measures f where things are ging nt lagging indicatrs that shw yu nly where yu are nw. In additin, bth internal and external custmers must be weighted within the screcard t reflect their relative imprtance t achieving yur crprate gals and bjectives. The Impact f Business Screcards n Prject Selectin Selecting the right imprvement prjects is crucial fr maximizing the return n yur imprvement investments. Pr prject selectin leads t rewrk, lst time, lst ROI, and the disbanding f teams. Our research shws that as a result f pr prject selectin mre than 60% f imprvement prjects are nt cmpleted within a 7-mnth perid frm their start dates and mre than 25% f prjects are never cmpleted. Mrever, mre than 40% f cmpanies d nt have a frmal prject selectin prcess. Pr prject selectin als means missed pprtunity. Implementing prjects that are nt ging t have a psitive impact n an under perfrming crprate strategy is time wasted that cannt be recvered. Once yu have a business screcard in place, yu can effectively mnitr the key perfrmance indicatrs (KPIs) that yur rganizatin has determined prvide a measure f success fr each custmer perspective. By lking at the impact f perfrmance imprvement initiatives n the key metrics identified in yur screcard, yu have the ability t align prject selectin with yur crprate strategy. Even with a screcard in place, hwever, prject selectin is nt merely a matter f chsing the prject that has the greatest impact n crprate bjectives nt every prject is affrdable; resurces are limited; and there are numerus ther feasibility cnstraints. Nevertheless, a screcard can have a prfund impact n yur selectin by helping yu determine the feasible prjects that are best aligned with yur bjectives. By ensuring that there is alignment f all yur perfrmance imprvement prjects t crprate strategy yu will naturally create greater impact fr yur Six Sigma prgram than cmpetitrs wh d nt fcus n alignment.
Using Crprate Screcards t Regain Cmpetitive Advantage frm Perfrmance Imprvement Initiatives Dynamically Re-weighting Criteria T enhance a standard prject selectin matrix, it is necessary t dynamically adjust the weighting f success criteria as the perfrmance f the crrespnding KPI in the screcard changes ideally with a technlgy slutin that can make the changes autmatically. As the strategy s success metric begins t slide, the slutin will increase the weighting fr the success criteria related t that strategy. Fr example, if the financial perspective is crucial t yur strategy and such KPIs as expenses as a percentage f revenue, new prduct revenue, and revenue grwth deterirate, then the financial criteria wuld be given mre weight. In the prject selectin prcess, yu wuld then give mre weight t imprvement prjects that affect thse KPIs. By assigning greater weight t prjects in yur prject pipeline that prvide the greatest impact n an under perfrming crprate strategy yu ensure that yur prgram resurces have the maximum impact n yur crprate gals and bjectives. Taking the Future int Accunt Once yu implement a technlgy slutin that allws yur prject selectin prcess t dynamically change the weighting f success criteria as screcard perfrmance changes, yu have a distinct advantage ver cmpetitrs that lack such capability. Hwever, there is anther equally imprtant capability that can drive the prject selectin prcess t a higher level the ability t determine the future impact n crprate screcards f prjects currently being implemented. Cnsider a strategy that is currently trending unsatisfactrily n yur screcard. In a simple apprach, the prject selectin prcess wuld increase the weighting f the relevant criteria and prjects that are aligned with that strategy. But there is a critical flaw in such a system. The time taken t implement prjects that will affect the strategy is generally measured in mnths. By the time the impact frm prjects in the prject pipeline shws up in the relevant KPIs, the KPI may already be trending satisfactrily as a result f previusly implemented prjects. As a result, yu waste yur resurces t bst a crprate strategy that was n lnger in truble. T mitigate that risk yu must get visibility int the future value f the KPIs t ensure that yu dn t expend precius resurces fixing smething that isn t brken. With judicius use f technlgy that includes nt nly a prject selectin engine that autmatically changes weightings as KPIs change but als a prject tracking capability, yu can implement a fully integrated system that ensures that yur resurces are always impacting the mst critical crprate strategy. Such a system shuld enable yu t: Link yur prjects t the screcard KPIs within yur prject tracking system t ensure that the impact f a prject is reflected in the screcard KPIs at the time f the prject s implementatin Rll frward yur business screcard t lk int the future and determine what the screcard KPIs will lk like after the impact f existing prjects currently being implemented has been applied Feed thse frward-lking KPIs back int yur prject selectin matrix and autmatically adjust yur criteria weighting based n future perfrmance t ensure yu are nt beginning a prject that will have n beneficial impact in the future n the KPI that is in truble tday The Result: A near real-time, clsed-lp feedback system fr prject selectin that puts yu far ahead f yur cmpetitrs in the efficient and effective use f yur resurces. 5
WHITE PAPER Reprting Results t Executive Management Once yu are effectively selecting and implementing perfrmance imprvement prjects that have maximum effect n crprate gals and bjectives, yu have a pwerful mechanism fr driving executive buy-in fr yur prgram. Executive management uses the business screcard t reprt the verall perfrmance f the business as it pertains t the custmer the same scale against which yu are measuring the perfrmance f yur imprvement prgram. With prjects aligned t critical success factrs that management has determined are critical t the success f the rganizatin, yu remve any lingering skepticism abut the value f these prgrams. An additinal benefit f aligning prject selectin t crprate screcards cmes frm the simple fact that mst executives are cmpensated n the perfrmance f the crprate screcard. Current Six Sigma thinking fcuses n the financial benefits f Six Sigma. Hwever the missing measurement in mst Six Sigma deplyments is the impact that Six Sigma has n crprate gals and bjectives. If the benefits prvided by yur Six Sigma prgram can be reprted in terms f impact against crprate gals and bjectives, then executive management will be able t identify directly with the measures that cntribute t their cmpensatin. Outpacing the Cmpetitin With the ability t extract greater value frm perfrmance imprvement, t imprve mre quickly and mre reliably, and t use resurces mre efficiently and effectively, yur advantage ver cmpetitrs wh lack that ability increases expnentially. N mre anemic, redundant, r failed prjects. N mre ambiguity abut the value f particular prjects. And with the ability t identify the direct impact f imprvement initiatives n crprate bjectives, yu frge a united, aligned rganizatin that can respnd nimbly and in cncert t new challenges as the business and the cmpetitin evlve. A Technlgy Slutin SixNet Intelligence, frm Six Sigma Qualtec, prvides state-f-the-art prject tracking sftware that helps enable cmpanies t integrate their business screcards with the prject selectin prcess and prject reprting systems. With SixNet yu can cmprehensively track Six Sigma prjects and ther perfrmance imprvement prjects against yur business screcard, dynamically and autmatically change the weighting f critical factrs, and cntinuusly imprve the Six Sigma capabilities f yur rganizatin. Mst imprtantly, because SixNet is designed t link Six Sigma and ther perfrmance imprvement prgrams t yur business screcards and strategic initiatives, it can bridge the gap between Six Sigma practitiners and leadership, helping win the kind f executive cmmitment required fr success. SixNet is the nly deplyment management and prject management tl that integrates within its reprting prtal critical business intelligence the brad range f infrmatin frm decisin-supprt, query and reprting, nline analytical prcessing, statistical analysis, data mining, frecasting, and similar applicatins thus enabling direct integratin t executive bjectives and measures. Yu can reprt benefits in the same terms in which leadership is measuring perfrmance f the cmpany. Further, capabilities within SixNet allw yu t dynamically link these activities and truly integrate perfrmance imprvement as the driving change-agent fr achieving crprate strategy. 6
Using Crprate Screcards t Regain Cmpetitive Advantage frm Perfrmance Imprvement Initiatives A Technlgy Slutin (cnt.) Because reprts and dashbards can be easily created, executives can instantaneusly understand the impact that perfrmance imprvement effrts are having n cre business prcesses. SixNet integrates business intelligence within its reprting prtal giving executives the instantaneus knwledge f the impact perfrmance imprvement effrts are having n their cre business prcesses. Using these builtin features yu can reprt yur prgram results in any frmat in real time and thereby capture the attentin f the leadership team. Mrever, the tight integratin f business screcards with deplyment management and prject tracking enables management t drill dwn int the prject details that are influencing critical success metrics identified n the business screcard. * * * * * Abut Six Sigma Qualtec Six Sigma Qualtec is a glbal prvider f business perfrmance cnsulting, training and technlgy slutins. SSQ has a wealth f experience helping senir management teams t successfully implement strategies. SSQ helps define and deply sustainable business perfrmance imprvement initiatives yielding greater custmer lyalty, reduced risks, imprved quality, quicker turn times and enhanced revenues. T learn mre, call (800) 247 9871, email inf@ssqi.cm r visit ur website at www.ssqi.cm 7
Six Sigma Qualtec Six Sigma Qualtec Six Sigma Qualtec is a premier prvider f perfrmance imprvement training, cnsulting and technlgy slutins that drive measurable financial results. Six Sigma Qualtecísmethdlgy is an integrated deplyment f training and tls fr achieving breakthrugh perfrmance including dramatically reduced cycle times, defects and csts. This apprach has significantly imprved prductivity, efficiency and custmer satisfactin with clients wrldwide. Our Missin Enterprise perfrmance imprvement centers n yur ability t accurately identify and deliver the prducts and services yur custmer values mst. Yur ability t deliver custmer value is dependent upn the skillful integratin f leadership and human capital with finely tuned business prcesses. Six Sigma Qualtec helps yu build the capabilities t deliver what yur custmer needs and values mst. Train with the Experts Six Sigma Qualtec s prven training methds have helped hundreds f cmpanies, in the Financial Services, HealthCare, Manufacturing, and Utility Industries t develp the internal knwledge and skills they need t maintain a cmpetitive advantage thrugh sustained perfrmance imprvement. Six Sigma Qualtec 821 Alexander Rad Suite 130 Princetn, NJ 08540 USA tll free (800) 247-9871 phne (609) 925-9458 fax (609) 419-9855 email inf@ssqi.cm website www.ssqi.cm Six Sigma Qualtec 1295 W. Washingtn Street Suite 208 Tempe, AZ 85281 USA tll free (800) 247-9871 phne (480) 586-2600 fax (480) 586-2586 email inf@ssqi.cm website www.ssqi.cm Six Sigma Qualtec P.O. Bx 2959 Kenilwrth CV8 1XR United Kingdm tel +44 (0) 1926 859555 fax +44 (0) 8701 400023 email inf@ssqi.c.uk website www.ssqi.c.uk 2007 Six Sigma Qualtec. All Rights Reserved.