Getting More From Six Sigma

A few months ago, my wife and I had to rush our daughter to the emergency room of our local hospital. While patiently waiting for a doctor to see her, I noticed a poster taped to the wall that proudly advertised one of the hospital’s Six Sigma projects had successfully reduced the cost of emergency X-Rays.

As I read the poster, I recalled watching a recent CNN news segment that reported adverse reactions to prescription drugs kill more than 100,000 Americans every year, making that the fourth leading killer in the U.S. after heart disease, cancer, and stroke.

Listening to the CNN reporter I thought: safety equals quality. Obviously, the medical industry has a quality problem. Listening to the reporter I also thought: patients equal customers.

What a crime, I concluded, that the potential power of Six Sigma was being wasted on simply reducing internal costs — such as the cost of X-Rays — instead of improving the quality of care provided to patients.

But this situation is not unique to the medical industry. The underutilization, if not misuse, of Six Sigma is quite widespread.

What It’s All About

Fundamentally, Six Sigma symbolizes a quantitative level of quality that is generally considered to be world-class. “Sigma” stands for the statistical standard deviation of a set of data, or the measure of the variability of the data, and “Six” represents the number of such standard deviations from the average, or mean, for a normal distribution of data. Think bell curve.

The more standard deviations you move away from the average, the less chance there is of finding any data (like fewer A+ grades).

When applied to the topic of quality, this concept can be used to estimate the capability of a process and the probability of the existence of a defect in a product or service.

The more standard deviations that fit within the specification limits for a process, the lower the probability of a defect and the higher the level of quality. Therefore, a Three Sigma (three standard deviations) process reflects lower quality than a Six Sigma one, which is 99.99966% accurate and results in less than 3.4 defects per million.

The derivation and significance of its name aside, the term Six Sigma has also become synonymous with a standardized methodology for problem solving.

Known as the DMAIC process (Define, Measure, Analyze, Improve and Control), most companies consider it to be the definition of Six Sigma itself. Numerous businesses specialize in training new “Black Belts” by the hundreds in the finer art of DMAIC with most of the Fortune 500 employing a large cadre of such specialists.

More significant than the ubiquitous DMAIC and Black Belts, most companies that have a Six Sigma program in place underutilize its potential by aiming it primary at reducing operational costs.

When used in this internally-focused way, Six Sigma can be an effective tool with a significant ROI to be expected. On the other hand, when used in a manner that is externally focused, i.e., on the customer, Six Sigma becomes a powerful tool that can be the foundation of a systematic approach to improve customer satisfaction.

An ironic twist to a customer-focused versus internally-focused comparison is that the primary objective of the internally-focused approach (cost savings) is actually a significant by-product of the customer-focused approach.

In other words, increasing customer-focused quality will also result in reducing internal costs.

Recently, a friend of mine who used to be an executive in a Fortune 500 company reminded me of this point by saying, “It used to drive me crazy that the same things that our customers were complaining about were costing us a fortune. Fix the root-causes of those complaints and you get happier customers and lower cost.”

Besides the obvious human impact, I wonder what the 100,000 deaths per year cost the health care industry.

For customers, quality is very important and pretty straightforward: deliver what they want the first time, accurately and on time. That covers everything from the availability of network-based services and the time it takes to deliver a customer transaction, to the accuracy of the bill customers receive every month.

At the end of 2001, my company, EasyLink was operating at about a 3.5 Sigma level of quality. It is generally believed that most companies operate around this level and, if the CNN statistics above are accurate, the prescription drugs we all take would be close to such a 3.5 Sigma level of quality.

Going for Gold

It was clear to EasyLink, that although it may be commonplace, 3.5 Sigma was just not good enough.

EasyLink built a quality management system in 2002 based on an overall long-term goal to achieve a Six Sigma-level of meeting our customers’ expectations.

Each year the progress needed toward that long-term goal is established by identifying customers’ basic expectations and determining how the company’s performance against each of these expectations should be measured.

With guidance from the customers themselves, the vital few customer-centric measures that emerge become the highest priority, customer-impacting metrics. Annual improvement targets for each measure are set based on the gap between current performance and the performance expected by the customers

In order to engage every employee and help make customer-focus part of the corporate culture, the Six Sigma goal and metrics are cascaded throughout the business with the intent of establishing clear organizational linkages at all levels.

This cascading, or “catch ball”, is an iterative set of conversations that result in determining what is possible by each organization to help achieve the company’s quality objectives.

With this approach, organizations not only derive their own measures and targets that are aligned with the overall goal, but everyone sees how their roles and work links to, and influences the company’s performance.

While all Six Sigma improvement projects and teams follow the standard Six Sigma improvement methodology of DMAIC they are very strategically driven and focused on “full-stream” — from customer input to customer output — process improvement.

This approach is, once again, different from the norm which tends to aim projects at internal costs.

It’s the Customer

The long-term goal, annual improvement targets and methodology are all very important. Nonetheless, it all boils down to delivering customer-focused results.

By the end of 2003, EasyLink had reached a 4.5 Sigma level in the areas of key importance to its customers (about 1,400 defects per million).

From a benchmark point-of-view, 4.5 Sigma is a pretty good place to be. The number of customer-impacting issues was down significantly and EasyLink’s customers were taking notice of significant performance improvement.

Over the past three years EasyLink has improved across all of the customer-impacting areas measured with some reflecting greater than 100% improvement over that timeframe. Still, it was clear that the journey had only begun and that even better performance was needed.

By the end 2004 EasyLink was knocking on the door of 5 Sigma as it continued on its way toward its long-term goal.

Imagine if the health care industry had a similar goal to achieve a Six Sigma level of meeting its patients’ expectations. Imagine the impact of prescriptions reaching a Six Sigma level of quality and reducing the 100,000 deaths each year to less than 200?

Sure that may seem a little farfetched, but sitting in the waiting room I hoped that my daughter was getting that level of care. She, as do all patients of every hospital and all customers of every business, deserves it.

Bill Robinson is vice president of Quality at EasyLink Services. He has more than 25 years’ experience in quality and reliability management. Before coming to EasyLink, he was vice president of Quality, Reliability and Customer Satisfaction with Lucent Technologies.