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© 2001 Sandholm Associates
Six Sigma the Swedish way
PAPER TO THE 4TH INTERNATIONAL QMOD CONFERENCE 2001
IN LINKÖPING
Abstract
Many Swedish companies are nowadays making efforts to implement Six Sigma programmes in their operations. So far, this has mostly been done in response to prompting by foreign, normally American shareholders, partners and/or consultants. This means that many of today's Six Sigma programmes are based on models that have turned out to be successful in other countries and cultures, which per se is no guarantee that they will have the same success in Swedish companies.
This paper presents some valuable lessons regarding how a successful Six Sigma programme can be developed for and implemented in Swedish businesses. It also discusses the most important differences between traditional American Six Sigma programmes and those that have turned out to be successful in Swedish companies and organisations. The paper is based on the author's research at the Royal Institute of Technology in Stockholm and on his experiences from training and consulting activities within Sandholm Associates AB.
1. Introduction
The Six Sigma concept was launched in the middle of the 1980s within Motorola. The reason was that the company had been intensively engaged, ever since the early 1980s, on improvement projects as a consequence of the serious quality problems that had emerged at the company when the Japanese revolutionised the market at the end of the 1970s. In 1987, a global corporate improvement programme, named Six Sigma, was launched with the object of radically reducing failure rates and lead times and of increasing customer satisfaction.
The name Six Sigma was taken from statistical theory. Its implicit target was that a minimum capability index of 2.0 and a variation in status of no more than 1.5 standard deviations could be accepted. The implications of this were then converted into a target whereby a maximum of 3.4 failures in million opportunities could be accepted. In practice, however, the main intention was to create a philosophy that focused the attention of management and employees on improvements.
The Six Sigma concept is an improvement programme that consists of an organisational structure on which to base improvements. The improvements are run in co-operation with the employees concerned in the form of projects initiated on the basis of problems and opportunities that have been systematically identified in the business. The projects are controlled by the management groups having responsibility for the problem area in question, and are supported by properly qualified improvement specialists. Distinct roles are defined in the form of problem owners (Champions), improvement specialists (Black Belts) and employee (Green Belts). The specific features of the a Six Sigma programme is that all role players are given well designed and challenging training programmes in problem solving, that the process advances at a high level of intensity, and that substantial resources are earmarked for improvements. The content of the programme and the training it requires are not new as such, consisting as they do of a number of selected problem solving methods and aids (Breyfogle, 1999) drawn from traditional quality management. However, the scope and intensity of Six Sigma projects open up entirely new improvement possibilities.
In the 1990s, Six Sigma programmes were also started in numerous other companies. Initially mainly companies in America, but later also in companies on other parts of the world. Some companies, among them General Electric, have succeeded very well and generated remarkable returns on their improvement projects. This has had the further effect of creating favourable publicity and stimulating interest among other companies. Six Sigma has consequently become one of the most popular trends in management at the beginning of the 21st century.
The other side of the coin, however, is that this trendy aspect can easily result in other companies unthinkingly following the crowd without critically questioning, adapting and redesigning the concept to meet their own specific needs. This behavioural pattern was also observed in the past in connection with other quality trends, such as Quality Circles, Kaizen, ISO 9000 and quality price models. The effect during the periods when these methods were trendy was that many companies failed on account of having the wrong expectations and applying the methods incorrectly. One consequence of these failures was that the methods in question fell into disrepute, their efficacy was questioned and in some cases the methods ceased to be used. At its worst, a future scenario for Six Sigma could be quite similar in character.
In Sweden, companies such as Volvo, ABB, Ericsson, SKF and others are running programmes that are entirely or at least partially inspired by Six Sigma. Many of the companies that have started Six Sigma programmes in Sweden have done so under American influence. In some cases because they were initially developed via their subsidiaries in the USA, in some cases as a result of the influence of American owners, customers or partners and in other cases through the engagement of American consultants.
Even if the design of the Six Sigma programmes in question was successful in American companies, experience shows that the direct copying of successful strategies and methods of approach from elsewhere is not always a risk-free process. Differences in cultures, languages and conditions can have far-reaching effects on how such programmes should be designed. A striking example of this is provided by the many Swedish companies which attempted to introduce Japanese Quality Circles in the middle of the 1980s (Sandholm, 1983). Many of these Quality Circle programmes failed. One of the main reasons was that many of these Swedish companies failed to understand the cultural differences between Sweden and Japan and consequently did not adapt the concept into line with the corporate culture prevailing in Sweden. This suggests that it would be wise to adapt Six Sigma programmes not only to Swedish conditions but also to the conditions existing in the company in question.
2. Research methodology
Through Sandholm Associates AB, the author has been engaged for several years in training and consulting activities in the quality area in Sweden and many other countries. In the past this mostly involved introducing efficient methods for running improvement activities in various types of enterprise and organisation. In recent years, it has also included the implementation of Six Sigma programmes at a number of companies. Several different and important lessons have been learned from this work.
Since 1995, the author has also had responsibility for the quality division at the Royal Institute of Technology in Stockholm. The author's main area of research is known as Return on Quality and it aims to establish effective methods for running and verifying improvements. The method used is based for the most part on case studies in which numerous companies are studied. In recent years, therefore, the author has been in a position to follow the introduction of Six Sigma programmes in a number of different businesses.
3. What factors make Six Sigma successful?
The author's research and experiences from training and the introduction of Six Sigma programmes have made it possible to identify a number of key factors that need to be taken into account if the greatest success is to be achieved. By the same token, shortcomings in these areas could well cause problems.
3.1 Involvement of top management
Far and away the most decisive factor determining whether a Six Sigma programme is successful is that the process is run by and has the full support of the company's top management echelons. Without the full support of top management, it would probably be very difficult to achieve those pioneering changes and breakthroughs in attitude that Six Sigma activities require throughout the entire organisation. Of course, most of the practical work in connection with the implementation of Six Sigma has to be delegated to the operative quality departments, for example, but it should be made clear that the process is run by top management. This has emerged particularly clearly in organisations that have successfully implemented Six Sigma, such as Motorola and General Electric. The fact that in some companies the emergence of a growing tendency for improvement activities not to be run by top management is the cause of no little concern.
Another recurrent problem is that the role of middle management in improvement activities is not well defined. Many companies experience difficulties in involving their middle-tier managers. It is often these cadres that are directly affected by the measures decided upon. In a worst case scenario, this can lead to strong resistance to change arising at this management level. As middle management is normally organised from a functional perspective, a further effect is that the improvement activities can give rise to sub-optimisation throughout the process.
In order to achieve real success with Six Sigma, it is therefore important that managers at all levels in the operative organisation are involved and are clearly designated as Champions (problem-owners). It is also important that the different roles in the Six Sigma process are given the correct status and recognised as important stages in the career development of the individuals concerned. Wage formation and bonus systems, if any, should therefore be closely linked to the improvement activities throughout the organisation.
Experiences shows (Blakeslee, 1999) that successful Six Sigma programs are integrated with existing initiatives, business strategies and key performance measures. For being able to do so top management involvement and commitment are a matter of vital importance.
3.2 Six Sigma is an overall concept
The point about Six Sigma is to introduce an efficient organisation upon which improvements can be based, which means that all the roles need to be properly worked out and effective if the desired results are to be achieved (Harry & Schroeder, 2000). It is of particular importance to co-ordinate the development of Champions, Black Belts and Green Belts, as these are the roles in the problem-solving based project organisation that Six Sigma is based on. Champions own the problems and order the improvement projects they want to see implemented. Green Belts take part in the projects, and Black Belts provide the necessary specialist support and sometimes also function as project managers in improvement projects. It is therefore essential that all these roles are implemented and works well.
There is a distinct tendency in companies that are currently implementing Six Sigma as well in the debates and discussions surrounding Six Sigma in the media, and this is the excessive focus that is given to the role of Black Belts. Much has been written about the content of Black Belt training and the number of trained Black Belts, etc. In the worst case, this can lead to a programme that has no real chance of functioning and to a failure to realise the currently rather high expectations.
The author's experience is that most interest should instead by focused on the role of management (Champions). It is important that the ability of top management to handle Six Sigma projects is developed before that of other employees since this will a) improve their chances of acting in a way that will support other developments and b) give them the necessary mental security that comes from mastering the area in conceptual terms. If the role of management becomes secondary, the consequences will be very serious as management is the owner of the resources; this means that lack of involvement on the part of management could quite easily make active improvement programmes ineffectual.
It is also of importance that the entire company is taking part in the Six Sigma program. If just parts of the organisation are effected there is a potential risk that improvement measures results in sub-optimisation. Successful Six Sigma programmes have furthermore often a strong support from the support functions of the actual companies.
3.3 Results require resources
In many companies, Six Sigma programmes have generated considerable financial benefits. For example, Motorola demonstrated savings of some $15 billion (McClusky, 2000) over an 11-year period, General Electric generated savings of $2 billion in 1999 (General Electric, 1999) and American Express saved an average of $ 285,000 on each improvement project. The return on the investments made can also turn out to be very high, often more than 5 or 10 times.
However, it is important to point out that those companies that have succeeded particularly well set themselves challenging targets. They arranged extensive training programmes and very large numbers of individuals were involved. Normally, the number of full-time employed Black Belts varied between 1 and 3 per cent of the total payroll. As long ago as in 1992, Motorola was already investing $150 million a year in Six Sigma training (Fisher, 1992), and in 1999 General Electric invested $ 500 million in improvement activities (General Electric, 1999). One conclusion of this is that for Six Sigma to produce the expected results, the necessary time and resources have to be systematically set aside.
Consequently, author is by no means convinced when companies claim that they cannot afford to devote these resources to Six Sigma. For example, situations are known to have occurred where Black Belts only take on this role on a part-time basis. This will significantly increase the likelihood of their failing since there will be considerable competition for their time between Black Belt and operative activities, and it will become far more difficult to run many improvement projects owing to lack of resources. Incidentally, this is also one of the most important reasons why many traditional improvement programmes have failed to achieve the desired results.
The argument that a company cannot afford Six Sigma is also easy to rebut. More detailed study of the cost of poor quality in a business can often quite easily throw up measurable costs in the region of 20 to 30 per cent of turnover (Sörqvist, 1998A). And this is not taking into account that fact that the cost of many faults and failures, such as dissatisfied customers and loss of market share, cannot be quantified. If a company claim that improvement activities are too costly, this should perhaps be interpreted as a result of ignorance and short-term thinking.
3.4 Focus on results
It is very important that Six Sigma activities focus above all on making actual improvements and on what results are to be achieved. The tools and methods that are required for this are the only aids in these programmes that might vary from one situation to another.
A possible threat to Six Sigma, therefore, comes from the exaggerated focus that is often given to the various methods and tools that are incorporated in Six Sigma training. The content of these training programmes is naturally important so that the right solutions to problems can be identified, but the current tendency is for tools and methods to become ends in themselves. Sometimes, one also sees signs that it is becoming a matter of prestige to use the largest possible number of advanced statistical tools and methods in Six Sigma training programmes.
It is obviously essential to provide training in various statistical methods of varying degrees of sophistication quite widely throughout the company if employees are to be capable of solving complex problems. But there is a serious risk that this will be done at the expense of other knowledge and skills, which will thus be excluded from the training. This is particularly relevant since most Six Sigma training programmes tend to last for more or less the same period of time. For example, a Black Belt training programme tends to run for about four weeks of total training time. Consequently, the training content will end up as a compromise between the various desirable areas of competence.
3.5 Customer focus
If a Six Sigma programme is to produce the desired effect, it is essential that the improvement activities have a distinct customer focus (Naumann, 2000). This means that the improvement projects in question should for the most part be selected on the basis of the customer benefit they can produce. It is therefore important that information about customer needs and their behaviour is either available or generated (Sörqvist, 2000), that improvement projects are also evaluated upon completion on the basis of the customers' perspective and that management gives the programmes and projects a strong customer focus.
There is, however, a serious risk that Six Sigma programmes will acquire an overly introspective focus. Such programmes tend to focus sharply on internal variations, the point of departure tends to be production, and in the training programmes, customer focus tends to come low down on the list of priorities. To the extent that this is the case, Six Sigma activities will be sub-optimised and transformed exclusively into a sort of cost rationalisation project where customers and opportunities to generate revenue have ceased to be of interest.
3.6 Professional project management
As already mentioned, the Six Sigma process involves introducing an effective project organisation for solving problems. It is therefore important that all players are aware of how important this is and that the training gives them the knowledge they need for running project activities efficiently. The Champions should therefore fully master their role as sponsor and orderer, Black Belts and/or Green Belts should be masters in their roles as project managers. Green Belts their role as project participants.
The author's studies suggest that normally it is essential to develop simplified project management models and aids since those that already exist often tend to be more suitable for running significantly more extensive projects. Six Sigma training programmes should include information about project initiation, project planning, project management, group dynamics, and project follow-up (Duncan, 1996). If they do not, there is a risk that some of the improvement projects that have been started will fail due to the absence of certain necessary conditions. In this area too, one far too often sees shortcomings in the design of the Six Sigma programmes in question.
3.7 Behavioural approach
Running improvement projects largely involves changing people's habitual methods of working and their attitudes. It is therefore important that the people who are involved in the change process are properly informed about how people act and how they are to handle such resistance to change (Sörqvist, 1998B) as may arise. If this is not done, situations can arise in which a Six Sigma project is successful in generating proposals for valuable improvement measures, but that the company fails to implement them. The author considers this to be a greater risk in Swedish companies than in companies in many other countries on account of our relatively flat and democratic organisations (see also below).
3.8 Follow-up of results
One essential aspect of successful improvement programmes, which has often been ignored by Swedish companies, is the need to follow up closely and verify the results of completed improvement projects. The follow-up should be based on the three different perspectives: goals, methodology and return.
Following up the project goals involves verifying that the intended results were actually achieved; this is an important part of the project management process. Follow-up of methodology means following up the tasks carried out with the object of learning useful lessons and absorbing them into the organisation so that they can be used in future improvement projects.
Follow-up of return involves verifying the effect achieved by implementing the improvements. By far the most important task is to determine the financial return (Sörqvist, 1998A) from the improvements that have been made, as this information will become a powerful instrument to drive the rest of the Six Sigma activities. By tradition, American companies have tended to attach great importance to this factor. Swedish companies, on the other hand, are normally relatively unfamiliar with this type of cost focus, and there is therefore a risk that it will not be given sufficient priority. A positive exception is Volvo, which has incorporated into its Six Sigma programmes an additional role, that of Financial Analyst, whose aim is to support this type of follow-up.
Apart from following up the financial return, improvements made should also be followed up in terms of customer and employee effects, as these non-monetary effects are also of great importance. Follow-up of customer effect will help to give Six Sigma programmes a customers focus, and follow-up of employee effect will provide valuable incentives for employees.
Finally it is very important that the measured return on the quality improvements are communicated all over the company. In this way both employee and management get knowledge about how successful the Six Sigma program has been. This will in the long range result in a change in their attitudes. A potential risk is that the Swedish culture makes it difficult to have focus on this kind of feedback.
3.9 Language and terminology
It is important to make uniform use of language and terminology, both internally and externally. So far, American terminology (roles, tools, etc.) has tended to predominate in Swedish Six Sigma programmes. As such, this is of no great importance, but there is a risk that some businesses and organisations will be put off by this practice. The author's experience shows, for example, that this is the case in certain public sector organisations. It might perhaps therefore be more advisable to agree on a uniform Swedish terminology.
A far more serious problem, however, is caused by the fact that different organisations have decided to use the same terms in different ways. For example, some companies fill the various roles in Six Sigma with different tasks and responsibilities. This reduces the scope for learning from each other, and means that misunderstandings can easily arise.
Another possible problem area is that many Swedish companies are using foreign consultants and trainers when implementing Six Sigma in their businesses. Experience shows that language and cultural differences can result in misunderstanding and failures. This is especially critical when training employees.
3.10 Implementation strategy
To improve the chances of successfully implementing Six Sigma in an organisation, a carefully prepared implementation plan should be drawn up. To be successful it is important that management is fully involved and that useful results are quickly obtained that can be used demonstrate the potential Six Sigma offers. A methodology has been developed within Sandholm Associates AB whereby Six Sigma is introduced in four phases.
The first phase is the Introduction Phase, in which management and other key personnel are trained by external specialists who explain what the concept involves. This is followed by the Trial Phase, in which, with the aid of outside support, a few improvement specialists are quickly trained so that they can carry out some improvement projects with outside guidance. The results of these trial projects are evaluated in detail and then serve as a basis for the development of a Six Sigma programme specifically designed for the individual company. They also provide the models that can be highlighted to give Six Sigma the necessary focus throughout the business.
The process then moves to the Implementation Phase, in which the Six Sigma programme is implemented throughout the organisation. After this it moves on to the Continuation Phase, in which the concept is continuously maintained and improved.
3.11 Responsiveness to external influences
One of the objects of Six Sigma is normally to enable the organisation to acquire long-term self-sufficiency terms of training. This is important as Six Sigma involves a great deal of training input, and the object of some roles, mainly Black Belts, is often to have a high turnover rate. Master Black Belts therefore function as trainers for new Black Belts. This structure also makes it possible to pass on earlier experiences to the next generation of Black Belts. However, one of the risks inherent in this system is that, in the long term, it may result in a sort of inbreeding whereby the business comes to base its improvement activities solely on information and expertise generated and developed internally.
A successful Six Sigma design should therefore be combined with active measures to identify new ideas and influences from outside the business. External further training programmes, benchmarking, co-operation with researchers, etc. are thus of great importance to enable the company to keep its expertise in the improvement area up at the cutting edge.
3.12 Six Sigma for small companies
Most of the companies using Six Sigma successfully today are rather large companies. This means that many of the Six Sigma programmes and their methods and tools are chosen and developed to fit this kind of companies. The author's experiences shows that it can be difficult to use the same concepts in a small business. This makes it important to develop Six Sigma programs specific for small companies. In the future this can be a very critical success factor for the entire Six Sigma concept as many of the larger companies plan to demand that their, in many cases small, suppliers are using Six Sigma.
4. Adapting Six Sigma to Swedish conditions
As mentioned above, it is important to develop a Six Sigma process that suits the typically Swedish corporate culture. Some of the areas where changes and developments can usefully be made include the following:
4.1 Role of the individual
The author's experience is that there is a greater need to understand and be capable of handling human behaviour when improvements are being made in Swedish companies than at companies in many other countries. The reason for this is that Sweden's corporate culture is characterised by a relatively shallow hierarchical structure and that employees have considerable influence. This involves a serious risk that resistance to change might arise, which makes it particularly important that individuals who are involved in and administer the change process are especially capable at handling human reactions in a professional way.
However, most American Six Sigma training programmes contain relatively few features of this type. One reason for this could be that a typical American company has a far more hierarchical structure, and it run from the top; consequently it does not have the same needs. When the Six Sigma concept is being adapted to Swedish conditions, therefore, the training for the various roles should be modified to include more behavioural factors and to provide information and aids for handling this type of problem.
4.2 Project management
As discussed above, one of the most important skills required for an improvement project is to be able to control and manage improvement projects effectively. The author's studies and experience also show that a very common reason why improvement projects fail is failings in this regard.
The training that is provided in the various Six Sigma roles should therefore be developed with regard to these skills. Individuals who are to run improvement projects should be given proper training in project management. Suitable aids and models for this should be developed and procedures drawn up.
4.3 Tools and methods
Many American Six Sigma training programmes, especially those for Black Belts, focus particularly closely on advanced statistical tools. Much of the time spent on training is devoted to teaching and providing experience in the use of these tools. However, there is a risk of this being done at the expense of other knowledge and skills, a point that has been discussed above. As the author's studies indicate the need to complement Swedish Six Sigma programmes with additional areas of competence, (see 4.1 and 4.2) certain changes in the tools and methods used needs to be made. Differences in educational systems and the focus of education in various countries may also have an effect on what tools and methods Six Sigma training programmes should include. At American companies, the connection between statistics and inspection in the quality area is often more pronounced than in Sweden. For example, it is fairly common for a quality manager in American companies to have a degree in statistics. This perhaps provides part of the explanation as to why many Six Sigma programmes attach so much weight to advanced statistical methods.
The author has some doubts about the extent to which knowledge of these tools necessarily needs to be dispersed throughout the entire organisation when it comes to problems that are typical of modern companies. A better arrangement perhaps would be to have a small number of experts, i.e. a few Master Black Belts, who have mastered advanced statistical methods and who can be drawn upon to support the analysis when necessary. An important challenge for the coming years, therefore, will be to attempt to determine what tools and methods are most useful for solving problems and to work out customise Six Sigma processes that best meet specifically Swedish requirements.
4.4 Terminology
So far, in Sweden Six Sigma has mainly been applied in large international industrial enterprises which often prefer to use the original American terminology so that they can communicate and discuss Six Sigma with foreign players and partners more readily. In the event that more small firms and public sector organisations decide to start using Six Sigma, it could be useful to create a readily understood and acceptable terminology in order to ensure it is understood and accepted.
5. Conclusions
The author's research and experience indicate that Six Sigma provides an efficient structure for improvement programmes. The method focuses on a distinctly problem-solving oriented project organisation that is well placed to produce useful results if it is implemented in the right environment. Hopefully, by giving quality activities this focus on improvements we will move into a new era in which the focus is on results achieved rather than on prizes and certificates awarded.
However, to be successful, the Six Sigma concept needs to be continuously developed and improved. The author wishes to point out the dangers of directly copying successful Six Sigma programmes from other companies. Six Sigma has to be adapted to meet the needs of the particular situation and the organisation in question. This is of particular importance when influences are imported from other countries and cultures. As far as Swedish companies and organisations are concerned, it is therefore particularly important to find ways of running Six Sigma the Swedish way.
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Background
PAPER TO THE 4TH INTERNATIONAL QMOD CONFERENCE 2001 IN LINKÖPING
Dr Lars Sörqvist
Industrial Information and Control Systems
Royal Institute of Technology, SE-100 44 Stockholm Sweden
Email: lars.sorqvist@sandholm.se
References
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Breyfogle III F W, 1999, Implementing Six Sigma - smarter solution using statistical methods, Wiley & Sons, USA
Duncan W R, 1996, A guide to project management body of knowledge, PMI, Sylva, USA
Fisher G, 1992, Veckans Affärer, nr 43
General Electric, 1999, Annual Report 1999
Harry M, Schroeder R, 2000, Six Sigma, Currency, New York, USA
McClusky R, 2000, The rise, fall and revival of Six Sigma Quality, Measuring Business Excellence, vol 4 nr 2
Naumann E, 2000, Customer Centered Six Sigma, AQC, Indianapolis, USA
Sandholm L, 1983, Japanese Quality Circles - A Remedy for the West´s Quality Problems, Quality Progress, February
Sörqvist L, 1998A, Poor Quality Costing, KTH, Stockholm
Sörqvist L, 1998B, Hantering av individers förändringsmotstånd och attityder vid verksamhetsutveckling, Dialogues on performing Knowledge, Handelshögskolan och KTH, Stockholm
Sörqvist L, 2000, Kundtillfredsställelse och kundmätningar, Studentlitteratur, Lund |
