The Basics of Lean Six Sigma for Marketing
Summary: The discipline of Six Sigma has a long history of being tied to manufacturing. Companies like GE and 3M have had success implementing Six Sigma practices in the development of their products. But what about the service side of business? What about a discipline like marketing? Absolutely, Six Sigma has a place in marketing operations, and has some proven success in the last decade. I am certainly not the first person to tie Six Sigma to marketing, but I do think there is a space to make it a little bit more accessible and relevant to today’s marketing challenges. Some of the materials out there that link Six Sigma to marketing are kind of dated, so I want to brush that off a little bit and give you a look at how Six Sigma can improve marketing in 2021 and beyond. I want to try and take the “scary” out of Six Sigma, and show you how its core concepts can accelerate your marketing operations.
In this article, I will be highlighting some of the high-level Six Sigma concepts, including:
What Six Sigma is
Important Lean Six Sigma Concepts
Voices of the Customer, Business, Process, and Employees
The Fishbone Diagram’s Use to Identify a Problem
Critical to Quality Characteristics
How to Build the Case for Using Six Sigma
How Marketing and Six Sigma Fit Together
What is Six Sigma?
Six Sigma is a methodology that utilizes statistical tools and concepts to identify variations or defects in a process. The Marketing sector of business is all about matching customers with products they need or want. When these two methods are put together, you end up with a statistically driven way of creating products or services that customers want, and will buy. Therefore, Six Sigma and marketing is an essential combination to reaching the goal to increase customer satisfaction at every interaction while simultaneously increasing profitability for your company.
Important Lean Six Sigma Concepts
Concept of a Process
Organizations deliver products and services to customers and clients. Amazon delivers books, YouTube delivers videos, Tesla delivers cars, and the Mayo Clinic delivers healthcare. Each and every one of them delivers products and services. They exist for no other reason.
But how do they deliver these products and services? They are delivered through processes. Every company, regardless of size has processes that drive operations, including marketing.
The textbook definition of a process is a system that transforms inputs into outputs. To keep this very simple, consider that the inputs to Amazon are products such as books, clothes, and toys from manufacturers and small businesses. The process receives and stores them. Orders are then filled. The goods are then delivered to the customer and represent the outputs of the process. Products in, order happens, products out. Simple as that!
Describing Process Inputs and Outcomes
I like math, so let me describe the concept of a process in a different, mathematical way. Consider a process with a single input. It can be expressed as:
Y=f(x)
The “Y” represents the process output and the “X” represents the process input.
Using mathematical terminology, we say that “Y is a function of X”. So the value of “Y” depends upon the value of “X”. Simply stated, output depends on inputs.
Relationships and Systems
But in most cases there may be several inputs. It would therefore be appropriate to describe a process with two inputs as:
Y=f(x1, x2)
Or with five inputs…
Y=f(x1, x2, x3, x4, x5)
By describing a process in this way, focus is directed to the relationship between inputs, processes, and outputs; we visualize it as a system. To say it another way, “systems thinking” is encouraged in contrast to viewing a system as a set of separate and independent factors.
Voices of the Customer, Business, Process, and Employees
A process has many voices that influence the way it is designed, and the way in which it delivers products and services to its customers. In Lean Six Sigma, these voices are given names.
First is the Voice of the Customer, or the VOC. It defines the needs and expectations of the customer. It is a voice that must be heard for the process to deliver customer value.
The second is the Voice of the business, or the VOB. It is a voice that ensures the objectives of the organization are reflected in its business processes.
The third is the Voice of the Process, or the VOP. It is a voice that addresses the capability of the process. It places limitations on the process. For example, it may not be possible to provide high quality content for a blog if the marketing team employs people with little knowledge of keyword research, copywriting, etc. The VOP is simply not capable of providing that level of service.
Finally, the Voice of the Employee, or VOE, is essential. Their voice is instrumental in designing processes and implementing them once they have been designed. Their voice cannot be neglected!
Identifying a Problem: Fishbone Diagram
When a problem occurs, it is important to find its root cause. One very useful tool is called a Fishbone Diagram. In this diagram the head of the fish represents the problem whose root cause needs to be uncovered.
By tracing all possible problems to their root cause, the real problem, not just its symptoms, have a better chance of being addressed.
Critical to Quality Characteristics
Critical to Quality (CTQ) represents those dimensions of a product or service that are instrumental in delivering a quality outcome.
Cost of Poor Quality
Lean Six Sigma promises efficient and consistent output in an appropriate level of quality. Poor quality is to be avoided. The term “Cost of Poor Quality” (COPQ), is a very useful concept in Six Sigma. It represents the cost that would disappear if the process that delivers products and services were perfect. Cost of Poor Quality is incurred when customers return a recently purchased item because it failed to perform as expected or because it failed all together. Cost of Poor Quality is incurred when patients are remitted to a hospital after they have been discharged. Cost of Poor Quality is incurred when a company's brand is damaged after a string of product recalls have been issued.
Pareto Analysis
When it is discovered that there are several performance issues with a process, a Pareto Chart, can be used. It displays the frequency of problems that have occurred by addressing the most common problem. The Six Sigma project team can identify where their attention needs to be focused, in fact, you may have heard of the “80/20 Pareto Rule” that states that 80% of problems can be addressed by focusing on 20% of the issues. This suggests that a significant impact can be made without the necessity to solve all the problems.
Kaizen
Kaizen is a Japanese word suggesting continuous improvement. Continuous improvement focuses on small changes to established processes. They represent the changes made in all corners of the organization from the factory floor to better tracking of web sales. But the operative word here is small. Indeed there are many large or disruptive changes that occur when processes are redesigned, but they are not the focus in a philosophy of continuous improvement. Those large changes are addressed separately through major projects.
Building the Six Sigma Case
The Business Case
A Lean Six Sigma project exists for one purpose and one purpose only: to contribute to the competitiveness and sustainability of the organization. If it cannot meet this simple objective then the project is unlikely to make the best use of scarce resources necessary to undertake the project. This objective is so fundamental to Lean Six Sigma that the first official document submitted to management when a new project is contemplated is a Business Case . This is a document expressing the nature of the problem, and how its solution can contribute to the objectives of the organization. A Business Case is not lengthy. It gets right to the main point. It defines the problem, suggests how the problem can be solved, and estimates the costs and benefits associated with the project.
Project Charter
The Project Charter is a document that formally authorizes a project and identifies the steps that we be followed to solve the problem. In contrast with the Business Case, it addresses in detail what will be done to achieve the project’s objectives. The charter summarizes the current process, identifies the problem areas that will be improved, specifies a step-by-step strategy that will be followed, defines metrics, and includes a financial evaluation of the project. As such, the charter is a contract between those who will do the work and leadership.
Metrics
It is not enough to promise that if a Lean Six Sigma project is approved process outcomes will be improved, the number of defects will be reduced, or that processing times will be shortened. These promises are far too vague to justify the time and expense that will be devoted to a project. Concrete metrics are recommended. So, if the purpose of a project is to reduce content publication time, then it would be more appropriate to establish a concrete estimate. For example content production time will be reduced from the current average of 5 hours to an average of 2 hours.
Financial Evaluation
In addition to concrete goals, projects must meet financial hurdles. Clearly, devoting time and money to a problem that contributes little to customer value, revenue growth, or cost cutting is hardly justified. Yet many organizations fail to prioritize their projects and as a result achieve far less benefit from marginal Lean Six Sigma projects than they would from those that promise better payoffs. A very simple way to justify and prioritize a project is to estimate its benefits and costs.
It will therefore be necessary to estimate what benefits that the company will see if the project is undertaken. Will it improve customer value? By how much, and what will this improvement be worth to the company? Will it lead to an increased in revenues? If so how much? Will it lead to reduction in cost? It will also be necessary to estimate project costs. What resources will be necessary? What will they cost?
Benefit Cost Ratio
There are several ways to compare benefits and costs. The simplest is to calculate a Benefit Cost Ratio. To compute this ratio the benefits are divided by the cost. Super easy calculation.
Ratio = Benefits / Costs
So if the benefits from a project are projected to be $450,000 and the cost estimate is $100,000, the benefit cost ratio is 4.5. In other words, the project will deliver four and a half times its cost. Clearly the larger the ratio the more the company will benefit from the investment.
Six Sigma for Marketing Seems Exactly Opposite of Agile Marketing… Huh?!?
You are not wrong. If you follow my blog, you will find a lot of content about Agile and Scrum, which takes a different approach from Six Sigma… at least on the surface. I use Agile and Scrum in marketing for new projects and initiatives. Agile and Scrum push value out to customers quickly, with little overhead. Six Sigma is definitely a more formal process, with documents like business cases and project charters. The difference is to treat Six Sigma principles as a process improvement tool. There is much overlap between them, which I think you will find I will draw if you follow my future posts.
This post was to provide an introduction to some core concepts in Lean Six Sigma, with some marketing examples. Stay tuned for a lot more content that will show you how to implement Lean Six Sigma tools in your marketing operations!
