SIX SIGMA: moulding organizational transformation

Globalisation, privatisation, deregulation - the pressure has been mounting on all fronts. It has been accompanied by sagging profits and dropping revenues, counterbalanced by the need to reduce costs on all fronts. Confronted with global competition, global customer bases and global suppliers, organizations are scrambling to work out new ways of coping with the changing business dynamics. Optimization of resources, improved process efficiencies and enhanced customer handling are some of the logical answers to the need to reduce costs while facing up to global competition and demanding customers. How does an organization achieve all this at one shot?

Wipro was faced with the same scenario as the winds of liberalization swept across India in the mid-1990s. The management assessed the situation and came up with the need to go world-class in order to stand up to the challenge of new levels of competition and new standards of performance. At the same time there was the recognition that quality alone would not provide the answer. There was the need for an organizational transformation that would prepare the entire organization - people, products, services, processes - for the new world of business. At Wipro the quest for such organizational transformation culminated with the adoption of the Six Sigma program in 1997

What is Six Sigma?

Sigma is the symbol for standard deviation in statistics. It indicates variance or deviation from a standard. What is its relevance to an organization? Six Sigma brings this statistical measurement to business processes - as an indicator of how defect-free a product or process is. Six Sigma implies 3.4 defects for every 1 million opportunities for defects, which translates into a process efficiency of 99.99966%.

Tracing its evolution, Six Sigma took root within the portals of Motorola in the United States. As it evolved Six Sigma grew from being a quality system to encompass an entire system of leadership and support systems. The main thrust of Six Sigma is the application of statistical tools to business problems. The premise is that a business problem can be described statistically to unveil a statistical problem. By pinpointing and rectifying the statistical problem one can arrive at a business solution.

Six Sigma adopts a twin-pronged approach of defect reduction and cycle time reduction that can be applied to virtually any business process or transaction. This system recognises that defects are the product of an entire process. It works by re-creating the process to prevent the occurrence of defects. Six Sigma extends a battery of methodologies that can be used in different scenarios – manufacturing, transactional, cross-functional etc. These methodologies emphasise statistical and mathematical systems that collect data, and analyze results as the path to reduce defects in products and services. While some methodologies help achieve defect reduction, others focus on cycle time reduction.

The scope of Six Sigma extends much beyond other quality systems. It touches every facet of organizational functioning, since it can be applied to a variety of processes across the organization. Thus Six Sigma lends itself equally to HR processes, administrative functions, software development, financial or manufacturing systems. At every step it goes beyond the problem at hand to create surround systems that ensure organizational transformation. A successful Six Sigma implementation works to ensure top management commitment and people participation and creates an appropriate organizational framework for the implementation and adoption of Six Sigma across the organization. It would also ensure integration with business needs and goals.

The logic is straightforward. If you measure how many defects there are in an existing process, you can figure out where you are today. You can then devise methods to systematically eliminate those defects and progressively get closer to a variance of Six Sigma - as near to perfection as possible. Six Sigma ensures the building of measurement systems that help measure progress at every step.

Why Six Sigma?

Financial savings are the most visible benefits that Six Sigma brings to an organization. The success and popularity of Six Sigma have ridden on this fact. Motorola reportedly saved over 2.2 billion in the first few years after implementing Six Sigma. Wipro has notched up savings of more than Rs 1 billion in year 2001-2002.

However, Six Sigma brings other equally significant and pertinent benefits to an organization. Topping this list are the operational improvements and enhanced customer satisfaction that Six Sigma introduces. Through a constant focus on customer requirements, process alignment, analytical rigor and timely execution, Six Sigma is able to deliver remarkable benefits - process cost reduction, defect reduction, cycle-time improvement, lowered wastage. It achieves this through a better understanding of customer requirements, increased customer satisfaction, and more reliable products and services.

Six Sigma also lets customers define quality. So “quality is value as perceived by the customer”. Under this scheme each time a customer expectation is not met, a defect is produced. It makes sense that by working to eliminate those defects Six Sigma translates into high levels of customer satisfaction. An organization that embarks on Six Sigma encounters a host of other intangible benefits. For instance the teamequired to bring off a successful Six Sigma project is something that stays with the organization. Similarly the statistical approach adopted by Six Sigma injects a data and process culture into the organization.

The bottom line is not just saving of millions of dollars but improved customer satisfaction, enhanced process efficiencies, and increased competitive advantage and market share. At Wipro all of these have helped the organization achieve its goals of becoming a prominent player in the global IT market space.

(The author is Subhash Khare, General Manager – Mission: Quality at Wipro Infotech and can be contacted at s.khare@wipro.co.in. )

Issue BG22 Jan03