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Lean Six Sigma, people and politicians
If there’s one thing that people and politicians alike can agree on it’s that tax dollars are constantly being wasted. Not only that but even when investigations are performed there’s hardly ever any means to hold one agency accountable. So much for Weber’s ideal bureaucratic model, how effective has that been? It’s time to try implementing something new, something fresh. Like lean six sigma! What is Six sigma you ask? Why it’s all the rage! I’m surprised you haven’t heard of it by now. Its helped businesses like GE and motorola save billions of dollars in the last few decades but the federal government has yet to give it a try.
Six sigma is a systematic approach to improve the process. It starts by observation finding what it is that the system is trying to accomplish as well as how it is received by consumers. The consumers in this case would be the citizens. Then it assesses the objective alongside the consumers feedback in order to determine the quality. Putting this to use in government for example might allow us to tackle the problem of over regulation. This occurs when many different agencies are given jurisdiction over the same areas, items or events. Like toilet seats. Thanks to Senator Ted Cruz’s speaking out against the government’s violation of the 10th amendment we now know just how invasive Uncle Sam can be when it comes to our most private habits. When it comes to toilet seats at least three different agencies have authority to tell anyone who owns a building what constitutes proper facilities.
This over regulation mandates that the building owners must be in compliance with not just OSHA standards but be in accordance with the Americans with disabilities act, the International association of plumbing and mechanical officials and the Mine Safety and Health administration for some reason just to name a few. Yet there’s another problem in complying with all of their standards, not only does this prove troublesome for some building owners but these regulations make the experience uncomfortable for many public restroom users. While it may not sound like a big deal the thought of paying several different agencies millions of dollars a year to inspect and enforce these regulations only to wind up with something that you are discouraged from using gets many people a little triggered.
If that doesn’t make for a convincing argument there’s also the matter of school lunches where the FDA and the USDA fight over defining what constitutes a vegetable. Meanwhile most school lunch programs are contracted out to private companies and then a change takes place that costs the company, it winds up costing the taxpayers instead.
Embracing lean six sigma would help us understand what it is that people want and give us the most cost effective way to give it to them. Seeing how feedback lies at the core of the concept it can only grow to strengthen our democracy.
Why Career Development And Training Is Imperative In Your Organization
Employees are the backbone of every organization, and it is therefore in every company’s interest to invest in the career development and training needs of their employees. The development of employees is often used as a strategic tool towards the continued growth of an organization. When employees are developed, a company will realize higher productivity and high retention.
The key to successful employee development is aligning the employees’ career goals with those of the organization so that it’s a ‘win-win’ situation.
Why Career Development & Training Is Necessary
There are several reasons why organizations must take part in their employees’ career development and training, and they include social and demographic trends. As times change so do trends the industry. These changes have forced organizations to ensure that their employees are equipped to carry out their functions in our changing world so as to ensure the organization stay relevant and competitive.
The other reason companies implement career development and training in the workplace is when they realize that there are limited opportunities for advancement of their employees. It is easier and in many cases cheaper to train existing employees than it is to bring in new ones and induct them into the organization’s culture. A high employee turnover destabilizes the company ultimately affecting the bottom line.
How To Successfully Implement Career Development & Training
The first step in implement a career development and training strategy for your employees involves communicating with them so as to identify what their individual career aspirations are. You also need to reintroduce them to the organization’s goals so that they can see how their individual career goals align with that of the organization and how they can develop their career given the various platforms available in the organization.
You’ll also need to analyse the needs of the organization against the skill set of your employees. By doing this, you identify any gaps and the best way to fill them. Will you outsource some of the work? Can you train your current employees so that they handle new or multiple tasks to meet organizational objectives? What specialized training is needed? Once you figure out the answers to these questions, you can move on to the next step.
The next step involves creating a training plan and budget. The training plan and budget are based on both the constraints and needs of the organization. Ideally, you should use the departmental objectives and goals to develop your employees. This is because employees need to be equipped to combat the challenges that come with the organizational goals.
Sigma Strategic Business Consult Ltd
Career development and training of employees is imperative in every organization. You need a trusted and qualified firm to help you make this possible and Sigma Strategic Business Consultant Ltd is your best option. SigmaStrat, a wholly Ghanaian owned multinational company which serves clients internationally through its offices in Ghana and Kenya and with strategic partnerships in Europe, Asia and America, is accredited by the Professional Evaluation and Certification Board (PECB), Montreal, Canada. Sigma Strategic Business Consult Ltd is recognized by the World Bank and the Government of Ghana and has won international awards including Training Service Provider of the Year in 2014 and Business Strategy Firm of the Year in 2013 by a UK based business publication, at the M&A Awards. When you choose SigmaStrat you choose our international reputation for being THE team Development and Performance Improvement People. With over a hundred years combined experience in business growth, we will give you the best career development and training solutions in the market.
SigmaStrat is your solution to guaranteed success.
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Put your money where your mouth is
If you walked into a banking hall or mobile telecom service center today you would find exciting posters and purported valuable doohickeys which seek to depict excellence as their schtick. It’s not uncommon to find many businesses gussied up for the stage while they struggle behind the scenes to make a headway. I wrote about People, Technology and Processes in my previous article. This is my little attempt to waft the aroma of business excellence. I’d like to zoom in on processes today. You manage your suppliers, revenue, cash flows, inventory, distribution and personnel. Why would you not manage the processes that make sure all these things work together effectively? My compatriot Steve Ball puts it this way that Business Process Mapping is a satellite navigation system for your business. “Without it you probably will reach your destination,” he says. “But the journey will take you longer, you’ll find out there are a lot of dead ends out there, you will feel lost sometimes or worst of all (for the men) we might have to stop and ask someone for directions.” I am E Kweku Haizel. I bet you would rather go dear hunting looking at your target through the crosshairs of a Kalashnikov. Get in touch and let’s work this out together. At SigmaStrat we will be able to walk you and your organization through a CI journey that would propel you and your organization higher. http://www.sigmastrat.com
Stop throwing money at business problems
Business leaders place resources into operations and do expect optimal returns. Many times, CEOs and managers resort to throwing money at problems in a bid to obtain the required results. Sometimes, the idea that money answers all organizational problems is “seductive.” But the seduction is about as real as the beautiful/handsome person across the room winking at us, only to discover it was a stray eyelash causing the winking. I’ll tell you what is NOT a secret and not intended to be foisted on your good selves as anything ‘ex cathedra’. It is that to adequately rake in returns you would need to improve your People, optimize the use of Technology, and streamline your Processes. At SigmaStrat we will be able to walk you and your organization through a CI journey that would propel you and your organization higher. http://www.sigmastrat.com
The Lean Church
The Lean Church
Gods work is business. Luke 2:49 says ‘And he said unto them, How is it that ye sought me? wist ye not that I must be about my Father’s business?’. In Matthew 25:14-31 and Luke 19:12-28, we understand that people who make use of the resources God avails to his people are considered ‘good and faithful servants’. Can we say this of today’s ‘everyday’ Christian? Let’s think about how church itself is run. A local church starts in a classroom. Members get preached to. They engage in prayer, fasting and evangelism and get more members. The church expands and they start making contributions toward getting into a bigger auditorium. Members contribute until there is donor fatigue. Some even leave the church because their perception changes. As to whether those remaining are just growing in terms of numbers or in depth of knowledge, ‘by their fruits…you shall know them.’ A few more ‘new believers’ join and some of the old members leave or become less and less committed because someone has offended them or nobody visited them when they were sick. The story continues on and on and one without anybody realising that there is a problem to be solved. What would you do if this was your business? What do you do if your customers leave you? How does it affect your profitability? Remember that the owner of the ‘business’ is God. God expects us to run His business in a way that glorifies Him. Remember what made the wicked servant wicked? 1 Peter 5:2 says ‘Be shepherds of God’s flock that is under your care, watching over them–not because you must, but because you are willing, as God wants you to be; not pursuing dishonest gain, but eager to serve;’
Prayer is key to doing God’s work. We need to take territories by prayer. We also need to evangelise and feed the flock with green grass. But what do we do after that? What other effort can we put in place to ensure we are continually building on what God has placed under our care.
One of the techniques that businesses are using to drive down waste, improve customer satisfaction and improve bottom line performance is Lean Six Sigma. I never imagined that lean principles could be combined with religious principles. But two men in Wisconsin are doing exactly that, creating the concept of what they call Lean Ministry.
Their goal is to achieve spiritual transformation and continuous spiritual improvement. And yes, they really are applying lean principles to achieve that goal.
One of the two is Charles Duffert, a retired Naval officer and business executive who currently teaches lean and six sigma methodologies at a junior college. The other is Dr. Tom Nebel, Director of Church Multiplication and Leadership Teams for Converge Worldwide – the new mission name of the Baptist General Conference.
If the goal of a lean manufacturer is to focus on creating value for customers, Duffert and Nebel suggest that the goal of a lean church is to focus its resources on the transformation of its people.
Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste. Indeed many aspects of life in general are prone to waste. In Lean Six Sigma, types of waste have been categorised by the acronym DOWNTIME: Defects, Overproduction, Waiting, Non-utilised talent, Transportation, Inventory, Motion, Extra-processing.
Examples of these in the church setting include:
Overproduction: Teaching or preaching to large batches of disciples at the same time under the assumption that they are all in need of the same message and are all at the same place on the timeline of the transformation process.
Extra-processing: Separating the congregation into batches by age or gender and placing them in classes with the assumption that God transforms people by age and gender. Also, music, instruments, worship teams, choirs and other productions having more entertainment value than impact on the transformation process.
According to Pande et. al., the “Ideal Six Sigma Roadmap” consists of five steps:
1. Identify core processes and key customers;
2. Define customer requirements;
3. Measure current performance;
4. Prioritize, analyze, and implement improvements; and
5. Expand and integrate the Six Sigma system.
This sounds basic. Right? It becomes even more outstanding when you think about what you are trying to achieve here.
How good is 99.9%?
Approximately 4 million babies are born in the U.S. annually. If the probability of taking home the correct baby was only 99.9%, then 4,000 families would leave with the wrong baby each year…Yes 4000. So we need to take a second look at what we consider ‘OK’ when it comes to God’s business.
“Six Sigma” describes any process which successfully meets all customer requirements 999,997 times out of 1,000,000. In other words, by attaining 6 sigma, you would have taken the time to ensure that given 1,000,000 opportunities, there can only be 3.4 defects. Your efficiency is 99.9999966%.
Lean Six Sigma uses a model in the acronym DMAIC in its problem solving approach.
DEFINE: To bring about any improvement, you need to know what the problem really is. Is it attendance, spirituality, contributions, loyalty, engagement with scriptures, etc.). Is it a real problem? Determine what excellent would look like and what is ‘critical to the customer’ about what you’re trying to improve?
MEASURE: You would then need to put this into actionable terms and determine a goal that is attainable but challenging. The goal should be measureable. In fact ‘SMART’ as we know it. This could be for example: number of new memory verses learned by members per month, new members per month, donations per member per month, tithe payment per month etc.
ANALYZE: This phase deals with understanding why the problem occurring. Use “5 why’s” to get to the real root of the problem. Again, what’s critical to the customer? If it’s attendance, why are people staying home? Because they have better things to do on a Sunday? Why? Because watching football is more exciting than sitting in a sermon? Why? Because football provides social stimulation? It’s exciting? Folks don’t have to dress up? Etc.. Get to the root of the customer expectations.
IMPROVE: Once you’ve really found the problem, then you can tackle this step. Map out the process to find out every relevant step taken in the existing process. What one thing could you do to solve the underlying problem?
CONTROL: Continue to measure, to see if the steps you’ve taken are working. Stay in tune with the customer to see if they perceive the problem improving. Control the improvements, and continue tweaking. Now, move on to the next problem.
I would end with explanations of a few of the jargons and acronyms used in Lean Six Sigma with the hope of driving the point home.
CPI or CI is Continuous Performance Improvement, which begins with Continuous Personal Improvement. Continuous Personal Improvement is the process of sanctification.
Sigma = standard deviation = missing the mark = sin. The closer we can get to the designer’s intent, the more consistently we can deliver the “ideal” to those around us. Missing the mark may not mean falling outside of the specification limits, but always has a cost to society.
Spec limits = the law. Think 10 Commandments. Thou shalt not…. doesn’t tell us what we should be doing — only what we shouldn’t. Focus on the law begs us to challenge every little activity as acceptable or not acceptable (“don’t commit adultery” is the law, but does that mean I can still flirt? Can I read baudy magazines?). Focus on the law will always lead our eyes away from the true goal, and will always have a cost to society. But, focusing on the ideal state — on the designer’s intent or the “middle” of the specification will always drive down variation, because our focus is continuous improvement rather than “good enough”.
The correlation between CPI / Lean / Six Sigma and the Christian walk is truly one-to-one. As you grow in performance improvement training and thinking, you will increasingly find that your job becomes a mission and a calling rather than just work. You become His hands and feet, transforming the world to a better place for everyone around you, for God’s glory.
Credits: This write up includes views and notes from thought leaders, writers and bloggers such as John Porcaro Bruce Hoppe; Scott Bonney, E.Kweku Haizel, and many others.
Customer-centrism
Customer service is the practice of providing customers with a positive and helpful experience, like a brand, it’s what the customer perceives and remembers of the product they used or the service they received.
So voice of a customer is crucial, it’s the driving factor of any organization to deliver quality products/services, conformance to customer’s needs, and developed products/services demanded in the market.
The “voice of the customer” is a process used to capture the requirements/feedback from the customer (internal or external) to provide the customers with the best in class service/product quality. This process is all about being proactive and constantly innovative to capture the changing requirements of the customers with time.
In customer service provision, the voice of the customer represents the aspects which the customers expect or demand from a product and how this can be translated to more specific relevant aspects of the process, this helps firms prioritize goals consistent to the specific customer requirements.
The customer either internal or external, is always the most important focal point for a Lean Six Sigma project.
Lean Six Sigma’s main goal is organizational survival and/or growth through superior and improving customer satisfaction.
Lean incorporates customers in the supply chain and allows them to pull the product through the supply chain which increases process speed whilst Six Sigma focuses on the customer as a source to define what aspects of a certain process are critical to quality.
The Lean speed and Six Sigma quality are brought together in Lean Six Sigma to be able to fulfill the delivery and process control requirements according to the Voice of the Customer.
Many companies tend to focus much on their revenues and forget to manage the expenses. Many realize the need for being lean just because of the realization of emerging competition and technology capability from rivals or other countries who can produce the same quality product at an extremely lower rate by being more efficient and managing their expenses better.
Most people would agree that customers are the most important part of a business – no customers, no business. In order to be successful, a business must know who its customers are and what the expectations of those customers are for the product or service the business sells. In Six Sigma, that process is known as identifying the voice of the customer (VOC). The key to having success in that process is gathering customer data and converting it into measurable critical-to-satisfaction elements.
Tony Watima – SigmaStrat
Organisational Culture lies in the Vision
Marissa Mayer the CEO of Yahoo, ranked the eighth on the list of most powerful businesswoman in America of 2013, believes that strong companies have strong cultures, each has unique and individual flavor.
So what are Corporate cultures?
It understood as a shared common resource, a pattern of assumptions, beliefs and behaviors while coping with problems of external adaptation and internal integration.
Dave Dufield co-founder of People Soft described corporate culture saying “our true competence is our culture, that’s what attracts people and keep them here. It also helps sell to customers. Customers want to work with companies that are competent, trustworthy and fun”
Organizational cultures are created, maintained, or transformed by people. An organization’s culture is, in part, also created and maintained by the organization’s leadership. Leaders at the executive level are the principle source for the generation and re-infusion of an organization’s ideology, articulation of core values and specification of norms.
It believed that companies with strong cultures generally perform better than those with weak cultures, but only when the cultural content is appropriate for the organization’s environment.
But rapid growth enterprises are facing many unique management challenges. One of the challenges is that the management environment is constantly changing and leadership roles rapidly evolving.
So there is need to maintain a strong innovative culture despite a constant influx of new employees and ever-expanding product line that must be developed in the face of limited resources.
Business expansion presents myriad issues that have to be addressed. Growth causes a variety of changes all of which present different managerial, legal and financial challenges.
Growth means that new employees will be hired who will be looking to the top management of the company for leadership.
Growth means that the company’s management will become less and less centralized and this may raise the levels of internal politics, protectionism and dissension over what goals and projects the company should pursue.
Growth means that market share will expand calling for new strategies for dealing with larger competitors.
Growth means that additional capital will be required creating new responsibilities to shareholders, investors and institutional leaders.
Thus growth brings with it a variety of changes in the company’s structure, needs and objectives.
When Marissa Mayer was appointed the CEO of Yahoo in 2012, the company was suffering from team work and diminishing quality of work as the primary motives to the company’s struggling performance thus gradually losing its market share.
She decided to take an inventory of Yahoo’s culture and work practices, assessed workforce interaction as a principal productivity driver and then realized that a cultural shift was necessary.
She says that it’s around strong Corporate cultures that you find the energy and then enhance that energy into innovation. She is quoted saying “You can take that energy around culture and find fun ways to apply it to engage users”
First change Mayer made was that employees were no longer provided the option of work from home but must be physically present in an office space. It didn’t end there, she also reformed Yahoo’s hiring policy in which she now personally reviews every new hire after they’ve been assessed by a team of colleagues.
Mayer then set her eyes focused on the mobile platform as Yahoo’s new frontier market Yahoo.
Second strategy for Mayer was to turn around Yahoo by enticing the current users; she re-launched Yahoo mobile apps, redesigned the Flickr photo service and released a cleaner search results page.
Inspired by her former employer Google often buying small companies in order to gain talented staffers, Mayer’s spin on that strategy is now a key part of her plan to turn around the struggling Yahoo and also a glimpse at how she views the company’s future.
Almost all startups Yahoo has bought were centered on mobile content, apps and services. From all the acquisitions Mayer has made, most have been shut down and talent brought on Yahoo mobile team.
She is pulling in people who are excited about mobile, people who want to build a winning culture. Her strategy is to use these companies these companies’ technology to enhance and improve what Yahoo already has.
The few companies that have survived are Tumblr, gaming infrastructure creator Playerscale and Video app Qwiki which have been integrated into Yahoo’s core businesses which are in four areas; core business (content, apps and search), Social, Gaming, Video (Chat and Conferencing).
Mayers main strategy has been to make Yahoo a company that builds products’ people are excited to use every day.
A culture change in Yahoo has now been defined that the smart, innovative workers can get some attention while others will either unlock new potential or move on to some where similar to the old yahoo.
And with her strategy, Marissa Mayer has got the markets’ attention.
Yahoo’s advertising market share may look gloomy but its focus now is on adding content and updating advert formats to their site which promises to turn the outlook around.
Recently Yahoo has announced their recent first quarter results and had surpassed market expectations, first quarter revenues grew 1% over the year to $1.09 Billion when the market was looking for revenue of $ 1.08 Billion. Yahoo has also reported a 30% growth in mobile user base to 430 Million.
A company’s culture reflects what its leaders believe will make the company sustainably successful.
For many companies, Yahoo’s “aqui-hire” strategy is capital intensive to afford, because if Mayer wasn’t able to selling part of the company shares to Ali Baba, Yahoo wouldn’t have the financial muscle to acqui-hire the promising start up.
A good contrary example to Yahoo’s strategy in expansion and still maintains their culture is Bank of America’s, which moved away from Acquisition strategy to organic growth.
In 2001 Bank of America was positioned well, its strategy of mergers and acquisitions had made the company a coast-to-coast powerhouse with significant competitive advantages, including a national customer base of 27 million households; small, middle market and corporate customers in the nation’s hottest growth markets; a diverse and stable mix of blue chip businesses; world-class executive management and a strong focus on the bottom line.
Unfortunately, the company was not so well-positioned when it came to providing its customers with the kind of world-class performance that would lead to customer acquisition, retention, loyalty and revenue growth. Account growth was always stagnant.
The then-new Bank of America chairman and CEO Kenneth D. Lewis announced a major strategic shift for the company, from growth through acquisition and merger to organic growth—acquiring, retaining and deepening profitable customer relationships.
Lewis and other top executives determined Bank of America needed a more rigorous, disciplined and comprehensive approach to process improvement and decided to adopt a quality program based on Six Sigma.
Goslee moved to change the culture by changing expectations, an enterprise-wide metric was established for customer delight, replacing product and channel centric customer satisfaction research.
Its goal was to contribute about $1 billion per year toward the company’s revenue growth and expense-reduction efforts, which was achieved, the bank reaped about $2 billion in revenue gains and cost saving.
By October 2003, Six Sigma had penetrated Bank of America’s culture; the Bank was now handling almost 200 customer transactions per second, faster and more accurately than ever, same day payments had improved by more than 36% and deposit processing had improved by 47%.
In 2004, the Bank of America reaped a record $14.1 in profits.
By 2005, online banking had became a big success for Bank of America, the bank’s 19.8 million online customers typically applied for more loans, made more deposits and were 30% more profitable to the bank than its other customers.
In 2005 when the Bank of America merged with FleetBoston Financial, creating the first banking institution with a truly national scope that served approximately 33 million consumers in the United States, with leading or strong market shares throughout the Northeast, Southeast, Midwest, Southwest and West Coast.
The success of merger between Bank of America and FleetBoston Financial was attributed to the six sigma linkage, both companies were using Six Sigma successfully in recent years to streamline processes, improve quality, efficiency and accuracy, and to free up capital for strategic investment, creating one corporate culture.
On many occasions, it been argued that internationalization (process of increasing involvement in international operations) can cause culture change.
Internationalization constitutes a phenomenon which affects the entire organization, a process affecting the entire organization, rendering the relevant organizational environment more international and calling for organizational adaptations.
But the intrinsic definition and perspective of internationalization should be viewed as an inward process whereby, it is bringing the new foreign operations within the boundaries of a firm.
The key objective for commercially oriented firms is to continuously put large efforts in give high quality products and services in the market. This leverage is not found in the targeted market during the expansion process but within the organization environment.
Firms only have to increase flexibility since customer requirements are increasingly becoming demanding, unique and volatile in order to maximize profits which require little strategy adjustments but still be able to maintain your core corporate cultures.
Why We Love Service (And You Should, Too!)
We routinely stop at fuel stations to get some service, perhaps to add some fuel, have more oil added to the engine, perhaps for a car wash or even maybe to have a mechanic service the vehicle. I was in line waiting to be served at my local filling station and as I waited for my turn to be served. I could not help but wonder what it would take to get quicker service without compromising on quality.
There was plenty of activity at the filling station and even if it was busy, I imagined that there must be some acceptable time frame for serving a customer from the moment they drive in and stop at the fuel pump up to the moment payment is successfully processed.
As I was contemplating this, my mind wandered off to a time I first admired the intrigues and efficiency of teams in my favourite motorsport of Formula 1. Even though there is great competition between teams and individual drivers, there are some models of service delivery that can be borrowed over for our day to day experience at filling stations.
On the formula 1 race track, there is a special designated service garage area known as the “Pit”. A pit stop entails a race car driving off the race track through a designated access route to the garage area, where it will stop for a brief moment to be serviced, assesses for damages and have some components replaced as the driver takes some water to rehydrate his body and is later on released back into the on-going race.
It’s a great marvel watching the sequence of events that occur during a pit stop and by observing the minimal time it takes to accomplish those activities, it’s truly a feat of efficiency. A couple of season’s back, before some race regulations were changed by the sport’s governing body, the FIA, the pit stop’s activities looked something like this. On a race cars arrival at the pit stop, it is directed to stop at its teams dedicated location, is propped up at both the front and rear ends. There are mechanics on hand to loosen and remove wheel bolts on a tyre, a second one to remove the tyre, and the third one to replace the tyre that’s been removed with a new one and the fastens the bolts to hold the wheel in place. This happens for all four tyres, being replaced with a new set while fuel is being added to the race car. If need arise from some structural damage, there may be a replacement for a front end wing. All these activities are carefully choreographed with precision and timeliness and in flawless execution can take anything from four to ten seconds, and the driver is released from the pit stop to continue with the race.
That kind of service is mind boggling and coming back to reality, I wondered just how much of that kind of service excellence can be replicated to our day to day normal circumstances. By using some tools in Lean and Six Sigma methodologies there will be a great impact on customer service by increasing efficiency and also when waste is reduced, with waste being described as activities or processes that do not add value to the customer and also by reducing defects in these processes.
An operational audit can be done and this can look at factors such as where the revenue comes from, how the majority of customers are handled and who are the primary suppliers. Having these factors known would be great for the business so that it can position itself well in terms of operations, as well as have a good Business Process Mapping and Value Stream Mapping.
We can consider using SIPOC which stands for Supplier, Input, Process, Output and Customer in helping somebody understand a proper mapping of components of the business from front to end. The supplier in this case is the car driver who gives the order. The input here will be fuel, lubricants and tyre pressure. The process would begin by the driver first arriving at the pump, the fuel attendant taking an order, adding fuel to the vehicles fuel tank, or air pressure to the tyres or adding lubricants to the car engine. The output should be correct air pressure to the tyres, correctly filling the required amount of fuel and lubricant levels. The customer’s requirements are that there is accuracy in filling the correct fuel type and quantity, the service being on-time and the products needed being available.
By using some management tools in Lean Six Sigma methodologies, there will be a great impact to customer service when waste is reduced and defects are minimized in the process. SIPOC defines the scope of work for a team and identifies at a high level the potential gaps between what a process expects from its suppliers and what customers expect from the process. This is helpful since it identifies potential gaps between suppliers and input specifications, and also between output specifications and customer’s expectations; thus defining the scope for process improvement activities.
In such a scenario, the greatest waste that would need to be worked on in order to create a better customer experience is the waste of time caused in waiting. This can be done by streamlining processes and making them consistent in outcome without defects or getting the customer order wrong. They will also need to remove unnecessary motion of people from their service points and can have the fuel pumps area redesigned well in order to have lubricants, an air pressure dispenser, and water jar so that a car does not have to drive from one point to another to access services that can be conveniently offered in one place.
Cycle efficiency can be increased tremendously through such a form of organisation of the work area, being the forecourt area and the management would do well by using XY Priority Matrix, which should be preceded by the voice of the customer input. This may come from various surveys or other efforts to collect customer priorities. In such a scenario, this service station could be trying to determine how to improve its services.
Customers could indicate that “fast and easy to get assistance” is their number one priority and “more fuel attendants” as their second priority. It would be easy to identify the priorities through voice of the customer, and by listing them correctly in order, management can brain-storm on ideas that can lead to creating service improvements.
The XY matrix is a tool that will allow a team to make informed decisions by comparing two sets of information and analysing the relationship between them; and will allow you to consider a list of characteristics and visually see patterns between them. That way the team can make decisions based on data rather than opinion and most importantly incorporate voice of the customer input in decision making.
This is why we love service. We help our clients improve their performance and achieve sustained profitable growth within the global market. We believe that if clients are happy with the service or product, they will be willing to pay for it. We drive this improvement by looking into the areas of People, Technology optimization and Process improvement.
Nicholas Maina Karuere – SigmaStrat
Why Mergers and Acquisition fail
In July last year, the world woke up to a $35 billion merger announcement of US based advertising giant Omnicom and its French counterpart Publicis, initiated to cope with an evolving advertising industry dominated by tech giants like Google and Facebook.
The merger deal was expected to dethrone WPP as the world’s largest advertising agency, heralded as a merger of equals.
Close to one year later, the biggest acquisition deal in the advertising industry was called off last week.
Merger or Acquisition deals have always been frenzied as a guarantee of tapping into various growth opportunities such as acquiring new products and expansion into new geographical areas or access to new customers. This is in addition to motives as improving profitability and the company’s strategic capabilities and positioning in the market.
Analysts had predicted the 50-50 ownership deal between the two ginormous advertising holding companies as a union would provide scale and capital to cope with technological forces reshaping the industry.
But research indicates that Mergers and Acquisitions have an overall success rate of about 50% only, that’s in the post-takeover period which is the integration process. The deals always look good on spreadsheets but few organizations pay proper attention to the integration process.
This can be attributed to the misleading notion in Finance and Economics field that Mergers or Acquisitions are a clear roadmap to increased market share. Researchers from these areas have always measured the success of a merger by the change in the stock rates in the first few days after announcement of the merger. The basic assumption is that the stock value reflects the company’s value in an objective manner based on all the existing public information. The idea is that the immediate change in the stock price reflects changed expectations on the value of the firm, and thereby indicates long term trend.
Therefore, they assert that every M&A that causes an immediate rise in the stock value reflects success and creates value for the stockholders.
Case in point, Sprint acquired controlling stake in Nextel communication in a 35Billion stock purchase in 2005.These two companies believed that merging opposite ends of a market’s spectrum would create one big happy communication family for only $35 billion making them the third largest telecommunication provider.
At the time, both Sprint and Nextel had a market capitalization of 30Billion and it was viewed as a merger of equals. In 2006 their market cap had even climbed to as high as $76 Billion, only to plummet by 2008 forcing Sprint to write down an astonishing $30 Billion.
It’s now considered as one of the worst merger deal to have happened in recent times.
The good thing is that most SME’s are not involved in M&A deals as a way of positioning itself in the market or increase market share, it would have been disastrous all round the economy.
Most SME’s have been sidelined by this Finance and economic scholars’ yardstick because they have no financial muscles to absorb a bad deal and patch it up like the large companies who have the resource and skilled managers.
Another constraining factor which I believe is a “blessing in disguise” for SME’s is that they have no proper financial data that can be manipulated to know financial implications of doing an M&A deal, they too have insufficient management capacity to take on the integration process, in fact most are stretched to keep the business running.
I say it’s a “blessing in disguise” for them because no amount of management can fix an acquisition that should never have happened. Large companies can high the best consultants to turn around or salvage the deal but sometimes it still doesn’t work, recovery alone can cost as much time and resource than the total cost of the merger or acquisition.
With the Omnicom-Publicis deal off the cards, WPP which will still keep its crown as the world’s largest advertising agency, used the uncertainty to negotiate better terms by cutting its fees and winning a lot of work worth more than $1.5 Billion from both Publicis and Omnicom clients in the past month alone.
What Finance and Economic researchers have ignored when analyzing the success of M&A deals is that the real success of the deal is in the integration process, the integration process is a long term process and not short term.
It’s easy to buy but hard to perform an M&A deal.
So why do M&A deals fail?
In general, many mergers are characterized by the lack of planning, limited synergies, differences in the management/organization culture, negotiation and difficulties in the implementation of the strategy following the choice of an incorrect integration approach on the part of the merging organizations after the agreement is signed.
The key sticking point that delayed the Omnicom-Publicis deal was that the two companies possessed strong divergent corporate cultures that couldn’t merge leading to a clash.
Omnicom wanted their people to fill the CEO, CFO and General Counsel jobs diluting Publicis management representation but Publicis were not ready to cede much position to such a point. The Chief Financial Officer was the key position both companies were eyeing because it was the position of influence on whether the new company should incline towards a centralized structure to manage costs which Publicis argued had driven its higher margin, while Omnicom was looking towards a more devolved approach.
Most companies never thoroughly assess the culture of the target acquisition and its compatibility with their own company’s culture.
During the pre-M&A deal, companies never try to resolve cultural differences that threaten the success of a merger. There is always an unconscious segmentation, that one team works on the due diligence to make sure that they understand all the financial implications of the deal and a second team works on the integration of business.
Then most M&A deals are not in line with the corporate strategy, when the target’s strategy is a diversion it’s always costly to change its course.
Also managers are always quick to seal M&A deals acting out of pressure from the board of directors and stockholders to show continuous growth, without looking at the big picture.
The main reason why M&A deals fail during the integration stage is that an operational audits that help decision-makers understand the operational implications of the deal is never done to accompany the due diligence report, which only captures the financial implications.
An operational audit looks at a few vital things like where the revenue comes from, how the majority of customers are handled and who are the primary suppliers. The best tools to use in doing this is a BPM (Business Process Mapping) and VSM (Value Stream and Mapping) activities which map out major components of their business from end to end.
VSM is an end-to-end system map that takes into account not only the activity of the product but also the management and information systems that support the basic process. It documents, analyzes and improves the flow of information/material required to produce a product/service for a customer. It helps one to understand the flow of material and information as a product/service making its way through the value stream.
An operational report gives shrift to assessing the target company’s operational effectiveness, providing a clear snapshot of the linkages across customers, operations, systems and financials.
A pre-M&A operational audit is important because it facilitates the transition from paper synergies to real operational improvements, providing the building blocks needed to create a business transformational roadmap without negatively impacting the customers and employee existence.
The operational understanding combined with other components of the due diligence process-financials, management composition, legal risks, willingness to embrace change and the asking price – creates a more complete picture of the value at stake.
Therefore, meticulously and diligently screening deals for integration always increases odds of success.
Written by Tony Watima.
SigmaStrat
Training is not Learning
Training is not learning. Learning is a process that occurs when an individual behavior changes and it happens over a period of time whilst training is an event that occurs to facilitate the learning process. Training is a small part of the learning organization which has the outcome of helping others to learn.
Very often many people do not know what is meant by performance improvement and training in an organization. Well, let me define it in the general terms for us to follow.
Performance improvement is the systematic process of discovering and analyzing important performance gaps, planning for future improvements in performance, designing and developing cost-effective and ethically justifiable interventions to close performance gaps, implementing the interventions, and evaluating the financial results.
From definition, we can see that performance improvement is in two (2) folds; discovering the gaps and planning a suitable learning system for it. Discovering the gaps deals with competency measure using forms and documentation supplied in class room training sessions, internal and external customers input and 360° appraisal and then measuring the technical knowledge of the product or service being offered by written evaluation, percentage of gain through training courses and self learning materials used.
Find out more how SigmaStrat can make an impact in your professional journey or your organisation’s people development endeavour. We serve both the West and East African markets from our offices in Accra and Nairobi. SigmaStrat – the team development & performance improvement people. http://www.sigmastrat.com
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