engineering management

Think you can't afford this business initiative? Recent changes have made it more affordable and accessible than ever.

By Mikel J. Harry andJ. Douglas Crawford

Although six sigma programs have delivered billions of dollars of profit to large enterprises, they've done nothing for small to midsize companies. The original Six Sigma architects didn't design their delivery systems for businesses of that size.

But the business initiative program continues to grow and change, and many small companies can now afford to implement the most recent iteration of Six Sigma, called Generation III. In fact, the very drivers of Six Sigma Generation III are small to midsize companies that need to improve their performance and profitability. The program is now more affordable for them because advances in online training technology and a new, smaller-scale training option help reduce training expenses.

Six Sigma has gained a following among executives and managers for its ability to reduce cycle time, eliminate product defects, and increase customer satisfaction. But what is Six Sigma? Loosely defined, the business initiative program focuses on minimizing errors in processes and products, and returning that savings to the balance sheet as increased profitability. Six Sigma is not a quality measurement program, nor is it an alternative to ISO 9000, which documents processes and generates reports to help maintain repeatable processes. Strictly speaking, Six Sigma can be defined as maintaining 3.4 errors per million opportunities for error and returning the savings to the bottom line.

The average U.S. company operates at Four Sigma, which is equal to 6,210 errors per million opportunities for error. Four Sigma is equivalent to many U.S. airline baggage-handling operations. Six Sigma is equivalent to the airline fatality rate. To put that in perspective, a person is about 1,800 times more likely to get to his destination safely than his luggage is. A company that moves from Four Sigma to Five Sigma can reduce its number of errors and defects from 6,210 to 233 per million opportunities for error.

Evolution of Six Sigma from Generation I to Generation III
Generation I Focuses on defect. Emphasizes provider Used in large-scale industrial organizations Black Belts	Generation II Focuses on cost. Emphasizes customer. Used in large-scale industrial and commercial businesses. Green Belts	Generation III Focuses on value. Emphasizes both customer and provider. Used in small, medium and large-scale industrial and commercial businesses. White Belts

Over the past 20 years, Six Sigma has moved its focus from reducing costs to creating value. The first iteration of Six Sigma was concerned mainly with reducing defects; its second iteration was concerned with reducing costs. The latest iteration, Six Sigma Generation III, aims to help companies deliver goods and services of the highest value possible. For business purposes, value is defined as delivering a product or service to the right spot, at the right time, in the correct volume, and at the lowest possible cost.

A key change in Six Sigma Generation III's professional designations makes the program more affordable for smaller businesses. The operational roles for these Six Sigma professionals—who carry out programs for companies—are referred to as X-belts, such as green belt or black belt. The high cost of training a black belt in an actual classroom and the relatively long wait for a return on investment makes the black belt cost-prohibitive for those without the deep pockets of a multinational company. Even a green belt can be expensive to train in a traditional classroom situation.

But with the introduction of Six Sigma Generation III, a new belt was created—the white belt—that requires far less training and offers a much quicker return on investment. The white belt professional has a much narrower focus than the black belt professional; he or she might look closely at a work cell within an organization rather than at the organization as a whole, for example. A person with a white belt could complete up to 12 projects each year with the potential of returning $25,000 from each project to the employer's bottom line.

A group of well-placed white belts can return significant savings to the profit column of a small business. In a multinational company, a high percentage of the work force can be trained as white belts. Through the skills of those with white-belt training, Six Sigma can be extended into previously inaccessible areas throughout every aspect of the business.

Another way Six Sigma Generation III makes the business initiative program more affordable—in addition to creating the white belt professional—is through online training, which cuts the cost of training by a factor of 10 or more as compared to traditional classroom instruction.

Although the classroom or the onsite training and materials are expensive, it's the huge cost of employees' lost production time and travel that puts Six Sigma out of reach for small to midsize companies. Small businesses don't have the reserves to take employees out of production for four to six weeks of training. The Internet and its attendant technologies have made online training as effective as classroom training, and online training can be done regardless of the belt one seeks.

Live and Almost in Person

When online training first appeared in the early 1990s, the Internet technologies then available didn't allow for the depth of training students received in an actual classroom. Today, technologies allow online students and teachers to develop and present curriculum that is as effective as classroom training. This has substantially cut the cost of training and lets small, midsize, and large companies take advantage of Six Sigma. In fact, anyone who wants to improve skills and earning potential can take the online classes.

But that's not to say that all Six Sigma online training is created equal. Online training that relies on PowerPoint slides with a talking head reading them is of uncertain value.

The Ira A. Fulton School of Engineering at Arizona State University in Tempe was an early adopter of Six Sigma Generation III online training. The school's program features a strict curriculum and takes advantage of the latest Internet technologies, including over-the-expert's-shoulder video training. The video style lets students see the concepts, ideas, graphs, and equations as they're explained, just as if they're in the classroom. Many of the videos show how to use software to analyze data.

If students don't understand something, they can see it on instant replay. A real-time interactive online discussion board allows students to move from online class to online dialogue. Online sessions are followed by online research assignments and online exams. Because the courses are taught through the Internet, the cost is reduced by a factor of 10 or more, when lost productivity and travel are considered.

Because the curriculum is modular, training can be customized to a company's needs. Managers tell trainers what they need and Arizona State University staff builds a training curriculum that addresses those needs within two days.

To make sure that students understand everything they learned, they have to carry out an actual Six Sigma application project. This ensures that students are qualified before they're certified as practicing Six Sigma black, green, or white belts.

Arizona State students, in order to pass the course, must pass the online certification tests of the Six Sigma Global Registry. The engine powering the registry is the PowerMatch patented candidate matching system developed by IdealHire, a Phoenix, Ariz., human resources software system developer.

The registry is a repository of industrial and commercial Six Sigma practitioners and helps managers who are searching for employees or consultants trained or experienced in Six Sigma.

The registry is also useful to those professionals who want to become a part of Six Sigma or who are Six Sigma practitioners and want to validate their credentials. In their case, the registry evaluates their standing in industry and gives them feedback about what, if any, additional training they need to meet their career goals or their company's objectives.

To become a part of the registry and to determine which level they're qualified for, professionals declare their training and experience, and take certification tests. They can also determine what additional training is required to move to the next belt level to advance their career. The employers benefit by hiring Six Sigma professionals with declared skills and validated credentials.

Ultimately, all companies, whether big or small, will need Six Sigma to improve their profitability. These companies will drive the new, affordable generation of this business initiative. Six Sigma professionals seeking to improve their career opportunities have never been in a better place to do so.

Mikel J. Harry, founder and former chairman of the Six Sigma Academy, is an author whose work includes the book, written with Richard Schroder, Six Sigma, the Breakthrough Management Strategy Revolutionizing the World's Top Corporations (Reed Business Information Inc., 1999). He was one of the architects of the Six Sigma program at Motorola Inc., when he was an executive there.

J. Douglas Crawford has served extensively in management. He is executive director of the California Coast Venture Forum and serves on the board of directors of IdealHire Inc., ABC-CLIO Inc., Digital Map Products, and the Santa Barbara Navy League.

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