Identifying Critical-to-Quality Factors from a Market Perspective

Reg Goeke and Eric Reidenbach (Courtesy : www.SixSigmaiQ.com)

The third generation of Six Sigma demands an emphasis on value—the creation and delivery of value to your targeted markets through the products and services you provide. The Define phase of Six Sigma Marketing provides the fact-based, data-driven process for identifying and targeting your most important product/markets. Each of the market segments you target will define value differently—uniquely. That’s the very reason for segmenting markets in the first place—to group together customers with similar needs (similar ways of defining value), and to separate them from customers who define value differently. The challenge for the Measure phase of Six Sigma Marketing is to identify precisely how each of those targeted segments defines value so that you can begin to prioritize Six Sigma projects that will create and deliver superior value.

The Value Concept

The concept of value is not new. What is new is the ability to bring the same level of measurement rigor to it that is typical of other Six Sigma metrics. And that means that Six Sigma practitioners are now in a position to quantify the organization’s ability to create and deliver superior value.

At the most basic level, customers define value in terms of the quality they receive in a transaction relative to the price they must pay for that quality. The challenge for Six Sigma lies in understanding precisely what customers mean by “Quality.” Customer definitions of quality go well beyond the physical characteristics of a product and typically include elements of service and support as well as the capabilities of channel partners such as sales personnel, branches and dealers. These components of quality are the Critical-to-Quality factors (CTQs) that Six Sigma practitioners have always sought to identify. The difference for Six Sigma: Generation 3 practitioners is that they must reach out to the Voice of the Market to identify those factors, rather than relying on internal perspectives that tend to be too myopic.



Leveraging a Six Sigma Marketing Metric: Using a Value Model to Identify CTQs

The foundational metric of Six Sigma Marketing is a Market Value Model. The Value Model must be market-based—that is to say, the model must reflect the perspective of all customers in the targeted market, not just the customers of your company. Increases in market share are a function both of keeping your current customers and acquiring new customers, so the Value Model must reflect that competitive reality. The Value Model is also unique to the targeted product/market—the relative importance of Quality, Image and Price will differ from one market segment to another, and from one product or service line to another. Similarly, the nature and importance of CTQs will vary from one product/market to another. Obviously, this begs the question: How is the Market Value Model generated?



Six Sigma Marketing Requires Redefining the Measure Phase of DMAIC

The Value Model captures the Voice of the Market and becomes the information platform that will define and prioritize Six Sigma initiatives. The Measure phase of DMAIC in Six Sigma Marketing, then, requires measuring market perceptions of value delivery—the value that you deliver as well as that of your competitors. This is done through a combination of qualitative and quantitative research.

Qualitative Research

Good measurement starts with asking the right questions, and this means conducting interviews or focus groups with customers to determine what those questions should be. Asking the right questions will produce a robust value model—one with a great deal of explanatory power leading to good decision-making. And this requires listening to customers tell you what issues they consider when buying or using the products or services you provide. Remember to stay focused on customers (users) within your targeted market segment. Relying upon internal judgments about what questions to ask can lead to very weak value models and/or unnecessarily lengthy questionnaires—either one of which will result in wasteful costs.

Quantitative Research

The qualitative research will enable you to identify the criteria customers use to evaluate the quality, image and price of their purchase options. These criteria will become the basis for a questionnaire asking customers to rate the performance of their provider. The actual survey can be conducted by telephone, on the Internet or in person, depending upon the product/market.

The survey should include a series of “screener” questions to ensure that the right person is actually responding, and various demographic or Firmographic questions for use during the Analyze phase of DMAIC. The performance ratings from the survey questions will feed into several statistical tools to produce the Market Value Model, revealing the relative importance of Quality, Image and Price in defining value within the targeted product/market, and identifying the Critical-to-Quality factors along with their relative importance. The result is a fact-based, data-driven determination of CTQs that will drive people, product and process improvements throughout the organization.

Implications of Market-Focused CTQs

Consider the following two Value Models. Both were focused on a single product line, but each came from a different market segment. In both cases, Quality is significantly more important than Price in defining value, and Image plays a relative minor role in each case. But the relative importance of the CTQs in each market segment is vastly different. In which segment would you focus on product development based on this information? In which segment on process improvement? In which segment would people skills be more important? Would you develop the same promotional materials for each segment? How would you ensure that your Six Sigma projects are aligned with your competitive marketing strategies? These are the questions that Six Sigma Marketing can help you address.



Challenge Your Own Organization: Is It Ready for Six Sigma Marketing?

One way to test your organization’s readiness for Six Sigma Marketing is to conduct a simple little straw man exercise. Select a product/market that’s important to your future growth, and then ask individual managers or groups of Black Belts to construct hypothetical value models for those product/markets. Be sure they can list some value performance criteria (typical questionnaire items) for each CTQ they include in the model, and have them specify the relative importance of the CTQs. Be sure, also, to specify the relative importance of Quality, Image and Price. Then compare the models. That should help you determine whether your organization is data-driven or agenda-driven, and whether you need the Voice of the Market to provide additional clarity.

About Reg Goeke and Eric Reidenbach
Principal and founding partner of Market Value Solutions (MVS), Dr. Reg Goeke has consulted on marketing, competitive strategy, and business process improvements for such companies as Thrivent Financial, Dunn and Bradstreet, the Principal Financial Group, the Caterpillar Inc. Worldwide dealer network, Case New Holland, Southern Companies and other public utilities. Goeke has pioneered in the development of customer information systems for these and other companies and specializes in the systematic deployment of customer information into effective competitive strategies and business performance improvements. For more information about Goeke and MVS, visit www.MarketValueSolutions.com.

Dr. Eric Reidenbach is also a Principal in the consulting firm of Market Value Solutions. Reidenbach is developing the Voice of the Customer (VOC) Resource Center at MVS and is the author of the forthcoming book, Voice of the Market: Listen, Learn, Lead, due out next spring and published by Productivity Press. Prior to founding MVS with Goeke, Reidenbach received a PhD from Michigan State University and enjoyed a strong and noted academic career with various well-known marketing programs. Several of Reidenbach’s articles on VOC and Six Sigma can be found on www.MarketValueSolutions.com.

You Need More Than Just an Analytical Mind—Four Qualities That Identify a Successful Six Sigma Belt Candidate -- Robert Stapp

How do you identify people who will make good Six Sigma Green Belt or Black Belt training candidates? This is a great question and one that has been discussed time and again. As the president of a consulting firm that educates and certifies many talented young men and women and a fellow practicing certified Black Belt since 1998, I will explore this question and provide some insight as to how one should go about identifying these special individuals.

The Origin of Six Sigma

First, let us explore the origin of Six Sigma and describe the method. Introduced within the Motorola organization by Bill Smith, a process engineer during the 1980s, Six Sigma became a system widely practice by 1989. At this time, it was determined that the traditional quality level—measuring defects in thousands of different opportunities—did not provide enough “granularity” (breaking down into smaller, more manageable parts), so “defects per million opportunities” was created. This allowed a deeper examination into the root-cause or contributing factors of defects and errors.

A new quality standard was adopted and the methodology of Six Sigma was developed as the corrective process known as DMAIC. This acronym broken out is a five-step process: Define, Measure, Analyze, Improve and Control, and is designed to improve any process through the stabilization and prediction of results, thus leading to the elimination of defects. Defects are characterized as anything that could lead to customer dissatisfaction. Six Sigma is a smarter way to manage a business or a department because it puts the customer first and uses facts and data to drive better solutions.1

These steps are very effective at improving the process and creating customer value; the caveat is the DMAIC process must be applied correctly, using the right resources, with strong leadership and communication. Improvements usually represent dramatic cost savings to businesses, as well as opportunities to retain customers, capture new markets and build a reputation for top performing products and services. The real message of Six Sigma goes beyond statistics. Six Sigma is a total management commitment and philosophy of excellence, customer focus, process improvement and the rule of measurement rather than gut feel.2 With this in mind let’s explore critical characteristics that make up a successful Six Sigma Belt candidate.

Looking at the Other Factors that Make for a Successful Six Sigma Belt Candidate

Following this mindset that the real message of Six Sigma goes beyond statistics, one must look to other factors of success. Six Sigma is a process that needs the human element to exercise. To bridge the gap between mediocrity and excellence there are four critical characteristics to look for in potential candidates who will take the process and execute to a level of performance that will drive dramatic, sustainable results. These are learning ability, leadership, desire and determination. Let us break each of these characteristics down and provide some factors to consider.

Learning Ability

This particular characteristic has been the primary focus, and at times the only one considered for many organizations choosing their Six Sigma Belt candidates. To compound this issue, the focus is generally geared to only those having prior experience with statistics. While this quality is important, it is not the determining factor. A candidate must be able to understand instructions and underlying principles with the ability to reason and make sound decisions possessing an analytical mindset. The ability to gather, analyze and summarize data in order to draw rational, fact-based conclusions is needed. A Six Sigma Belt candidate will be placed in a learning environment where mathematical science is discussed and instructed. Statistical reasoning is needed for proper understanding and execution of the Six Sigma DMAIC method.

Leadership

A candidate must have demonstrated leadership in a team environment with the ability to mentor team members to achieve a level of knowledge that fosters cultural growth and individual project success. The candidate usually knows what must be done and how to get it done, but genuinely involves others and listens to their concerns and ideas. He or she is willing to change course as a result in order to achieve greater results. This person can convince others to follow his/her lead despite skepticism, and is generally able to win the hearts and minds of others to achieve breakthrough objectives. The candidate works collaboratively with fellow employees at all levels of the organization and is able to maintain a blameless environment by focusing on issues and facts rather than seeking who is at fault. This quality to lead and inspire others to achieve a common goal is paramount for Six Sigma success.

Desire

Strong intention or aim for excellence is another characteristic to be considered. A candidate must possess the trait of motivation that has been demonstrated in past performance. The ability to be proactive with foresight to undertake strategic actions aligned with organizational goals is important. The ability to plan and execute work that is accurate, complete, timely and reliable while never compromising integrity shows that the candidate takes pride in all that he or she does. This personal desire for excellence is a good indicator that the candidate will apply the same for anything he or she undertakes. As a company searching for the right Six Sigma Belt candidate it is necessary to communicate the positive education in this continual improvement methodology and the personal growth experience that the candidate will receive. This understanding will help to stimulate the already existing desire and help facilitate the continuing aim for excellence.

Determination

Once a candidate has been selected and embarking on this Six Sigma journey it is crucial that they are devoting full strength and concentrated attention to achieving results in the short and long term. This focused results orientation will keep the candidate moving toward breakthrough objectives while potentially undergoing immense pressure from outside influences to forego the Six Sigma process and fall back into the traditional methods of operation. The ability to adapt effectively in an environment of change, uncertainty and ambiguity is required. The candidate will implement creative solutions that fall outside of the current paradigm, thus challenging the current standard. This will prompt a strong reaction within the status quo and steadfast determination from the Six Sigma Belt candidate is needed to ensure successful implementation and sustainable results.

In Conclusion: Six Sigma Belt Candidate Must Possess All Four Characteristics

Each of these characteristics discussed are crucial for choosing a candidate that will be successful in completing the rigorous Six Sigma training and certification process. The more important aspect is the continued return that a company receives from this individual as a change agent within their continual improvement journey. To ensure that this takes place the Six Sigma Belt candidate must possess all four described characteristics. Six Sigma is a commitment to a management philosophy that drives for total customer value creation. This commitment is not guaranteed by focusing only on the attribute of possessing an analytical mind. The combined characteristics of learning ability, leadership, desire, and determination are paramount for selecting a successful Six Sigma Belt candidate.

Sources

1, 2Pete Pande and Larry Holpp (2002); What is Six Sigma?, New York: McGraw-Hill

Robert Stapp is the Founder and President of OP-EX Direct Results Inc., a process improvement and engineering solutions consulting firm located in the Fort Wayne/Huntington, Indiana area. He is an executive professional with over 19 years of process improvement management experience. He is a Certified Lean Master™ and Certified Six Sigma Black Belt process improvement expert. E-mail: results@opexdirect.com