7 Defining Client Values and Relationships

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2001 ConceptFlow 1

Defining Values and Client Relationships


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2001 ConceptFlow 2

Module Objectives

By the end of this module, the participant will be able to:

Discuss how values drive a companys behavior

Understand how the relationship between client values andcompany values plays a key role in six sigma

Translate client needs and wants into specifications andmeasures for six sigma projects

Translate specifications and measures into functionalprocess requirements

Create a CT Tree to define CTSs in terms of clients needs

and wants


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2001 ConceptFlow 3

Values And Behavior

Behavior is a function of Values

BehaviorValues


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2001 ConceptFlow 4

Developing and Reinforcing Values

Cycle ofRefinement

VALUES

BEHAVIOR

ATTITUDESCULTURE

What gets measured, gets done!


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2001 ConceptFlow 5

Exploring Our Values Exercise - Part I

Describe and rank what you think is really valued by your company


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2001 ConceptFlow 6

Six Sigma Values

These are the values that Six Sigma Academy helps you support Improving business performance by consistently meeting or

exceeding client expectations for quality and value

Measuring inputs, not just outputs - focusing on the reduction ofvariation and elimination of waste

Reducing defects by improving both processes and products to helpachieve business objectives


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What Do We Measure Today?

What numbers get the most attention?What quality and performance measurements do we use?

Do we have a client focus?

Do we have a quality focus?

Do we have an input/output focus?

Do we have a focus on waste elimination?

How do we use these measures?



Values Exercise - Part II

Return to values chart How are values measured?

Is organization measuring things that are valued?



New Measures Arise When New QuestionsAre Asked

Do questions trigger actions? If we ask questions about outputs not inputs, we get a lot of focus and

measures on outputs

If we ask questions about budgets, we measure budgets

How many of our questions are focused on process and product

quality? How many of our questions are focused on causes and inputs versus

results and outputs?

New measures, and new behaviors, require that we ask new questions



Black Belts To Define New Values AndMeasures

NewQuestions

NewValues

NewMeasures

Considering New IdeasBlack Belts

NewBehaviors



Values Exercise - Part III

Go back to the values/measurements chart and add a column forAccountability

What is the accountability method for each of the values?

Are they really values if they do not contain all 4 elements?



The Six Sigma Scorecard Must

Add value! Drive the proper behaviour

Communicate actual cost, schedule and quality status

Stimulate action

Integrate into existing management reporting and be actively reviewed


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2001 ConceptFlow 13

Scorecards: The Need for Balance

BalancedOperation

Quality / Performance

These three factors must be balanced acrossthe entire business operation


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2001 ConceptFlow 14

The Right Measures Drive Desired Behaviors- Financial Metrics

Some Examples: Net Present Value

Internal Rate of Return

Return on Capital Employed

Revenue Growth

Gross Margin

Marginal Production Cost

Cost of Sales

Overhead Rates

Working Capital Available Working Capital Turns

Inventory Costs

Cash Flow


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2001 ConceptFlow 16

The Right Measures Drive Desired Behaviors- Quality/Performance Metrics

Some Examples: Successful New Product / Service Launches

Client Returns per Period

Defect Rates (ppms)

Process Variability Measures

Client Satisfaction Ratings

Quantity of Rework

Warranty Costs

Performance Test Data

Process Capability Data


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2001 ConceptFlow 17

Values Summary

Behaviors are a function of Values What gets measured gets done

Drive and discipline are key elements of a successful deployment

Change must be supported and driven from the top


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2001 ConceptFlow 18

Value Defined By The Client

For something to add value:

It must change the product or service

Value-added

It must be done right the first time

Quality

It must be on-time

Delivery

It must be something the client will pay for

Cost


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2001 ConceptFlow 19

Who Is Your Client?

Define products or services provided to client Identify related process

External clients pay our bills

Internal clients use our outputs as their inputs to achieve our businessobjectives and ultimately satisfy external clients

Client

External Internal


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2001 ConceptFlow 20

Maximizing Client Value

ClientSupplier

Delivery

Price

Quality

Need

Do

(CTD) Cycle Time

(CTC) Cost

(CTQ) Defects

Maximizing client value = close the Need/Do gap


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2001 ConceptFlow 21

What is Critical to Satisfaction (CTS)?

It is defined by our clients standards for Delivery, Price, Quality, etc. It drives the companys generic CTSs

Critical to Quality CTQ

Critical to Delivery CTD

Critical to Cost CTC

CTX etc.

CTX is referred to generically as CTQThereby encompassing all of the companys CTXs


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2001 ConceptFlow 22

Client Focus

Business survival is based on how well we satisfy the client Client Satisfaction is a function of cost, quality and delivery

Cost, quality and promptness of delivery are dependent uponprocess capability

Customer

Satisfaction

Product Focus

Breakthrough

Improvement

Continuous

Improvement

Process Focus

People

Involvement

People Focus

Customer Focus


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2001 ConceptFlow 23

CTQ Flow Down


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2001 ConceptFlow 24

Critical to Satisfaction (CTS)

Defined by clients standards for Delivery, Price, Quality, etc.Drives the companys generic CTSs

Critical to Quality CTQ

Critical to Delivery CTD

Critical to Cost CTC

CTX etc.


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2001 ConceptFlow 25

Cost Quality Delivery

Process

X1

X2Y

(VOP)

Correct

Xn

X3

Process InputVariables

(PIV)

Process OutputVariables

(POV)

ClientsNeeds &

Expectations(VOC)

Critical To Satisfaction(CTS)

Manage the INPUTS so OUTPUTS willsatisfy the clients

Process Focus of Six Sigma


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2001 ConceptFlow 26

Determine/Identify the Business Drivers

The Business Drivers for USPC: Service

Growth

Eliminate Redundancies

Develop Talent

All Projects Must have Line of Sight to the Business Drivers


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2001 ConceptFlow 27

CTQ Flow Down

Critical to Satisfaction

CTCCTQ

CTD

CTD

CTD

CostCTC

QualityCTQ

DeliveryCTD

CTQ CTQ CTC CTC

SatisfactionDrivers

BusinessDriver

DrillDown


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2001 ConceptFlow 28

CTQ Flow Down Client Service

Profitable client growthQuality/Accuracy ofPortfolio Review

Accuracy of GuidanceExecution of GuidanceTimely Review

CostCTC

QualityCTQ

DeliveryCTD

SatisfactionDrivers

BusinessDrivers

DrillDown

ProjectClusters

Scheduling Process Cycle Time for Review Prep Document Availability Etc

Growth Client

Service

Eliminate

Redundancies

Develop

Talent


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2001 ConceptFlow 29

Building the Business Driver Flow Down

Initialize flow down with business drivers

Identify satisfaction drivers of business drivers

Select most important satisfaction driver of each business driver

Identify components of most important satisfaction driver

Select component with most impact on satisfaction driver

Identify project clusters with greatest influence

Select and scope projects for execution


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2001 ConceptFlow 30

Project Selection


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2001 ConceptFlow 31

What Makes a Good Six Sigma Project

Project is supportive of key business objective

Project is focused on an ongoing process

Process has a measurable outcome

Process is creating defects

Project is linked to client satisfaction

70% reduction in defects is required


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2001 ConceptFlow 32

Evaluating Potential Projects

Is process not meeting client or business requirements?

Are projected savings greater than or equal to $350K per year?

Can project be completed in 4-6 months?

Is the project linked to business objectives?

Have defect/defect opportunities been identified?

Is there process owner and Champion agreement on project?

What are the constraints that limit achieving the goals of the project?


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2001 ConceptFlow 33

Project Authorization/Contract

Project Name

Group Name Project Champion Name

Department Name Master Black Belt Name

Total FTE's Performing

Process

Process Owner Name

Total Cost of Process (000's) Team Member Names

Green Belt Name

Problem Statement Defect FTEs Cost of Defect

Complete the descripti on:

State Defect or U ndesired E vent

Exclu de solutions

Do not incl ude causes

Review with M aster Bl ack Belt

Defin e measurement source

Defin e measurement standard

I nclude Baselin e

Timeframe

Conditi ons surroundi ng problem

State the Problem/Defect

Project Objective State the Project Objective and make sure it l ink s back to the Problem Statement

Clearly define and quantif y

70% Defect Reduction Sought

Include En titlementsBest

Performance

In clude availabl e benchmark

data

1.Stakeholders

2. Problem

Statement

3. Future

State


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2001 ConceptFlow 34

Stakeholder Lessons Learned

The Purpose of the Contract is to Avoid:Projects not aligned with business drivers

Stakeholders/process owner not prepared to support the project

Lack of project team

Finance not consulted during project selection


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2001 ConceptFlow 35


Project Name




Process

Process Owner Name


Green Belt Name


Compl ete the descripti on:

State Defect or Undesired Event

Exclude soluti ons

Do not include causes

Review with M aster Bl ack Belt

Defi ne measurement source

Define measurement standard

In clude Baseline

Timeframe

Conditions surrounding problem


Project Objective State the Project Objective and make sure it l inks back to the Problem Statement

Clearly define and quantify

70% Defect Reducti on Sought

Incl ude Entitl ementsBest

Performance

Incl ude available benchmark

data

2. ProblemStatement

3. Future

State

1.

Stakeholders


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2001 ConceptFlow 36

Problem Statement Guidelines

Clear, concise, quantified description of the problem

Identifies gap in performance

Contains no solutions or causes

Includes other than financial measures

Includes time period measured

Measured problem does not link to voice of client, not anecdotal


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2001 ConceptFlow 3737

The "4-Whats"

Problem Statement: Client Satisfaction score for the FAresponsiveness is 11 percentage points lower than Best-in-Class

Benchmark, resulting in a potential lost revenue of $9.6MM!

Client Satisfaction scores for FAresponsiveness are too low

Compared to Best-in-Class Benchmark firm(which is at 94%), Client Satisfaction is at 83%

11% relative Client Satisfaction gap representslost revenue & earnings potential

4 points of Client Satisfaction translates to 1point of Worldwide market share which equals

$3.5MM of revenue

What is too Low?

What is the impact ofthis gap?

What is the correlationbetween % ClientSatisfaction andrevenue?

What is the total lost

potential?


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2001 ConceptFlow 38


Project Name




Process

Process Owner Name


Green Belt Name


Complete the descripti on:

State Defect or Undesir ed Event

Exclude solutions

Do not in clude causes

Review with M aster B lack Belt

Defin e measurement source

Defin e measurement standard

Incl ude Baseline

Timeframe

Conditions surrounding pr oblem


Project Objective State the Proj ect Objective and make sure it l ink s back to the Probl em Statement

Clearly define and quantify

70% Defect Reducti on Sought

In clude EntitlementsBest

Performance

In clude available benchmark

data

2. Problem

Statement

3. MetricFuture State

1.

Stakeholders


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2001 ConceptFlow 39

Defining Process Metrics

What defect is being reduced?

How will success be measured?


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2001 ConceptFlow 41

Business Impact

What is the financial impact of the project?

Requires financial approval

Includes financial calculations and formulas


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2001 ConceptFlow 42

A Simple Project Prioritization Tool

Deployment team applies matrix toselect projects using the business

drivers (an example):1. Expense Reduction (1 low, 5

high)

2. Revenue Growth (1 low, 5 high)

3. Client Satisfaction (1 low, 5large impact)

4. Employee Satisfaction (1 low, 5large impact)

5. Feasibility or Degree of Difficulty(1 difficult, 5 easy)

6. Current Measurable ProcessPerformance (1 high, 5 low)

7. 4-6 Month Target goal ($)

committed by Champions orProcess Owners

If a project ranks high after sortingproject totals for 1-5, 6 and 7, thisproject should be a strongcandidate for selection

The Cause and Effect (C&E) Matrix


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2001 ConceptFlow 43

Finance departmentReport cycle time reductionReport accuracy improvementReducing a/r day outstandingReducing a/p day variabilityReduce cycle time for removing assets from books

Reduce cycle time for data reconciliationIT

System availability improvementSystem problem resolution cycle time reductionReduce failed changes to systems

System recovery time improvementRepeat defect reductionSystem response time improvementUser call resolution cycle time reduction

Project Examples


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2001 ConceptFlow 44

HRImprove employee retentionImprove employee training effectivenessImprove employee hiring speedReduce cycle time to add employees to payroll and benefitsReduce defects in changing employee information

Client RelationshipsProcess risk and market errorsCA productivityPerformance reporting process

US Banking

MLCC credit approval processBank treasury systems and operationsBank loan portfolio and support structure

Investor StrategiesClient communications and mailings

Product features (statements, etc.)

Project Examples


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2001 ConceptFlow 45

FAC/Retirement Group

FAC Middle Office and operational support

FAC ISA productivity

Retirement plan profitability at point of sale

Retirement plan communication and marketing

TechnologyDASD storage

CPU run time/jobs

Development costs/TSO usage

Project Examples


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2001 ConceptFlow 46

Key Learning Points


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2001 ConceptFlow 47

Module Review

By the end of this module, the participant will be able to:

Discuss how values drive a companys behavior

Understand how the relationship between client values and companyvalues plays a key role in six sigma

Translate client needs and wants into specifications and measures

for six sigma projects Translate specifications and measures into functional process

requirements

Create a CT Tree to define CTSs in terms of clients needs and

wants


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Trademarks and Service Marks

Six Sigma is a federally registered trademark of Motorola, Inc.

Breakthrough Strategy is a federally registered trademark of Six Sigma Academy.

ESSENTEQ is a trademark of Six Sigma Academy.

METREQ is a trademark of Six Sigma Academy.

Weaving excellence into the fabric of business is a trademark of Six Sigma Academy.

FASTART is a trademark of Six Sigma Academy.

Breakthrough Design is a trademark of Six Sigma Academy.

Breakthrough Lean is a trademark of Six Sigma Academy.

Design with the Power of Six Sigma is a trademark of Six Sigma Academy.

Legal Lean is a trademark of Six Sigma Academy.

SSA Navigator is a trademark of Six Sigma Academy.

SigmaCALC is a trademark of Six Sigma Academy.

SigmaFlowis a trademark of Compass Partners, Inc.

SigmaTRAC is a trademark of DuPont.

MINITAB is a trademark of Minitab, Inc.

7 Defining Client Values and Relationships

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