Six Sigma approach to BPM outdated
The 'Six Sigma' approach to business process management (BPM) is not yielding the expected benefits, as businesses are rapidly evolving.
So said Steve Towers, co-founder of the BP Group, speaking during the ITWeb BPM Summit, at The Forum, in Bryanston, today.
Six Sigma is a business strategy that seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimising variability in manufacturing and business processes.
Towers likened the Six Sigma approach to weight-loss programmes, saying they typically start off well, generating excitement and great progress, “but all too often fail to have a lasting impact, as participants gradually lose motivation and fall back into old habits”.
Recent studies, he added, suggest that nearly 60% of all corporate Six Sigma initiatives fail to yield desired results.
“We can't solve problems by using the same kind of thinking we used when we created them. Add to that, if you do what you have always done, you will always get what you have always got.”
He explained that Six Sigma failures could be a result of escalation in commitment, which he said refers to the tendency of decision-makers to continue investing in a failing course of action.
Towers also pointed out that the Six Sigma approach tends to leave businesses organised in rigid structures, like a pyramid.
“However, processes wend and meander their way around these rigid structures,” he explained.
He also pointed out that businesses using Six Sigma often have an “inside-out” approach, whereby they mainly focus on doing things right. “These organisations mainly focus on improving efficiency, effectiveness, cost control and throughput. However, this industrial focus misses massive opportunities.”
Towers then urged organisations to shift their focus to improving customer experience as well as removing points of failure. He referred to this approach as “outside-in”.
Quoting Jeff Bezos, CEO of Amazon, Towers said: “Rather than ask what we are good at and what else can we do with that skill, you ask 'who are your customers?' 'What do they need?' And then you say, 'we are going to give that to them regardless of whether we have the skills to do so.'”
He also urged businesses to adopt a scientific approach towards customer experience. “The customer experience is the process,” he added, quoting Steve Jobs. “You have to be scientific in understanding where a process starts and where it finishes.”
Concluding, Towers said the outside-in process achieves dramatic internal benefits, typical cost savings of 40% to 70%, and extends an organisation's value chain. “Outside-in is winning in terms of revenue profitability and customer service.”