4th Sigma: Project Charters, Part 2 – A Step by Step Guide

Posted on June 8, 2011 by Chris Niccolls

When you’re ready to start a project you need to create a Project Charter. In our last Blog we went over the consequences of not having a charter. Today, we’re going to cover the steps you need to take to create a Project Charter. There is no specific template. There isn’t a formula, like a math equation. You have a lot of flexibility and you should create a process that matches your culture and environment. There are, however, elements that need to be in your charter. Just as importantly, you need to always remember that the purpose of the Charter is to make disagreements apparent. IF, and only IF, everyone is in agreement the Charter process ensures that you stay on track. Let’s take a look at the steps you need to take:

Charter Document: Try to keep as much of the following in a single document. It doesn’t matter if it’s Word or PowerPoint or something else; just use whatever is comfortable for you. Try to keep to just one document, that is physically signed by all the participants. If you need to you can have supplementary documents, but try to keep all the key data in the one document.

The Project:Make sure that this is just one project. If you have more than one project, that’s fine. Just create more than one Project Charter. A given charter may have more than one action, or doing one project may imply other projects (that don’t need to
be described in this document… remember, keep it simple). However, if there are
obvious “other” projects make sure that this is not a surprise to the rest of the group. If it is not in the Project Charter, it needs to be touched on in the stakeholder meeting.

Describe the project: It can be just a few sentences. You don’t need to go into a great deal of detail. That can lead to lengthy discussions over the details, even when there
is agreement on  the overall project. A description like, ”Reduce errors in documents by installing custom spell checker dictionaries and ensuring that 100% of document are spell checked.” Make it as basic as possible, but use as much space as you need.

List stakeholders: List all the stakeholders, all team participants, and the sponsor. Not all stakeholder will necessarily need to do anything for your project, but they need to be
involved enough to know what’s going on. For a lot of stakeholders I’t not so important if they will help the project “go”’ it’s more important to know if they plan on making the  project “stop”.

List the team: Who will do the actual work for the project? If you don’t have a dedicated improvement group, it may require more of a time commitment than the team you have pulled together. Do you need to expand the team, or do the team member’s managers need to free up more of their time? This is an important issue for the success of the project. Don’t sweep it under the carpet. Make sure that this is loud and clear in the meeting!

List the sponsor: One big, but frequent, mistake is that projects move ahead without a clear sponsor. Make it clear who is asking for this project and that they MUST physically
sign the Charter (e-signature is fine) before the project proceeds.

Review meeting: Remember, the purpose of the meeting is NOT to get the Charter signed. If it’s a difficult project with cranky team members, you may just want to get through the meeting and move on. DON’T DO IT! The purpose of the meeting is to get all the key individuals to get all of their issues, disagreements and problems on the table. The 1st draft of the Charter is just the talking point, it is not a sacred document. Be prepared for it to be blown out of the water. That’s fine. Even if the project comes to a stop and is taken off of your project list, it is better for a project to die a quick death before resources
are spent rather than have a painful and lingering death after you’ve spent months working on the project. So, be prepared to have at least one follow-up meeting to re-review the 2nd draft.

Signatures: Your template for a Project Charter can be anything you want it to, but I recommend that you have more than just the sponsor sign. The extent of the signature
process depends on the size of theproject, the degree of contention, etc. If you currently have a lot of contention during or after a project about who agreed to what… sounds like you need more signatures rather than less.

Charter updates: While the project is ongoing, changes almost always happen. Sometimes the changes are small, sometimes the changes are large. As changes build up over the lifetime of the project, you can sometimes drift from the original goal. Which is one of the major causes for friction after a project: “I never signed off on that change”, “This project is not what I signed off on”, “Why was this change approved without my involvement”, “You removed an important component… the project is a failure!”. Avoid all that by having a formal change process for the charter. There are no hard and fast rules, but I recommend that if the project is under 30 days you don’t need to meet or modify the charter, unless there is a major change (and that might be done by email). If the project is more than 30 days, have a regular meeting (every two weeks, every moth, etc.) to go over changes. If there are no changes, the meeting can be skipped (after emailing everyone… “I
haven’t heard of any changes team, should we cancel this meeting?”).  If a big change happens today, you may need a special meeting.

Project completion: Once the project is over, you need one more meeting. This serves two important purposes. The first is actually ending the project. Project can either go on forever or the final completion steps of a project are never completed, and then the improvements never quite work as expected. The completion meeting is where you check, and everyone in the meeting agrees, that they have delivered everything they are supposed to (and no one is “covering” for a friend). The second reason is that the project sponsor is incentivized to check the details. For example, training may have updated the training materials  to reflect project updates, but a manager may not agree that the materials are inadequate. They may be poorly written and missing information. This is the opportunity to say there is a problem. Everyone who had any sort of deliverable must sign off.

Sponsor acceptance: When all the team members and stakeholders have signed off, then the sponsor does a final signoff. This is the sponsor’s agreement that the project was
completed to their satisfaction.

That’s about it. Each of these steps has a separate tangible benefit, but it all comes down to informing everyone who needs to know and driving out issues and problems early in the process. Remember, using the Charter to drive success for a project is very important. However, using the Charter to identify a project that will never succeed is even more important. Maybe a bad project can be rehabilitated, or maybe it needs to be killed. Getting a bad project off of your agenda will free up resources and improve your team’s morale. Spend your time on the projects that sponsors want, and that will succeed! And that’s my Niccolls worth for today!

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4th Sigma: Project Charters, Part 1 – Do We Need Charters?

Posted on June 7, 2011 by Chris Niccolls

If you were to take everything in the very large Six Sigma toolkit
and try to identify the top ten most important tools, the Project Charter is near the top. A charter is just a very good description of what you plan on doing, how long it will take, who will be involved, etc.; the Charter makes sure that everyone who needs to know is aware of the project and has committed to doing what needs to be done to complete the project. Six Sigma didn’t invent the Project Charter, and isn’t the first or only methodology to use it. PMP, Prince2, Agile, Scrum… they all use the Project Charter process. Nor is there a specific format for the Charter. It’s just a few common sense steps. That’s why the process has seen around for so long and why it’s a part of so many different disciplines. Yet, many projects still fail to follow the basic ideas behind the Project Charter. You may work in an unusual environment where Charters aren’t needed, but for the vast majority of the world
a Charter makes life a lot easier. To understand why, let’s see what happens when we don’t have one.

Absent resources: Have you ever had a project where the people who are supposed to be involved never show up to meetings or do their work? You may hear a lot of excuses, but the reason is usually that they did not agree that his was their project or that it was not their priority. The Charter process informs everyone who will contribute time to the project, what they will need to contribute and what you’re trying to accomplish. If they are not in agreement or if they aren’t authorized to work on this project, these issues come out in the beginning, and not later. Some projects shouldn’t take place because the key stakeholders aren’t interested, or other projects are a higher priority. Find out sooner rather than later!

Criticism of methods: If all stakeholder are not aware of a project, they may be
slighted when they do become aware (through rumors, gossip, or otherwise by
accident). This can build resentment and someone who might have been a
supporter is now upset any may directly block you, complain about you to your
manager or just have negative conversations behind your back. These outcomes are
undesirable, but avoidable!

Territoriality: If you don’t follow a formal process, you can accidentally forget to inform or involve a stakeholder. Accidents happen. However, accidents are less likely when
you follow a process that works. Either by filling out a Charter or by meeting
with other stakeholders, these gaps are usually identified. That means that you
can avoid spending time and resources on soothing upset people.

Stuck project: Many little things go wrong and slow the project to a crawl or a stop. Because there was no time to discuss the goals at the start of the project there are
gaps, inconsistencies and differences in opinion. Not just the Charter, but the
Charter process as well, help to keep the project on track.

Blame gamers: Something things go wrong. If your team is suddenly filled with revisionists that don’t remember what you agreed to or say they weren’t there “at that one
meeting” or “you weren’t clear in how you explained that”… maybe they’re right!
That’s why the Charter clearly spells out what everyone agreed to, and then
provides a ay fro everyone to say that they agree or not (signatures!). If
someone legitimately disagrees with some aspect of the project, but they keep
signing off, it’s much easier to deal with their signing when they shouldn’t,
than dealing iwth a stalled project. If your Charter process today is just a scattering
of emails and a few meeting notes, it’s hard to say what anyone agreed to. It’s
not about blaming everyone, or about protecting yourself from blame. It’s about
eliminating the causes for blame.

Disputed benefits: If all key individuals are not involved, there can be disputes
over the methodology AND the larger goals of the project. There may even be a
lack of agreement on benchmarks (i.e. if there is anything to fix!). If
everyone understands and agrees with the goals, then everyone can rightfully
claim their share of credit when the work is done. That’s a great motivator!

Do any of these items sound familiar? Every organization has
friction, some of it is intentional. That’s why business models often create silos
that require effort to cross, limiting the opportunities for different groups
to interact, and to create friction. Natural friction should prevent projects
that shouldn’t happen, from ever getting off the ground. And it sometimes does.
But when the project should happen, you need to make sure that the normal level
of friction doesn’t work against you. Being clear and brining the right people
into the process usually goes a long way towards taking care of this. If in the
early stages of the Charter process you find there is NOT consensus on the approach
to a project or a key team member or stakeholder is causing insurmountable
opposition: STOP! Maybe this project shouldn’t move forward. Maybe there are
reasons to reconsider the project, or at least some aspect of the project.
Perhaps the project just needs to be rescheduled for a time when the problem
participant has more bandwidth.

You need to listen to objections, but also be prepared to
answer these objections. The Project Charter will help you identify these
issues early on, but you may need to offer concessions to get some approvals.
In our next Blog, we’re going to go step by step through the Charter process. You’ll
understand what you need to include and why. But for today, that’s my Niccolls
worth!

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Size Matters: How Big Is Your Work Day?

Posted on June 6, 2011 by Chris Niccolls

Understanding exactly how many hours of work your staff is  capable of is important if you have any hope of efficiently staffing your  organization. The hours of capacity in a service organization are usually  completely misunderstood. Once you  understand the real hours of work in an  organization, you can create a realistic hourly cost/charge, and you will be
able to easily spot some of the little tricks in outsourcing.  Let’s start with…

The length of a day:
What is a “normal” workday?  We still use the term “9 to 5”, but is that really your workday?  If you work in London, there are still a lot of jobs that are indeed 9 to 5. In New York, the standard workday  is mixed but is leaning more to a 9 hour day… often 8:30 to 9:30. In a lot of other locations in the US, especially hot outsourcing locations, a 9 hour day is common. Offshore it can be very confusing. For example, in India the day tends to be 9 hours, but the employer can skip lunch hours and overtime doesn’t start until after the 47th hour has been worked. That extra work time can be a benefit (free extra work!) or a bad idea (do errors go up and quality goes down after the 45th hour?). Or did the outsourcer tell you about this extra time… and is your offshore staff using the extra hours for work that you don’t know about (internal admin or work for other clients)?

Paid vs. Work hours:
So we start with a day that is either 8 or 9 hours. A very simplistic model
might say, “OK… let’s multiply by 5 days a week and 52 weeks a year (260 days).
That’s 2,340 hours for a 9 hour day and 2,080 hours for an 8 hour day. Simple,
no?” No! It’s not simple. First, you need to deduct lunch, which is usually an
hour a day. Then you have to take away another 30 minutes a day for, coffee and
bathroom breaks. But, you think, “I never made any rule that people get
this half hour.” Well, you may be required by labor law (check your state)
but whether you have a rule or not, people use the water cooler and the bathroom
and go out to have a smoke… you’re lucky if it’s just 30 minutes. Some firms
say that lunch is paid and some say it’s not, but that’s just semantics. At the
end of the day your work hours just drop by 1.5 hours, between 6.5 and 7.5 work
hours per day.

Work Weeks: There are 52 weeks in the year. How many of these do you work? After all, when you’re on vacation how many hours do you work every day?  (YOU IN THE BACK, STOP LAUGHING! I meant hourly workers, not managers.) A new worker probably gets at least two weeks of vacation time, two weeks of holiday time, and probably takes off a week of sick time. That’s more than 10% of the year. Our work hours are now between  1,762 and 1,527. And remember, as your staff gains seniority they gain vacation time, further reducing work hours.

Work hours vs. Production hours: “Work hours” tell you how many hours a worker is available, but your work rules or environment always reduce this amount. Some
of you may be thinking, “I’m not doing anything to stop my workers from working!” Do your workers use a computer? Do they log on and off on work time, or do they arrive 5 minutes early and leave 5 minutes late to take care of this? Do you have multiple shifts? When one shift hands over work to the next shift, this is another loss of work time. They are doing work but it’s not client work. Not something you could bill. And therefore, not something that you can use in your unit cost. Likewise, do managers talk to their staff? Do they have weekly or monthly management meetings? Do they have one-on-one performance reviews? Does staff ever get trained? Let’s be very conservative and assume that logging in and all of these other items total slightly more than 10 minutes a day, or an hour a week. We’re now down to 1,715 to 1,480 work hours annually.

A sidebar on downtime:  Some of you may be saying, “But I do all of these activities when we’re not working! This is free time, so it shouldn’t be counted.” OK. What happens when you are busy and there isn’t any free time?” This is why service groups fall apart when they reach 80% capacity for any sustained period. They are really at 100% or more
capacity.  People are skipping lunch or necessary administrative functions are not performed, quality falls, and then the client complaints begin. By hiding these overhead numbers and creating a false capacity number, it ultimately makes your organization look very inefficient. You may raise questions about WHY you 30% of your service’s time is for administration, but that easier to deal with than explaining why services malfunction at 50% capacity.

Available work: Regardless of how many hours your staff can work, the ultimate limit on work actually performed is if work is available. If you run a programming group where work is queued up and the next client in the queue waits weeks or months until a resource
is available, this will rarely be an issue.  However, if you have multiple shifts or if you deal with services in real time (a library, copy center, document center, a conference center, etc.) there are times when the phone doesn’t ring or no one comes to your center (slow days, very late hours, before and after holidays, etc.).  Depending on your operation, this
can strip away hundreds of hours from each worker every year. When you deduct this number you have real production hours. If we remove a modest 20% of hours to allow for these dead times (your mileage may vary) you are left with 1,372 hours for a 9 hour day and 1,185 for an 8 hour day.

I’ll try to use the same naming conventions from blog to blog, just for consistency. Some management books get hung up on the terms, but you each have different operations that use (or don’t) different aspects of these calculations. The point is that most of you probably don’t account for all the time segments above. For some of you it’s legitimate to exclude different segments.  For others you may be doing yourself a disservice by leaving too much undefined.

It is a bit of a shock the first time you go through this to find out how little real work time, and even less billable time, is really available, but if you don’t first start with these calculations, you end up with a billing rate that won’t recover your costs or an outsourcing vendor that isn’t managing your team’s time the way you expected.  And that’s my Niccolls worth for today.

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How Much Do Your Services Cost?

Posted on June 4, 2011 by Chris Niccolls

Budgeting in Corporate Services has always been an approximate science. In some cases, very approximate. Because your services are far removed from the products that your firm sells to the outside world, it’s hard to know how and when to add costs or to change your budget. In a business, when sales go up, you need to spend more for people, equipment or consumables. In services, these changes rarely come from direct information. Instead we rely on proxy information. Let’s say you run a copy center in a law firm. When the volume of requests exceeds your capacity, you ask for authorization to buy/lease/use more resources. You may be refused because the increase in volume does not match an increase in new clients, or the work volume may be of a type that management sees as unnecessary. Likewise, just because you have a budget it doesn’t mean that you will be allowed to spend your entire budget without additional approvals. With all  these changes in work volumes and in budgets, just having a bigger or smaller budget one year doesn’t mean that you are more or less efficient. How do you see past the budget “noise” to see what’s really happening to your budget? The answer is… use a unit price!

Identifying your unit cost requires just a bit of simple math and a whole lot of philosophy. In the past services only partially included costs. They more interested in creating a charge to limit the use of services (if it’s free, why not use as much as possible?), rather than fully accounting for costs. So, throw out any previous concepts you have, today you’re going to identify a real cost.  You may want to charge for every separate feature of your service or you might want to load just one or two functions with all the costs. Let’s continue with the idea of a copy center. Copy centers often load up their costs into a single fee, usually a cost per page. A document center could charge per hour (for individuals performing edits or for editing and proofreading staff) or it could charge a price per page.  A page is a pretty good unit measure. Of course you could charge by the hour, but still collect page information for the unit price (per page, per document, etc.). A Library might charge for time and for use of external databases, but still have a unit price per request; or if there are several fundamentally different products (looking up an article, downloading and formatting data into an Excel spreadsheet, preparing a Public Information Book) you could have a different unit cost for each product line. Of course with multiple products and unit costs, you also need to track how your service changes over time (does one service become more popular, does a drop in volume increase the cost for a specific product, etc.?). 

That addresses variable costs, but what about your fixed costs? This is a bit trickier since not all corporate services even know what their fixed costs are.  Do you know what your rent and power costs are? You may not get a bill from the firm for these costs, so they may be a bit of a mystery to you. Let’s clear up that mystery and look at all the costs that you need to account for:

Salary: Do you have a report from HR that gives you Salary costs? Does it include temp workers and overtime? Have you verified that everyone is on the report by name (assigning having to the wrong group is quite common).

Bonuses: In recent years, bonuses have been suspended in many firms. However, the economy is returning, and bonuses with them. Have you figured them into your cost structure?

Compensation costs: What about all the other costs for personnel? Does your report include social security, benefits, taxes (paid by both the employee and employer)?      

Recruiting fees: Does the staff you hire come through outside recruiters? Typically, recruiters charge 20-30% of the first year’s salary. Are you tracking these costs?

HR costs: You probably don’t get a bill from HR, but even if they rely heavily on recruiters, you still have staff in HR working on your staffing requires. Depending on the size of your staff and your attrition, you may have several dedicated staff in HR working on your staffing needs (typically HR staffs 1 associate or every 70-100 employees). Ask HR how you should account for their costs in your model.   

Space: This is a strange expense, in that people are divided over when it should be counted. It is often said that you can’t count this cost because if you could give up the space, the firm would still have the property/lease/sub-lease so nothing is saved. True, but over a larger time frame or in conjunction with a larger cost saving initiative, reduction of space may be on the agenda. Typically, an 8×8 cubicle costs about $10,000 a year in a major city; that includes power, common space (hallways, elevators, restrooms, etc.), cleaning, etc. If you have multiple shifts, having different shifts use the same desks can make a huge difference in costs.    

IT:  Every service group (even IT groups) uses technology, and therefore has IT costs. What are your costs? If you don’t get a bill from your IT department, internal cost allocations from IT usually average $5,000 to $15,000 per user per annum just for PC support and servers (but unallocated costs from other groups may be buried in these charges). Investment Banks tend to have higher costs than Law firms, and certain groups are heavier technology users. Make sure that you have some number, even if it is just an estimate, to account for IT costs.      

Desk phones: What is your phone bill? Do you even see these costs? This could be minor or it could be very high, if you are a call center. If you saw these costs, would you demand VOIP phones or use Skype or other lower costs systems communication systems?

Cell phones and offsite tech: Does your staff charge back (or do you supply) cell phones and home Internet connections? What does this cost?

Equipment: All the other equipment in your group: computers, monitors, printers, chairs, etc. Typically, you would amortize the computers over three years and the furniture over five years.

Contracts: A corporate library needs to pay for market data contracts and subscriptions, IT pays for software licenses… do you have any external contracts?  

That’s pretty much it. Many of these items have been left out of the discussions about the cost of service, but with the rise of the Regulators and the greater use of Outsourcing they can no longer be ignored. It’s time for everyone to get familiar with these costs… so that they can be better controlled. Not only do you need this information to develop a realistic unit cost, you also need this information to understand exactly what you’re getting when you look at an Outsourcing agreement. There is, however, one other item that you need to understand. The hours that your staff works. Which we’ll pick up on in the next Blog. But for today, that’s my Niccolls worth!

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The Regulators: Round 2 – Are Your Costs In Line With The Market… Which Market?

Posted on June 3, 2011 by Chris Niccolls

Yesterday we spoke a bit about the rise of “Regulators” in Fortune 500 Firms. In the past service managers would periodically see directives for firm-wide budget controls, freezes for new hires, or (during especially difficult economic times) special committees that control expenses. These initiatives ruffled a lot of feathers but were able to deliver savings… even if they were only short term. When the crisis is over everyone goes back to their old way of doing business.  That may have been a good thing, since those short term solutions were not sustainable. As an experienced manager you knew that taking benefits or wages away from your staff would come back to bite you when the economy turned around. These new Regulators are different. They have a permanent mandate, and they are procedurally based; Regulators have credentials in Six Sigma, Lean or similar methodologies. Regulators have a mandate to comb through the firm and identify opportunities to cut costs and increase performance. They also serve a new function: Ongoing monitoring. In previous programs you often just saw that you took the steps you said you would, and you assumed that you received all the benefits. Regulators are beginning to analyze costs to see if all the benefits have actually been delivered… and if they will continue to bedelivered onced the project is over.

That means that your cost of operation, and especially your unit cost, become a lot more important. You not only need to know your unit cost, you need to know what the market rate is you’re your services. In the past, we often looked at other corporate service groups (either in our firm or at competing firms) for a comparison price, but that has its limits. Corporate services do not directly pay certain costs (such as rent or electricity) or are not required to fully recover costs; as a result, the rate they charge for their services often does not reflect real costs. If your services were performed by an outside group, what would they charge for the same service? An outsourcer needs to include their entire cost structure… salaries, equipment, rent, taxes, heating,  etc. (we discussed how to collect comparable costs for an outsourcer in yesterday’s Blog, “The REGULATORS: Who Are They And Why Are They Interested In You?”).  

If you aren’t allowing for these costs, your internal rates and your total cost of operations are lower than they should be. As Regulators look at more and more improvement projects, these forgotten costs are moving back onto the table and cost comparisons are getting more accurate. As an example, the cost of space (rent, power, etc.) for a typical 8×8 cubicle is about $10,000 in most major cities. In the next Blog we’ll do a deeper dive into costs, but for today  pull together the numbers that you have and see what your cost looks like. How does it compare to outsourcer rates now?

If your cost of operation is high compared to an outsourcer, quality issues may account for some of that difference. You may be providing more quality, or a larger range of services, than your users need (24 x 7 coverage, overstaffing to reduce queue times, too many managers, etc.), or you could have a lot of production problems that require the application of people hours and other resources. If you these issues make you less efficient than your competitors, you will see this in the pricing you get from outsourcers. Now, let’s look on the flip side of costs. Is there a value to your services that hasn’t been accounted for? Can employees provide a higher level of security… how? What would it be worth? Do you have proprietary processes that cannot be shared with an external provider? Think about it; are there aspects to you services that can only be delivered by you, and how would you price the value of this service?  Add and subtract from the market price.  Where does that leave you?  

Well, it should leave you in three different places! When you compare yourself to an outsourcer rate, you should get three different rates.

  • First, what is the rate for providing the service in your (local) market? If an outsourcer provided the service in your current space or in a nearby building, what would they charge? Ideally, you should be fairly close in price, since labor and key costs come from the same market. If there are significant differences, it should come from the service model. How is an outsourcer’s model different than yours?  
  • Second, what is the rate for providing the service at a “nearshore”” location? For a New York based operation you could nearshore in New Jersey or perhaps in Alabama. How much of a price advantage is there in a more remote nearshore location? Here, you should see a larger difference in costs. How much of a savings could nearshore deliver?
  • Third, we have the offshore rate. This should be the lowest price. However, the father you move a service, the more up-front costs you are likely to incur and the higher the possibility that the service will not be a fit. It’s not that a distant location cannot provide a service, it’s more that there are small cultural and training issues that can be overcome… but it takes more time than most people realize and these costs are often inadequately budgeted. This results in lower than expected service levels. Also, easy project went offshore years ago. Services that are being offshored today tend to be more complex, more costly to replicate, and more likely to miss key training (cost) elements. Consider some adjustments to the initial offshore rate you are given.

Naturally, when you move a service away from a major metropolitan areas cost equations change. The further away you can move, the lower the cost. Can you meet the cost of offshore locally… probably not. However, you can probably come pretty close to the rate of a local provider. If you run an exceptionally efficient service you might be close to the nearshore rate. If you can’t match the offshore rate, how much could you improve your price point? What improvements could you make to half of the financial advantage of moving your service offshore. How about just a third? How much you leave on the table is a pretty good indication of how much interest the Regulators will have in your operations.  We’ll pick up the theme of costs in our next Blog, but keep collecting in formation and building your cost models. And that’s my Niccolls for today!

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The Regulators : Who Are They And Why Are They Interested In You?

Posted on June 1, 2011 by Chris Niccolls

Most signs for the economy are looking up, and the pressure to reduce costs has reduced. However, as business is rising and new income producing staff is being hired, the new pressure for Corporate Services is to support these new users without raising costs or headcount. If you don’t already produce basic metrics (on-time delivery, quality, productivity, utilization), now is the time to roll them out or clean them up! As your work load increases, there will eventually be an opportunity to add staff or resources, but you need to be able to show how that affects your unit cost (cost per hour of work, per user supported, per completed product… whatever you have identified as your critical metric or metrics). The clearer your definition of unit cost, and the more that you understand the levers that drive unit cost, the better you will be able to defend your decisions and gain support for changes to your budget (or even authorization to take action on already budgeted events). At least that’s the way it normally works.  However, the last few years have been anything but normal.

If you’ve managed operations for any period of time, you know that business works in cycles. There are parts of the cycle  where you need to build services, parts where you downsize to match a declining economy, and even tiny little parts where you can pause for a breath. This recent down cycle started like most others with non-specific reduction goals that were communicated with statements like: “Cut costs 30%… somehow… and try not to impact services.” What happened next, though, was different. Most of you have (if only recently) been introduced to Six Sigma, Lean or other “improvement” systems, as well as Outsourcing as a method of ensuring cost reductions.  By now many of you may think, “The economy is rebounding. Shouldn’t we put away these tools and get back to our normal business processes?” Not this time. Purchasing departments have transformed into Procurement, a group that is responsible for ongoing improvement in the cost and quality of purchased items. Procurement has been very successful, and has been gaining power in corporate decision making. Procurement may use Six Sigma, although it has its own quality improvement process, which… pretty much use the same tools.  

Originally, Procurement was focused on traditional purchases (paper, filing cabinets, pencils, business cards, etc.). As time went by, Procurement’s structured approach showed improvements in quality and cost over the old purchasing process. An increasing number of firms are involving Procurement in the acquisition of temporary workers and other staffing services. As Outsourcing joined the mix, Procurement was often the only group that knew how to effectively collect outside pricing information, so they became a permanent part of the Outsourcing process. Additional improvement groups have either spun out of Procurement or were developed from other Corporate services, especially IT, which had its own procurement type processes and project management disciplines (Agile, Scrum, etc.).  The regulators are everywhere.  At least for the next few years you should assume that regulators will examine your services and question whether everything is running as well as it should. They may still be looking for new Outsourcing targets or they may want to identify groups that can be improved. However, you may not become aware of these initiatives until they are in the very late stages of development.  

In this more regulated world, just how do you effectively manage your services? The key is to run your operations as efficiently as possible, so that there are few targets for outside improvement initiatives. That’s not to say that you should hide information or evade firm-wide initiatives… with the level of transparency in corporations today, you couldn’t hide from the regulators if you wanted to! Instead, you need to understand what drives the regulators. These groups have a mandate to find and fix problems. Do you look like a problem to a Regulator? If you want to see how your department looks to the regulators, consider these three questions:

  1. Cost: Often cost is the only “hard” piece of information that internal auditors have access to. Not surprisingly this is where they focus their efforts. Cost alone is important, but by itself it doesn’t tell you much. Is your service too expensive… it depends on your service levels, and how well you are achieving them: how often do you meet deadlines; how much capacity is needed; how great is the training burden; what is the quality of service; what are your hours of operation; etc. Without these service levels, you don’t know which model is appropriate for cost comparison. You, on the other hand, are knowledgeable about the service levels needed for your products. It’s good to know what your competitors charge for their services, but corporate services rarely charge based on actual cost, so the rate they charge may not tell you much. A better comparison can be found in outsourcer pricing. Some services outsourcers might say, “We can just take over your services and charge a management fee”, but this gives you a poor number. A better way to approach this is to provide information on your products and your volume, and ask the outsourcer how they would staff it and what it would cost. If every firm you talk to consistently tells you that they would require “X” workers and “Y” managers…. does their staffing model look like yours? Are they saying that it would take significantly less staff? Consider if they are right or wrong, and why? Remember, these are the questions that the Regulators are asking suppliers all the time. Understand how well priced your services are compared to the competition.
  2. Client Feedback Report: Do you have a process for collecting feedback every time your service is used by your clients? Are you collecting useful information? Having someone rate how good you are on a 5 point scale, or even if the service was  acceptable is a start, but it doesn’t give you actionable steps to follow up on. Asking which area needs improvement (intake, customer support, automated phone line, etc.) is more valuable. Be prepared to answer the question, “How has the feedback process changed your service?” If there aren’t major, measurable, changes that you can cite that resulted from the feedback process… you need to change the way you collect feedback from your users!
  3. Client Survey: Most feedback forms get a response level of between 1-2%, if you put in a significant effort. This sort of feedback process is important, but it ignores the vast majority of your clients. This “silent majority” may be very unhappy about your services but may not see any value in telling you that you need to improve. Likewise, they may love your service and even think that you provide more services than they can use… which could be an opportunity to reduce cost or redeploy resources… but they may have not told you so. By conducting an annual survey you can collect information that verifies the appropriateness of your services, provides more support for the quality of your services, and will provide you with information to develop a prioritized list of what needs to be fixed.  00

Regulation is here to stay… at least for the next few years. You’re going to see more Regulators, so understand what they’re looking for and try to get a few steps ahead of the game. Understand your service costs in the context of the larger market, and understand what your clients think about your services. Add this to the information you already produce for your monthly management reports and you have a pretty rounded view of your organization, and how the Regulators view it.   Get that information! And that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Delivering Services, Improvement, Continuous or Not | Tagged , , , , , , , | Leave a comment

Management Trends for 2011: MORE!

Posted on May 30, 2011 by Chris Niccolls

The corporate world is changing. The biggest firms in the world are almost entirely public corporations, and an every smaller number of the largest firms are privately owned. Of the largest firms in America, the top five public firms are about four times larger than the largest private firms. This pushes more and more people and processes into the public camp. Unfortunately, the last couple of decades have had too many stories about high quality firms that have gone under because they were not efficient enough (how many department store and supermarket chains are gone?), or lacked transparent in their operations (Enron?) or were change leaders who didn’t change fast enough (Blockbuster, Circuit City, CompUSA).  Shareholders have put increasing pressure on big firms to be more professional and have fewer unexpected results. Add to this a long period of merger-mania that has made the largest firms larger than ever. And of course the drive towards international operations. It’s increasingly difficult to tell which firms are American, or British, or Chinese. Every large firm has some operations in another country, most recently that means a distant location that can exploit markets in and around India and China.  

All of this is interesting, but how do these changes affect you? What these changes mean to you is that these four concepts are now front and center on your agenda: Regulation, Transparency, Qualification, and Standardization.   Let’s break it down:

  • Regulation: A public company agrees to a higher degree of regulation than a privately held firm; it’s a requirement to be a public firm. However, there have been many spectacular failures of this regulation in the last few years, and regulation is on the rise. Remember, regulation doesn’t just come from the government. Stockholders, internal regulators, and other groups. The more general regulation, the more it puts a burden on every service group. Consider how every time a Wall Street firm has a possible breach in confidentiality (such as insider trading) the ripples look like this: Have all employees received confidentiality training (HR-Training); are documents treated with confidentiality (document and copy centers); are corporate computers secure (IT department); do you control visitors in your building (facilities, building security, conference center management);  how are temporary workers managed (HR, Procurement); are all papers destroyed before they leave your workspace (?).  This is just one tiny example.  
  • Transparency: In order to regulate a firm, you need to know what everyone is doing. As firms become larger, it is increasingly difficult to know what everyone is (or is not) doing. That’s one of the reasons why the need for meaningful reporting… meaningful reporting…  is  increasing.  You don’t just need to provide more information, more individuals need to have access to this information. As you may have noticed, the more you can report, the more you will be asked to report. This is a good thing. If your reports are better than any other source, then your data may be a proxy for something larger. For example, the activity in the document center may be a proxy for overall corporate activity in a Legal or Investment Banking firm…. but it may require greater detail (different documents may be associated with new accounts vs. ongoing account work)and greater  resolution (perhaps weekly reports instead of monthly, or reports by user sub-groups).        
  • Standardization: It’s great to have everyone report information, but do any two groups make the same assumptions in their reports, or use the same terms the same way? It’s common that when there is some sort of improvement or positive thing to report, MANY groups may each take full credit for it. Because of the way that firms are built in silo’s and given the way that incentives are provided to managers.  That’s OK when you’re just looking at one group, but when you look at the entire firm as one operation a $1,000 cost saving looks like a $10,000 saving. And of course if one manager’s claims to have created a saving, will a second manager (claiming the same saving) even be aware of a conflict over the credit? Individual reporting systems are getting linked up. Methods of reporting are becoming more standard. With standard terms and measures across a firm, there is a multiplier effect in transparency. Now you not only see more, you know what you are looking at.
  • Qualification: Most support services used to be learned through on the job training (OJT)on the job. That’s still largely the case, but today you need verification of your abilities. In part this may come from an internal assessment, but in part it needs to come from an external source… from an educational facility or a certification body. When a profession is relatively new, there are few external sources for training or certification. Look at IT. There were technical colleges 30 years ago, but the profession grew so explosively and in so many different directions, that OJT outpaced external certification. Now there are many different specific school degrees and certifications that apply to different aspects of IT.  Everyone needs to show more documentation of their qualification to do their jobs than ever before. Documentation of qualification is another form of transparency, although both the value and the limitations of qualifications are often misunderstood. Still, qualifications provide a “shorthand” that indicates the level of knowledge in a group.

Let’s put these separate concepts together.  As your firm gets larger and is under more pressure from stockholders for profit and transparency, as regulators also increase reporting needs, all units will be required to report more… which leads to still more reporting. As all units of the firm expand their reporting, reports will need to be more meaningful and more integrated, using the same terminology and methodologies for reporting. This will work together with a push or more standard qualifications, which will infuse your firm with more people with similar educational and training backgrounds (Six Sigma, PMP, Agile, Prince2, etc.), reducing barriers to communication. However, isn’t one of the reasons why we all limit our reporting that some people might not understand the inner details of how we work? They might make superficial observations and look for changes that aren’t good for my group? Even if I want to be transparent, if too much information is available, won’t I spend my entire life just defending how my group works?

These are legitimate concerns. The reason that most large firms have divided their business into different silos is so that each business can do what it does best, in its own way. But due to all the changes we’ve been discussing, there is a push towards breaking through silos… which are more likely to be seen as barriers to profitability than as useful structures for managing a business. The secret to successfully managing in 2011 will depend on your ability to embrace these changes, but still maintain control of your operations. And that is a great subject for tomorrow’s Blog. But for today, that’s my Niccolls worth!

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The 4th Sigma: The Paradox of Customer Service

Posted on May 28, 2011 by Chris Niccolls

You’ve probably heard about it elsewhere, and if you haven’t in these Blogs we’ve discussed how the Six Sigma framework defines waste as any activity that doesn’t contribute value. For example, in “Is Quality Control A Waste of Time?“ we looked at the quality control process and saw that it usually just serves to fix the work that should have been done correctly in the first place. If you have error filled products, a QC process is necessary in the early stages of a delivery center, because your clients need to be protected from bad products. Over time, the QC function should focus on finding and eliminating the source of errors, rather than becoming a permanent part of the normal production process. So, QC can be both useful (preventing clients from having a bad experience) and a waste (costly reworking) at the same time. That’s the traditional Six Sigma view. However, it’s wrong in at least one aspect. One of your most important and value-added processes is thrown into the same bucket as QC or other “waste” processes. That function is, Customer Service.

We have a shared responsibility for Customer Service being incorrectly categorized. Partially, customer service is  mischaracterized by many service delivery groups. Partially, it is misunderstood by Six Sigma experts. Isn’t customer service just a lot of people trying to calm down angry clients because the flaws in how the service was delivered? How is it any different than any other “fix” related waste? Have you already had this disussion with Six Sigma experts, or other quality improvement groups? If you have, you probably needed to gather data and support the argument that customer service is substantively different. But the nature of Six Sigma means that customer service will be examined repeatedly,  leading to a loss of management time (and yes, time spent arguing with efficiency experts is waste too). One of the arguments supporting a 4th Sigma process is that because it is designed for Corporate Services, it starts out with different assumptions than generic (industrial) Six Sigma. The 4th Sigma assumes that the customer service process adds value. What sort of value does customer service add?

  1. Dynamic quality definitions:  Industrial production, which produces many identical products, it is absolutely necessary to have clear, rigid quality definitions before the production process starts. In fact, without very exact and rigid definitions of quality, the products will not work. In services, which produces many similar but not identical, an overly rigid definition of quality degrades customer satisfaction. Because the “resolution” of products is so much lower in services, the remaining few percent of quality definition is provided by the client before, during and after the production process. Some Six Sigma projects have failed because dynamic quality definitions are mistaken as a lack of process control earlier in the production process. When this line of reasoning is followed, rigid but efficient services are created… that no one uses. Customer Service is part of the production cycle, adding value to the end product. Think of an industrial process where a block of aluminum is roughly milled by a fast machine with limited accuracy, and then moved to a second machine that can do the final finishing work.
  2. Freedom and Influence: Most industrial goods are consumed by external consumers, who choose products from a marketplace of competing products. Corporate Services are consumed by internal clients, who usually have just one supplier for each product. If an external consumer is unhappy, they may choose a different supplier. This causes irrational improvement to customer satisfaction scores (the lowest scores are the most likely to go away) and equally irrational improvement to customer satisfaction for the new supplier (I’m so happy to get away from someone I don’t like, that I automatically like you). Good examples of this are in changing cell phone providers after a bad experience; your improvement in satisfaction is less likely to come from the new phone plan, and more likely to come from your freedom to choose and/or punish. Without a release valve, Customer Service has the potential to accumulate unhappy clients. Customer service is a powerful option for converting detractors into evangelists.
  3. Complaint spread: In previous blogs we talked about clients that react to poor quality by talking to their colleagues. One survey found that 75%  of clients tell other people about negative experiences, but only 42% talk about positive experiences. For outliers, clients with very good or bad experiences, a bad experience is more likely to be talked about… and to influence neutral users (those who receive a merely acceptable service). An industry statistic says that a client with a complaint repeats it to 14 colleagues. Every negative story a neutral hears eats away at their own satisfaction levels, even if they never have a negative experience of their own. By providing negative and neutral users with a good “after production” experience, you can raise their satisfaction levels beyond what is achievable through well made products. Addressing minor client complains now, develops a pool of good will that reduces resources consumed when the big complaint arrives (and it will). Only customer service raises client satisfaction to a higher level than is achievable by just producing a good product. That additional satisfaction adds value to your services.

Does this mean that customer service is an unlimited good? No. Customer service is just like every other aspect of production, and has to be provided efficiently and effectively. However, traditional Six Sigma… partially due to our own commingling of definitions and positions… tends to look at these resources as unproductive waste.  So, keep these issues in mind as our next Blog will look at the importance of customer service in outsourcing. But for today, that’s my Niccolls worth!

Posted in 4th Sigma, Best Practices, Continuous or Not, Delivering Services, Improvement | Tagged , , , , , , , , , , | 6 Comments

The 4th Sigma: Analysis Paralysis… More Options Don’t Always Help

Posted on May 25, 2011 by Chris Niccolls

Any good management book or management system provides you with more than a few tools or the steps for a process. The best books remind that you are applying these systems to people, people with preferences and limitations. Some people have more talent, or more focus, or training and have fewer limitations (at work, at least), but they still have limits. One of our limits is that we can only process so much information without causing problems. Over the last couple of decades we have tried to escape these limits by modeling ourselves on computers; we tried to “multi-task” our way out of confusion and overload. However, we are now learning that human multi-tasking is an illusion. When we do several things at the same time, we either don’t get it done on time or we just do it very poorly (see my Blog earlier this month, “The Mind Muddle Of Multi-Tasking ”). As human beings we can fail in a variety of ways when we have more information than we can deal with. When we try to process too much information we can become victims of “Analysis Paralysis”… and get stuck in the analysis phase, failing to move projects into action. Why is this?

When we’re overwhelmed, we freeze. Fear of making the wrong decision holds us back. We keep looking for an option that will solve all of our problems without an excessive cost or negative results. When we have many different ways of looking at the problem… many tools or many competing measurement systems… we “churn” the options hoping that a perfect solution can be found. When we enter  this churning process, we see that there are two variations: static paralysis and dynamic paralysis:

  • Static paralysis: You feel you don’t have enough data, you question the data collection methodology or perhaps the analysis doesn’t ring true. If you have specific concerns that perfectly legitimate, but this is usually just unsupported anxiety. The data is pointing (or could point) towards taking actions that are very undesirable or very risky. This isn’t an intentional attempt to put off a decision; it is an uncertain manager seeking more assurances. However, with so many available tools, you can churn the data forever. Fewer options would limit the churning process and move you more quickly towards taking action.  
  • Dynamic paralysis: You trust your data and your processes, but in the time it takes to complete your analysis, the data changes. You start again, and once again the data has changed. If you work in a rapidly changing environment (company changing size, budgets changing, new offices opening or closing, mergers or departments being sold) or if technology is involved (new products, new models, rapidly changing benchmarks) there is always a need to gather and process data again, because the results probably will be different.  With new data constantly arriving, the analysis process can be repeated endlessly and a superior process of analysis could arrive tomorrow.    

Whether your paralysis is static or a dynamic, it all comes down to too much information, too many processes, and too much fear.  Complexity directly relates to uncertainty. The FUD (Fear, Uncertainty and Doubt) sales technique was supposedly developed by IBM to stall clients which were considering competing products. “No one ever got fired for recommending IBM” was a primary selling point for IBM, and a not so subtle reminder that unknown details could have negative consequences. It certainly delayed decision making when competitors brought out new products. You face the same FUD when you need to rely on a complex system like Six Sigma. If you had a less complex and more understandable system, a system that was more specific to Corporate Services, the greater understanding would lead to more confidence. You and your team would encounter less fear, less confusion, and improvement programs would move forward more quickly. That’s why we need a “4th Sigma” program.  

How will we create this program? Primarily, we need to reduce the size of our toolkit, and focus on a few tools that address most of your issues. Will fewer tools give us a less useful system? Not at all. When you go to a restaurant, you are generally given a couple of forks, a couple of knives and a spoon or two. At a very formal affair you may be given a more extensive set of cutlery. At the turn of the last century, when formal dining was at its height, cutlery manufacturers had as many as 150 eating implements per setting. I rarely find the need for a demitasse spoon, let alone an ice cream fork or a pickle knife. The reduced set is usually more functional, and certainly takes less time to lay out and learn. An old joke has the artist Andy Warhol at his first formal dinner with his patron, he was so worried about using the wrong fork or spoon that he passed on every course. Eventually his patron asked him if there was something wrong with the food and he replied, “I’m sorry, I only eat candy.”        

We’re going to have our cake and eat it too (but we’ll share just one fork). Over the coming months we will go through some exercises together to use a simple but reliable tool kit for improving quality. Nothing will prevent you from using Six Sigma or other more complex processes, but you will be able to do most of what you need with very little fuss and bother. If anything gets missed or any of you see a need to develop a missing process… just say so (I read every comment you send!), and I will see what I can do! So, for today, that’s my Niccolls worth!

Posted in 4th Sigma, Best Practices, Decision Making, Improvement, Continuous or Not, Learning and Development, Unique Ideas | Tagged , , , , , , , , , , | Leave a comment

The 4th Sigma: Is It Time to Rethink Six Sigma?

Posted on May 22, 2011 by Chris Niccolls

Over the past few months, I have been using this blog to collect information from different operational managers, especially IT managers because of the wide range of services they run. The subject has been, “How are you dealing with the pressure for  change and “transformation” in the services you manage?” What have I found? Pressure to improve services is at an all-time high. There is pressure to limit cost while improving service quality. There is pressure to outsource services, although managers are often unsure that outsourcing can accomplish this. There is also pressure to “transform” services, which is even more confusing to most managers. In order to create change, managers are becoming familiar with Six Sigma or are incorporating Six Sigma expertise into their groups. These managers are feeling something that is difficult to articulate, and too vague to outright challenge the experts. Especially in these difficult economic times. What is this feeling? Something is not quite right.

Six Sigma provides a great tool kit, a cookbook of analytic recipes that helps any manager serve up a feast of improvement projects. However, just as a cook needs more than one cookbook, we need more than one “book” of Six Sigma. Six Sigma began in an industrial environment. The tools are good, but the targets are inappropriate and have not been redeveloped for Corporate services. This, I believe, is what the managers have intuitively discovered. A few years ago Malcolm Gladwell put out a book, “Blink” that explained how we can know in an instant something that escapes teams of experts… even after extensive research. This flash of insight could be summed up as, “Something is not quite right.” It’s time to examine the objective information and create appropriate goals for Corporate Services, something that might more appropriately be called 4th Sigma:

  1. First Sigma: Motorola attained the 3rd sigma, and stayed at that level of quality until Japanese colleagues pushed for a new goal, a 6th Sigma goal. Most corporate services are struggling to reach the 1st Sigma (85% quality). Some report 95% or better quality but few are truly performing at that level (see my earlier blog, “100%, Guaranteed On-Time… Sort Of!”, for details). Not only are Corporations at least 2 Sigma’s behind industry, but they NEED to live within the 3-4 Sigma level to be effective. As you will see.
  2. Similar vs. Same: Six Sigma processes need to be repeatable. Each time a function is performed provides a new opportunity to measure results, identify issues, and improve processes. In Corporate Services, functions never repeat exactly. Consider a document with 10 words that need to be corrected: it could take 10 keystrokes, or a larger number (depending on the words); all words could be on one page, or you might need to search through many pages; different documents will vary in size and complexity. Each variable affects how edits are performed. We can learn from similar functions, and we can apply what we’ve learned when the “resolution” is no more than 3 or 4 Sigma’s. When we turn up the resolution to Six Sigma’s, similarity generates so much background noise that the results are not useful.
  3. Client Position: In industry, clients are not integrated into the physical production process, although clients may “direct” production through survey data, input from sales representatives, and data from marketing. Corporate Service clients are directly integrated into productions. Lawyers, consultants and accountants are direct users of corporate services, and external clients (revenue sources) are also involved in production processes: presentation documents, contracts, research projects, application development, and other services. The haze of additional variables from clients prevents… and indicates against… a higher Sigma resolution.
  4. Open Production Floor: The ultimate example of Six Sigma success is the microchip factory. The greater the need for quality, the higher the Sigma level. Microchips are so complex and have so many opportunities for errors they could not be produced without Six Sigma. Chip factories control airborne contamination by sealing the production space; prevent human contamination by sealing workers in environmental suits; and reduce disruption to calibration equipment by having everyone whisper and walk softly. Corporate Services, by contrast, need to work in an open environment. IT often travels to other departments and clients to perform a function, other services must interact outside of their own physical space. Corporate services can never control their space at a Six Sigma level.
  5. Role of Procurement: Procurement plays a vital role in industrial production, assuring that external inputs (products from suppliers) meet production needs (quality, timing of delivery, price, etc.). The most important inputs for Corporate Services come from clients or proxies (lawyers, bankers, accountants, consultants, etc.), who are not controlled by Procurement. Because Procurement’s control over supplier inputs is derived from control over payments, they are largely powerless in Corporate Services where “outside” suppliers (the clients) control the payments. Corporate Services lose a powerful Six Sigma lever, reducing possible results.
  6. Speed of Improvement: Six Sigma text books target a reduction of errors by a factor of 10 every 2 years. This rate of improvement is largely fueled by the rapid evolution of technology. Machine based functions dominate industrial processes, which in turn provides many opportunities for rapid speed/cost/quality upgrades. Service functions are largely people based, where cost is generally rising. Opportunities for speed/quality upgrades exist but are limited, and there is no guarantee that large percentage improvements can go on forever.
  7. Ownership of IP: In factories, many business processes are embedded in equipment that the firm owns or leases. When equipment is replaced, the new equipment will incorporate existing and upgraded processes. In a Corporate Service, business processes are primarily embedded in individuals, who may leave at any time taking precious knowledge with them. You can turn to your training materials for an (incomplete) backup of business processes, but “reloading” this information into new staff is expensive, time-consuming, and problematic.
  8. Physical vs. Knowledge Inputs: Measurement is a necessary part of Six Sigma. Measuring industrial inputs is relatively easy because weight, size, height, thickness… are all physical, linear properties. Knowledge inputs, especially client produced inputs, are more difficult to measure and offer few opportunities to examine the elements of the input (Is that spreadsheet formula correct? Do company names require clarification? Was IT instructed to go to the wrong location for a computer installation?). Measurement is possible, but the range and quality of input measurements are greatly reduced.
  9. Measurement Cost: The cost of measurement is higher for services, because what is measurable (see above) is likely to require an expensive human resources to record the measurements. Furthermore, humans take longer to record measurements than machines, which will increase the time needed for production, negatively impacting client satisfaction. Measurement is necessary and possible, but must be more limited than in an industrial process.
  10. Definitional Drift: Definitions always change, but changing definitions is a larger issue in services than in industry. If you have a titanium rod as a reference model, a measurement of its length in 1982 will match a measurement in 2082. A corporate library may use reports from a specific equity analyst as a standard for research, but analyst change firms and research groups can go away (example: Lehman and Bear Stearns). Many benchmarks for Corporate Services are relative or abstract. Every process has definitional drift, but it is greater in services than in industry.

Let’s not throw out the baby with the bath water. The tools that have been assembled by Six Sigma have been around for a long time. They work. But the target goals, which are embedded in the Six Sigma process, just don’t work for Corporate Services. According to Praveen Gupta, a noted author and Six Sigma expert, fully 60% of Six Sigma projects fail to achieve the results they planned. We need to turn Six Sigma methodology on Six Sigma itself. By fully developing a 4th Sigma process, something similar but scaled to meet the needs of a service group, we can make the process more understandable and more successful. That’s going to take a lot more than just this one article, but it’s a start. Over the coming months, we will revisit this issue and lay the foundation for a simple but meaningful quality improvement system. But for today, that’s my Niccolls worth!

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