The corporate world has relentlessly been at the forefront of the fight to find a lasting solution to the current economic challenges. This has led to numerous inventions in forms and patterns of management, leading to the successful invention of the six sigma management strategy. This strategy was developed by the international telecommunication giant Motorola in the mid 1980s. However, its popularity grew a decade later, and in 1995, Jack Welch made this strategy his centre of focus, and from there, the strategy is widely put in use in many other industries today. The main agenda in the six sigma strategy is to identify and enhance the quality of output procedures by minimizing the level of errors, ultimately reducing the company’s vulnerability.
This strategy engages a number of quality checks and management methods following defined steps to ensure quality output and minimal errors. In simpler terms, the six sigma strategy can be defined as a way of reaching perfection, a discipline driven approach to avert any instances of faulty circumstances in an organization. My focus will be in the successful Abu Dhabi commercial bank in the United Arab Emirates. Formed and founded 32 years ago as a limited liability company, the Abu Dhabi was a public shareholding company. The majority of shares are held by the Abu Dhabi government. The rest are owned by other institutions and individuals.
The government owns about 65% of the total shares, while the rest are distributed to the public. The bank is one of the largest in the country in terms of the overall shareholding and market value (Dahlgaard, Kristensen and Kanji). The company engages in a number of financial services including retail, commercial, investment, brokerage, merchant, fund management and many other financial services (Dahlgaard, Kristensen and Kanji). The bank adopted and rolled out the use of six sigma in its managerial systems influenced by the successful records reported on the use of this strategy.
The results achieved in the implementation of the six sigma business strategy are unbeatable. I am going to discuss below the strategy in-depth to describe the practicability of the method to the Abu Dhabi commercial bank. Looking at the events that led to the invention of the business strategy, the system was borrowed from the statistics output quality management method known as process capability (Charles Sturt University). The reasoning behind this method is to achieve a lofty fraction of output within specific processes. Six Sigma is a registered trademark of Motorola Inc. In the year 2006, the company saw a rise in savings at about US$17 billion (Charles Sturt University). Other companies that adopted the use of Six Sigma and reported remarkable success include Honeywell and General Electric.
The Lean Six Sigma technique is built on lean principles of mechanization, which looks into development course and waste disposal, and Six Sigma, with its centre of attention being on deviation and design, as corresponding regulations meant to support trade and operational merit. The bank adopted and rolled out the use of six sigma in its managerial systems influenced by the successful records reported on the use of this strategy. The results achieved in the implementation of the six sigma business strategy are unbeatable. I am going to discuss below the strategy in-depth to describe the practicability of the method to the Abu Dhabi commercial bank. Looking at the events that led to the invention of the business strategy, the system was borrowed from the statistics output quality management method known as process capability (Charles Sturt University).
The reasoning behind this method is to achieve a high fraction of output within specified processes. Six Sigma is a registered trademark of Motorola Inc. In the year 2006, the company saw a rise in saving of about US$17 billion (Ashton). Other companies that adopted the use of Six Sigma and reported remarkable success include Honeywell and General Electric. In the recent past, management experts have joint Six Sigma principles with lean manufacturing to build a tactic which has been named the Lean Six Sigma.
Six sigma has been approved in a number of companies in the UAE as a viable managerial strategy to cope with the current global challenges (Ashton). This strategy is a discipline driven approach for improving managerial strategies. The strategy’s success in many institutions has further promoted the use of this strategy as a tool to drive strategic goals in the company. The notable industries that have embraced the idea of the six sigma strategy include the health sector, companies in the manufacturing sector, firms in the services sector, non-governmental and non-profit organizations, government institutions and research firms. Six sigma principle agenda is basically the achievement of companies’ goals under the protocol of leadership.
Abu Dhabi bank has achieved good results by using the six sigma strategy, which ensures that customer satisfaction is increased with the reduction of error. This has helped the bank to be able to produced products that meet the market demands. The strategy is useful in helping companies lay more emphasis on producing perfect products in the market. What this does is that it heightens the company’s capability to beat its competition with the production of reliable products. This strategy is characterized by well defined and prudently set principle in respect to the organizational goals and objectives (Anthony and Govindarajan).
Roles are well defined and clear comprehensible to the participants. The other characteristic of this strategy consists in the fact that accurate data collection and information are adapted. The strategy in itself is driven by data constraints so it is important to have genuine and authentic sources in place to justify any managerial actions.
The strategy banks on financial data and accuracy is off essence in order to go with the spirit of the strategy’s intentions which are to elevate the company’s productivity. The structures put in place in a six sigma business strategy are aimed at the following objectives. First and foremost, six sigma is aimed at improving the functioning processes and lowering the possibility of defects in the company. Then there is the other function of reducing the operating processes variability as well as reducing costs. These objectives finally add up to more beneficial and advantageous situation where the consumers are well catered for and as a result consumer confidence rises proportionally (Anthony and Govindarajan).
This then leads to an accumulative profit and increased returns propelling the company’s financial stability hence success. Six sigma is more concerned on how far a production process can deviate from the perfection (Anthony and Govindarajan). The argument in this business strategic process is that when one knows the possible number of defects expected in a function of a certain process, then it is easy to determine and find ways of eliminating the defects. The perfection notion comes in since a defective process leaves a perfect process in place.
Key concepts of six sigma
The concept is very keen on the quality of product as this is attributed to customers’ confidence which ultimately brings about the actual growth and profitability to the company. Another concept is that of defect which basically the instance is where the customer’s needs are not met. Meeting customer’s needs and maintaining their confidence in the quality of products they get, is a keen concept of this business strategy. The process capability to offer products that fully satisfy the needs of the customer is another concept of this management theory. Six sigma management strategies are critical about what the process of production can offer. Customers’ preference is an important aspect of this concept. This represents customers’ variations and change of feelings towards a product.
The concept seeks to ensure stable operations of the company. This is to ensure sustainable and consistent activities to run the company effectively. The managerial plan must be of highly sustainable nature if a constant and consistent productivity is to be achieved (Anthony and Govindarajan). This concept seeks to establish such a plan in the managerial system. All of these put into consideration, the most important consideration is the need to layout a managerial design that depicts and keeps up to the customers’ expectations addressing their needs. Sadly the concept has been criticized to lay extra emphasis on reducing the defects hence seen to be fit only in the production processes. Critics say the process involves difficult statistical analysis and that it is a difficult process to comprehend. However, going by the benefits laid by this process, the criticism leveled against the strategy remains skeptical.
Benefits of the six sigma strategy
The benefits of Six Sigma are numerous as discussed above but there are six crucial benefits being fundament. The first benefit accrued from the use of this business concept is the possibility of creating a sustainable successful procedure. The possibility to identify defects early enough before they take effect is a sure way to provide for a sustainable growth and success. This in effect forms an individual performance goal in the company. Growth in this kind of a strategy is highly manageable and sustainable. The process as discussed earlier in this case is placing more focus on customers’ satisfaction and reputation of the company through offering quality products.
Quality production is essential as it keeps the customers buying the products as they find satisfaction in the products (Anthony and Govindarajan). The keen process to avert any form of defects means that the likelihood of the customers’ dissatisfaction is brought to naught hence adding value to the consumer confidence. With the whole idea of maintaining customers’ confidence, there is another emerging benefit. The rate of improvement in the company is far much boosted by consumer confidence. Consumer confidence is a surety of increased volumes of sales. Increased sales volumes translate to increased proceeds and untimely increased rate of improvement. With this mode of business management learning and transfer of information is very sufficient hence the strategy promotes learning interactions and exchange programs.
This helps to identify key projects and strategies in solving different situations. As it can be noted, the six sigma strategy is composed of three key elements which are customers, processes and employees. The customer is more concerned with the quality of goods he or she is getting from his purchases. They expect to purchase reliable products at competitive and pocket friendly prices. Secondly, the process, on the other hand, is the procedures of production. The quality of any product is measured by how far it can satisfy the customers’ needs (Anthony and Govindarajan). The customer’s point of view is supreme and the process must act in response to the customer requirements. This includes comprehending the customers’ requirements and needs in terms of their feelings and preferences. This allows the management to identify the point of disparity and change effectively in favor of the customers’ advantage hence move closer to the main objective which is perfection.
The third element of this strategy is the employees who are the main drivers of productivity. Growth opportunities and attractive remuneration can be offered to employees to help encourage talent exploitation and maximum focus on the job. Incentive given to employees motives them to offer all of their attention to the job and hence help in quality production. In six sigma, leadership and division of roles is of principle priority in the case where leadership is not clearly spelt out. Conflict is likely to erupt in the event that roles are not well stipulated and given a clear definition. Leadership is responsible for spelling out the companies’ objectives, missions and goals and they are the people to ensure compliance to these rules. In implementing the six sigma, it is of paramount importance to explain to the workers and define the role of it and its benefits to the customer. Under the responsibilities of the leaders, setting timetables and time limit is a very important aspect of management.
In the implementation process there should be an implementation overseer who supervises the process to ensure it is successfully assimilated in the system (Anthony and Govindarajan). The leader always makes sure that the processes are running smoothly, and solve disparities and queries arising during the implementation process. This should be a person with a very high level understanding on what the six sigma processes is all about. To determine whether or not a company is in a position to absorb the six sigma strategy, analyzing the company’s readiness for the event is very important. As noted earlier, Six Sigma requires statistical verification of data and authenticity is of paramount importance.
The question that a company should consider is how clears the objectives and goals of the company are. Six Sigma operates on clarity of information and it is an analytical approach of management. All of its processes are formed and retrieved from the company’s records of information. Investors and analysts can have over exaggerated and strenuous expectations. Can the company handle this type of pressure to achieve such heights of investors’ expectations? For this strategy to be fully utilized in an effective manner, there has to be a clear vision and prospective future and it has to be well publicized internally, and staff should be constituently reminded about the course of the company to avoid losing track on the main activity and objectives of the company.
Effective responses to changes in the market structure or even internal changes are obvious in every company. How well a company is prepared to face such circumstances is important in determining the level of ability for a company to be able to transit and fully internalize the principles of the six sigma business strategy. To fully implement the process then a fill evaluation of business performance can be useful in such a circumstance. How effective has the company been able to maintain and respond positively to customers need and requirements.
These is yet another challenge regarding implementing the six sigma in any country. Implementation looks at the current improvement and sustainability of managerial changes and its effects on the long-term productivity of the company. Most importantly, a prudent move on implementation of the sigma is to identify the current activities of the company that can work against the implementation of the six sigma process. It is also possible to take advantage of the current activities in the company that support the implementation of this process
Six Sigma Implementation
The Abu Dhabi bank has adopted the six sigma strategic management concept and is reaping benefits already. In the sequential process, the bank first identified and developed new process of in banking. The bank is credited with revolutionizing the banking industry with unbeatable products such as loaning facilities and money transfer. Taking into account how far the services offered by the bank are effective goes along way in changing the business’ strategic management. The bank ensures it reaches and matches up to the global strategic benchmarks in order to compete with global institutions. In the six sigma implementation process, the bank has been striving to surpass its customers’ expectations.
This is achieved by researching the changes in preferences and change in market structures that necessitates a shift in the way the bank operates. The bank has succeeded in creating in making quality services its organizational culture. Offering quality services has the benefit of eliminating the possible errors hence living up to the intended spirit of the six sigma concept. The Abu Dhabi bank took the challenge and organized for a training seminar to train its employees on how to conceptualize the use of Six Sigma. By so doing the company increased its customers’ satisfaction. Sealing the loopholes where loses are incurred the bank dealt with the most imperfection in its operations as required by the six sigma concept.
Six sigma implementation can be done using varied procedures that have been tried, tested and have been successful. Looking at Motorola, for instance, they had a successful experience with the six sigma. Hoverer, the best way is to find your one’s own way that would work for one’s company. Companies are different and every company has their own ways of dealing with difficult situations. While there may be some similarities in companies’ challenges, reception and reactions towards the same difficulties may differ.
Approach towards situations can be really tragic if the wrong move is made in response to a challenge (Banik). That is why it is highly recommended that companies find a way of implementing the six sigma concept in their companies in a more personalized approach to avoid disappointments. Companies have different objectives as well a more reason why there should not be a universal way of implementing the six sigma but a window is left for the personalize implementation in response to an individual company’s needs.
Plans set should be within the framework of the company’s resources and should be feasible in both short and long terms for maximum benefits realization. In the implementation, process leaders are important as they oversee the process and guide their implementation (Banik). The staff must receive training and acquire skills to be able to carry out the plan effectively. Six Sigma skills are uniquely engineered to help achieve zero tolerance for faultlessness. Perfection and success are principles. Conduction of pilot sigma process can help evaluate the effects and benefits that can be expected in the event that the process is rolled out and is used by the company. Amidst all this, it is clear that for a management process to be seen as six sigma, it should have the customers’ needs as its first priority.
Anthony, Robert, and Vijay Govindarajan, Management Control Systems, New York: NY, 2000. Print.
Ashton, David. “The impact of organizational structure and practices on learning in the workplace.” International Journal of Training and Development. 8.1(2004): 43–53. Web.
Banik, Aviroop. Management control system- Rendell Company case. 2012. Web.
Charles Sturt University. Organizational Structure. 2012. Web.
Dahlgaard, Jens, Kai Kristensen and Gopal K. Kanji. Fundamentals of Total Quality Management: Process Analysis and Improvement. London, UK: Routledge, 2005. Print.