Is Six Sigma Hijacking the Real Customer?

We've lost sight of who our customers really are.

Published: Friday, July 31, 2009 - 11:20

Pick up any article or book, attend any conference on Six Sigma, or talk with any Black Belt or Master Black Belt and you will hear the Six Sigma gospel about the importance of the voice of the customer. For example, in their book Six Sigma: The Breakthrough Management Strategy Revolutionizing the World's Top Corporations (Currency Random House, 2000) authors Mikel Harry and Richard Schroeder argue, "The heart of Six Sigma lies in improving products and services what will benefit the customer. Companies need to understand how their customers measure quality and to create products and services that meet their expectations." (p. 170)

Clearly the authors are referring to the end user or the buyer of the product or service.

In his book, Lean Six SIGMA: Combining Six SIGMA Quality with Lean Production Speed (McGraw Hill, 2002), author Michael L. George echoes this sense of end user: "The Six Sigma culture is customer-centric; its goal is to delight customers. The quality of a product or service is measured from the customer’s perspective, by its contribution to their success. This customer focus comes through the Six Sigma drivers:
• Voice of the customer: What the customers say they want.
• Requirements: Voice of the customer input that is translated into specific, measureable elements.
• Defect: Failing to deliver to a customer’s CTQ [critical to quality]
• Design for Six Sigma: Designing products and processes based on customer requirements."

Here’s where an element of ambiguity seeps into the customer definition. In explaining the cause-and-effect matrix, George points out, "In this context, the term 'customer' does not mean only those external to the organization. Here, the customer for an internal process may be the next downstream workstation as well as the external customer." (p. 190).

However, it’s not surprising to find that theory and reality fail to converge. For example, in a 2008 survey conducted for iSixSigma Magazine (July/August), 951 organizational Six Sigma practitioners were asked, “When people at your company talk about the voice of the customer (VOC), whom do they most often refer to?” From the respondents, 68 percent indicated end users or external customers. The remaining 32 percent responded, internal customers (other employees) or channel partners (e.g., dealers, agents and brokers). Clearly the end user is not the universal definition of customer.

When asked, what percentage of their company’s improvement projects are driven by each of the different voices, only 48 percent indicated the voice of the customer. So, while 68 percent of the organizations in the study referred to the customer as the end user, less than half used the end user as a source of information for process improvement projects.

Why is there this schizophrenic attitude and behavior regarding the customer?

Hijacking the customer

There are four reasons why firms are relying on the “internal customer” instead of the end user to pursue their goals of operational excellence. Each of these reasons has implications for the future of Six Sigma and the training it uses to meet the needs of a changing marketplace.

Culture

Many organizations embrace a production orientation. This produces a culture that looks inward, and that focuses on product and cost. In this type of culture, current Six Sigma orthodoxy is highly suited. The emphasis on cost reduction or defect reduction is done under the direction of the internal customer, often without a clear line of sight to the end user. The end user is not concerned with the efficiency and effectiveness of an organization’s process unless those processes are not providing the level of value that they want and are willing to pay for.

An underlying belief of these types of cultures is the idea that quality at the point of production translates directly into quality at the point of consumption. It ignores the more holistic end-user definition of value that includes all aspects of the value delivery system such as product support, repair services, technical support, parts availability, etc. Instead, it embraces more of a conformance type of quality—conformance to engineering standards. It is not uncommon to find many of these types of firms dominated by engineers. Their training focuses correctly on engineering issues and there's little in that training that speaks of customers and how to understand their needs.

Control vs. chaos

Within the friendly confines of the manufacturing environment there exists a certain sense of control. This allows Six Sigma practitioners to craft highly-focused experiments, and create and design random samples with clear tolerance and confidence limits.

By contrast, the marketplace is a fairly messy place populated with customers who are nontrivial learning machines capable of changing under the impact of any number of uncontrollable events ricocheting with apparent random effects. It is so much easier to talk with internal customers than to have to figure out which end-users to talk to and how to talk to them. Throw together a couple of interviews or a focus group of IT personnel or accountants and you have the "voice of the customer” easily captured. Contrast this with having to figure out how to capture the real “voice of the customer” with all its potential sampling and measurement error.

Lack of tools and lack of know-how

Clearly related to the issue of control vs. chaos is the need for different tools than those used in traditional Six Sigma. For example, obtaining the voice of the customer from different market segments is significantly more complicated than constructing samples or using a census of internal customers. Similarly, identifying CTQs based on market data requires the use of statistical tools such as discriminant analysis, factor analysis, multiple regression analysis, or cluster analysis. Dealing with nonresponse error is another issue not found in traditional Six Sigma. Do those end users who refuse to answer the survey have the same opinions as those who did? How do you deal with this? How do you grow market share without understanding what the end user wants and needs? Can you get this same information from internal sources? Not likely.

The construction of surveys to gather the information from different market segments is another issue that makes the use of internal customers more attractive. At what level of measurement should the data be collected? Should you use nominal level, ordinal level, interval or ratio level, or perhaps more accurately, when do you use those different levels of measurement? How do you analyze the data? How do you identify the key CTQs that drive customer value? Reliance on focus groups and interviews to capture the internal voice of the customer obviates the more difficult issues of data collection within the marketplace.

The point is, few Master Black Belts and Black Belts are equipped to deploy Six Sigma on external issues using current Six Sigma training. To capture the voice of the end user requires a different set of tools and expertise than that what is currently taught and in use.

Simplicity and cost

Many organizations are similar to individuals when it comes to seeking solutions. They opt for the simplest and least expensive solution. The use of the voice of the internal customer provides the easiest and least expensive solution to getting some kind of input. Gathering customer information can be costly and certainly requires more time.

Underlying the use of internal customer information is the notion that some information is better than none. Nothing could be further from the truth. Consider the case of the underground mining company that relied upon internal customers to drive a kaizen on cost reduction. The outcome was to consolidate their two parts warehouses into one in order to serve customers located in diverse areas of the country. Simple and inexpensive—at least in the short run. In an industry where equipment downtime has a direct effect on the bottom line, miners were turning to competitors to obtain the needed parts and repair services in a more timely manner to keep their equipment running. The short-term cost savings turned into longer-term losses as market share dropped significantly. Some information is seldom better than good information.

So what?

Ironically, Six Sigma and its reliance on a hijacked version of the customer have made many organizations even more inward looking and more reliant on the internal customer. However, the implications of this are significant.

Absent the voice of the end user, the organization runs the risk of cutting not only nonvalue-adding costs but also those that actually are involved in the creation and delivery of value. Cost cutting under this condition can result in short-term cost savings but the loss of longer-term profitability. Without a clear line of sight to the end user, internal customers may provide good advice as to how to restructure jobs to save money but what effect does this have on the end user?

Growing market share without the direction of the voice of the end user is difficult. A strong predictor of market share growth is customer value. Value is the interaction between the quality of a firm’s offering and the price that the firm charges to obtain that quality. And quality has no real meaning outside of the marketplace. It can be guessed at using internal personnel but it is not uncommon to find that even marketing and sales personnel, those closest to the customer, are often wrong in identifying CTQs and definitions of value.

Quality Digest reported a 2004 interview with Mikel Harry regarding the future of Six Sigma. Harry opined, "The first generation of Six Sigma was focused on defect reduction. That was at Motorola. The second was when I refocused it—at ADD and then at AlliedSignal and GE—on economics and cost reduction. The third generation is about value creation. How do I grow the company, my shareholder value, my stakeholder value?"

My answer to Harry is easy: Value creation relies heavily upon the input of the individuals who define it and are willing to pay for it—the end user. Internal customers, can only guess at what value means. Sometimes they may be right but other times they will be wrong. The history of U.S. business is replete with companies who have guessed wrong. For Six Sigma to evolve to the next level, it will have to become more externally focused and develop the tools to capture the real voice of the customer—that of the end user. This will require a hard look at what Six Sigma training is currently focused on and what it needs to add to its curriculum.

Changing the training regimen will not be easy. There are many entrenched interests at stake and too many organizations, businesses, and consultants alike, still willing to rely on the voice of the internal customer. There is much inertia to be overcome but as organizations become more market-focused, the voice of the end user—the real voice of the customer—will become the key driver of innovation and performance. The question is, will your organization listen?

About The Author

R. Eric Reidenbach Ph.D.

R. Eric Reidenbach, Ph.D., is the developer of Six Sigma marketing a disciplined and fact-based approach to growing market share in targeted product/markets by creating and delivering superior value. His book, Six Sigma Marketing: From Cutting Costs to Growing Market Share (ASQ Quality Press, 2009), has been described as the next generation of Six Sigma. His book Listening to the Voice of the Market: How to Increase Market Share and Satisfy Current Customers (Productivity Press, 2009) was released November 2009.

Reidenbach is currently the director of the Six Sigma Marketing Institute. Six Sigma Marketing is a fact-based disciplined approach to growing market share in targeted product/markets by providing superior value.   For a free pdf of his new book Best in Marketing: The New Imperative for U.S. Manufacturing go to www.6sigmarketing.com and go to the contact page.