There’s pretty much just the two key things together to look at when you’re trying to develop your business or service if you’re talking about a for-profit situation. You can look at how you can boost your sales and how you can reduce your costs. If you look at one without an eye on the other, you might still not get to your end objective, which is to increase (or make) a profit.
So you could be really successful in increasing your sales but if your costs exceed the sales you’ve made, you’re still losing money. If you cut your costs too hard, you’re going to impact the customer experience somehow, eventually. And they’re going to stop buying, and with your income stream, goes your profits.
So why do people buy from you, whatever you’re selling?
Here’s where a wee bit of business jargon might come in handy as a mental frame, an easy way of summarising some of this stuff.
If you’ve ever skimmed a business book in the last couple of decades, you’ll have encountered the concept of “value proposition.”
An even easier and more visceral concept is that of “pain points”. Put simply, human beings crave ease. We don’t like to have to think too hard and prefer to operate within patterns. Most of the time, we react automatically to external stimuli if we can. “Pain points” are moments or stages within the processes your customers have to use in order to get their jobs done. They’re the things that make your lives more complicated than they might be. I’m pecking this out on a train to my commute. I commute by train because Edinburgh traffic is a pain, and there’s nowhere free or cheap or close to ditch my car. That’s my twin pain points today. So anyone who comes up with a way of letting me get as much done from home as I do in the office is going to find me a receptive audience.
Step forward Microsoft Teams, or Skype for Business, or any other video conferencing app. Video is a better replacement for face to face than audio conferencing. So I can mix things up now, and spend days at home.
Alongside the concept of pain points, and customer needs, is the concept of a value proposition.
How you or your product deals with a pain felt by the customer
What’s in it for the customer
Why buy you (from you) given there’s others who do the same thing.
So where does Lean 6 Sigma come in?
The history of improvement theories is arguably at least as old as the concept of bartering goods for other goods, which led to the concept of money around 5000BC. Back in the pre-BC days of Lydia, the first creators of cash in 700BC and before, there was bound to be a particularly effective farmer and trader who told her mates how she managed to create and sell so many bushels of produce by making her land more productive. History might not record her name though it did the kings and warriors, but it will have happened. Moving forward into the world of the 18th and 19th century industrial revolutions, a new science of industrial development and improvement was created, with some insights hard-won in those days still being relevant now.
Lean 6 Sigma is the combination of Lean – making the steps to delighting a customer as infrequent as possible – and 6 Sigma, a quality discipline which focuses on getting the number of defects in a process down to as low as possible, with Sigma being defined as 3.4 per million of “defect opportunities”.
The road leading to Lean 6 Sigma arguably started with a chap called Walter Shewhart, who made a study of repeatable processes. Shewhart was the first to be credited with the idea of looking at variation in process outcomes, and produced concepts such as statistical control charts to assess the outputs and see if processes were stable or not.
His ideas were taken up and developed by W Edwards Deming, a US industrial thinker who travelled widely and developed a strong knowledge of industrial practice in post WW-2 Japan. I’ve lectured on Deming – here’s a quick primer of a presentation I gave to Business Analysts in Edinburgh in September 2019.
Deming’s philosophy, Systems Thinking, was then moulded with improvements associated with Toyota, leading to Lean and then Six Sigma. Lean 6 Sigma is an improvement methodology which combines methods and concepts used in both. It is a systematic approach to delivering improvements for businesses and organisations involved in both making things and providing services for customers.