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usinesses today seek an effective corporate performance measurement system to maximize the bottom line. With the advent of the Internet, ongoing globalization, and standardization in management systems, business leaders must focus on how to measure performance to monitor their continued viability and success. Many existing performance measurement systems were designed to support business practices and to monitor progress. With shrinking margins and competitive pressures, however, corporate performance measurement systems must do more than monitor. They must identify opportunities for optimizing profitability and growth, without pitting one against the other. The idea is to use performance measures to add value, instead of simply measuring for a formality. That is precisely what the Six Sigma Business Scorecard is designed to do. The Six Sigma Business Scorecard combines the Six Sigma methodology for dramatically improving customers delight with the Balanced Scorecard method for achieving financial objectives. The Six Sigma Business Scorecard utilizes strategy to maximize profitability and growth, accelerate improvement, foster leadership accountability, and encourage employee involvement. It builds on proven methodologies and offers a new method for measuring corporate performance. Filling in the blanks that have been left open by the other measurement systems or methodologies, the Six Sigma Business Scorecard is integrated into a Business Performance Index (BPIn), a
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measure of corporate wellness. Currently, there is no method that enables an organization to determine its overall performance level. The Six Sigma Business Scorecard methodology highlights the responsibilities for corporate performance and establishes a formula for determining the sigma level of an organization. The purpose of the Six Sigma Business Scorecard is twofold: (1) to identify measurements that relate key process measures to a company s profitability, making the opportunities so visible that they are difficult to ignore, and (2) to accelerate the improvement in business performance. Optimizing the profitability, cost, and revenue variables is a primary purpose of the Six Sigma Business Scorecard. The salient features of the Six Sigma Scorecard include the following:
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Provides a new model for defining a corporate sigma level Aligns with the business s organizational structure Maintains visibility of cost, revenue, and profitability Includes leadership accountability and rate of improvement
The Six Sigma Business Scorecard is a great model for establishing a common target in terms of corporate defects per unit (DPU), defects per million opportunities (DPMO) and Sigma. In the absence of such a target, corporate leaders are unable to focus and suffer from ineffective implementation of Six Sigma. The Business Performance Index provides a onenumber measure of corporate performance in terms of Sigma that can be used as a benchmark for driving future improvements. The benefits of the Six Sigma Business Scorecard include the following:
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Provides a target for performance improvement Enables a business to drive dramatic improvement Promotes the intellectual participation of all employees Forces changes in an organization on a continual basis
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Acts as a catalyst for bringing out the best among employees Generates energy and enthusiasm Reduces cost and improves profits
Throughout the book, a business has been considered as a collection of business processes, irrespective of their output, products, or services. Therefore, the Six Sigma Business Scorecard can be applied to all organizations. It has been adapted for even small businesses based on the feedback from small business owners. The book is meant to be a documented methodology to implement a practical corporate performance measurement system that provides some predictable indicators and identifies opportunities for improvement. To benefit from the Six Sigma Business Scorecard, business leaders must be willing to think creatively and make necessary organizational changes to balance profitability and growth. The organization of Six Sigma Business Scorecard is shown in Figure I-1. The Six Sigma Business Scorecard includes 13 chapters that lead step by step through the implementation process. Different organizations will face different challenges in implementing the Six Sigma Business Scorecard, depending upon their complexity and level of commitment to improving profitability and growth. Many in the leadership cadre believe that profitability and growth have an adversarial relationship. The current business environment encourages maximization of one or the other. However, to survive and thrive, businesses must balance both profitability and growth. The Business Performance Index has been validated based on estimation and public information about the companies on the Dow Jones Industrial Average Index and several companies on a one-to-one basis. BPIn has shown correlations with performance. BPIn would not be significantly affected by minor errors in the measurement system. To improve a company s BPIn, that is, profitability and growth, the company must improve dramatically in all areas of business led by the leadership, facilitated by management, and executed by employees.
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