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CHAPTER ELEVEN
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inventory is for leaders to review their own strengths and continue to improve. There is no good or bad score. At the end of the day, the leader can reflect and answer the question, How was the day He or she can answer using the following criteria:
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Implementing the Six Sigma Business Scorecard requires a total leadership approach. It requires a balance between production and innovation, productivity and creativity, management and leadership, cost and revenue, personal and professional, and profitability and growth. In the world of business, the requirements for leadership have changed over time. Instead of managing material and labor, the leadership needs to challenge information and minds. This requires empathetic and thinking leaders who can use objective and subjective measurements for a sustainable value to stakeholders. The Six Sigma Business Scorecard is a measure of tangible and intangible accomplishments, just like a combination of profits and growth. Similarly, leadership involves a combination of hard and soft skills. Leaders need to find a personally suitable way to maintain a balance between knowledge and goodness, wealth and health, tangibles and intangibles, and profits and growth.
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C H A P T E R T W E L V E
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SIX SIGMA BUSINESS SCORECARD VALIDATION
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he Six Sigma Business Scorecard was developed to monitor growth and profitability through a set of measurements applicable in today s business environment. Competitive pressures, customer expectations, and the role of knowledge management require that businesses establish practical measurements that add value to the business. The Six Sigma Business Scorecard provides a framework and a set of initial measurements based on my 20 years of research, experience, and observations as an engineer, a manager, a leader, and a consultant working with about 100 business organizations. The Six Sigma Business Scorecard can be used both internally by businesses for performance improvement and externally as a leading Business Performance Index (BPIn). The index is based on the business s real performance rather than the market s perception of that performance. The BPIn should provide greater confidence in corporate performance because it is based on more complete information instead of on just financial information. The main differences between the Six Sigma Business Scorecard and other corporate performance measurements are that it requires increased involvement and accountability of the leadership, it emphasizes management s responsibility for achieving a dramatic rate of improvement, and it encourages employees intellectual involvement for innovation. The Six
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CHAPTER TWELVE
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Sigma Business Scorecard has been balanced for cost and revenue, growth and profitability, internal and external research and development, objective and subjective measurements, human and material resources, production and nonproduction processes, and management and employees. The measurements are designed to monitor the corporate performance effectively. Through discussions with professionals in industry and academia and analysis of data for DOW 30 companies using criteria for America s Most Admired Companies at Fortune magazine s website, we validated the effectiveness of the Six Sigma Business Scorecard. Accordingly, companies are rated based on eight criteria: innovation, financial soundness, employee talent, use of corporate assets, long-term investment value, social responsibility, quality of management, and quality of products and services. The data were manipulated in a proprietary manner to apply BPIn measurements to the Dow 30 companies using empirical guidelines. In addition to identifying areas for improvement, the intent was to apply the Six Sigma Business Scorecard measurements at the CEO level and determine the corporate Six Sigma level for the Dow 30 companies as a benchmark.
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THE 10 BPIn MEASUREMENTS
The 10 BPIn measurements are listed in Figure 12-1. All seven categories of the Six Sigma Business Scorecard are represented in the BPIn measurements. Initially, subjective measurements, such as Employee Recognition and Employee Involvement, appear difficult to measure. After all, the data for such measureBPIn Measurements Employee Recognition Profitability Rate of Improvement in Process Performance Recommendations per Employee Total Spend/Sales Suppliers Defect Rate Operational Cycle Time Variance Operational Sigma New Business/Total Sales Customer Satisfaction
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
FIGURE 12-1.
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