Six Sigma is a management strategy you’ve no doubt heard of in the years since its origination in the 1980s. Well there is a new book on the shelves titled Six Sigma for Financial Services by the authors Rowland Hayler and Michael D. Nichols. This book provides background concepts for the understanding and a specialized “Business Process Excellence” model for implementation of Six Sigma. The author’s primary goal is show how Six Sigma in conjunction with complementary business process improvement methods can be successfully implemented within the financial services industry.
The authors have cited a number of financial service companies using Six Sigma to streamline their operations, eliminate waste, and increase revenue. What sets these case studies apart is the perhaps direct source of their information. Rowland Hayler is Vice President of International Operations at Pivotal Resources and Michael Nichols of Nichols Quality Associates and formerly Director of Six Sigma Design at American Express®. They have managed to accumulate a respectable list of company insiders to outline instances were Six Sigma was used with impressive results. When asked how they were able to gain such detail beyond the standard publicly published information available online, the authors revealed the direct contribution of personal interviews and material by several organizations. They also conducted an in depth survey of 11 leading financial services organizations, focusing on those firms “identified as exponents of specific Business Process Excellence techniques”. The framework of the survey was based upon the Business model they developed. The author’s were pleased to find certain quantitative validation of previous trends identified in their initial research.
The authors reiterate that what sets their book apart from all the others is their presentation of the Business Process Excellence Model. They promote this as a “robust model that enables organizations to asses the gaps” in their improvement methods and provides a “roadmap of the necessary components needed for successful organizational transformation and continuous improvement effort”. Additionally the authors, believing many people do not properly understand what comprises a high performing process focused organization before they undertake improvements, are pleased to define those characteristics. They took the opportunity to reiterate that “although this book uses examples from financial services organizations, we believe the model is sufficiently robust to be applicable to many businesses or organizations.”
In addition to the beginner’s guide introduction to the central definitions and concept of Six Sigma, they go on to outline situations for use and a general picture of the benefits reaped. Among these examples are Bank of America®, Wachovia®, and American Express. Also provided is a how to model of developing an approach strategy using Six Sigma in conjunction with Lean and Process Management to leverage knowledge for structure, execution, control and measurement to determine cost versus benefit results. Of course if you were hoping for them to reveal every detail, you will be disappointed.
Citigroup® and Bank of America cited as examples. However this was before the current market turmoil. So it is unknown how these process improvements and the use of Six Sigma may help them adapt or how quickly. Certainly process improvement methods discussed in this book, are focused on streamlining operations. However, there should also be a conscious decision as to how much quality is forgone in pursuit of volume. As these variables are dependent but inversely related, so a balance must be struck.
The authors use examples within a framework of what they believe are the 5 “key driving forces of change” existing within the financial services industry. Such forces include the ever present need to satisfy customers in order to maintain current and increase future revenues. They recognize the same trend voiced by IBM® Business Consulting Services in 2002, “While customers seldom desert their traditional suppliers totally, they increasingly look elsewhere for their new banking, insurance and investment needs.”
Attempts to increase efficiency through outsourcing and off shoring are discussed with the movement occurring in both directions. Recent history has shown some companies bringing functions back in-house as costly challenges have caused reversion. Perhaps the most intuitive application is the integration of similar information systems across organizations to streamline process for cost reduction and provide a more “unified face” to customers. But the author’s offer a word of caution not to allow systems to dictate the pursuit to align and prioritize business improvement activities. Instead these processes need to recognize and operate within an integrated portfolio of opportunities in order to reap the greatest benefit of technology enablement and acceleration.
Ultimately the author’s hope you won’t get hung up on the methodologies “Lean, Six Sigma, Process Management, or any others they are all effective methods, tools and techniques that organizations require to successfully compete. The important thing, is knowing when to use what, to obtain the bet results.” Although they would be pleased if you will pick up their first book “What is Six Sigma Process Management” as well.
On behalf of those not expert in the use of Six Sigma, the authors declined to answer due to conflict of interest, when asked to recommend what would be the greatest resource for identification, development, and application. Michael Nichols is currently the President of ASQ which delivers Lean and Six Sigma training, conferences and education and has his own consulting company, Nichols Quality Associates, which provides Lean, Six Sigma and Process Management consulting and training. Additionally Rowland Haylor is SVP for Pivotal Resources which is also a premier provider of the same services.
