IBM Global Business Services View

There are more forces pushing on businesses than just the economy.  Businesses are facing more difficult credit issues; the explosion of information; globalization of suppliers and customers; and new customer demands.

Cost Management will not be enough, they will need to:

1) Focus on Value

Do more with less –
Focus on Core Competencies –
Re-align Relationships for Efficiency – Partner extensively and enter new markets

2) Exploit Opportunities

Capture Market Share –
Build Future Capabilities –
Change Your Industry – Double down in growth markets

3) Act with Speed

Risk and Transparency – Make use of business analytics to make decisions
Leadership –
Manage Change – Set targets and measure your success

It is all about Smarter Business Outcomes – Reduced Costs; Increased Revenues; and Improved Customer Service.

Our Thoughts…

This appears to be IBM’s answer to ‘Never Waste a Good Crisis.’

They are using different words to address cutting costs, increasing revenues, and improving customer service [the Triple Crown].  They have put forward elements of a plan and we all need a plan.  This may be a good place to start in building your own plan.

They do make some important points…

Focus on Core Competencies – all too often, companies will spend efforts that are not among their core competencies.  In the past, Sun, HP and IBM all made their own microprocessors [building chips and writing software to run on them] and today they are all moving to Intel.  A bank will have their IT departments write software when there are commercially off the shelf solutions available.  Companies really need to focus on their core competencies and farm out the ‘noise’.

Change Your Industry – they suggest to ‘double down’ in growth markets.  Now is the time to attack growth markets.  This is an example of the all too obvious:  Find out what people want and give it to them.

The common thread through the entire plan is efficiency.  The goal of six sigma programs and lean manufacturing is efficiency.  Your biggest gains in efficiency will be made through business process management.  Process improvements, if done right, can have a big impact on cutting costs.  Process improvements with customer focus can have a big impact on increasing revenues and improving customer service.

The current economy will create some losers, some middle of the road companies and it will create some winners.  The challenge – Companies need a plan to become one of the winners.  They need to throw some innovation at the problem.  And, they need to start becoming that winner.  The sooner the better…

Your thoughts…

More on Six Sigma & Efficiency…

During my research on Six Sigma, I discovered a written piece that I thought was informative. The author put forth 6 themes for Six Sigma and I will share them with you.

1. Genuinely focus on the customer [deliver customer value]
2. Manage with data and facts [not opinions and assumptions]
3. Processes are where the action is [focus on managing and improving processes]
4. Proactive management [define ambitious goals and review them frequently]
5. Boundary-less collaboration [break down barriers and improve teamwork]
6. Drive for perfection / Tolerance for failure [you will never get there if you don’t try]
   

Our Thoughts…

When your company is flying high, you don’t really have the time to focus on the basics [like delivering customer value] - You do have the time when sales are down.

Many companies have failed because they forgot about delivering customer value. As an example, Microsoft is hoping that Vista is going to deliver customer value - The difference between success and failure will be measured in $ Hundreds of Millions.

Processes are where the action is. Companies are made up of a bundle of processes and if you are looking to get lean [cut costs] then this is where you make it happen.

Throughout this decade, companies are looking anywhere in the world for the necessary resources to run their company. We see companies doing engineering in the US, manufacturing in China, assembly and test in Mexico. This kind of geographic company depends on the ability to collaborate in a boundary-less fashion.

When a company is in its hay-day, like Google is now, they are in the mode of driving for perfection with a tolerance for failure. When a company is in a downward cycle, like SGI, there is very little tolerance for failure. That tentativeness will not bring back a company to prominence.

Six Sigma is all about Efficiency. And, processes are where the action is.

Your Thoughts…

Has your company embraced any of these 6 themes? Have you uncovered other themes that you believe have made your company more Efficient?

Efficiency has been my topic for many of these ‘Ideas’ newsletters. Even though a company may not actually say their objectives for 2007 are Efficiency, its components [increased revenues and/or decreased costs] are always mentioned as candidates.

If your company is in manufacturing, you may be embracing Six Sigma principles to become more Efficient. The main thrust of Six Sigma is to reduce manufacturing defects [which will decrease costs]. And, half of the 6 steps to Six Sigma deal with process. They even have a couple of different 6 step processes to define and improve their processes [DMAIC & DMADV].

Our Thoughts…

Six Sigma is about Efficiency.

Since our focus is on defining and improving business processes [not just manufacturing processes], we have come up with a ‘process loop’ that is very similar to the Six Sigma DMAIC process.

The DMAIC process is: define, measure, analyze, improve and control the process.

We see the process of improving processes as a loop:

1. Define the process - Confirm the definition is correct by testing it, edit and retest, measure
2. Automate the process - Where can you automate? Where could you eliminate steps? etc.
3. Manage the process - Implement the solution and manage your processes
4. Integrate the process - Integrate your process with other processes/software where feasible
5. Monitor the process - Monitor the process against people changes, environment changes, etc.
6. Improve the process - Implement the improvements in the definition

The last step calls for you to edit your process to input the changes. The process loops from step 6 back to step 1. This should be an ongoing process.

Note: Most Six Sigma writings state that Zero defects is unachievable. However, these same writers recommend continuous process improvements. The Six Sigma Academy contends that ‘black belts’ can save companies $230k per project and they can complete 4 to 6 projects per year.

The savings are there - it is all about Efficiency.

Your Thoughts…

Has your company embraced process improvements? Have you uncovered strategies that you believe have made your company more Efficient?