Building the Business Case for Six Sigma Projects
By Charles Wilson, Ph.D.
Gaining approval to implement a Six Sigma project is often difficult. This can be especially true if your team is competing for funding or if your project is particularly large.
The Executive Management team is more likely to approve your request for a six sigma project execution if you present them with a cohesive justification.
A complete business case contains all of the facts that can assist you to justify your proposed Six Sigma project execution effort.
Not all projects will require all sections of this suggested Business Case outline. You should tailor these suggested outline headers to meet with the needs of your audience and your suggested Six Sigma project execution.
It would be wise to realize and to think in terms of your competiting for vital and prescious resources that will need by the team in order to execute your proposed six sigma project.
Executive Summary (slide)
The executive summary provides executive management team with a short (one to three pages) snapshot of your business case. It must be persuasive.
The remainder of the business case provides the detail and analysis to support the statements you make in the summary.
For a more effective executive summary, complete all other sections of the business case first.
Then pretend you are in an elevator and someone asks you to summarize the results of this Six Sigma project. The executive summary is your “two minute drill” or your evelator pitch.
The focus of the executive summary should be on the bottom line financial benefits to your organization. All of the other information in the business case should be summarized as supporting details.
Remember that executive managers use data and information to make decisions.
Is your Six Sigma project in direct alignment with your organizations current Strategic Plans and Goals?
Does your propose Six Sigma project provide for “focus on a constancy of purpose and a resolve for excellence in all that you doe towards delighting your customers?”
Situational Assessment and Problem Statement (slide)
Make certain your Business Case effort is being undertaken for some specific reason that is supported by data and in direct alignment with the organizations strategic plans and goals.
Perhaps something is broken, something is lacking or missing, customer satisfaction is low, sales are lagging, profits are not what they should be or employees are not performing as expected or needed.
Whatever your reasons, a strong business case will begin with a thorough understanding of the issues facing the organization and your teams' conclusions about what is wrong, broken or under performing.
A strong situational assessment will assess the historic, current and future issues related to:
operational performance
customer satisfaction
employees
competitors
industry and market trends
Project Description (slide)
This section describes the objective of the Six Sigma project efforts. Define the processes, systems and organizations included within the scope of this Six Sigma project re-engineering effort.
Summarize the activities to be performed by the Six Sigma project team. Finally, include an overview of the stakeholders for whom this effort is being undertaken (customers, management, etc.).
Solution Overview (slide)
This section defines the desired end-state for the proposed Six Sigma project efforts. The end-state provides the framework for the solution definition.
Things to include are your Six Sigma projects vision statements or goals. In addition, the solution overview should provide a high level description of the solution.
It should also paint a clear picture for the audience or reader as to what the proposed end state will look like.
Solution Detail (slide)
This section should walk your audience or reader through all aspects of the solution. This would include:
Changes to organization -- people, culture, training, etc.
Changes to processes
Changes to support systems
It is important that the solution be presented from the viewpoint of the organization receiving the benefit of the solution.
For example, present the solution through the eyes of the customer if the goal of the Six Sigma project effort is to improve customer service.
The solution detail should clearly point out how issues presented earlier are being resolved by this Six Sigma project solution.
Solution Alternatives (slide)
Discuss the alternatives to the solution you are proposing. This must include a discussion about the implications to the organization if this Six Sigma project does not become implemented (the do-nothing scenario).
One alternative should be a subset of the proposed solution. A discussion of previously tried and failed efforts may also be appropriate here if it helps to justify why a Six Sigma project effort is required.
This would typically be the case if past efforts were Band-Aid or incremental solutions instead of Six Sigma project re-engineered solutions.
Costs (slide)
This section should include an estimate for every anticipated cost of the Six Sigma project. This includes costs for the Six Sigma team, development, quality assurance, and testing, parallel operations during transition, implementation, etc.
It should also include any ongoing maintenance or administrative costs. Calculate the impact upon the operation due to the implementation.
This would include productivity losses or the need to hire temporaries to cover for personnel while training.
Benefits (slide)
The benefit section should quantify or qualify those benefits that were touched upon in the solution detail.
Count benefits for any organization that will reap positive results from the solution. Benefits should be both qualitative and quantitative.
Include: cost reductions, revenue increases, improved customer satisfaction, improved employee morale, lower turnover, standardization to remove or eliminate variation, etc.
Activity Based Costing models are useful tools for capturing the benefits associated with a Six Sigma re-engineered process.
However, so is common sense and plain language approach -- especially if that is the culture of your organization.
Categorize your benefits into groups for ease in understanding. Some business cases link the benefits directly to the solution elements.
However, this is not always possible. Other methods for categorization include:
Organization affected (customers, development, parts, service, etc.)
Type of benefit (cost reduction, increased revenue, reduced or eliminated variations, etc.)
Timing of benefit (immediate, first year, future, etc.)
Implementation Timeline (slide)
Depict each major step in the implementation of the solution on a time line. Major steps should include: development, testing, training, initial implementation, and roll out.
Consider any impacts to the organization from a productivity or operational viewpoint.
Most implementation plans get dictated by the systems development schedule because it is usually the least flexible and has the most dependencies.
However, it is important that your Six Sigma project team think about each solution element, and define an implementation time line that will maximize benefits while having the fewest impacts on the organization.
The implementation focus will enable you to prioritize the steps in the implementation.
For example, if the focus is to streamline the operation, then the priority would be to implement the automated functions quickly.
In order to help you to focus your implementation, link your costs and benefits to the time line.
Critical Assumptions and Risk Assessment (slide)
List all assumptions made by your Six Sigma project re-engineering team. Include assumptions about: the current state of the business, the status quo of organizations, processes and systems that are outside the scope of the project, constants used in cost/benefit analysis, the approval of the business case, etc.
Your description should indicate the impact to the solution if the assumptions did not hold true. Include any competitive business advantages that may be lost if this Six Sigma project solution is not implemented.
Discuss the risks of the implementation. Discuss what will happen to the organization if the benefits from the Six Sigma project re-engineering effort do not come to fruition.
Include an assessment of the risks caused by implementation on the ongoing operation of the business. Discuss the steps that will be taken to minimize or mitigate each risk.
SWOT Analysis (slide)
This analysis looks at the Strengths, Weaknesses, Opportunities and Threats (SWOT) of the solution being proposed. Demonstrate how the organization will maximize strengths and minimize weaknesses of the solution.
Include a discussion of the opportunities now possible because of the solution. Include a means to minimize and prevent threats to the organization caused by the solution. (See copy of SWOT in your GBPM support tools)
Conclusions and Recommendations (slide)
This should summarize the issues, costs and benefits of the solution. Demonstrate that the financial benefits outweigh the costs by including a financial return on investment analysis. Convey a sense of urgency. Re-iterate the goal of the solution.
I would work up my Business Case and include each of these major components, as separate and additional slides, to be incorporated within your existing presentation.
About the Author
Charles E. Wilson, Ph. D. is President/CEO of Lakota Training & Development. As well he owns and operates LTD Publishing and Six Sigma Doctor. WIlson is the author of several books, including "Six Sigma Deployment". He serves on TreQna Board of Directors, the Board of Directors for Brazoria County Dream Center, and has responsibility for knowledge development for TreQna University.
Dr. Wilson holds multiple degrees in Psychology. He is a motivational speaker, training facilitator, training developer, management coach, business improvement consultant, and author. Charlie has 36 years of experience in the business and coaching worlds.
Please visit http://treqnauniversity.org/default.aspx to learn more about effective and unique “blended learning” and “be able to do” skills approach for Six Sigma training.
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Building the Business Case
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