Six Sigma Principle Four: Apply Leverage - dummies

Six Sigma Principle Four: Apply Leverage

By Craig Gygi, Bruce Williams, Neil DeCarlo, Stephen R. Covey

In Six Sigma terms, leverage is the ability to apply effort toward the critical few Xs that have the greatest impact on your desired Y. You have to expend a little effort to find the leverage, but when you do, it catapults you over your problems and through the obstacles that stand between you and your goal.

The vast majority of leverage, or impact power, in creating any desired outcome comes from a surprisingly small number of contributors. This is true for the simplest of goals as well as for the most-complex systems. Improving the outcome all comes down to finding those critical few inputs that give you the leverage. These vital few enable you to move the “boulders” in your life, your process, or your organization.

The difference between the critical few and the trivial many

The law of the critical few versus the trivial many comes from the work of early 20th-century Italian sociologist and economist Vilfredo Pareto. You may also know this law as the 80-20 rule, where 20 percent of the inputs in any system account for 80 percent of the influence on that system.

In his dedication to exploring the nature of individual and social action, Pareto determined mathematically that, although many factors are connected to a given outcome, only a few carry the weight to change that outcome in a significant way.

In a process, a few key variables are the cause of most problems or defects. This holds true even when you analyze the impact of dozens of variables involved in assemblies with hundreds of separate parts. When you look for leverage in business, you search for the minority of variables that provide the majority of power in solving problems in manufacturing, assembly, distribution, procurement, accounting, finance, customer service, so on.

Although businesses often employ sophisticated statistical tools to find leverage, you may or may not need such tools for finding leverage as individuals. The key is to know with certainty that, whatever your goal or situation, leverage does exist; some factors in a given situation are more powerful than others.

Similar to illusions of cause-and-effect, leverage may not exist where you think it does; the obvious isn’t always the correct answer. Look closely, apply tests, and challenge your assumptions to find the true sources of leverage.

Note also that the factors that represent leverage in one situation may not represent leverage in another similar situation. Each process or problem has its own unique dynamics and interactions.

After you determine that a factor is insignificant, don’t waste time and energy putting attention on it; you’ll just spread your energy too thin and minimize your ability to create positive change. The key is to engage in a filtering process by which you weed out the many trivial variables that compete for your time but offer no real advantage.

By doing so, you disable the force of confusion and achieve clarity of focus around your efforts to resolve an issue, solve a problem, or reach a goal.

Separate and utilize the critical few in Six Sigma

The way you find the critical few is to follow a structured process for defining, measuring, and analyzing all the cause-and-effect relationships. In Six Sigma, structured and powerful tools help you brainstorm the possible causes (Xs) of performance problems and operational issues.

Collect performance data that reflect the behavior of the many Xs, as well as the behavior of your Y of concern. Analytical tools enlighten you as to which Xs are the critical ones and which are the trivial.

The results of these operations tell you — and show you objectively and clearly — which Xs you need to focus on to impact your Y. They also show you which Xs are out of control, or behaving too erratically. Such variation is the primary cause of problems in performance predictability.

When you have your baseline of measurements and understand numerically how your Xs interact and impact your Y, you can then implement countermeasures — different X-related actions that ultimately improve your Y. Head to Part IV for details.

Using your same data framework, you can take new measurements to test the impact of your countermeasures. You have established a data-oriented baseline against which to prove that the new way of doing business is truly a better way, and you’ve validated that the critical few Xs are truly the critical few. This confirmation is the essence of the Six Sigma principle of finding the leverage.