In a perfect world, every project would lead directly to financial gain. We’d draft a charter that, when well executed, produced savings or income that translated directly to the bottom line. And this would be good because we all like making money. We can put it in the bank, earn interest on it, add many small amounts together, and eventually buy the things we need and want. That’s true of both businesses and individuals. We like financial gain not for itself, but because we enjoy the benefits that financial gain can bring. So, we conceive of most projects along the lines of the structure below.
Trouble is, the link between project goals and delivering financial gain is seldom as direct as we’d like it to be. Although there are exceptions, most projects require an intermediate series of steps wherein it is necessary to learn something. In other words, although we’d all like to proceed directly to financial gain, we usually don’t know how. So the project ought to be about going out and gaining some useful knowledge, then turning that knowledge into financial gain. The picture ends up looking something like the structurebelow. As I said before, there are exceptions (a project to increase capacity on a known product or service in an underserved market, for example), but in my experience the vast majority of Six Sigma projects have to follow the knowledge gain pathway because it’s the most efficient route to financial gain. If this wasn’t true, then the project would probably be addressed through some other methodology.
This being the case, it’s worth thinking about what we teach our Black Belts, and what we demand of them in terms of intermediate and final results. Certainly we all want the benefits of financial gain in the long run, and every project ought to have financial metrics. But if we recognize that knowledge gain is almost always a necessary precursor to financial gain for Six Sigma projects (and particularly if we believe that knowledge gain is the most efficient route to financial gain), then we ought to include in our methodology and metrics a way to capture and evaluate what has been learned as well. In fact, I believe this so strongly that I often insist problem statements be re-worded to emphasize knowledge gain at least as much as financial gain. Just like money can be banked and accrue interest, so too can knowledge. If we emphasize and value knowledge gain in our projects we end up not only making money, but increasing the level of knowledge in the organization as well. And just like with money, we can store knowledge away, assemble small amounts into larger ones over time, and pull it when we need it on a rainy day. In others words, knowledge is a bankable currency in the organization, just like money.
In fact, looking at the diagram above,one might take the view that stored knowledge actually has more much intrinsic value that stored currency, because well-managed knowledge can be converted into dollars more than once; that is, even though we can withdraw at will from the knowledge bank, our store of knowledge does not deplete. Further, we have control over when and how we convert knowledge into financial gain, so it is a very flexible currency as well.
This is certainly not an original observation – indeed, I’m fairly confident that diagrams like the ones above have been scratched out in many organizations for more years that I’ve been alive- yet how many Six Sigma projects have metrics thatmeasure knowledge gain in addition to financial gain? It’s a continuous improvement truism that we need to measure what’s important to us. My contention is thatour measurements should include an assessment of what is being learned in addition to what is being accomplished. Properly managed and focused Six Sigma projects ought to deliver both knowledge gain and financial gain, and to make that happen the project (and program) metricsneed to reflect both streams.
