Applying the Science of Six Sigma

In my previous stints as a marketer I have been asked this question multiple times whether marketing is an art or a science and my answer has always been a simple one – ‘it’s a science’.

Many of the marketing gurus & aspiring marketers out there may argue that it’s not a complete science, but has elements of judgment and opinion. I mean no disregard to any of them but if you look at it from my perspective then you may regard it as a science and not an art. Moreover I also believe that there is nothing called “half pregnant”. So either it is or it’s not.

Early in my career I got the opportunity of undergoing my Six – Sigma Black Belt training and I was fortunate to be trained by none other than Glenn Clark (Master Black Belt – OPEX & CCOPEX – Whirlpool Corporation) and Amit Rohatgi  (Master Black Belt and Senior Director Whirlpool Asia)

Six Sigma’s golden equation Y = f (x) + N (where N stands for Noise) changed my approach towards handling situations completely. I was told that Six Sigma principles would remain theory if they were not applied. If applied then eventually they will become a way of life.

We can put this equation to test with every situation that we encounter in our business environment and when applied it will give us a much better understanding of the variables (read x’s) at play, the impact of each on our final output {read Y (expected outcome)}. Not only that, it also gives a much better understanding of the other factors (read N) that may have an impact on Y but these factors may not be under our direct control. Typically factors such as external environment and market competition fall under the NOISE category.

The benefit of integrating Six Sigma into your marketing processes includes better information (management by fact) to make better decisions. Using the more robust approach reduces the uncertainty inherent in marketing. Go-to market processes with Six Sigma embedded in them can better sustain growth. One way to maintain growth over time is to focus on “leading” indicators of your desired goal. Leading indicators are factors that precede the occurrence of a desired result.

Let’s take an example of product whose off take is pretty low in a store. If you were to go up to the store manager and ask him what corrective actions we should take then straight away the answer will be that we should reduce the price or offer a discount. But when you dig deeper and ask the next question which is “Will my sales go up by 10% if I reduce my price by 10%” then the answer will be a big NO.

Next logical question would be Why not? The moment we start asking these questions then we are applying the Six Sigma thinking into our problem. Because by asking more and more questions what we are really doing is building our understanding of the various factors at play which in Six Sigma terminology is known as X’s.

For me this approach of Six Sigma discipline is similar to a curious toddler asking many questions to his or her parents. And that’s the mindset we need to develop while applying this discipline to our business. Understanding can only be built by asking questions. More the questions, better the understanding. One of my earlier bosses Mr. Milind Pant (President – Pizza Hut ,Yum! Brands)  always said that all of us should have a jigyasu balak (Curious child) like mindset  - a child who has lots of questions and never shies away from asking them.

Coming back to our example – now when we have asked all the questions we realise that there are many other factors beyond price which may possibly have an impact on the off take…. The factors could be product packaging, placement in store, knowledge,  training of the staff about the product, retailer margin, communication, lack of consumer understanding, advertising medium and also the Noise (which is the actions taken by our competition). It’s great that we have built an understanding of all these variables but the big question is the interplay between these variables which is impacting our ultimate objective i.e. Off take = Y.

This brings us to another concept of six sigma discipline which is Design of Experiments (DoEs). DoEs help us put these variables to test in different scenarios in a scientific manner in controlled group. In a normal scenario more often we get to hear “Let’s do a pre & post and measure” . In a way we are applying the principles of six sigma but randomly and when we do that we are bound to get erroneous results. But if we have a DoE approach towards changing the variables and measuring results at each change level then we will be able to complete our equation of Y= f (x) + N and ascertain the impact of each variable and you can be precise in your forecasting exercise.

So, now you know what to do when you are asked to make a marketing decision pertaining to any of the 4 P’s.

Another interesting number that fascinates retail marketers is Like for Like (L4L) Sales Growth (in some companies aka SSSG). I have seen many of the marketers celebrating when this number is high single digit or double digit in a particular week and running helter skelter when it falls in the following week. In such situations some of us have knee jerk reactions and land up either aping the competition or under cut to improve the situation.

However if we have a Six Sigma mindset then we will always look at the same data on a graph with clearly plotted Upper Control Limits and Lower Control Limits  (UCL and LCL). If the sales are falling in the limits then there is no reason to rejoice or take hasty decisions because the UCL and LCL define the outer limits of your business which is increase or decrease of LFL sales in this case and this is how the processes is expected to behave, so nothing special here….But any number falling outside these limits is an interesting data point and needs to be looked at. When we further explore such a data point we mostly land up uncovering a special event or an action that we had taken that had caused this change (most probably a single variable change).

So the big question is - if the numbers fall in the range then is there any reason to rejoice?

Applying to Six – Sigma mindset to our personal lives can also lead to interesting discoveries. Let’s say you are concerned about dealing with a weight problem. You could be reactive by regularly getting on the scale to see how much you weigh. Or you could be proactive by monitoring your caloric intake and burn rate - The two key X’s (with other variables remaining constant). The latter approach of watching what you eat and how much energy you expend during exercise is harder than simply getting on the scale. But with Six – Sigma discipline you land up finding simple answers to difficult problems.

So discard your notions and embrace Y = f (x) + N as a way of life!