Balanced Scorecard: How to Integrate Six Sigma Principles Successfully

Balanced Scorecard in Six Sigma

How high is your sigma? Are your processes lean enough? If these questions are eating away at you, then it may be time to stop and take a hard look at your business. You’ve worked hard to get where you are, so why should something like low Sigma set you back? The answer: it doesn’t have to. In this practical guide, we explore how to integrate the principles of the balanced scorecard with Six Sigma strategy.

Six Sigma + Balanced Scorecard = Success

Process improvement can be hard work. But Six Sigma aims to make the transition a smooth process that allows you to access your business’s potential for progression. Furthermore, the savings Six Sigma can create are tremendous, as it teaches you how to effectively identify and correct problems at the source, without wasting your time and revenue in the process.

It helps to understand how Six Sigma and Balanced Scorecard methodologies can complement and run parallel to each other. Truthfully, they marry together very well when it comes to integrating both strategies into your business. In fact, both Six Sigma and Balanced Scorecard rely on your company to receive regular input from customers, as well as other stakeholders. We also know that this company-customer relationship, and the data it generates, informs your value stream.

Moreover, both methods utilize metrics and accurate data in the same way, by which to convey information, e.g. progress made in production and acquisition of goals. Furthermore, you can use Six Sigma’s output indicators (Ys) in Balanced Scorecard methodology.

Integrating Six Sigma with Balanced Scorecard

Balanced Scorecard allows you to view your organization from the perspective of the key stakeholders while delivering a comprehensive assessment of our progress. The name also gives it away: Balanced Scorecard allows for balanced focus where all aspects of the business are considered when making improvements, so as not to harm or hold back one sector to improve another. It’s a tool to help you improve.

You can score your business’s success based on color-based ratings:

  • Red = Poor performance.
  • Yellow = Mixed results.
  • Green = Excellent.

Luckily, you don’t need a Master Black Belt integrate this properly.
Use key perspectives of your Balanced Scorecard alongside general Six Sigma practices as follows:

  • Customer. As always, the customer is at the forefront of your business dealings. Consider: how does the customer see your business? How does this affect your success? Remember, better efficiency from improved processes can translate to more loyalty from customers, which equals greater revenue, as well as stakeholder satisfaction.
  • Internal Procedures. Where does your company excel? And where does it simply not need to? These questions can help you identify and prevent non-value-adding processes.
  • Learning and Progression. Continuous improvement, or Kaizen, is closely linked with Six Sigma and Lean Thinking. Interrogate your company: how can they be used to create value? How can they allow opportunities for improvement to be revealed? Maintaining a consistent interrogation of your processes will enable you to generate continuous improvement.
  • Finance. Stakeholders are important, which is why you need to ask, how do they see your company? Like the company-customer relationship, this level of thinking can help identify cause and effect relationships between certain actions and results.

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