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Mar 4, 2010

Lean Six Sigma Process Improvement

A SWOT analysis is a well established and particularly useful technique for helping decision makers determine if their strategic business objectives are achievable. It is normally conducted during strategic planning and, it is used to quickly identify a company's Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is essential because subsequent steps in the planning process are derived from SWOT.

To set the stage for showing how a SWOT diagram is useful in improving business processes, one must first understand how it is typically used to support a SWOT analysis during strategic planning.
A SWOT diagram is a rectangular diagram, divided into four quadrants, used to articulate the results of a SWOT analysis. The top left quadrant identifies a company's strengths. Strengths are those attributes that aid in achieving the strategic business objective. An example of a strength might be current market share of a product. The top right quadrant identifies a company's weaknesses. Weaknesses are identified as inhibitors to achieving the strategic business objective. An example of a weakness might be insufficient capital to ramp up marketing. The bottom left quadrant identifies a company's opportunities. Opportunities are conditions that are helpful in achieving a company's business objective. An example of an opportunity might be a relaxation of a government regulation that enables the company to enter a new market. The lower left quadrant is used to identify a company's threats. Threats are normally external conditions that can derail a company's strategic business objective. An example of a threat may be the development of a similar product by a competitor. Each of the four quadrants is further subdivided into "Internal Attributes and External Attributes." Sometimes there is a fine line between these two but that is a subject for another time. When separation is not apparent, I always classify the attribute as Internal.
Now let's draw the parallel for using a SWOT diagram in a Lean Six Sigma process improvement engagement. I prefer to use SWOT diagrams early on in the process improvement program. As in strategic planning, my goal early on is to help my client focus on the objective and determine under what circumstances that objective is attainable. Also, as in strategic planning, the SWOT analysis and supporting diagram drive subsequent process improvement steps.
Once the strategic process improvement objective is identified and quantified (a fundamental rule for any Six Sigma engagement), I begin to populate the SWOT diagram. SWOT quadrant names remain the same but the definitions are modified to fit a process improvement model. Strengths now identify the current strengths in the existing process and/or the desired strengths of a new process. An example of an existing or desired strength might be subject matter expertise that gives the company a strategic process advantage. Weaknesses now identify weaknesses in the existing process model or potential weaknesses to achieve desired objectives. An example of a weakness might be a lack of subject matter expertise, technology, or information that is critical to the operation of a new or improved process. Opportunities now identify conditions that will help make the strategic objective attainable. An example of an opportunity might be seamless supply chain integration due to the installation of a new computer system. Threats now identify competitive threats, regulatory risk, and a "bottom line" analysis if we fail to act. I always ask the question "If we fail to act, what impact will it have on the customer, our company, and our employees?"

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