Designing Financial Services with DMEDI

The objective of the Define phase is to develop a well-defined charter for the project team that includes: a product/service description, business case, project goals, project scope, a high-level project plan, and team members. The charter should be sufficiently detailed so that the business objectives and the scope are clear to both the team and the management.

In addition, there are two major elements of risk to be considered in a DFLSS project. First, the risk that the project will not meet its objectives, which would primarily be a risk to the schedule and to benefits (technical, cost, schedule, and market risk). Second, there are the risks that the project poses to other elements of the business.

The purpose of Measure is to understand the Voice of the Customer (VOC), and to translate customer feedback into measurable design requirements.

The first step in capturing the Voice of the Customer is determining the appropriate customer segment. While in theory anyone in the world could buy your services, there is a particular subgroup, or segment, that is most likely to buy. If you're interested in achieving maximum performance, you want to focus your products and services on the customer group where it is most likely to resonate in the marketplace.

Focus on the customer segment(s) that align with the company's business strategy, are attractive from a size and profitability standpoint, and align with the business's capability to satisfy them.

Start the VOC process by taking advantage of existing and available information within the business. Every company has customer contact sources that can provide a baseline for service/product design. Some sources to look at are complaints, compliments, returns or credits, contract cancellations, market share changes, customer referrals, closure rates of sales calls, market research reports, completed customer evaluations, industry reports, available literature, competitor assessments, web page hits, or technical support calls.

Once you understand the gap between the customer information you already have and what you need, use proactive methods to gather additional information. The most common techniques are interviews, focus groups and surveys.

Translating needs into requirements -- If you survey customers and ask which features they would like to see in your services, they will undoubtedly say, "All of them!" However, customers don't value all features equally. That's why the DMEDI process exploits a tool known as Quality Function Deployment (QFD) that helps you understand customer priorities. The secret to QFD's success is that it establishes design requirements that are:

• Measurable (quantifiable) so you can tell whether or not you've met them.
• Solution-independent, meaning the requirements aren't linked to predefined solutions that the design team might have in mind (allowing for much greater creativity).
• Directly correlated to customer needs, so you know that you're addressing issues that are important to customers.
• Easy to understand.

To achieve these goals, QFD walks through a series of steps:

1. Identifying customer needs from the VOC data you gathered
2. Prioritizing those needs
3. Establishing design requirements that address all customer needs
4. Prioritizing those design requirements (to help focus the design effort)
5. Establishing performance targets

These steps are linked together deliberately, so that at the end you can trace a path directly from customer needs to specific elements of the design.

The team also will assess the impact of failing to meet the targets and specifications, including an assessment of different risks (to the customer, to the business) and whether the organization's current competencies are well matched to meet the performance targets.

Because there is such a learning curve in the Measure phase of a project, teams often discover quick wins: changes that look to be a sure thing, are easily reversible, and require little or no investment. The team should take advantage of quick wins as soon as possible, and begin accruing financial benefits.

After defining requirements, the team needs to answer the question: What is the best way to meet our customer needs at a conceptual design level?

This is where innovation occurs. Usually, teams will discover that there are conflicts between customer needs and the company's ability to meet those needs, conflicts between different design parameters, or conflicts between cost and performance. Often, trade-offs or compromises are made -- though finding solutions to resolve these conflicts rather than compromise leads to more innovative products and services.

The tool used here is a component of QFD called "functional analysis." Every service or product has certain things that it must do in order to perform acceptably from a customer's viewpoint. Functional analysis breaks the service down into its key tasks. For example, rather than brainstorm concepts for an imaging service at a system level, the team would identify the functions (prioritize paper items, scan paper to create images, validate scans, forward images) and then brainstorm solutions for each of the functions (e.g., prioritize paper images -- on-us listing, transit listing, equipment, software).

The goal is to prioritize the functions that have the strongest link to the Voice of the Customer, because those will be the foundation of any new design. You also can use the House of Quality to flow down the high-level design targets into smaller design elements.

After generating many interesting concepts, the team will need to narrow the field to the one or two most promising alternatives. (Notice the key assumption that the team has multiple concepts to consider!) You want to be sure that all feasible alternatives have been explored before deciding on a single concept. World-class innovations don't come from a one-horse race. If the investigation of concept ideas only brought about one or two options, it is strongly recommended you develop a plan to create additional options before moving forward.

The Develop phase is where the detailed design occurs. In addition to designing the core service, attention should be paid to developing information technology elements of the project, establishing a plan for human resources, developing sites/facilities, and purchasing materials that will be required for implementation.

As the solution is developed, the team should take advantage of lean tools to maximize speed and minimize waste in the new process. In particular, Value-Added Analysis is beneficial to many projects. The process map of the to-be service is reviewed and each step analyzed and assigned to one of three categories:

• Customer Value Add -- Tasks that the customer would be willing to pay for (i.e., adds value to the service, provides competitive advantage).
• Business Non-Value Add -- Tasks required by business necessity (i.e., financial reporting) but that do not provide value to customers.
• Non-Value Add -- All other tasks (i.e., approvals, all rework loops, waiting).

The objective of the Implement phase is to successfully conduct a pilot, transfer ownership of the project to the new process owner, and implement the new service. One of the key benefits of the Six Sigma methodology is the rigor around implementation and process control. Everyone has worked on a project that started off well only to watch it fall apart when the solution was implemented. With solid up-front work in the Implement phase, these issues can be avoided.

Design for Lean Six Sigma is the logical step for a company pursuing excellence in designing new products and services. Lean Six Sigma focuses on delivering both Lean speed and Six Sigma defect-free quality. Design for Lean Six Sigma takes the next step by focusing on new development to eliminate unwanted complexity and deliver streamlined, customer-focused, defect-free services.

Kimberly Watson-Hemphill is a Master Black Belt with George Group (http://www.georgegroup.com) and lead author of their Design for Lean Six Sigma curriculum. She has trained and coached hundreds of Black Belts and Master Black Belts throughout North America and Europe. She has a strong background in all areas of Lean Six Sigma, new product development and project management. She has worked with Fortune 500 companies in both service and manufacturing industries. She can be reached at kwatson@georgegroup.com.