Whats Ailing You?

Genworth Financial uses Six Sigma in almost everything the life carrier does. Scott McKay, Genworths CIO and senior vice president of operations and quality, believes Six Sigma focuses on reducing variation, meeting the customer needs, as well as reducing cost structures. Weve executed a number of strategies, and I dont know whether we could have done these strategies effectively without having a process-based organizationan organization that understood what process was all about, he says.

The general theme behind Six Sigma is all about quality, points out Vin Campisi, director of information technology, underwriting, risk and actuary, for GE Insurance Solutions (GEIS). Its a methodology of how you focus on process improvement and improve the quality of the output, he says. Its a set of tools and a methodology for looking at the inputs, looking at the actual process steps, getting better clarity on the handoffs, measuring how often there are defects occurring within that process, looking for opportunities to improve it, and developing a control plan to make sure the improvements you make are sustained over time.

Where It Works

Genworth has a system called Genius that McKay explains is a complete rebuild of the new-business underwriting process for life insurance. We rebuilt it by designing around the process we wanted to have vs. the process we were bound by with the existing technologies, he says. [Genius] focuses on driving our cycle times down to about half of what they used to be for life insurance, reducing cost by about 40 percent, and the process capabilities enabled us to design the technology and build that project.

All the acquisition integrations used a Six Sigma framework, and Genworths toolkit is built from that basic framework. Weve done an awful lot of work developing new products, and most of that work now is done using Six Sigma tools, reports McKay.
As an example, he points to Gen-worths retirement answer product. Its a product where you put your money in and it gives you a payment stream like a personal pension type plan, he says. Weve done a lot of work with both customers and suppliers. We have a program we call at the customer for the customer (ACFC). We go to customers and, in essence, work on joint Six Sigma projects on things that basically create value for both us and the customer. On the supplier side, we call it our strategic supplier partnership initiative. Its a program that creates efficiency across the relationship between us and our suppliers.

When buying products, GEIS will pull out some of the Six Sigma tools that help the carrier evaluate which product to buy. We take the critical needs of our business users, review and evaluate products, and then score them against our needs to determine which one we consider more favorable, says Campisi. Its a prioritization tool. We have other tools similar in nature that help ensure it is a product that is going to deliver everything we want in the best fashion compared to the other products that are available.

Core Pieces

Campisi adds when you hear the term Six Sigma, you also will hear the acronym DMAIC (Define Measure Analyze Improve Control). [DMAIC] is the core piecethe tools and the steps of the processbut the real output is delivering a process improvement, reducing the defects or rework that may occur in a process, and then making sure you control that improvement and sustain it over time, he notes.

When a carrier brings Six Sigma into the IT fold, there are two approaches, states Campisi. The first is to have a solution in place from a technology perspective. The technology is just a way to institutionalize your process, he says. You define how you want your business to operate, and then you implement technology to facilitate the process and allow you to control it. When you blend in Six Sigma, the technology you have in place really is the measurement system that lets you see how many issues are occurring, where the backlogs are building, and where rework is being performed.

To illustrate this approach, Campisi describes the operation of a hypothetical corporate Web site with global users. The company has users who are unhappy in Europe because it is a system thats based in North America and the response times are slower than users outside North America would like them to be. The users want the site to perform in five seconds, and currently its taking 10 seconds every other time they click on a page, he says. One solution would be to implement a measurement systema monitoring tool, for exampleto control and ensure the customers feedback. You analyze how the process works, how they use the system, what are the steps they go through in using it, and then identify opportunities to improve or tune the process, suggests Campisi. So, using the Six Sigma approach, the company analyzes the site, spots the pages causing most of the pain, finds an opportunity to improve the pages, and establishes a control plan to ensure every time users click on the site, pages are produced in less than five seconds, he says. You have visibility to thatyou have made an improvement and are able to sustain it from an IT perspective.

Designer Products

Another approach to Six Sigma concerns building an entirely new solution. I know [the solution] is going to be used in Europe, continues Campisi, and I know they want response times that are five seconds every time they view a screen. In this instance, the company would use a system called Designed for Six Sigma (DFSS). This is not an instance where I have something working today and I need to find where the smoke is coming from, where the issues are happening and fix them, which is the DMAIC approach, he says. The DFSS approach is, I havent built it yet; I know what the people are expecting it to do. Now, I need to understand all the variables that can cause it to exceed their expectations. I need to design it in such a way it is able to produce the level of outputthe five-second response timeno matter if theres a ton of people using the bandwidth from here to Munich and no matter if there are a lot of users on the system at that time of day.

All the factors that can cause the system to exceed those limits need to be factored in. The DMAIC approach is if you have one variable causing people to be unhappy, you need to fix it, says Campisi. The DFSS approach is you know what the people want, you havent built it yet, and you need to understand all the variables that can cause it not to produce at the level they want it.

The DMAIC approach is simpler, Campisi believes, be-cause you have something in place that is easier to measure. You can see the issue, he says. You have something there to look at for opportunities to optimize, whereas the DFSS approach involves trying to produce something perfectly upfront and understanding all the things that can keep [the product] from being effective.
For a typical product, a company has a normal development life cycle, goes through user testing, and launches it, Campisi explains. This is followed by a period where all the defects start to show up, and the company has to do a second release to improve all the things that arent working the way they should. The DFSS approach involves spending more time upfront before even starting to build anything to understand fully what the users want, how they want it to work, and what are all the factors that can cause the issues theyll complain about later.
Old Hands

Organizations just starting to use Six Sigma are more conscious of the process than are old-timers. After doing [Six Sigma] for many years [at Genworth], so much of the Six Sigma process management tools are imbedded in the culture and the processes today, says McKay. Its more a case of just a common practice where we very naturally use the tools to run the business. Its not like doing a Six Sigma project, which is what we were doing in the beginning. Now, we do work, projects, strategic initiatives, and Six Sigma is just the process tool to get there. It takes many years to get to that point.

Larger companies tend to build an organization around Six Sigma, according to Campisi, with staff dedicated to look for projects, identify opportunities, and own those projects all the way through. For smaller organizations, the opportunity lies in training their resources on the skill set, the tools, and methodologies and having the resources to leverage those skill sets in daily work. What youll find within GE and other large organizations that have adopted SS is they have a combination of both, he says. You have people dedicated in rolesmaster black belts and black beltsresources whose sole purpose is to identify quality projects and deliver them. You also have something called a green belt that is not a dedicated resource. They will launch a project if they see an issue in their daily work they can make an improvement on.

GE was successful with Six Sigma because it was sponsored at a very high level and the entire company did it, Kopp believes. I would recommend for any company that wants to try, start with focus in one area underneath a business group to keep it manageable, he suggests.

What Is It?

When asked to describe Six Sigma, McKay says, it essentially is process-based business management. Companies have to go through the steps where they accept that everything they do is a process and that those processes consistently can be improved. The real trick is you have to learn enough skills so you can use the right tools at the right time on the right problems, he says. Thats kind of my litmus test for when you are getting mature around process managementwhen you no longer are saying, Lets just solve the problem with the DMAIC. Instead, you look at the problem and say, With this kind of problem, maybe the Lean toolbox is better. Or maybe parts of the DMAIC toolbox might be more appropriate. When you get the maturity where youre starting to disconnect the toolboxes and say, Heres the problem I have, let me try to match the right tools to the problem, then you are starting to reach maturity.

McKay disagrees with those who claim insurance processes are different than the processes involved in manufacturing. Let me slightly challenge that assumption, he says. They are, in fact, both processes. The challenge is getting people to understand even though [insurance] is an intangible product, its still a process we go through to produce. Insurance may be built off a supply chain of information rather than a supply chain of raw materials, but nonetheless, you still are taking a whole set of inputs, putting them through steps, and creating outputs.
One of the goals Genworth set was to move beyond process enablement and move toward process automation. Once we made that leap that started getting people to understand whats going on under the covers, they began to think about these processes as being, in essence, the same as the manufacturing process, explains McKay. We first had to challenge the paradigm that it was more of an art than a science.
The key takeaway a carrier gets after going through the Six Sigma experience is it becomes very data driven on decision-making projects. Traditionally in IT, if you see an issue, you run at it and try to fix it and continue to try to fix it until you ultimately get to it, says Campisi. The Six Sigma approach will let me measure this and collect some data to see what the issue is. Six Sigma is the tool to point me to what truly is causing the issue, develop an improvement to fix it, and sustain the fact you fixed it. It helps with your problem-solving skills. It really forces you to understand fully the issue you are trying to fix from everyones perspective and make sure you are collecting appropriate data to ensure you have truly fixed the problem.
Teamwork

The goals for carriers are to reduce errors or defects, speed up the process, and gain in the customer experience by improving customer satisfaction, according to Kopp. There is a lot of potential for improvements in back-office processes because there are many manual steps, handoffs, and validation reconcilement looking for information that may be missing, he adds.

For example, in claims processing insurers can study how many controls there are, errors that may surface, exceptions that need to be escalated, or missing data that must be filled in. In a typical example, a process may involve 150, maybe 200, actual steps, so Six Sigma tends to simplify those processes and reduce them to a more manageable number, such as 20, maybe 30, process steps, says Kopp. The scope of the transformation is from where the mindset is you have to do it a certain way because thats the way its been working for decades to asking dumb questions such as, Why are we doing it this way? [Such changes] dont necessarily come naturally in an industry thats been very conservative.

GEIS recently launched a claims workbench, an integrated portal that ties together some of the carriers back-office systems to give an end user an integrated view. Without having the Six Sigma team engaged with our IT team, I know we wouldnt be as far along as we are today, states Campisi. The Six Sigma team really helps us understand the business processhow things operate and perform. The technology team blends in how technology can deliver an impact to that business process. What weve commonly used here is the analogy that for every project you have to have three legs of the stool. You have to have a functional owneran internal resource who is an expert on the process you are working on. You need to have a Six Sigma resource engaged to process, map, and better understand the project. And you need an IT resource in place to develop the improvement or build the solution. If one of those three is missing, typically youll have a project that will have a lot of challenges because those are the three core mentalities you need. You need that expertise, you need that process understanding, and you need the technology capability to make the impact.

Unlock the Door

Success can come quickly for carriers adopting Six Sigma, maintains Kopp. In any situation there is low hanging fruit, he says. I mentioned the claims process intentionally because thats a great driver of customer satisfaction with insurance companies. Thats the moment of truth. Theres been an accident or an incident, and the customer wants to be made whole. The company delivers what the customer has paid for, which is piece of mind, or there is a dissatisfied customer. So, thats why the claims process is so sensitive. But there are many other factors involvedfrom accounting to regulatory reporting. There is so much paperwork in the insurance back office that Six Sigma has a lot of potential.

McKay sees the possibilities for improvement continuing thanks to Six Sigma. I use the word automation regularly because I find the industry wants to gravitate toward finding things and doing them slightly better rather than taking things and changing them dramatically, he observes. It [resembles] how robotics changed manufacturing; we have similar opportunities in insurance, too. And Six Sigma starts unlocking some of those doors for you.

Six Sigma Toolkit

There are six basic tools needed to undergo a Six Sigma project, according to Guillermo Kopp, vice president, cross industry practice, for the consultancy TowerGroup. The process starts with a flowchart, according to Kopp, which enables the team to visualize the process being studied. The next tool is a check sheet to track specific defects in the process. A Pareto chart then is used to identify frequent defects in the process. Next, a cause-and-effect diagram is drawn to identify possible causes for the defects. Finally, a scatter diagram is used to reveal performance patterns, adds Kopp.

He also recommends the use of management and planning tools in the Six Sigma process. These include an affinity diagram to categorize issues or ideas; an interrelationship digraph to explore possible root causes; a tree diagram to decompose and analyze issues; prioritization matrices to select what improvements to pursue; a matrix diagram to analyze relationships between requirements and capabilities; a process decision program chart to evaluate alternate courses of action; and an activity network diagram to formulate improvement plans.