Solving the Puzzle of Value Creation

Rubics Cube

Over the past three decades Six Sigma has swept across the landscape of international commerce and distinguished itself as a new and better way of doing business. While the first generation of Six Sigma (G1) was focused on product quality, the second generation (G2) was concerned with business economics. In this context, it can be said that G1 was largely quality-centric and G2 was cost-centric.

Across that period of time (G1 through G2), Six Sigma grew in popularity at an astounding rate.  Essentially, Six Sigma was rapidly becoming the “tool of choice” for driving business improvements to the bottom line.  And now in the 2010’s, we’re seeing Six Sigma evolve again, to an even higher level.  This new generation of Six Sigma envelopes the customer and provider, but the focus is on the creation of value.  In this context, the third generation (G3) is value-centric.

Being value-centric means the customer and provider must concurrently realize full value entitlement in every aspect of the business relationship if that union is to grow and prosper.  In other words, companies must now be outwardly and inwardly focused at the same time.  An organization’s ability to create and exchange value (in a quality way) is what a good business is all about – from the customer’s and provider’s perspective.

In this sense, G3 is branded with the mantra: Quality of Business Versus Business of Quality.  As we reflect on this mantra, the positive implications can quickly become overwhelming.

Simply stated, G3 creates higher levels of tangible value by focusing business leaders, operational managers, and key Six Sigma players on a simple, but highly effective four-phase process, called ICRA. These letters stand for the progressive flow of strategic activity leading to the on-going creation of value – Innovation, Configuration, Realization and Attenuation.  Exhibit 1.0 presents the four phases of the ICRA Value Creation Strategy.

Exhibit 1.0. The Four Phases of Value Creation

When considering ICRA as a strategic process, it is important to recognize that the Innovation Phase is about creating new opportunities for growth and improvement.  From here, we are naturally guided to the Configuration Phase where channels are created to move raw ideas from visionary concepts to detailed plans.

Following this, the Realization Phase is invoked so as to transition the critical designs from mere ideas into a physical existence. Once the ideas have been manifested into a deliverable form, the Attenuation Phase seeks to identify and abate the many risks commonly associated with the act of realization. Such is the process of value creation.

The ICRA roadmap takes on even more meaning when it is crossed with the four primary domains of an enterprise – Market, Business, Product, and Process (MBPP). The resulting intersects of ICRA and MBPP reveal there are 16 core competencies of a world-class business. When these competencies are focused on the creation of value, the net effect is a comprehensive and unparalleled set of organizational capabilities.  Exhibit 2.0 provides the ICRA matrix and 16 core competencies.

Exhibit 2.0. The 16 Core Competencies

In summary, the ICRA strategy creates higher levels of tangible value by focusing business leaders, operational managers, and team leaders on a simple, but highly effective four-step process called ICRA, which stands for Innovation, Configuration, Realization and Attenuation – the 4 steps for achieving a distinct competitive advantage.

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About Mikel Harry

Dr. Harry has been widely recognized in many of today's notable publications as the Co-Creator of Six Sigma and the world's leading authority within this field. His book entitled Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations has been on the best seller list of the Wall Street Journal, New York Times, Business Week, and He has been a consultant to many of the world’s top senior executives, such as Jack Welch, former CEO and Chairman of General Electric Corporation. Dr. Harry has also been a featured guest on popular television programs, such as the premier NBC show "Power Lunch." He is often quoted in newspapers like USA Today and interviewed by the media, such as The Economic Times. In addition, Dr. Harry has received many distinguished awards in recognition of his contributions to industry and society. At the present time, Dr. Harry is Chairman of the Six Sigma Management Institute and CEO of The Great Discovery, LLC.
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5 Responses to Solving the Puzzle of Value Creation

  1. The irony of the first graphic is that Bill Smith tossed me a Rubrics cube when I interviewed with him. I was not able to completely solve it and handed it back when I got stuck. What I think he appreciated was that I new when to ask for help and did not assume I had all the answers.
    G1 was a big step for Motorola at the time and there was a difficult job in showing people the you can not inspect in quality. But Bill recognized then that you needed to evolve as the organization matured. Getting people to accept the value of an ICRA strategy today while difficult, is critical to an organizations continued competitiveness.
    Good thing we have quality professionals to guide us through the process.

    • Mikel Harry says:

      Mike Williams:

      I really like your story of Bill Smith and the Rubics cube. I believe you are spot on about needing to evolve as an organization matures. Its always good hearing from a fellow Motorolan.

  2. Quite like the holistic framework.

    But, the challenge I see is post facto, considering the LSS deployments in the previous 2 cycles (G1 and G2) being limited in scope to quality & cost, and not being focused on value creation / Business Quality. To me, it raises the question – why didn’t we, the LSS practitioners leverage the principles to deliver holistic business excellence. These days, there’s a fight even between lean and six sigma, six sigma and innovation etc. etc.

    So, do look forward to this new phase (G3) as Mike calls it, delivering results with focus on sustainable and holistic business value.

  3. Reblogged this on Mbarriger and commented:
    Six Sigma and ICRA

  4. Value creation was an important topic at the University of Chicago when I attended graduate school. In this article Dr. Harry has been able to elevate a measurement / design / value system to achieve steps effectively with a competitive decision tool. I am excited to read the following series.

    Before I have often heard from the customer, “Just do it – I don’t care.” With this series of information it will enable us to better serve our customers so they win every time and get what they need, rather then what the comment stated.

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