In a recent post on the Wall Street Journal’s The Accelerators blog, Robert Siegel, general partner at XSeed Capital, makes some interesting connections between Six Sigma and successful new business practices in technology startups. One key element of this link is focus, because maintaining consistent focus on the critical activities that drive growth as quickly and sustainably as possible can be a significant challenge. As Siegel observes:
When a company is in its early stages, the confusion of determining product/market fit, combined with the challenges of building a team while developing a new technology, can lead to a fatal lack of focus. As entrepreneurs embark on their journey and attempt to gain customer traction, they are sometimes tempted to go off-course and chase potential “partners” who may want a slight variation of a company’s initial product with only “a small amount of custom work.”
The appeal of this strategy is early revenue and the promise of work generating work, but far too often the small amount of custom work becomes an expensive and potentially dangerous distraction:
Not only do they take away from where the company is headed, but there are unintended consequences for taking on these projects: ongoing sales and customer service support is needed, engineering maintenance needs to be addressed, and continued executive time is spent managing these partners which end up taking away from a startup’s primary task.
In contrast to this, Siegel cites Intel, where former CEO Andy Grove had the gift of getting tens of thousands of employees to maniacally focus on whatever was the key issue confronting their business at a given moment in time.
To help achieve such focus, Siegel proposes that companies focus on “the big Xs” of their business, a term that comes from Sig Sigma. The fundamental Six Sigma formula is Y=f(x) (i.e., “Y is a function of X”). This means that one’s ability to consistently and predictably deliver products or services to a customer is a function of the inputs (X) of the process. Put simply, the qualityof a product depends on the “ingredients” (Xs) used. When leveraging this formula, companies should both look for those few Xs that create most of the variation in their process (i.e., the little Xs) and take to heart the big Xs that go into the process and allow it to function without undue variation—without threatening focus. “I’ve realized that for every company, large or small, the ability to clearly articulate the most important thing for the organization is critical to maintain focus and figure out which items people should work on and which items to skip,” concludes Siegel.
Thinking in terms of Six Sigma’s “big Xs” can be one way to help new businesses maintain the consistent focus they need to succeed.