Innovation Management, Balanced Scorecard and Six Sigma Methodologies
On February 26, 2019, João M. F. Calado, José Gomes Requeijo, António Abreu and Ana Dias have published an article entitled “Management of Innovation Ecosystems Based on Six Sigma Business Scorecard” in Open Engineering.
A Blog Post by Pablo Markin.
In their paper, João M. F. Calado, José Gomes Requeijo, António Abreu and Ana Dias have concentrated on “the principles of Six Sigma and the Balanced Scorecard [BSC]” (41), in order to demonstrate that “the BSC ensures that top management pays attention at any time to the specific elements of the Six Sigma implementation that are not working as planned” (41). As these researchers explain, “[a]t the end of the 1980’s the methodology […] known as Six Sigma was developed at Motorola. This methodology presents the limit value of 3.4 per million as an admissible value for non-compliant production. It identifies “two states” in a productive process, the first called “short term” and the second “long term”. In the first, it is considered that the process is stable and produces items with mean µ and standard deviation σ [sigma]. In the second, […] it is assumed that the process average can range from ± 1.5σ” (43).
Therefore, as this article explores, in the framework of this methodology, “the quality level (sigma level) of a given process is expressed as a function of σ” (43). Similarly, as these scholars indicate, “the Balanced Scorecard (BSC) [developed as a management tool by Robert Kaplan and David Norton] is […] a structured model that not only complements the traditional financial indicators but also relates the long-term strategy to short-term interventions. The BSC has emerged as a decision support approach at the strategic management level” (45). Furthermore, as Calado, Requeijo, Abreu and Dias specify, “[b]ased on the Six Sigma philosophy and the BSC approach, Praveen Gupta proposed a Six Sigma Business Scorecard methodology […] that allows management to monitor company performance based on the dimensions of the Balanced Scorecard but through Six Sigma levels” (45-46).
Relying on their analysis results in the context of applying this management methodology to collaborative business networks, such as “collaborative innovation ecosystem[s]” (49), these authors conclude that “the BSC is a tool with great capacity to integrate and interact, in a logical and coherent way, with a set of other tools used by organizations, such as the Six Sigma approach” (50). Calado et al., likewise, add that, whereas in their study the BSC has been deployed as “an instrument to assess the degree of alignment of the organization with its strategic direction” (50), the “Six Sigma strategy worked as a way to operationalize the necessary improvements for this strategic alignment” (50), while providing “a link between strategy and quality initiatives” (50).
By Pablo Markin
Featured Image Credits: IMG_2237 Holistic Management – Östling on Scania Leadership 1531, May 31, 2011 | © Courtesy of Johan Lange/Flickr.
Calado, João MF, et al. “Management of innovation ecosystems based on six sigma business scorecard.” Open Engineering 9.1 (2019): 41-51.