six sigma: positioning for competitive advantagesix sigma is a methodology focused on improving...

18 ACCA Docket January 2001

Six Sigma has emerged as the latest and hottest quality initiative within corporateAmerica. Pioneered and embraced by such companies as Motorola, Allied Signal, and GeneralElectric, this statistically driven, data-intensive methodology has become a key business strategy for increasing client satisfaction, reducing costs, and improving earnings for America’sFortune 100. DuPont is a recent convert and has placed considerable talent, resources, andexpertise behind this process-focused effort.

A common reaction to Six Sigma is that, whatever its value when applied to the manufacturingsettings where it originated, it does not translate well to transactional functions, such as thepractice of law. Our two years of experience suggests otherwise. Analytically, the statisticaland organizational principles underlying Six Sigma apply naturally to a broad array of legalfunctions. The challenge is how to identify those functions and to translate concepts originallyconceived in an engineering environment to a company’s legal department. We trust that ourexperience at DuPont Legal demonstrates that this translation effort is time well spent.

SIX SIGMA—HUH?

First, some basics. Six Sigma is a methodology focused on improving processes. The term“six sigma” is a statistical measurement, signifying 3.4 defects per one million opportunities forfailure. By way of comparison, four sigma is an average process: it equates to about 6200defects per one million opportunities. Another example: three sigma is equivalent to one misspelled word per 15 pages of text, whereas six sigma is equivalent to one misspelled word per

Thomas L. Sager and Scott L. Winkelman, “Six Sigma: Positioning for Competitive Advantage,” ACCADocket 19, no. 1 (2001): 18-27.

Thomas L. Sager is vice president and assistant general counsel,DuPont Legal, and a Six Sigma Champion.

Scott L. Winkelman is a partner with the law firm Crowell & MoringLLP. He is his firm’s engagement partner to DuPont, a Six Sigma

Black Belt, and chair of the firm’s eBusiness Group.

By Thomas L. Sager and Scott L. Winkelman

Six Sigma: Positioning for

Competitive Advantage

January 2001 ACCA Docket 19


300,000 pages. Thus, when we say Six Sigma, wemean best in class, a virtually defect-free process.

To define the term “defect,” we must determine acustomer’s expectations. The customer is theintended beneficiary of any given process, whether itbe the purchaser of the product created or the user ofthe service provided. If the customer’s goal from agiven process is quick delivery, then slow delivery is adefect. If the customer’s goal is low cost, then highcost is a defect. Six Sigma efforts strive to maximizecustomer satisfaction and, hence, maximize quality bydriving quality at the front end rather than playingcatch-up at the back end after failure has occurred.

Six Sigma purports to be different from previousquality initiatives in its dedication to rigorous scien-tific proof. Six Sigma reduces all processes to acommon statistical formula: a sigma value signify-ing x number of defects per unit. To satisfy SixSigma rigor, process improvements must then bestatistically proven to improvethat sigma value. Thus, SixSigma trainees learn to use suchtools as process mapping, failuremode and effects analyses, stan-dard deviation calculation, andrelated methods to ensure thatthe savings we think we are see-ing and hope we are seeing arein fact realized.

Six Sigma, in short, repre-sents the maximum performancea process can feasibly obtain. But Six Sigma is more than aformula. It is a culture shift. Itdrives an organization to driveall of its processes toward totalquality and to join all its personnelin this mission.

GETTING STARTED

Six Sigma begins with training—and lots of it. Acompany’s Six Sigma army consists of“Champions,” “Green Belts,” and “Black Belts.” Asimplemented by DuPont, Champions receive oneweek of training; Green Belts, two weeks; andBlack Belts, four weeks, all conducted by outsideSix Sigma experts. The training is essentially an

intensiveprimer instatistics andprocess man-agement withplenty ofhomeworkand both indi-vidualized andtag-team efforts at actualprocess improvements.

At DuPont, the Champion’s role is toquarterback a business unit’s Six Sigma effortby defining its Six Sigma goals (amount of savings,numbers to be trained, areas of application), identi-fying its Black Belt candidates, removing cultural,institutional, and other barriers to implementation,and creating a sense of urgency and optimism insupport of the unit’s efforts. Black Belts are the

foot soldiers who must completefour to six major projects peryear with annual savings ofabout $175,000 per project.Green Belts work with BlackBelts on ad hoc projects that aretypically smaller in both scopeand forecasted dollar savings.

At DuPont Legal, BlackBelt candidates are culledfrom attorneys and staff

who possess sometechnical/scientific competence,familiarity with legal processes,a facility for bottom-line, busi-ness-like thinking, and, perhapsmost important, a willingness toaccept with good humor the

inevitable ridicule of peers and to pursue actionthat threatens the legal status quo.

IMPLEMENTATION AT DUPONT

So how has Six Sigma played out at DuPontLegal? Quite well thus far, we think, thanks largelyto three factors.

First, this initiative, like no other, has the fullsupport of DuPont’s senior management. A highdegree of focus, intensity, resource commitment,

SIX SIGMA EFFORTS STRIVE TO MAXIMIZE

CUSTOMER SATISFACTION AND, HENCE, MAXIMIZE

QUALITY BY DRIVING QUALITY AT THE FRONT

END RATHER THAN PLAYING CATCH-UP AT THE BACK END AFTER

FAILURE HAS OCCURRED.

SIX SIGMA EFFORTS STRIVE TO MAXIMIZE

CUSTOMER SATISFACTION AND, HENCE, MAXIMIZE

QUALITY BY DRIVING QUALITY AT THE FRONT

END RATHER THAN PLAYING CATCH-UP AT THE BACK END AFTER

FAILURE HAS OCCURRED.

January 2001

and accountability at the executive level has greatlyfacilitated the rollout of Six Sigma within DuPontLegal and elsewhere. To that end, how we performrelative to our Year 2000 SixSigma goals in DuPont Legalwill directly affect everyone’svariable compensation. That’sright, eveyone: lawyers, legalassistants, office managers,human resources professionals,and staff. This initiative alsoincludes financial incentivesfor extraordinary contribu-tions by our law firms and suppliers.

Second, most of our per-sonnel view Six Sigma as anopportunity to become moreknowledgeable about andaligned with the company’score business values andprocesses. This viewpoint hasproven to be a tremendousmotivator for many.

Third, because of our strate-gic partnering relationships

with DuPont’s network of primary law firms andsuppliers and our previous collaborations on

metrics in support of the DuPont LegalModel, project identification and implemen-

tation have occurred in the spirit ofcontinuous improvement. Everyone

(both inside and outside) focuses onthe right solution for the client, in

this case DuPont. That focus maymean fewer resources allocated to

a given task. But we all learnfrom the process and become

more competitive in ourrespective marketplaces.

This focus also explains,in part, why we chose

two professionalsfrom our outside

network to joinour Six Sigma

effort and tobecome Black

Belts, to

ensure that DuPont sees through the eyes of valuedpartners how to best implement these projects toensure support from our firms in the field.

CORE PRINCIPLES

Almost two years of SixSigma experience have left useight core principles that driveour efforts within DuPontLegal—principles that, webelieve, could similarly aid any

other legal organization’sembrace of Six Sigma.

Identify Processes Six Sigma is, at bot-

tom, a methodology formeasuring and improvingprocess capability. For starters,then, the legal Black Belt mustseek out legal processes, bywhich we mean functions char-acterized by repetitive, recurringsteps. How the department

stores litigation case files, how the department pur-chases deposition transcripts, and how thedepartment compiles company business records forproduction in lawsuits are all processes susceptibleto Six Sigma analysis no less than how a product ismade or shipped.

Start with Paper All legal processes can generally be grouped into

two categories: (1) paper-driven processes, such ashow the department collects and maintains litiga-tion documents and whether the departmentmaintains records in paper or electronic form, and(2) people-driven processes, such as how efficientlyattorneys take depositions and what role local, asopposed to national, counsel should play in plead-ings preparation. Our experience suggests that it isbest to focus initial Six Sigma efforts on paperprocesses. The reasons? First, Six Sigma philoso-phy frowns on variability, and paper processesoften lend themselves to standardized processimprovements that necessitate little tolerance forvariance: thou shalt image, thou shalt retain these

22 ACCA Docket

HOW THE DEPARTMENT STORES LITIGATION CASE

FILES, HOW THE DEPARTMENT PURCHASES DEPOSITION TRANSCRIPTS,

AND HOW THE DEPARTMENT COMPILES

COMPANY BUSINESS RECORDS FOR

PRODUCTION IN LAWSUITS ARE ALL PROCESSES SUSCEPTIBLE TO SIX

SIGMA ANALYSIS NO LESS THAN HOW A PRODUCT IS

MADE OR SHIPPED.

HOW THE DEPARTMENT STORES LITIGATION CASE

FILES, HOW THE DEPARTMENT PURCHASES DEPOSITION TRANSCRIPTS,

AND HOW THE DEPARTMENT COMPILES

COMPANY BUSINESS RECORDS FOR

PRODUCTION IN LAWSUITS ARE ALL PROCESSES SUSCEPTIBLE TO SIX

SIGMA ANALYSIS NO LESS THAN HOW A PRODUCT IS

MADE OR SHIPPED.


categories of litigation files but not those, thoushalt use this copying vendor but not that vendor,and so on.

Also, paper processes often yield the quick victories, the low-hanging fruit that Black Belts seekout to achieve the early Six Sigma success storiesthat are essential to building confidence in the company’s effort. Third, proposed improvements inpaper processes tend to encounter less resistancethan changes in how people behave, attorneys often

being of the view that how they spend their time issacrosanct with no room for adjustment.

Accordingly, the legal Black Belt’s first trip is oftento the company’s records custodian. He or she knowshow paper processes operate in the legal department,has already compiled much of the data needed tomeasure process defects and improvements, and,most important, has pent-up opinions about whatworks and does not work in the legal function andhas likely been frothing to share those opinions.

In Six Sigma, we can’t assume savings: we mustprove them. At DuPont Legal, the challenge is tocompare the costs of a given legal process in its cur-rent state with the costs once we have applied SixSigma analysis and have eliminated defects in theprocess. Basically, this process involves seven steps:(1) Define the defects. Through process-mapping

and other tools, we first work to understand theprocess in question and how to improve it. Forinstance, a recent DuPont Legal project focusedon what becomes of litigation files when the lit-igation ends. We concluded that the processdefects were that we retained too much filematerial and that we retained the wrong cate-gories of materials.

(2) Identify the cost variables. We then identify thecost elements of the process. In the closed liti-gation file example, those variables are the costsassociated with (a) processing (culling the file),(b) purchase of the box used for off-site stor-age, (c) shipping the box to the storage facility,(d) costs of storage, and (e) any real estatespace saved by retaining fewer records.

(3) Distinguish hard from soft savings. At DuPont,only hard savings count toward our dollar objec-tives. By hard, we mean those cost items forwhich DuPont actually pays out money. Thus, themanual labor associated with processing a closedlitigation file is a hard cost if an outside vendordoes the processing, but a soft cost if a DuPontemployee does the processing, because freeing upan employee’s time, while of great value, does notdirectly reduce DuPont’s bottom line.

(4) Identify a measurable unit. To compare theworld as it is with the world post-Six Sigma, we

must choose a standard unit of measurement.In the closed litigation file example, the unitchosen was costs per box of closed files.

(5) Compare the old to the new. To determine thecosts of the current process, we took a statisti-cally significant sampling of litigation files,making sure that the files fairly represented thelitigation docket in terms of size of case, subjectmatter of litigation, and so on. Using data overa five-year period, we then calculated the costper box and total boxes stored historically toarrive at a total annual cost of closing filesunder the current system. We then performedthe same analysis again, this time assuming thatthe new process was in place with its newguidelines governing which litigation files toretain. The difference between the results ofthe two analyses represent annual savings fromthis project.

(6) Review with an expert. We are neither statisti-cians nor financial analysts. Our next step,therefore, is to review our data analyses withan assigned financial analyst, himself trained inSix Sigma, to reality check our calculations andmethodology. At DuPont Legal, this step oftenresults in the Black Belt project leader beingdirected back to the drawing board before the project is initially validated with definedprojected savings.

(7) Control. Even once the project is initially vali-dated, the Black Belt’s work is not done. Withthe process improvement in place, we must thenanalyze its implementation, continue to gatherdata, and return for final validation in which pro-jected savings are in fact proven or disproven.

HOW DO YOU PROVE SAVINGS WITH SIX SIGMA?HOW DO YOU PROVE SAVINGS WITH SIX SIGMA?


Map the Process Of the analytical tools used in Six Sigma, we

have found process mapping most pivotal to successful legal projects. The concept is simple:diagram, in flow-chart fashion, each step in thelegal process under review, such as how a pleadingwinds its way from outside counsel to in-housecounsel to client to open litigation file to closed litigation file and so on. Done correctly, the resultis often multiple versions of a map: the process aswe believe it exists, as it in fact exists, and as itshould exist once defects are eliminated.

Mundane though it sounds, process mappingoften yields dramatic results. Litigation paper, forexample, typically travels through a legal functionin mysterious, labyrinthine ways, often for no betterreason than historical accident or uncheckedbureaucracy. Defects abound, from redundantsteps to wide variability to excessive paper touches.Eliminating such defects can yield substantial savings and efficiencies without any damage tocompany interests. Process mapping is also impor-tant for isolating both the specific process defectand the unit of measurement, whether it be cost(the dollars it takes to store a box of litigationpaper), cycle time (the number of days it takes for clients to receive transcripts), or some othermeasurable unit.

Target Unconscious Spending Legal departments routinely take action without

internalizing or even considering the costs of thataction. Attorney A orders an expedited transcriptwhen no case urgency exists. Attorney B retains alldrafts of pleadings in her litigation file without considering the storage and processing costs associ-ated with maintaining the file. Attorney C sends apleading to a client simultaneously by mail, email,and fax, again for no apparent reason. Attorney Dnotices a deposition without analyzing why thenoticed witness is material to the case, offensivelyor defensively. In each instance, the defect is not aquestionable attorney decision but a nondecision,an action driven by reflex, not reflection.

Legal processes teem with such unconsciousactions, not surprising given that careful analysis ofthe costs and benefits of legal action is rare. SixSigma, as a statistical methodology, can help imposerigor on legal decision-making and better discipline

• Founded by copioneer Mikel J. Harry to spread SixSigma principles beyond Motorola and other early con-verts, the Six Sigma Academy is at www.6-sigma.com.

• The statistical nuts and bolts of Six Sigma trainingappear in M.J. Kiemele, S.R. Schmidt, and R.J. Burdine,BASIC STATISTICS: TOOLS FOR CONTINUOUS IMPROVEMENT

(Air Academy Press LLC 4th ed. 1999).

• Any internet search using the key words Six Sigma will alsoturn up an array of training and informational offerings.

From this point on…Explore information related to this topic.

legal action. Six Sigma forces us to ask whyprocess steps are as they are. Absent good reason,those steps are eliminated. In the course of theiranalysis, Black Belts routinely stumble upon mind-less process steps in which inefficiencies have goneunnoticed. Better yet, eliminating such inefficien-cies is often pain-free: defects are eliminated, andmoney is saved, without any corresponding erosionin the quality of legal services.

Apply Information TechnologySix Sigma trainees are taught to focus on

process inefficiencies first and solutions later. Inpractice, however, information technology fixesoften bubble up early on in legal projects. Analysisof a litigation document repository, for example,instantly stimulates the question, “Why are we notimaging?” Purchasers of transcripts soon wonder,“Why are we ordering paper transcripts when com-puter disks are available, cheaper, and more readilysearchable?” Likewise, legal processes that seemneedlessly slow cry out for technologyapplications that reduce cycle time. Byemploying technology to improve legalprocesses, Black Belts not only furthertheir Six Sigma goals, but also help moti-vate a company’s attorneys to becomemore adept at using litigation technology.

Strive for Absolutes The best Six Sigma legal projects typically

lend themselves to absolute, standardizedguidelines. Many aspects of the practice oflaw are poor candidates in this regard becausethey necessarily involve judgment and case-specific analysis. How to cross-examine a trialwitness, which expert scientist should testify inthis case, and which affirmative defense is bestargued on summary judgment are all functionsthat require attorney discretion and are not thebest targets of initial Six Sigma projects. It is bet-ter to start with projects that are amenable toacross-the-board, absolute process mandates: thoushalt electronically image collection documents;thou shalt retain litigation records for x years; thoushalt reimburse outside counsel for this form ofdeposition digest but not for that form; and so on.

Of course, attorneys will reflexively resist mostany absolute mandate as a shackling of their

creative freedom and will insist on exceptions torigid Six Sigma rules. Don’t buy it. Plenty of legalprocesses are ministerial, have no effect on legaloutcomes, and lend themselves well to corporatemandates that are binary (lights on, lights off),enforceable, measurable, and controllable.

Leverage Learnings or Don’t Change the SubjectUpon completing a Six Sigma legal project, the

Black Belt’s strong temptation is to turn next toaltogether different legal functions. Resist thattemptation. Six Sigma successes can expand expo-nentially when a company leverages project lessonsto similar functions elsewhere in the business.Thus, upon completing a statistical analysis ofwhich litigation files a company should retain at theconclusion of a lawsuit, the next question should bewhether the resulting guidelines could improve theprocess for retaining nonlitigation files, active casefiles, or even files outside the legal area. By lever-aging projects in this way, the legal department canpioneer Six Sigma’s application to transactionalprocesses company-wide.


Be a Forum for Pent-Up Grievances Most legal departments feature their share of

attorneys and staff who have long been thinkingalong Six Sigma lines without knowing it—identify-ing process defects and wondering why we practicelaw in the inefficient way we do—but have lacked aforum in which to voice their insights. The SixSigma legal team should be that forum. Pent-uppet peeves are often the stuff of superbSix Sigma projects. Create a sug-gestion box or chat site on thecompany intranet. Call townmeetings to invite project suggestions. In theseand other ways, the legal teamshould energize the entire legalfunction around common SixSigma goals and thereby har-ness existing project conceptsbefore feeling obliged to generate projectsanew. This initial invitational step shouldyield promising projects, lighten the creative burdenfacing the Six Sigma team, and promote a climate of inclusion and buy-in to thelegal Six Sigma effort.

IT WORKS FOR US; HOW ABOUT YOU?

Do we commend Six Sigma to others in the corporate legal world? Yes, for some. Six Sigma

principles will resonate with those whobelieve legal professionals

should bear someresponsibility

for their client’s bottom-line success, with thosewho think that legal services, no less than other services, can improve through process analysis,with those who agree that process is not somethingto create anew every time a new lawsuit or com-mercial transaction surface, and with those drivenby a commitment to continuous improvement andwho recognize that the complete lawyer brings

more to the table than legal acumen.Of course, your Six Sigma efforts will meet

plenty of skepticism, fromattorneys in particular. Expectsuch reactions as “Isn’t thisjust the newest corporate fla-vor of the month?” and“Maybe this works fine in anassembly plant, but not in thepractice of law.” As we trustwe have demonstrated here,

such reactions don’t move us and shouldn’t moveyou. Fairly answering such doubts requires a mix-ture of balance (conceding that Six Sigma does notapply to all legal functions), proof (in the form ofactual Six Sigma successes), persuasion (demon-strating analytically that the principles apply), andpatience (tolerating, even humoring, those skepticswhom you can never hope to turn around). Thefact remains that not everything an attorney does isimpervious to process improvement. And the factthat core features of Six Sigma—attention to effi-ciency, elimination of process defects andredundancies, and striving for process standardiza-tion—are countercultural for lawyers is merely onemore reason to embrace Six Sigma, because attor-neys often are most in need for the wake-up callthat Six Sigma provides.

Our experience at DuPont suggests that SixSigma translates well to the legal function. That isnot to say it translates indiscriminately to all legalprocesses; it does not. But with careful application,the payoff can be significant. Indeed, by getting itsown Six Sigma house in order, the legal functioncan lead a company’s effort toward efficiency andimprovement and thereby round out its usual imageas a drag on company resources.

We at DuPont Legal are by no means experts inthe application of Six Sigma. But it takes no expertto recognize its value to the practice of law. A


MOST LEGAL DEPARTMENTS FEATURE THEIR SHARE OF

ATTORNEYS AND STAFF WHO HAVE LONG BEEN THINKING

ALONG SIX SIGMA LINES WITHOUT KNOWING IT

MOST LEGAL DEPARTMENTS FEATURE THEIR SHARE OF

ATTORNEYS AND STAFF WHO HAVE LONG BEEN THINKING

ALONG SIX SIGMA LINES WITHOUT KNOWING IT

six sigma: positioning for competitive advantagesix sigma is a methodology focused on improving...

Documents