It seems like Six Sigma and profit go hand-in-hand.
The methodology was designed around manufacturing, after all. When you hear terms like Lean or Kanban, you probably think of names like Toyota and Motorola (and recently, Amazon). You picture warehouses and forklifts and shelves stacked with products.
Or maybe you think of service industries, like airlines or restaurants – packing as much efficiency as possible into every single aspect of their business, in order to maximize return on what they charge you.
But do you think of libraries? Do you think of boy scout camps? What about women’s shelters or food banks?
Nonprofit organizations, despite their profit-agnostic approach to business, benefit from the same efficiencies as all other organizations.
Because it was never about profit. It’s about process.
The Practical Use of Six Sigma
Since nonprofits don’t always prioritize revenue, Six Sigma seems difficult to implement. You don’t necessarily measure success in dollars; you measure it in the service you provide to clients, or the satisfaction of the people you help. So, if your efforts aren’t necessarily impacting something measurable (like revenue), then how do you use Six Sigma to facilitate success?
Simple. It’s the same way HR professionals use Six Sigma to boost employee happiness and company culture – you measure something else, and improve the business holistically.
That’s step one. Find an outcome to measure, so you know if your effort is working or not.
Once you have a measurable outcome, try these things to see how it’s being impacted:
- Save high-cost resources for high-value work – Gifts, donations and weekend volunteers aren’t worth any direct money, but don’t let that skew their value. You need to assign value to all non-monetary resources. That way, when five people come to help out on a Saturday, you know that they’re worth at least the hourly minimum wage (per person). Don’t squander their time by having them reorganize inventory or sweep the floors.
- Create a standard process for every outcome – Your day-to-day operations are probably outcome-oriented. You’re working to achieve specific goals, whether it be a certain number of outbound phone calls, a specific amount of funds raised, etc. Write down each of your most relevant outcomes, and think about how you can achieve those outcomes with less variance and less wasted effort.
- Don’t measure things you don’t need to know – It might be fun to count how many emails you receive each day, or you might be interested to gauge the average age of your volunteers, but… don’t. Your measurements should be creating meaningful, actionable insights that can lead to broad changes to your business. Don’t go crazy measuring every little thing so you can design complex processes. Make everything as simple as it needs to be, and instead focus your effort on the handful of processes that are (1) totally broken, or (2) create the most value when tweaked and perfected.
In 2016, an Ohio-based nonprofit scored high returns on its Six Sigma efforts. The Akron Children’s Hospital spent a small fortune on training – in an effort to speed up efficiency in their food bank – and the process worked. Previously to the Six Sigma initiative, it took food 92 days to move through the food bank’s processes and into the hands of Akron’s underserved population. Today, it takes fewer than 40 days.
A Portland, Oregon nonprofit, called Friends of the Children, provided long-term mentorship to troubled kids. But their mentors were spending inordinate amounts of time filling out paperwork instead of advising youths. How’d they fix it? Some simple process mapping. They broke down every component of their business’s core process, and rearranged those components to maximize mentorship time with the at-risk children.
In Jacksonville, Florida, graduates of the engineering and business departments have used Six Sigma principles to help local nonprofits save more than $3.5 million since 2011.
Six Sigma is about process, not profit, and guess what? Your nonprofit is made of processes. Give Six Sigma a try.