Preliminary results of a Global Survey on Business Process Excellence. More than 800 comp;anies represented

1. The Current State of Business Process Excellence:Preliminary Results focused on the Customer Experience LSS & Process Improvement for Customer Experience Conference March 23, 2010 Reginald W. Goeke, Ph.D. Market Value Solutions 814-234-2486 Reg@MarketValueSolutions.com

2. Market Value Solutions MVS is a consulting group that focuses on the measurement and management of customer value. Different from most consulting firms MVS uses the VOC to quantify your firm’s current value propositions in your targeted markets More than just a research firm Focus on the effective deployment of VOC to drive business results Recognized thought leaders in customer value analysis and management -- authors of : Dominating Markets with Value: Advances in Customer Value Management – (2002) Value-Driven Channel Strategy: An Extension of Lean Thinking (2005) Competing for Customers and Winning with Value (2006) Strategic Six Sigma for Champions (2006) Six Sigma Marketing: From Cutting Costs to Growing Market Share (2009) Listening to the Voice of the Market (2009) Subject matter experts in the area of Customer Value Management for the American Productivity and Quality Center the International Quality and Productivity Center the Institute for the Study of Business Markets the Maryland World Class Manufacturing Consortium 2

3. Companies That Have Deployed Market Value Solutions Strategically & Operationally 3

4. Topics We’ll CoverIn This Session Objectives of the Global BPE Survey Quick overview of how we did it Who participated Key success factors A “Best Practice” model 4

5. Global BPE SurveyObjectives How companies are using the Voice of the Customer (VOC) to identify improvement priorities How companies are measuring the success of their Process Excellence initiatives, and What types of new approaches are working particularly well.

6. Methodology Personalized email invitations IQPC and MVS Links to web-based survey Newsletter invitations Six Sigma and Process Excellence IQ Drawing: 5 tickets to 11th Annual Process Excellence Summit and Awards London in April Executive summary, if requested

7. Survey Participation (1) 835 Responses Representing a variety of BPE Roles Across companies of all sizes

8. Survey Participation (2) Representing a variety of industries

9. Survey Participation (3) From many different countries

10. Types of BPE Deployments Lean and/or Six Sigma Business Process Management Balanced Scorecard Business Process Re-engineering Total Quality Management Design for Six Sigma Six Sigma Marketing Hoshin Planning 77% 74% 67% 64% 52% 42% 31% 22%

11. Whose “Voice” Determines Improvement Priorities VOB:Voice of the Business – internal business stakeholders such as IT, accounting, and other internal personnel from internal departments, as well as dealers, brokers, and agents VOC:Voice of the externalCustomer, or end user, who buys your products or services VOM:Voice of the Market, which includes not only your current customers, but also the customers who buy your competitor’s products or services

12. Impact of “Voices”on Program Success

13. Linkage of BPE Projectsto Competitive Business Strategies

14. Impact of Strategic Linkageon Program Success

15. Correspondence Between Strategic Linkages and Influential “Voices”

16. Primary Purposeof BPE Initiatives

17. Correspondence BetweenBPE Purpose andInfluential “Voices”

18. The Evolution of Six Sigma And Business Process Excellence

19. 6s – Gen 1 Defect Reduction Mid- ’80s Motorola Customer Satisfaction 19 Defect reduction is a good thing!

20. 6s – Gen 2 Cost cutting Mid -90s GE Internal Focus 20 But are you cutting the right costs?

21. 6s – Gen 3 Shift from emphasis on cost cutting to revenue generation and market share Requires a focus on value creation and delivery Value from the perspective of targeted customer groups Value from the perspective of channels of distribution Requires shifting from an internal focus to an external focus This is the role and expertise of marketing Requires: Modifying the DMAIC process of Six Sigma Adding PROCESS to the traditional 4 Ps of marketing 21

23. Justifiable price relative to product performance

24. Delivering best value in the industry

25. Providing best productivity for the moneyValue = Customer Loyalty Market Share Customer Acquisition Customer Value Requires a shift in measurement from Voice of the Customer (VOC) to Voice of the Market (VOM) 22

27. Voice of the Market Tractors/Hobby Farmers Acquisition Market Share Retention .229 Dealer Service Machine Operation .189 Quality .518 Machine Productivity .149 Trial & Training .147 Value Image .101 Dealer Sales .139 Order & Delivery .074 Machine Reliability .073 .381 Price Critical-to-Quality Factors (CTQs)

28. Competitive Value MatrixHobby Farmers High Outstanding Value Expensive Relationship Competitor 1 Quality Evaluation Competitor 4 Competitor 2 Competitor 3 New Holland Value Performance Gap What’s the basis of the gap? Discount Relationship Poor Value Low High Low Price Evaluation

29. Competitive Performance GapsQuality, CTQs, Price & Image The numbers are mean performance scores (averages) on each of the CTQs and value drivers. They represent the average ratings across the survey questions within each “bucket.” Advantages and disadvantages are defined in terms of statistical tests of significance

30. CTQ Gaps & Their Importance Differences between New Holland and the targeted competitor (Comp 1 = John Deere) Importance weights from the value model CTQ importance times the competitive performance gaps

31. Value Performance Criteria (VPCs) Provide Actionability VPC Importance based on correlations with the CTQ Gaps & Gap Importance calculated as before

32. The Cause & Effect MatrixTargeting Processes: Linking X’s to Y’s These are the VPCs, with Gap Importance highlighted Targeted Processes Individual processes within the repair (service) value stream. Evaluations of the process (X) impact on the on the relevant VPCs (Y). 0 = No impact 3 = Low impact 6 = Medium impact 9 = High impact

33. Value Stream Mapping:Targeted Improvements Tractor Transmission Repair Value Stream Analysis based on Market Opportunity #5 Service: Repair Processes Scheduling Diagnosis Critical Areas of Focus Repair ©2008 Market Value Solutions

34. Six Sigma MarketingThe Value-Strategy-Process Linkage Strategic Focus VALUE Develop Value Model Identify & Prioritize Quality Drivers Competitive Value Matrix Competitive Strengths & Weaknesses Market Value Opportunities STRATEGY Action Programs Budget Business Performance Objectives Product/Market Strategy (Lead, Challenge…) Marketing Mix Objectives (5 Ps) PROCESS Calculate Value Gaps Identify Key Value Stream Cause & Effect Matrix Value Stream Mapping Prioritize Improvement Opportunities Lean or Six Sigma Initiatives 33

35. For More information Executive summary How to compare your company to your industry 34 Oksana Shubchinskaya Senior Conference Director IQPC 535 5th Ave, 8th Floor New York, NY 10017 P: 212-885-2672 Oksana.Shubchinskaya@iqpc.com Genna Weiss Senior Editor, Six Sigma IQ Anchor House 15-19 Britten Street London SW3 3QL +44 (0) 207 368 9822 Genna.Weiss@sixsigmaiq.com www.sixsigmaiq.com Reg Goeke President & Managing Director Market Value Solutions 281 Homan Avenue State College, PA 16801 P: 814-234-2486 Reg@MarketValueSolutions.com www.MarketValueSolutions.com