Sunday, December 26, 2010

Winning ( Chapter 15 ) Six Sigma - Andrew Mason, the founder of Groupon

Six sigma is quality improvement program for large enterprise. The program includes the operational efficiency, raising its productivity, lowering its cost and improves product design process. Moreover, the program can speed up the delivery time to the end users and builds better leaders. In this chapter, Jack Welch doesn’t explain the six sigma in detail, he primary focuses on two applications.

The first application is designing the process into simple and repetitive activities from a complex situation. It is the internal process of elimination the unpleasant surprises and broken promises. The top levels employees should discover the root causes of inconsistencies. Spend time on studying and make the process from complex into simple production line. Then pass the skills to the lower level employees. Thus the whole process will be manageable.

The second application is making the decision to determinate the right actions in the process. The senior level employees should monitoring the external process every moment and study the update statistical analysis. They also involve sophisticated level of training. Since the market trends, customer’s behavior and the economic factors are changing every moment. They need to update the information everyday in order to meet the requirement from the clients.

Andrew Mason, one of the 40 under 40 CEO who defines a new concept of purchase. He is the founder of Groupon which is group purchasing method on web 2.0. Groupon is a deal of the day web site that is localized to magjor geographic markets in US, CA, Brazil, France and UK. The first city is Chicago in Nov 2008. According to the record of October 2010, it serves more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users.

This new concept of purchasing online is to generate a certain amount of buyers to purchase the same service or items at the same period of time in the same location. Buyers can purchase the service or items in a discount value. The sellers can use this selling method as a new kind of promotion in online platform. This can elminate the waste of time for every single buyer and sellers and speed up the delivery in the whole process. The senior mangers in Groupon is applying the second application. They study the bussiness with outstanding reviews. They find out the major buyers are young, educated, female customers. As a result, Groupon focuses on the health, fitness and beauty markets in other countries. Moreover, they use social marketing sites such as Facebook to promote the idea.

Jack Welchs defines six sigma in a simple way. He suggests do not use six sigma to implement to your industry or business. He recommends the CEO should understand the two applications and design a new working process in your industry. 60% of time and effort is used on reviews and designing the new working process. The rest of the 40% will focus on elemination the variation. He also indicates that setting the correct concept is the key factor in the designing process. The right concept is to gain the huge part of your customers sticky is meeting or exceeding their expection. Groupon is the best example of creating win win situation in online business.

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