If you have to implement a continuous improvement methodology in your organization, how will you deal with resistance to change from various stakeholders?

First of all, I think before we consider the possible solutions, we have to understand what are stakeholders and then the possible reasons why they resistance to change.

What Is A Stakeholder? 

A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers, suppliers, communities, and governments(Fernando, 2022). Stakeholders can be internal(employment, ownership, or investment)or external(suppliers, creditors, and public groups).

Resistance To Change from Various Stakeholders

No matter the size or scale, people resist change. Overcoming this resistance to change is an inevitable challenge. A common problem that arises for companies with multiple stakeholders is that the various stakeholder interests may not align(Fernando, 2022), or even in direct conflict such as labor costs and maximizing profits. If a company may seek to keep these costs under tight control, it is likely to upset other stakeholders such as its employees. I think leadership is one of the vital elements of any solution to deal with these kinds of resistance. If leaders better understand resistance and successfully motivate those opposition to support for change, it would be a huge competitive advantage.

In addition, I have to identify the company’s stakeholder groups first. Then, I reckon that creating a value proposition for each stakeholder group targeting how you will create value for them may be helpful. This value creation for each stakeholder group needs to be balanced by what the business will gain in return. For example, switching a fossil fuel automaker to an electric car maker inherently feeds the fear of a possible massive layoff. However, we can provide training for employees to upgrade their skills and keep them aligned with the company. 

Usually, implementing a change inevitably means some trade-offs among the stakeholder groups, especially a big one. Leaders have to understand the levels of influence of the stakeholders. Some stakeholders may interact directly with the company, some were not. I think for companies to build a successful stakeholder management strategy to figure out what each stakeholder needs and how the leaders can best communicate with them.

Reference

Dolfing, H. (2020, January 3). How to deal with stakeholders resistance to change. Henrico Dolfing - Interim Management and Project Recovery. Retrieved October 2, 2022, from https://www.henricodolfing.com/2020/01/deal-with-stakeholders-resistance-to-change.html 

Fernando, J. (2022, September 9). What are stakeholders: Definition, types, and examples. Investopedia. Retrieved October 2, 2022, from https://www.investopedia.com/terms/s/stakeholder.asp 

(Fernando, 2022)

Reflection on the article “Why You Can Safely Ignore Six Sigma” in Fortune Magazine, Jan. 22, 2001(http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/22/295545/index.htm). Why You Can Safely Ignore Six Sigma The management fad gets raves from Jack Welch, but it hasn't boosted the stocks of other devotees.

 Reflection on the article “Why You Can Safely Ignore Six Sigma” in Fortune Magazine, Jan. 22, 2001(http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/22/295545/index.htm). Why You Can Safely Ignore Six Sigma The management fad gets raves from Jack Welch, but it hasn't boosted the stocks of other devotees.

Let's read the original text first:

A few years back Whirlpool, the appliance maker that had been reliably pumping out dishwashers and dryers for decades, decided to tackle quality head-on. Executives at the company implemented their proprietary version of the highly touted principles of Six Sigma, a quality-assurance strategy that has come into vogue in the past several years. Companies like Motorola and General Electric swear by Six Sigma. But as an investor, can you use it as a litmus test of whether a stock is going to appreciate? Probably not. 

Six Sigma, and a couple of similar-looking knockoffs, are nothing short of a full-on corporate fad, the latest in a long line of must-have efficiency crazes that perpetually spread through corporate America. Fueled in large part by GE CEO Jack Welch--who frequently talks it up to the media--companies today are constantly pumping out press releases hyping their own Six Sigma initiatives. What's more, consultancies have sprung up across the country to help CEOs muster the troops, and the term itself has turned into the financial equivalent of a Good Housekeeping seal of approval. (Incidentally, the name comes from statistics, where the Greek letter sigma is used to measure how far something deviates from perfection. Six Sigma means a company tries to make error-free products 99.9997% of the time--a minuscule 3.4 errors per million opportunities.) 

In the right hands, admittedly, it works. Welch wrote in GE's 1999 annual report that its initiatives had saved the company more than $2 billion in 1999, just three years after implementing Six Sigma. And there's certainly nothing wrong with a company's trying to improve quality and reduce errors. Whirlpool wanted to make itself more efficient by building its products right the first time rather than spending cash later to fix malfunctioning dryer doors and appease disgruntled consumers. 

But like a lot of management trends, certain aspects of Six Sigma can get downright silly. The corporate efficiency experts who implement it are coined "black belts"--martial artists who get deployed to chop, kick, and block until errors are virtually nonexistent. Raves Mikel Harry, one of the founders of Six Sigma at Motorola in the 1980s and now head of the Six Sigma Academy, a consulting firm that helps companies train their warriors: "A black belt can save $300,000 to $400,000 per project and return that to the company, and they can do four to six projects a year. On the conservative side, they can save the company $1 million to $1.5 million per black belt!" 

So what happened at Whirlpool? Though a company spokesman says the program has resulted in "substantial" efficiency gains, analysts aren't quite as impressed. "You'd have to get out an electron microscope" to see any real impact, says Nicholas Heymann, an analyst who follows the company for Prudential. And incidentally, the stock is down 12% over the past two years. So much for the martial arts. "It can be wildly successful," says David Fitzpatrick, the worldwide leader of Deloitte Consulting's Lean Enterprise Practice, "but I would say fewer than 10% of companies are doing it to the point where it's going to significantly affect the balance sheet and the share price in any meaningful period." 

Why? First are the obvious pitfalls: a CEO who isn't committed, an inability to motivate employees, or a company that allows its initiative to trail off before there's been any progress. But beyond that, Six Sigma can be mind-numbingly vague. If you're manufacturing pills, defects are easy to track, but what about at a customer service center? Exactly what constitutes an "error" or "mistake"? You guessed it--it depends on which black belt is counting. 

Then there's the latecomer issue raised by some analysts. "Six Sigma's ability to incrementally improve performance and shareholder value is highly correlated to how early a company has implemented it," says Heymann. Bob Hendricks, the CEO of international consulting concern Holt Value Associates, also ventures that the competition is a factor: "If Whirlpool implements it, and then Maytag does too, who wins? The consumers--those savings will mostly get passed along to them." 

But the main reason Six Sigma is no guarantee of stock market success is also the most obvious one: Defects don't matter much if you're making a product no one wants to buy. As one consultant notes, referring to Motorola's disastrous foray into satellite-linked mobile phones: "Remember, Iridium came out of a company that's famous for Six Sigma." 

So while dozens of companies may be saving money with these error-reduction programs, a lot of others are spending valuable time and resources on something that may never have any tangible payoff for shareholders. Even the concept's biggest booster can't argue with that. Says Mikel Harry: "I could genetically engineer a Six Sigma goat, but if a rodeo is a marketplace, people are still going to buy a Four Sigma horse."

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Now, let's discuss its criticism of the Six Sigma approach. Do you agree with its criticism of the Six Sigma approach? Before we discuss them, we have to understand what is Six Sigma. 

What Is Six Sigma?

Six Sigma is a statistics and data analysis process for analyzing and reducing errors or defects in management or manufacturing. It is a method that offers organizations tools to improve their capabilities in managing their businesses such as reducing defect rates, improving employee morale, and improving the quality of products or services(Kumar, 2022). Six Sigma methodology is based on the concept of six standard deviations from the product or process goal, and it's the average distribution of variations with a specific data set of your process(Simplilearn, 2021). Six Sigma can help businesses reduce defects by effectively solving problems. In addition, Six Sigma develops a sense of ownership and accountability for employees and increases their effectiveness at delivering results for any improvement project they are involved in.

How Does The Six Sigma Work?

Based on the DMAIC concept, there are five procedures.

i. Define: Define the problem and what is required to satisfy your customer. 

ii. Measure: Map the current process to collect data.

iii. Analyze: Investigate and identify what causes the problem.

iv. Improve: Implement a fix that will solve the problem.

v. Control: Sustain the improved results.

Now, let's look at each of the criticism of the Six Sigma approach. 

Do the results of Six Sigma have an impact on the financial statements, and therefore on stock value?

Financial statements can have a drastic effect on the stock price of a company. Many investors look at the financial statements when making investment decisions. If information is presented in a financial statement that is better or worse than expected, it can send the stock price up or down. Investors often use financial ratios based on information from financial statements to make assumptions. The income statement and statement of cash flows are two crucial parts of the financial statements. When Six Sigma reduces the number of defective products manufactured or services provided, resulting in increased revenue and greater customer satisfaction, it also means higher income and increasing cash flows.

Is Six Sigma only valuable to early adopters?

I think logically if Whirlpool succeeds with Six Sigma and has a cost advantage, latecomers may have to implement the Six Sigma or better methods just to keep up. For example, what do you think when Ford, Toyota, or Volkswagen(the latecomers) are chasing after Tesla? Of course, consumers can benefit from a competitive market compared with a monopoly market. However, does it means that Tesla start to lose its advantages? Six Sigma goes beyond defect reduction to emphasize business process improvement in general, which includes cost reduction and increased customer satisfaction. 

Does Six Sigma apply to the service industry, since it focuses on defects, which are difficult to identify in services?

Six Sigma is only a manufacturing concept? This is incorrect. Service organizations can also incur the cost of poor quality and that can be a significant amount of the overall budget. In the manufacturing process, the actual product is going through the process and the customer sees it only at the end. In contrast in the service process, it is the customer who is going through the process(Wanniarachchi, 2020). Consider a hotel service process. Customers book a stay and interact with the waiter throughout the sub-processes. When the room is not clean, it will significantly affect customer satisfaction. Therefore, the hotel has to define the problem, map the current process to collect data, investigate what causes the problem(what causes the room unkempt?), and implement a fix that ensures the rooms should be always clean and sustain improved results.

Does Six Sigma help products find a market?

In my opinion, Six Sigma is a fact-based, data-driven disciplined approach to growing market share by providing targeted markets with superior value. Therefore, I think Six Sigma is not so good at "FIND" customers in a market. Instead, it is good at "ATTRACT" the customers in a market. However, attracting customers can also mean discovering a new market.

Leadership

Finally, I would like to mention that leadership is one of the vital elements to successfully implementing Six Sigma or any other methods. A leader who isn't committed and inability to motivate employees is probably the major cause of defects rather than Six Sigma itself.

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Reference

Arthur, L. (2016, October 26). The impact of financial statements. Small Business - Chron.com. Retrieved October 1, 2022, from https://smallbusiness.chron.com/impact-financial-statements-23794.html 

Kumar, P. (2022, September 7). What is Six sigma: Everything you need to know about it [updated]. Simplilearn.com. Retrieved October 1, 2022, from https://www.simplilearn.com/what-is-six-sigma-a-complete-overview-article 

Simplilearn. (2021, October 28). Your complete guide to six sigma methodology. Simplilearn.com. Retrieved October 1, 2022, from https://www.simplilearn.com/six-sigma-methodology-article 

Six sigma in service sector a comprehensive review. Six Sigma In Service Sector A Comprehensive Review. (n.d.). Retrieved October 1, 2022, from https://www.greycampus.com/blog/quality-management/six-sigma-in-service-sector-a-comprehensive-review 

Thomas Pyzdek and Six Sigma--Quality Digest columnist. (n.d.). Retrieved October 1, 2022, from https://www.qualitydigest.com/april01/html/sixsigma.html 

Wanniarachchi, P. (2020, June 14). Can we apply lean six sigma in service industry? LinkedIn. Retrieved October 1, 2022, from https://www.linkedin.com/pulse/can-we-apply-lean-six-sigma-service-industry-pradeesh-wanniarachchi-