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Six Sigma Methodology
Copyright 2015, Faulkner Information Services. All Rights Reserved.
Publication Date: 1510
Report Type: TUTORIAL
Sigma is a program, a methodology, and an ideal. In any of these three
meanings, it offers the enterprise the opportunity to improve product
quality at often significant financial savings. Its implementation
requires major management buy-in and initial investment, but the
results can more than justify the cost.
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"We believed then and we are convinced
today … that there is an ‘infinite capacity to improve everything’ – but there was no methodology or disciple attached to that belief.
There is now. It’s Six Sigma quality, along with a culture of learning, sharing, and unending excitement."
– former GE CEO Jack Welch1
Six Sigma began in the 1980s as a statistical measure of quality for
Quality Management Tutorial
Six Sigma now has three meanings. First, it can represent a quality level of fewer than 3.4 defects per
Second, Six Sigma can represent a systematic, data-driven approach and
methodology for designing, evaluating, or improving any business process. The
methodology for process improvement is called DMAIC, for the five steps – Define,
Measure, Analyze, Improve, and Control – that help a business align its processes to achieve customer requirements, minimize variation, and achieve
rapid and sustainable business process improvement. The methodology for new
process or product design is called DFSS, Design for Six Sigma, or DMADV
for the five steps: Define, Measure, Analyze, Design, and Verify.
Third, Six Sigma can represent an integrated, top-down management system for
executing business strategy and prioritizing resources. Designed to ensure that
application of the above metrics and methodology is directly linked to
enterprise strategy, it integrates development of strategic objectives and
measurement with project prioritization and governance in addition to performance
Six Sigma is executed within an enterprise by a hierarchy of full- and
part-time specialists with various levels of instructional and hands-on
training: Executive Leaders, Project Champions, Master Black Belts, Black Belts,
Green Belts, and Yellow Belts. Although it was first applied in manufacturing processes, Six
Sigma has since been applied to diverse functions in diverse industries
including transactional, support, and service functions such as supply chain
management, sales and marketing, shipping and receiving, document control, and
research and development. Software packages are available to
help enterprises with Six Sigma-related data analysis, project management,
resource management, and reporting. High start-up costs generally limit
implementation to large enterprises (with more than 500 employees), although
smaller enterprises may implement a more limited version of Six Sigma.
Enterprises that implement Six Sigma report numerous benefits, including fewer
defects, improved cycle times, higher customer focus, increased customer
satisfaction, lower costs, higher employee focus, better (data-driven)
decision-making, and more effective management vision. Motorola, the founder of
Six Sigma, reports over $17 billion USD in Six Sigma-related savings from 1986 to
2004. After breaking even the first year, most enterprises can expect to save from
1.2 to 4.5 percent of revenue annually. But these gains can be expected only if
an enterprise first makes significant investments in training, enterprise infrastructure, and cultural evolution.
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Six Sigma was developed at Motorola in the 1980s as a quantitative,
statistical measure of quality to help identify and prevent defects in
manufacturing processes. It offered a new method for standardizing how defects
are counted as well as a new quality goal: near perfection. Since then, Six
Sigma has grown to represent: (1) this rigorous measure of quality; (2) an
overall business improvement methodology; or (3) a full management system.
As a metric, Six Sigma is a measure of quality in terms of defects per
million opportunities (earlier metrics measured defects per thousand
opportunities). Whatever doesn’t fall between the lower and upper tolerance
limits of customer specifications is a defect. Each standard deviation above and
below the mean is a sigma. The goal is for the process to reach the quality
level where there are six sigmas (six standard deviations) between the mean and
the nearest specification limit, which means that all but 3.4 out of the million
opportunities fall inside the specification limits. Thus, Six Sigma represents
the nearly perfect quality level of fewer than 3.4 defects per million
opportunities, or 99.99966 percent quality.
Six Sigma also refers to a systematic, data-driven approach and methodology
for evaluating and improving any business process – manufacturing or
transactional, product or service – through process improvement and variation
reduction. Six Sigma helps a business focus on understanding and managing
customer requirements; aligning business processes to achieve those
requirements; minimizing variation in those processes via rigorous data
analysis; and achieving rapid and sustainable business process improvement. The
methodology is designed to help an enterprise capture the customer’s voice, then
maintain a focus on the end result to deliver consistent, reliable output to the
customer. Training and certification are an important part of the Six Sigma
methodology: Six Sigma aims at equipping and empowering employees to make decisions and
improve their enterprise. While the intention is still to achieve near-perfection in
every product, process, and transaction, Six Sigma methodology in this sense is more a process
than a goal.
Six Sigma has been expanded by Motorola into a
top-down management system for executing business strategy and prioritizing
resources. The Six Sigma management system is designed to ensure that the above
metrics and methodology are applied to improvement opportunities that are directly
linked to enterprise strategy. It integrates development of strategic
objectives and measurement with project prioritization and governance, and performance
management. Some enterprises, notably General Electric, have made Six
Sigma certification an important requirement for advancement.
While some enterprise planners have flirted with other
quality programs, Six Sigma remains relevant today, almost three decades
after its initial development. As reported by analyst Molly
Koernke, "Global Productivity Solutions (GPS) launched a survey in 2013 to address the
question, ‘is six sigma dead?’ According to the results, only 5
respondents discontinued Six Sigma for a different alternative. 50 percent of
survey respondents said they are maintaining a high commitment to Six Sigma. 73 percent of respondents stated that their previous Six
Sigma deployment was a success."2
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Six Sigma uses separate methodologies for process improvement and for process
and product design. The Six Sigma methodology for improving an existing process
is called DMAIC, an acronym for the five steps of process improvement: Define,
Measure, Analyze, Improve, and Control.
Define the opportunity for improvement: the business problem to be
solved or the customer requirement to be met.
- Measure the current performance of the process, and compare it against
the desired state.
- Analyze and determine the root cause or causes of whatever
defects or variations there are, and prioritize among the opportunities for
- Improve the process by eliminating defects.
- Control future process performance and the long-term sustainability of
improvements by developing, documenting, and implementing an ongoing monitoring
Process and Product Design
Using Six Sigma methodology to develop a new process or product, or to make
large-scale changes in an existing process, is known as Design for Six Sigma (DFSS).
DFSS is a methodology for extracting the voice of the customer and converting it
into quantitative design requirements. This forces product designers to meet
real customer requirements and stimulates top-line growth, not just bottom-line
savings. Numerous enterprises have defined different sequences of steps for DFSS.
The most popular version of DFSS uses five steps: Define, Measure, Analyze,
Design, and Verify (DMADV).
Define project goals and customer requirements and deliverables.
Measure and determine customer needs and specifications.
Analyze process options to meet customer needs.
Design the process in detail to meet customer needs.
Verify design performance and functionality (ability to meet
Some versions of DFSS add a sixth step – optimize – before the verify step,
so the acronym is DMADOV. Other versions use Identify, Design, Optimize, and Validate (IDOV), or Define, Measure, Explore, Develop,
and Implement (DMEDI).
One interesting innovation in Six Sigma is Motorola’s integrated Six Sigma
management system, known as the New Six Sigma, or second-generation Six Sigma.
It is also referred to by the acronym AMAG for its four leadership principles:
Align, Mobilize, Accelerate, and Govern. AMAG is designed to enhance the
effectiveness of Six Sigma outside of manufacturing and engineering
environments, and to yield faster and more sustainable results. Like the Six
Sigma methodologies, it provides a framework for understanding customer
requirements, continuously driving process improvement, and using statistical
analysis to drive fact-based decision-making. It goes beyond DMAIC and DFSS,
however, by offering a broader, integrated approach for executing full business
strategies. AMAG is designed to help an enterprise simultaneously achieve short-term
financial gains through fast business improvement, and build future capability
in key talent and critical processes. Note that process refers not just
to classic product and service domains, but also to goals such as market share
improvements, better cash flow, and better HR processes. The four leadership
principles of AMAG are summarized below.
Align executives with the right objectives and targets. Link business
strategy and core business processes with critical improvement efforts that
address customer requirements. Create a balanced scorecard of strategic
goals, metrics, and initiatives to identify the improvement points with the
greatest benefit to the bottom line.
Mobilize and focus teams by providing clear charters and success criteria,
and rigorous reviews. Organize team efforts and focus projects on the
Accelerate improvement in business results by implementing shorter
deadlines, rigorous reviews, and an action-learning methodology (which combines
structured education with real-time project work and coaching.) Take
advantage of employees’ motivation to act before it perishes.
Govern efforts with visible sponsorship by top management to ensure
sustained improvements and bottom-line results that drive business goal
achievement. The need for management doesn’t stop after improvement
opportunities are selected and teams are assigned. Continue rigorous,
structured review of projects; knowledge sharing; proactive communication;
and management of scorecard metrics.
Six Sigma Hierarchy
Six Sigma is executed within an
enterprise by a hierarchy of full- and
part-time specialists with various levels of training and certification. Each level of certification generally involves passing a written
proficiency exam, plus displaying competency in a hands-on environment by
completing one or more projects. Certification requirements have not yet been
standardized. There is no accepted definition of competency at a given level,
and different certification programs require different numbers of projects for
certification at each level.
- Senior management at the CEO, CIO, CFO level.
- Sets, communicates, and drives overall business objectives. Incorporates
Six Sigma objectives into operational plans. Establishes enterprise goals and
business targets (e.g. percent of employees trained or percent reduction in
defects by target date). Plans and spearheads Six Sigma program rollout.
Establishes compensation/reward structure to promote commitment.
- Executive Leaders
may also receive Black Belt training.
Project Champion (Sponsor):
- Senior-level executive/manager (reporting to senior management). There is
usually one project champion per business unit, manufacturing site, or
service facility. In a large enterprise, functional or process managers
(e.g. of human resources, call center, etc.) may also serve as project
- Champions the cause within the enterprise. Translates senior management’s
strategic directions into tactical objectives and actions (with Master Black
Belt and Black Belt). Selects Six Sigma projects (with Master Black Belt).
Has day-to-day responsibility for the process being improved, ensures the
team has the necessary resources, and is accountable for the project’s
- Uses advanced statistical tools and Six Sigma concepts.
- Project Champions may also
receive Black Belt training.
Master Black Belt (Quality Leader):
- Has demonstrated experience.
- Works full-time overseeing a Six Sigma project, including the most complex
projects. Trains, coaches, and monitors Black Belts and Green Belts. Works
with the Project Champion to develop the enterprise training program and to
pick projects and people. Reviews projects at milestones, tracks cost
savings, and ensures appropriate use of tools and methodologies.
- Must be expert in statistical techniques and Six Sigma methodology, with
leadership, communication, teaching, and mentoring skills.
Black Belt (Project Leader, Technical Leader):
Agent of change who works full-time implementing and executing a Six Sigma
project. Creates, facilitates, trains, and leads teams. Maintains time lines
and budget. Serves as central point of contact for specific process
- Uses management, communication, presentation, and training skills. Must be
expert skilled in application of rigorous statistical tools and
methodologies to drive business process improvement and significantly
improve bottom line.
Green Belt (Employee):
- Team member under Black Belt.
- Works 25 percent of time executing Six Sigma project and assisting Black
Belt in collecting and analyzing data. May be project leader on small,
- Uses basic statistical tools and process knowledge.
- Asks Black
Belts for help on questions involving complex tools and statistics.
Yellow Belts (Administrators, Operations Personnel, and
other Six Sigma Support Personnel):
- Apply some elements of the Six
Sigma methodology as they help Green Belts meet project goals and
Six Sigma Improves Enterprise
Apart from its quality improvement benefits – which
are considerable – Six Sigma has a particular pubic relations appeal.
Enterprises can leverage their investment in Six Sigma to improve their
image and reputation as quality leaders – a vital component in improving
enterprise business prospects.
From a personnel perspective, Six Sigma experience – and
especially Sig Sigma certification – look good on a resume, thus
encouraging employees to enlist in Six Sigma projects. On the flip
side, Six Sigma specialists are highly mobile, and enterprises that invest
in Six Sigma education may find it difficult to retain those individuals
Six Sigma Has Competition
While popular, Six Sigma is only one of many
highly-regarded quality management disciplines, including:
- Total Quality Management
(TQM) – TQM is a strategic approach
to management aimed at embedding quality awareness into all enterprise
processes. TQM evolved during the mid-1980s into the first generation of Six Sigma at Motorola.
- Business Process Reengineering
(BPR) – Introduced in the early 90s in Michael Hammer and James Champy’s
Reengineering the Corporation, BPR was welcomed by an audience disenchanted with TQM, and ready to
improve quality by streamlining processes, eliminating unnecessary and redundant steps.
Manufacturing (JIT) – Pioneered by Ford Motor Company, JIT is an
inventory strategy that strives to improve an enterprise’s return on
investment by reducing in-process inventory and associated carrying costs.
- Lean Six Sigma – Lean Six Sigma is a process
improvement methodology that merges tools from both Lean Manufacturing and
Six Sigma. Lean manufacturing focuses on speed; traditional Six Sigma
focuses on quality. By combining the two, the result is better
quality faster. According to Accenture, Lean Six Sigma drives
shareholder value by spurring operating income growth (by addressing
efficiency) and revenue growth (by attending to what matters to customers).3
Politics & Lean Six Sigma
Former Speaker of the House and Republican presidential hopeful Newt
Gingrich promoted Lean Six Sigma as a means by which to reform the
US government. Other prominent Republicans, as well as the Obama
Administration, have expressed a similar sentiment.
to a survey conducted by the American Society
for Quality, the very structure of the US government would inhibit
success. Major obstacles include:
- An environment faced with conflicting strategies, goals, and
- Creating a sense of urgency to deploy a comprehensive
improvement methodology across all government agencies.
- The personnel management model currently used by many government
agencies, i.e., civil service.
- A lack of familiarity with Lean Six Sigma and how it can benefit
- Ongoing political partisanship.4
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Six Sigma began in manufacturing industries, with a focus on cost reduction
and productivity improvement. It then spread to the chemical and continuous
process industries, still with a focus on production. As it has gained
popularity, it has been adopted in diverse industries, including financial
services, telecommunications, information technology, healthcare, education, and
government. Enterprises that have implemented Six Sigma include Black &
Decker, Dupont, Federal Express, GM, IBM, Johnson & Johnson, Kodak, NBC,
Polaroid, Sony, Texas Instruments, and Toshiba.
It is likely that this spread
into other industries will continue. However, the rigor of the Six
Sigma process to some extent limits its growth, since it requires
significant capital investment (particularly for startup), dedicated
staff, and a major learning curve. For enterprises with fewer than
approximately 500 employees, these factors can significantly
reduce the possibilities for implementation.
Motorola first applied Six Sigma in its manufacturing processes, but
eventually included transactional, support, and service functions including
supply chain management and sales and marketing. This is true at many
that use Six Sigma. A Quality Digest survey found that 30 to 50 percent
of respondents use Six Sigma for non-manufacturing functions such as plant
operations; engineering; test/inspection; administration; shipping and
receiving; and document control.
The use of Six Sigma in research and development is somewhat
controversial, since creative operations must be allowed to fail as
well as to succeed, and failure definitely is not a part of the Six
Sigma approach. It is likely that Six Sigma can best be used in the
later stages of research and development, when the creative team has
passed the project on to implementers.
Six Sigma has also been applied in areas such as product design; customer
service; transaction processing; purchasing; and pollution prevention. It is
likely that this spread into non-manufacturing functions will continue.
Several vendors now offer software that helps enterprises
with data analysis, project management, resource management, and
reporting for Six Sigma projects and implementations. For example,
Minitab offers tools for Six Sigma and other quality improvement projects that provides data
analysis, graphical data presentations, and simple to advanced statistical
Size of Enterprise
Because the training and other start-up costs for Six Sigma are fairly high,
it has generally been implemented by large corporations with large consulting
budgets. Smaller enterprises would also have trouble with the expense of assigning
one or more employees to work full-time just on Six Sigma. In a Quality Digest
survey of enterprises using Six Sigma, only 16 percent of respondents were in
enterprises with fewer than 500 employees, and in two thirds of those cases, the
“small enterprise" was really part of a larger enterprise.
Many consultants, however, have developed training materials or off-site
courses to enable smaller enterprises to implement Six Sigma, too. Six Sigma software can also aid a smaller
enterprise by reducing the burden of processing Six Sigma analysis. Even so, it is
unlikely that the full Six Sigma program with a full-time Six Sigma practitioner
will be practical for most smaller enterprises. It will probably be necessary for
smaller enterprises to adapt the program to fit their situations, so that
employees could be trained and use Six Sigma skills as part of their existing
jobs, instead of the enterprise dedicating a full-time Six Sigma employee.
About Four or Five Sigma Instead?
Voltaire once observed that: "The perfect is the enemy of the
good." "Not all [enterprises] need to achieve [or have the resources
to achieve] six sigmas. Four or five sigmas might be enough, and six can
be something to strive for over time."5 The inability to
achieve "near-perfection" (six sigmas) should not be an excuse for
failing to pursue the "good’ (four or five sigmas).
Higher Education: The Last Frontier
While Six Sigma has found eager adherents among the corporate
class, those involved in higher education have been strangely resistant to
quality movements. As analyst Brandon Busteed observes, "Strategies such as Six Sigma and total
quality management took corporate America by storm in the 1990s, serving
as tools and techniques for continuous improvement. Yet higher education remained
conspicuously absent from the quality movement, even as industries
around the world widely adopted these strategies."
This situation may change, however, as a Gallup-Purdue
study revealed six critical ingredients of the college experience that have a
profound relationship to long-term success in work and well-being. Three
elements pertain to feeling supported at college, and three apply to
experiential and deep learning.
"College graduates who felt supported during college (professors cared, professors made
them excited about learning, and they had a mentor) doubled their
odds of being engaged at work. They were also three times as likely
to be thriving in all areas of well-being as those who didn’t feel
"College graduates who engaged in
experiential and deep learning (worked on a
long-term project, had an internship, and were extremely active in
extracurricular activities and organizations) during their college
experience doubled their odds of being engaged at work. They also
were slightly more likely to be thriving in all areas of well-being
than were students who did not have these experiences."6
No business process methodology receives universal acclaim. A number of high-profile figures have cast doubt on the utility of Six
Sigma, complaining that rigorous attention to process – which
Six Sigma promotes – can stifle innovation and creativity. While Six Sigma
may be useful in improving production operations, it can frustrate product and
According to Geoff Nicholson, a 3M ambassador, former vice
president for international technical operations, and "father" of the Post-It note initiative:
"The Six Sigma process killed innovation at 3M. Initially what would
happen in 3M with Six Sigma people, they would say they need a five-year
business plan for [a new idea]." Nicholson’s reaction: "Come on, we don’t know yet because we
don’t know how it works, we don’t know how many customers [will take it up], we
haven’t taken it out to the customer yet."7
Musk, founder of Space-X and Tesla Motors, is generally skeptical of
process-oriented methodologies, which would necessarily include Six Sigma. "Now I have to tell you something, and I mean
this in the best and most inoffensive way possible: I don’t believe in process. In fact, when I interview a potential employee and he or she says that
about the process,’ I see that as a bad sign … The problem is that at a lot of
big companies, process becomes a substitute for thinking. You’re encouraged to
behave like a little gear in a complex machine. Frankly, it allows you to keep
people who aren’t that smart, who aren’t that creative."8
Analyst Andrew Smart offers a more pointed
critique: "If you want a sure fire way
to reduce morale, induce widespread cynicism, stop innovating, and turn people
into mindless bureaucrats why not give Six Sigma or any related process
improvement fad a try."9
Finally, analyst Susan Adams declares that
variation, which Six Sigma discourages, is actually essential for innovation and
growth. "Eliminating variation in a large
organization can be a laudable goal, leading to profit and
efficiency. Yet variation is also not an obstacle to steadfastly
avoid; it is a key to unlocking your breakthrough future. Success
requires embracing the alternative paths that markets randomly
present to us in order to find your organization’s own unique place
to grow and thrive."10
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Businesses that implement Six Sigma report numerous benefits, including fewer
defects, improved cycle time, higher customer focus, increased customer
satisfaction, lower costs, higher employee focus, better (data-driven)
decision-making, and a more effective management vision. In short, processes run
better, faster, and at lower cost.
Six Sigma success stories are famous, although they must be carefully
evaluated to make sure that similar metrics are being used. Motorola
has documented over $17
billion in Six Sigma-related savings from 1986 to 2004 by
applying the program
throughout the enterprise in areas such as product design; manufacturing;
chain management; sales and marketing; customer service; and
processing. GE saved $750 million by end of 1998, cutting invoice
disputes by 98 percent. Ford added $300 million to the bottom line in
realized savings of $350 million through waste elimination in 2002. In 2008 Cigna reported that it had saved nearly $100
million over five years through its Six Sigma methodology.
these gains can be expected only if an enterprise first makes significant
investments in training, enterprise infrastructure, and cultural
(all employees thinking about how their actions impact the customer;
communicating with consistent language). Six Sigma is not a
scheme. In fact, enterprises should expect only to break even in the
first year of
implementation, although one implementer claims that costs savings of
between $300 thousand and $400 thousand are possible the first year. In
the long run, enterprises can expect to save from 1.2 to 4.5
percent of revenue annually by implementing Six Sigma.
Five Steps to Six Sigma Success
MetricStream, provider of enterprise quality and compliance management
solutions, has identified five key steps to Six Sigma success:
Your Team – Top management must have an expanded role and demonstrate leadership in directing and supporting the Six Sigma initiative through a variety of methods from establishing and monitoring achievement of programs to communicating customer requirements to the work
force. Top management must be involved during the implementation driving from the top and at the same time empowering a multidisciplinary team of individuals from within the
enterprise who understand the critical processes involved, and take ownership of solutions, controls and procedures.
Six Sigma Activities with Enterprise Goals and Objectives – It is absolutely critical that all Six Sigma activities contribute to
enterprise goals and objectives and are aligned with the enterprise’s mission, responsibilities and policies.
- Providing Training, Certification and Infrastructure – To ensure effective Six Sigma implementation, it is essential that employees are trained and certified in
their various roles: Champion, Black Belt and Master Black Belt.
- Pursuing Continual Improvement – Identifying opportunities for continuous improvement by constantly tracking critical customer complaints and feedback, finding areas that can be detrimental to improvement and removing blocks towards achieving the goals and objectives
of enterprise improvement.
- Ensuring Meticulous Execution and Complete Accountability – Meticulous execution and complete accountability is critical to Six Sigma success and can be achieved by communicating the process across the
Six Sigma deliverables need to be incorporated into every employee’s performance objectives and training/certification must be prerequisites for advancement in the
1 Daniel L. Quinn. What Is Six
Sigma? Rath & Strong’s Six Sigma Leadership Handbook. John
Wiley and Sons. 2003.
Molly Koernke. "Six Sigma is Not Dead." PowerSteering Software blog. July 6,
3 Mark O. George. The Lean Six Sigma Guide
to Doing More with Less: Executive Summary. John Wiley and Sons. p.10.
4 "Can Lean Six
Sigma Reduce Government Waste?"
IndustryWeek. September 20, 2011.
"FAQ: How Does the Six Sigma Methodology Benefit IT?" SearchCIO.com.
June 25, 2009.
6 Brandon Busteed. "Higher Education’s Six Sigma."
Gallup, Inc. May 30, 2014.
7 Ryan Huang. "Six Sigma ‘Killed’ Innovation in 3M." CBS Interactive. March 14, 2013.
8 Andrew Smart. "Six Sigma Is Draining Employees’ Creativity." Excerpt from
Smart’s Autopilot: The Art and Science of Doing Nothing. July 22, 2013.
10 Susan Adams. "Is Six Sigma Killing Your
Company’s Future?" Forbes. June 11, 2014.
11 "Enterprise Quality and Compliance Management Solution." MetricStream,
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- International Society of Six Sigma Professionals: http://www.isssp.com/
- iSixSigma: http://www.isixsigma.com/
- MetricStream: http://www.metricstream.com/
- Minitab Statistical Software: http://www.minitab.com/
- SigmaXL: http://www.sigmaxl.com/
About the Author
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James G. Barr is a leading business continuity analyst and
business writer with more than 30 years’ IT experience. A member of
"Who’s Who in Finance and Industry," Mr. Barr has designed,
developed, and deployed business continuity plans for a number of Fortune
500 firms. He is the author of several books, including How to
Succeed in Business BY Really Trying, a member of Faulkner’s Advisory
Panel, and a senior editor for Faulkner’s Security Management
Practices. Mr. Barr can be reached via e-mail at email@example.com.
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