Recording the Inputs (Xs) at Actionable Level
The 5 why method or the Root Cause analysis method that has been described in the Tools section plays an important role in determining that the X’s are recorded at actionable level. In this implementation of the 5 why tool, there is a slight variation from the standard methodology and hence it has been explained…
Developing the Predictive Equation
Once the Scatter plot has been used to find out the correlation between the inputs being measured as well as the desired outputs, it is now time to come up with an equation which shows the precise relationship. This is called Regression. Regression is a technique which summarizes the relationships observed in the Scatter plot…
What is Hypothesis Testing ?
What is Hypothesis Testing ? Hypothesis testing is one of the statistical method used to confirm the effect that critical few inputs have on the outputs. Hypothesis testing must be used when the inputs are measured discretely. The outputs may be discrete or continuous. However the inputs must be discrete, if the inputs are continuous…
Correlation analysis is a vital tool in the hands of any Six Sigma team. As the Six Sigma team enters the analyze phase they have access to data from various variables. They now need to synthesize this data and ensure that they are able to find a conclusive relationship.
One can best understand correlation analysis with the help of an example. Let us suppose that the management of a factory has come up with data which says that the as the shift time of the workers is increased, their productivity decreases.
However, as of now there is raw data and this is only an observation that some Six Sigma team member may have come up with after having a first look at the data. But Six Sigma methodology does not lie on opinions of the people involved but rather on objective fact. Correlation analysis will help statistically confirm the fact that this is indeed the case.
In order to perform the correlation analysis, there must be sufficient data for the variables under question. Once there is sufficient data, this data was plugged into a formula developed by Karl Pearson. This formula was famously called Karl Pearson’s co-efficient of correlation. This involved complex calculation and mandated the presence of a statistician in the Six Sigma team.
However, fortunately nowadays most of the calculations are performed by a software tool. The humans involved must merely know how to add data to the tool and how to interpret the results.
Correlation analysis typically gives us a number result that lies between +1 and -1. The +ve or ve sign denotes the direction of the correlation. The positive sign denotes direct correlation whereas the negative sign denotes inverse correlation.
Zero signifies no correlation. And the closer the number moves towards 1, the stronger the correlation is. Usually for the correlation to be considered significant, the correlation must be 0.5 or above in either direction.
Correlation analysis just confirms the fact that some given data moves in tandem. A dangerous implication that mangers make is of causality. Based on the correlation analysis it is impossible to say which variable is the cause and which is the effect? It is also likely that both the variables move in tandem because they are affected by some third common variable. However, these are just cases and the fact remains there are other analyses available to find out the causal relationship. However, in most cases the fact the variables have a correlation is enough to take relevant action.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
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