Define Phase: Scoping Your Improvement Project

The Define Phase

The Define phase is where every Six Sigma project begins — and where many poorly scoped projects fail before they start. The purpose is straightforward: clearly articulate the problem, set boundaries around the project, and secure the sponsorship needed to proceed.

A common mistake in banking operations is jumping straight to solutions. Someone notices that KYC onboarding is slow, and the immediate reaction is "we need a new system" or "we need more staff." The Define phase forces you to slow down and ask fundamental questions first. What exactly is the problem? Who is affected? How bad is it? What would success look like? Only when these questions have rigorous answers should you move forward.

The key deliverables of the Define phase are: a Voice of Customer analysis, a CTQ tree, a SIPOC diagram, a project charter, and a stakeholder analysis.

Voice of Customer (VOC)

Voice of Customer (VOC) is the process of capturing what customers need, expect, and experience from your process — expressed in their own terms.

In banking, "customer" does not only mean external clients. Your customers include anyone who receives the output of your process. For a KYC onboarding team, the customers might include the applicant (who wants a fast, smooth experience), the relationship manager (who wants to start generating revenue from the client), and compliance (who needs complete, accurate due diligence files).

Methods for gathering VOC in banking include:

• Complaints analysis — What do clients actually complain about? Late responses, repeated document requests, and lack of status updates are common themes.
• Surveys and feedback forms — Structured questions to internal and external stakeholders about process quality and timeliness.
• Interviews and focus groups — Sit down with relationship managers, compliance analysts, and operations staff to understand their pain points.
• Process data — System logs, SLA reports, and exception queues tell you what is going wrong even when nobody is formally complaining.

The goal is to move from vague dissatisfaction ("onboarding takes too long") to specific, actionable customer requirements.

Critical to Quality (CTQ) Trees

A CTQ (Critical to Quality) tree translates broad customer needs into specific, measurable requirements that your process must meet.

The structure flows from left to right: Customer Need leads to Drivers which lead to CTQ Requirements. Here is a banking example:

• Customer Need: "I want my account opened quickly"
  • Driver: Speed of onboarding process
    • CTQ: KYC onboarding cycle time ≤ 48 hours
  • Driver: Minimal document re-requests
    • CTQ: First-pass document acceptance rate ≥ 90%
  • Driver: Clear communication
    • CTQ: Status update provided within 4 hours of each milestone

Notice how each CTQ is measurable. You can track cycle time, calculate first-pass rates, and measure communication response times. This is essential — if you cannot measure it, you cannot improve it.

SIPOC Diagram

SIPOC (Suppliers, Inputs, Process, Outputs, Customers) is a high-level diagram that defines the boundaries and key elements of a process before you map it in detail.

Let us build a SIPOC for a KYC onboarding process:

• Suppliers: Applicant, identity verification providers (credit bureaus, government databases), relationship manager, sanctions screening vendor
• Inputs: Application form, identity documents (passport, utility bills), source of funds documentation, screening data feeds
• Process (5 high-level steps):
  1. Receive and log application
  2. Verify identity documents
  3. Conduct sanctions and PEP screening
  4. Perform risk assessment and due diligence
  5. Approve or escalate and open account
• Outputs: Verified customer profile, risk rating, due diligence file, account credentials
• Customers: Applicant (receives account access), relationship manager (receives client onboarding confirmation), compliance department (receives audit-ready KYC file), regulators (rely on the bank's KYC standards)

The SIPOC keeps the team aligned on scope. It makes clear what is inside the project boundary and, just as importantly, what is outside it. If someone suggests improving the credit decisioning process, you can point to the SIPOC and say, "That is outside our scope — we are focused on the onboarding steps between application receipt and account opening."

Project Charter

The project charter is the single most important document in the Define phase. It is a concise, typically one-page document that formally authorizes the project and aligns all stakeholders around a common understanding.

A strong project charter includes:

• Problem Statement — A factual, data-backed description of the issue. Example: "KYC onboarding for new corporate clients currently averages 12 business days, against a target of 3 days. This has resulted in 34 client complaints in Q3 and an estimated revenue delay of $2.1M."
• Goal Statement — A SMART objective. Example: "Reduce average KYC onboarding cycle time from 12 days to 3 days within 6 months, with no increase in compliance risk."
• Scope — What is included and excluded. "In scope: corporate KYC onboarding for the Investment Banking division. Out of scope: retail onboarding, periodic KYC reviews."
• Team — Champion (Head of Operations), Project Lead (Green Belt from the KYC team), team members (analysts, compliance, IT representative).
• Timeline — Key milestones aligned to DMAIC phases.
• Expected Savings — Quantified benefits: reduced cycle time, lower rework costs, faster time-to-revenue, improved client satisfaction scores.

The charter acts as a contract between the project team and the sponsor. When scope creep threatens to derail the project — and in banking, it almost always does — the charter is your anchor.

Stakeholder Analysis

Not everyone affected by your project will have the same level of interest or influence. Stakeholder analysis helps you identify who matters, what they care about, and how to engage them effectively.

The Power/Interest grid is the most practical tool for this. You plot each stakeholder on two axes — their power to influence the project and their interest in its outcome — and then tailor your engagement strategy:

• High Power, High Interest — Manage closely. In banking, this includes regulators (who care deeply about KYC quality), the project sponsor, and compliance leadership. Keep them informed, seek their input, and address their concerns proactively.
• High Power, Low Interest — Keep satisfied. IT leadership often falls here — they control system access and development resources but may not be deeply engaged in the day-to-day project. Give them what they need without overwhelming them with detail.
• Low Power, High Interest — Keep informed. Front-line KYC analysts are directly affected by process changes. They have invaluable knowledge but limited organizational power. Engage them early to build buy-in and gather insights.
• Low Power, Low Interest — Monitor. Peripheral teams that are not directly impacted.

Getting stakeholder management right is especially critical in banking, where process changes often touch compliance, risk, technology, and front-office teams simultaneously. A technically sound solution that lacks stakeholder buy-in will fail every time.

In the next module, we move to the Measure phase, where we will collect the data needed to baseline current performance and understand exactly how the process behaves today.