Tool 73: Factor Analysis

AKA

N/A

Classification

Evaluating/Selecting (ES)

Tool description

A factor analysis is an assessment technique that surfaces product, process, or service factors that may require immediate attention or further analysis. Similar to benchmarking, product and/or service factor ratings are compared to best in class or to one's own organization to determine competitive strengths and weaknesses.

Typical application

• To assess best in class processes.

• To compare product and service ratings with those of the competition.

• To identify problem areas for the assignment to problem-solving teams.

Problem-solving phase

→	Select and define problem or opportunity
→	Identify and analyze causes or potential change
	Develop and plan possible solutions or change
→	Implement and evaluate solution or change
	Measure and report solution or change results
	Recognize and reward team efforts

Typically used by

	Research/statistics
2	Creativity/innovation
1	Engineering
	Project management
	Manufacturing
3	Marketing/sales
	Administration/documentation
	Servicing/support
	Customer/quality metrics
4	Change management

links to other tools

before

• Benchmarking

• Matrix data analysis

• Linking diagram

• Customer needs table

• Organization readiness chart

after

• SWOT analysis

• Gap analysis

• Radar chart

• SCAMPER

• Value analysis

Notes and key points

• Factorial ratings can reflect customer satisfaction, best practices, overall quality, design, or process categories.

• Optional ratings: 4 = very high; 3 = high; 2 = medium; 1 = low. Other rating scales can be used.

• The overall or category of factors rating is an average of all factor ratings within a particular category.

Step-by-step procedure

• STEP 1 An integrated product development team (IDPT) selects the most important product or service factors to be analyzed. See example TV/Cable Providers—Service Factors Analysis.

• STEP 2 Next, competitors are identified for data collection on the selected factors. Sources of data are customer satisfaction surveys, benchmarking partnerships, secondary data, interviews, documentation, and others.

• STEP 3 Data from competitors and one's own organization are verified, rated, and organized into category of factors groupings.

• STEP 4 A factor analysis table is constructed and ratings recorded for each listed factor. Also, a category of factors average is calculated and recorded.

• STEP 5 Finally, the factor analysis table is checked for completeness, dated, and presented to the respective process owners.

Example of tool application