Secret Sauce for Six Sigma—Lessons from GE on Building a Fertile Soil for Six Sigma
Posted: 10/08/2009 9:45:00 AM EDT | 14
Six Sigma is under attack. Relentless attack. And in most cases the most stinging barbs come from people who have little clue about what makes Six Sigma tick and/or are trying to sell us something. So what’s new now? We have seen such attacks on almost every management concept that has hit the market ever. Even the Baldrige Criteria and Balanced Scorecard were not spared. Why am I upset this time? Most attackers of Six Sigma are seeing it as a tool that can be used to fix any problem, in any situation, any context.
A “Fit” History Can Lead to a Better Shot at Six Sigma Success
I have for long held a view that most management concepts (as in medicine) are effective in a given context, a given situation, a given culture. Let’s pause and think. Imagine two people with some sort of illness. Nothing major, just fever and stuff. One of them is healthy, fit and can run a marathon. The other is obese, has blood pressure issues, and let’s throw diabetes in as well. They are both given the same medicine. Who is likely to recover faster? Take this further. Two people have gained weight. One of them has a fit history and is disciplined in everything she does. The other has an unfit history and can never stick to what he sets out to do. They both join the same gym and have the same trainer. Who is likely to lose weight?
Bitter truth is, Six Sigma works best with companies that have a history of making a success out of management concepts. Look around. The companies that are cited as Six Sigma successes have also been cited as successes for other concepts and are successful companies. Does this mean Six Sigma won’t work in unsuccessful companies, or companies that don’t have a great track record of adopting a concept? I am not saying it won’t work. But chances are surely less.
Does a “Fit” Company Lead to Six Sigma Success? A GE Example
If a “fit” history is a good foundation for a speedy and lasting recovery in life, can the same hold true for companies? I think it can. Let’s look at the most fabled Six Sigma success story: General Electric. We all know that while Motorola developed Six Sigma, it was GE that gave it cult status. It wasn’t for the success of Six Sigma at GE it is unlikely that Six Sigma would be a run-away success as it was.
The question then is, what was the precursor to Six Sigma at GE? What made GE Six Sigma ready in 1995? I dug out some information on this. Looked at a few books that cover the period I was looking for—mid 1990s. The most definitive answers come from Control your Destiny or Someone Else Will, Jack: Straight from the Gut and The GE Work-Out.
Cut to 1995. GE was a successful company, a very, very successful one. Jack Welch had been CEO for 15 years. The soil was as fertile as it gets for positive change programs. From what I have read and confirmed with people who were with GE at the time, here are the two items that made the GE soil fertile for change:
- Work-Out for eliminating inefficiencies
- Working with the right people
When Jack Welch took over as Chairman of the Board at GE in 1980, GE was already amongst the best companies in the world. It wasn't as if he was the captain of a sinking ship and he rescued it miraculously. Moreover, Reginald Jones, the predecessor to Welch, was voted the CEO of the decade. Among the several improvement areas Welch identified at GE was the bureaucracy that was considered natural for a large company. After grappling with how to break this wall, he came up with the idea now popular as Workout. With a lot of help from consultants, Work-Out was developed into a company-wide change program with remarkable success.
This is not a piece on what Work-Out is, but a summary is in order. Work-Out is an off-site workshop of employees of a company to discuss and debate problems that the company faces. The new thing is the head of the unit or division has to face the employees at the end of the workshop and accept or reject their suggestions for improvement. No extensions for further thinking. GE had remarkable success with Work-Out. Between 1988 and 1995 Work-Out was the primary method of eliminating bureaucracy at GE. Apart from the obvious benefit of efficiency the real benefit of Work-Out was that people at GE embraced change and learned to continually improve! Fertile soil for Six Sigma in 1995.
If people embraced Work-Out and changed for the better there was a reason for it. As is always the case, this secret lies in what was done with people prior to the change rather than during the change. Jim Collins in his path-breaking research, Good to Great, has cited Getting the Right People on the Bus as a foundation practice for the good to great journey. He argues that this must be done even before a vision is developed. Even before the research for the book was done, Welch was doing this at GE. He found the best-fit people for each role. At times he found the people and then created the roles. Moreover, through the 1980s and most part of 1990s every manager had to replace 10 percent of his/her staff every year. This may sound absurd. Why upset a working machine? Remember that this rule was functional at a time when GE was already the leading company in the world. Each manager would have to decide on a ranking of his/her staff on the basis of performance and potential. Then the bottom 10 percent would be asked to leave (though some got a second chance). Many saw this as very cruel. Welch's response was—with GE doing well, these people will easily find another job and will probably enjoy it much more than at GE. He saw his as a liberating role. In the process he created a highly competent and change ready organization. Fertile soil for Work-Out in 1988!
Six Sigma’s Secret Sauce is in Creating the Fertile Soil for Change
Was GE an exception? Not really. Even Motorola had years of success with Juran’s quality improvement methods when they came up with Six Sigma. It was a good company struggling a bit. And they found Six Sigma as a good tool to fight back with. Without the preparation of previous years and the right people in place Motorola would not have made a success of Six Sigma.
When I see companies complain that Six Sigma didn’t work for their organizations, I can often see them saying the same for every management concept that they have ever used. Surely all can’t be at fault! The secret sauce is in creating the fertile soil for change, as GE and Motorola did years ago.
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Very good article! I totally agree that most part of the Six Sigma criticism comes from people with very few knowledge about for with type of problems the methodology works good and what benefits a good Six Sigma implementation plan and execution can bring for a company.
And the worst part is that there are a lot of Six Sigma leaders in the companies that, with a lot of misanderstood concepts about what their Six Sigma definition (and a complete ignorance about the situations where the methodology does not work well), contributes a lot for the confusion installed on the Management point of view. Luciano
As a Six Sigma Green Belt, I'd like to comment on GE's implementation of SS at the former OEC Medical Systems, now GE Healthcare Surgery. From an engineering point of view, the concept was important and useful, especially as applied in DMAIC and DFSS. However, some aspects of GE policy such as the removal of the lowest performing 10% of the people had a very negative effect on quality, particularly in the manufacturing area. People with years of loyal service and pride in their work were severely disgruntled when their manager reviews gave them a 4 rating, and others who had worked with them had also become quite annoyed about this aspect. Whereas before, there was a sense of pride in one's work, after the change many of the workers were fearful of their jobs and quality suffered. One could find lots of examples - screws that had fallen out of systems otherwise ready to ship was just one. The basic principles of Six Sigma as applied to DMAIC were not new; I had a book that was 48 years old at the time, full of examples of using statistical analysis, control charts, and so on, to improve product quality and reliability. As noted there, Deming had shown us that inspection alone was not a viable method for improving quality - the requirement was more that everyone was committed to ensuring that procedures were followed and work was properly checked, and that statistical analysis helped to control quality.
That said, the process did not apply well to all types of engineering projects either. Mine was fairly successful, in making improvements to an IR remote control receiver, but as an analog designer I knew it could go no further without a specific piece of digital technology. When I retired, soon after my input to this project was completed, another engineer with significant DSP experience was able to take the ball and run with it, implementing additional digital filtering that all but eliminated the problem, which was severe interference from electronic ballasted fluorescent lighting in the frequency range used by the receiver. I achieved my goal of a 30 ft. range in bright fluorescent lighting conditions, but his improvements took it to 40 ft.
In this case, blind application of Six Sigma principles was not what provided a significant improvement; investigation of the issues and design of specific circuitry to eliminate them was key to providing the improvement needed.
Today, the emphasis has shifted somewhat from engineering design projects into other areas, and in my last three years of post-retirement part time work I have encountered only a few examples where Six Sigma could or did significantly improve product design. But LSS is still being used as a management tool, and still presumably has some benefits to the company as a whole. It's much more about having the right people, with the right education, experience, attitudes and commitment to quality.
This article is fair, and the precept is good. Six Sigma, or any other CI initiative does need fertile soil and a culture that embraces change. I do take issue with a couple of points, though. One is the "fire the bottom 10 percent" idea. Just espousing the idea that you can identify the bottom ten percent revealed that Welch had not learned much about stats in whatever Six Sigma classes he attended, and somehow missed General Systems Theory altogether.
Another is that everyone in GE underwent a cultural change. Several years after Six Sigma was implemented at one Business Unit, I happened to attend a retirement ceremony for an engineering manager. He was asked what he wouldn't miss. He said "Having to do Green Belt projects and reports." The engineers in attendance (most of the engineers at the business unit) stood up and cheered loudly. So the soil there had maybe not been as well-fertilized as it should have been (although most of those engineers thought the whole program was fertilizer, in a sense).
What is fertile soil? And how does a company get it? The answer is found in "Leading Change" and includes a sense of urgency (Motorola was successful because they were on their way out of business had they not changed), vision and strategy, a guiding coalition, enabling others to act, generating short term wins, and it goes on. I agree to successfully apply Six Sigma, Lean, or any other initiative the company has to have fertile soil, but what if they don't? Can you create fertile soil? I believe you can! Check out www.pdgconsultants.com if you want the answer on how to create fertile soil.
Great Article i am currently receiving standoff approach about Six Sigma in our organzation. Hope when i receive my Black Belt Certification i can give better influence for implementation.
Firstly apologies for a delayed response. No excuses. Just got lazy.
I have been reading your responses with great interest and while all of them are useful some were very interesting. Even if they were not in agreement with me. I must say that a post of this nature can not and should not seek agreement. It is more a view point and will not hold true in all conditions. Hopefully will work in most conditions.
Dhruv – Thanks. I agree with you on getting the basics right. You say it well and I am sure it is backed by experience.
Dike – Thanks. I liked your term ‘Serial Success’. Will check your site, as suggested.
Sergei – Thanks for a dissenting voice. Your response is at a level higher than my post. I agree with you – Six Sigma is not a panacea for all. In fact that is in a point I have been making in my Baldrige sessions. Six Sigma works well in a context and has pre-conditions. Thanks for reinforcing this. Great response.
Ron Thomas – Lol. Well said. Like I said above Six Sigma is just one method with limited relation to a company’s well being at the stock exchange.
Mike – Thanks for your comment. It is educative.
Mayank – Thanks for the Japanese angle. You are right about them not promoting Six Sigma but following the principles. Thanks for the key steps to success too.
P G Subbu – Thanks much for reading through and commenting.
R. West – I loved the peanut butter quote. Thanks much.
I agree with Sergei Dovgodko,
I worked for many years as a first tier supplier to Motorola. At the time I was in the position of Quality Contact. After having that direct experience I can say with certainty that Six Sigma can be very expensive and if implemented in a textbook style it is not suitable to smaller suppliers at all.
There are some good business practices in the methodology but it has its time and place. I also like peanut butter but I don't spread it on everything I eat.
I do agree with Anshuman on his views. If I may add based on my experience with Six Sigma Projects is several organisation, The failure also happens because misuse of Tool. Six Sigma as any tool would not work if not use properly. For example senior management at time tries to push any issue under the umbrella of change through Six Sigma. I have seen companies working software implementation or rollout project as part of DMAIC project. The Black belts and team fits the DMAIC forcibly.
It is not only culture but also the liking to Six Sigma not on the basis of merit of tool also leads to failure. As usual the tool invariably gets the blame of failure.
i think that implementing six sigma is just like using correct set of tools or instruments for operating a patient. Six sigma requires committed leadership, leadership which have vision, and leadership which knows there customers. Six Sigma or lean are not magic wands, they r tools which are to be applied with lot of thoughts and determination. look at all Japanese companies are they bankrupt? people who says that there is no difference between companies with or without Six Sigma, for those i have only one suggestion. Please look at Japanese organizations, although they have not marketed six sigma. but still they use tits and bits of six sigma tools. And as per my view following points are important for having success with Six Sigma.
1. Keep Customer in Focus and fulfill customer demands.
2. Always be ready for change.
3. Keep Employees involved in change.
4. A strong & determined Top Management.
5. Trained & Skilled Manpower.
6. Culture of Continual improvement.
If a company has above qualities in its DNA, then whatever scenarios the future throws on them they will play the Game.
I don't dispute your history, but I believe that we have learned a good bit more about how to make (Lean) Six Sigma a success in organizations since Motorola invented it and Jack Welch made it a religion at GE. I was at GE in te 1980s. In the early days, Welch could not get it adopted because he didn't have an internally strong sales-ready message. Once he explained it better *** and *** mandated adoption, it began to work. In any case, since those days, we know that it takes a committed CEO who is in it for the long run, who takes LSS leadership training, applies LSS to the strategic business plan and turns his C level suite into process improvement champions - like it or not. When directors, managers and individual contributors see the CEO and his direct reports in the classes and learn that no one gets promoted without Six Sigma experience, their hears and minds follow. Still, to make it a success, the enterprise has to have excellent training, accountability for improvement results, the best and brightest involved in the beginning to create early wins, must clearly focus on the voice of the customer and other voices, then move up the maturity ladder until continual improvement is ingrained throughout the organization. They have to have good tools, especially an enterprise dashboard with drill down to lower levels, and much more. GE may have been a lucky early adopter, but if Jack Welch hadn't talked to Larry Bossidy early on about LSS, others would have gotten the word out and some CEO would have done it instead of Welch. Another reason LSS has been a success, even beyond Lean or Six Sigme themselves is that they are true methodologies, with tool kits and road maps and in the case of Six Sigma, a dedicated infrastructure. None of the earlier approaches, especially TQM, can claim that. Plus, when done properly, LSS just plain works. So, the story is much more complex than that GE happened to be ripe for Six Sigma because of Work-Out and because Welch found himself in a successful company.
It probably doesn't help that GE stock just dropped 90% from peak to trough.
May I introduce a dissenting voice?
One can find good examples of companies where Six Sigma worked well for some time. GE and Motorola are good examples. To me Motorola is even more interesting than GE because this company incorporated Six Sigma to every aspect of management. They aligned their strategic work with operational Six Sigma projects (there is a book written on Six Sigma at Motorola).
Yet Motorola almost went bankrupt. How could this happen? Take Nardelli's attempt to implement Six Sigma at Home Depot. You know the results. What about GM?
In fact, I would like to see any evidence yet that companies implementing six Sigma perform better than overall market, measuring for example, Total Shareholder Return.
There are deep reasons why taking Six Sigma out of manufacturing environment and using it as a management tool is a methodological mistake. Business environment is by and large is driven by subjectivity and perception of human beings. Business environment is circular not linear. It is almost always complex or chaotic, where cause-effect relationship are not traceable. It is contextual, where the actions depend on the dynamism of the environment and the degree of stakeholder consensus. Etc.
Bottom line - Six Sigma is too primitive tool to deal with real complexity of business challenges. This is why business people resent it.
Having said that, the benefits of Six Sigma are undeniable in closed and controlled manufacturing settings oriented toward mass-production. Especially where the human factors place fairly minimal role compare to technical factors.
To survive, Six Sigma must reform in many ways. Most important it should put people in the middle and center of its improvement efforts, not processes.
Great article Anshuman.
IMHO, looking at why Six Sigma works in situations where it is successful will almost certainly turn up the same reasons you quote in the GE example.
What Welch's Work-Out programs does is deal up front with the people issues that so often sabotage Process Improvement. Work-Out systemizes the relationships between leaders and the team and puts everyone on notice that both "How" you work and "What" you do are being monitored.
Your observation of "serial success" in change management for these companies is also interesting.
In our experience it is the so called "Culture" that makes the difference and it is People Skills that form the culture. Think of it as the "Context" or Environment you create for your teams as a leader. With a well constructed context of trust and respect, your team can take on change or innovation more effectively. Trust and Respect breed enrollment and adaptability.
And People Skills are the key for the leaders to implement successfully.
My two cents,
Dike Drummond MD CPC
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