Secret Sauce for Six Sigma—Lessons from GE on Building a Fertile Soil for Six Sigma
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.