Monday, July 01, 2002
Six Sigma program becomes business darling
By MATTHEW BARAKAT
AP Business Writer
CHANTILLY, Va. — The business world has its share of buzzwords, fads and mumbo-jumbo. And that's what former General Electric chief executive Jack Welch thought at first about Six Sigma.
Welch admits he was disinclined to embrace Six Sigma, a management system in which trained “black belts” and “green belts” use a variety of statistical models to measure the company's performance on a slew of internal processes.
Now though, Welch is the biggest evangelist for the Six Sigma movement. The success enjoyed by GE after it adopted Six Sigma in 1995 has prompted scores of companies, including Fortune 500 icons like 3M, Home Depot and Ford, to adopt the system.
“I really believe it can change a company,” Welch said in an interview last week during a conference of the International Society of Six Sigma Professionals.
The society's third annual meeting drew nearly 300 business leaders, compared with just 75 in the first year.
Roxanne O'Brasky, the society's president, said Six Sigma originated with Motorola in the 1980s, but that Welch's advocacy of the program, and the success he enjoyed with it at GE until his retirement last year, have given it momentum.
“Jack being such a PR leader, he just promotes the heck out of it,” O'Brasky said.
The Six Sigma system is designed to eliminate deviations in a company's operations. A company that adheres to Six Sigma standards will have only 3.4 defects per 1 million opportunities. And the company will use statistical models to measure performance in an array of categories, including many that would appear at first to be difficult to quantify.
Despite Welch's high-profile advocacy of Six Sigma, he acknowledged that it remains a mystery to many in the business world, and can be perceived initially by employees as an unwelcome imposition.
“You've got cynics everywhere. They say, 'Oh my God, Six Sigma's coming. Here comes another program,”' Welch said. “But the benefits are so broad that once you see it, you want to get into it.”
Mary Meixell, a business professor at George Mason university, said Six Sigma is one of several quality management programs that have been popular with some businesses in recent years. But while others have faded, Six Sigma has remained relatively popular.
“I think it's been more successful because it's so measurable,” Meixell said. “With some of the softer tools that businesses used, it was harder to measure the impact.”
The key, according to Welch, is Six Sigma's ability to eliminate variation and give customers reliable, consistent service.
Graham Richard, the mayor of Fort Wayne, Ind., said Six Sigma management principles have transformed the city's public works department. City workers now patch 95 percent of all potholes within 24 hours of the time they are reported.
Richard said the city needed Six Sigma because previous management methods were failing.
“Until we did the process map (a Six Sigma technique), everybody said, 'It's not my problem,”' he said.
Others are skeptical that Six Sigma is a solution for every company.
Bill Domeika, a vice president with consulting firm Cap Gemini Ernst and Young, said Six Sigma principles work well for manufacturers who can easily measure and alter their manufacturing processes.
But he's skeptical about applying rigid statistical methods to measure something more subjective, such as customer service.
What's more, he said, it is unwise for a company to strive for perfection in every facet of its operations. He said it was more important to be dominant in one category, like price or product quality, and stay on par with the industry in other categories.
He offered Wal-Mart as an example of a company that has distinguished itself on price. At the same time, service at Wal-Mart probably ranks as average. In a Six Sigma philosophy, company managers would devote significant time and resources to improving service, and that could eventually hurt the company's hallmark trait of low prices.
“It's our belief that you don't have to be world class in every dimension” of your business, Domeika said.
At times, Six Sigma proponents seem to offer the program as a solution for everything. Domeika noted that Six Sigma proponents discuss the program in a manner “that really borders on a religious framework.”
At last week's conference, for instance, participants debated whether Six Sigma principles could be used to combat terrorism.
Welch, for his part, seemed skeptical that Six Sigma could tackle a problem like terrorism. And he said Six Sigma would do little to fix the current crisis in the business world of companies inflating profits and concealing debt.
“Six Sigma methodology ought to drive more accurate reporting of earnings and more consistent reporting,” he said. “Whether or not you actually report the earnings accurately is another story.”
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