In God we trust, everyone else must bring data

Jitender S. Thakur (E05)

 Introduction to the topic of discussion
• It's one of the most ultimate management jargons of all time,
thanks to its initiation by Motorola and subsequent promotion
by Jack Welch!
• But over the turn of the century, companies that swore by this
concept have been caught in an abyss.
• Is the practice worth it any more?
 What is Six Sigma?
• Six Sigma is a business management strategy originally
developed by Motorola, USA in 1986.
• Six Sigma seeks to improve the quality of process outputs by
identifying and removing the causes of defects (errors) and
minimizing variability in manufacturing and business processes.
• The term six sigma originated from terminology associated
with manufacturing, specifically terms associated with
statistical modeling of manufacturing processes.
• A six-sigma process is one in which 99.99966% of the products
manufactured are statistically expected to be free of defects
(3.4 defects per million).
Defects per million
 The Evolution of Six Sigma

• The evolution began in the late 1970s, when a Japanese firm

took over a Motorola factory that manufactured television
sets in the United States.
• Under Japanese management, the factory was soon
producing TV sets with 1/20th the number of defects they had
produced under Motorola management.
• Since then Motorola management decided to take quality
seriously.
• When Robert Galvin became Motorola's CEO in 1981, he
challenged his company to achieve a tenfold improvement in
performance over a five-year period.
 Godfather of Six Sigma
• Mikel Harry, who is called the “godfather” of Six Sigma and is
acknowledged as the leading authority on theory and
practice.
• In 1984, after Harry was awarded a doctorate from Arizona
State University, he joined Motorola where he worked with
Bill Smith, a veteran engineer.
• Harry called Bill Smith, “the father of Six Sigma”.
 Birth of Six Sigma @ Motorola
• During 1985, Smith wrote an internal quality research report
which caught the attention of the CEO, Bob Galvin.
• Bill Smith discovered the correlation between how well a
product did in its field life and how much rework had been
required during the manufacturing process.
• He also found that products that were built with fewer
nonconformities were the ones that performed the best after
delivery to the customer.
• Harry & Smith submitted a paper at Arizona State University on
the concept of “logic filter”, expalaining four-stage problem-
solving approach: Measure, Analyze, Improve, Control (MAIC).
 Road map to Six Sigma Quality
• Motorola set a goal of "six sigma" for all of its manufacturing
operations, and this goal became a byword for the
management and engineering practices used to achieve it.
• Six Sigma project methodology is inspired by Deming's Plan-
Do-Check-Act Cycle.
• The DMAIC project methodology has five phases:
 The global promoter of Six Sigma
• Jack Welch’s way of implementation to the evolution of Six
Sigma.
– Welch demonstrated the great paradigm of leadership.
– He changed GE’s incentive compensation plan for the
entire company so that 60 percent of the bonus was based
on financials and 40 percent on Six Sigma results.
– Six Sigma training was made a prerequisite for
advancement up GE’s corporate ladder.
– Welch insisted that no one would be considered for a
management job without at least a Green Belt training by
the end of 1998.
Different Levels of Training
 Is Six Sigma losing its sheen?
• By the late 1990s, about two-thirds of the Fortune 500
organizations had begun Six Sigma initiatives with the aim of
reducing costs and improving quality.
• Apart from Motorola & GE, others top companies that
implemented six sigma were Honeywell, 3M, Lockheed, Ford
& Xerox.
• A Fortune article stated that , a huge 91% of companies
adopting Six Sigma trailed the S&P 500 in the first of this
decade.
 Dabbawala’s from Mumbai
• It has been recognized since 2002 to be one of the most
reliable supply chains in the world, after being given a Six
Sigma rating by Forbes Magazine.
• This indicates less than 3.4 errors per million items carried,
and is despite the supply chain using no computers or modern
technology and most of the delivery staff being illiterate.
 Criticism of killing Innovation
• The criticism is attributed to an analysis by Charles Holland of consulting firm
Qualpro (which espouses a competing quality-improvement process).
• The summary of the article is that:
– Vijay Govindarajan, Professor of International Business at Tuck School of
Business, comments to B&E, "Six Sigma is about continuous improvement
whereas radical innovation is discontinuous change. So they conflict.”
– In a 2003 study, Nitin Nohria (current Dean ofHBS), W. Joyceand
B.Robertson found that there was "no direct causal relationship between
some specific management techniques (including Six Sigma) and
"superior business performance.”
– Eugene C. Reyes, VP-Business Development North America, BPO
International, Inc. gives a scathing critique of the concept to B&E, "Six
Sigma, TQM and even ISOs can stifle areas of business where innovation is
key.”
 The Welch Way
 Despite targeting outstanding improvement in quality, Jack
was never fanatical about achieving the "3.4 defects per
million" impossible target.
 His prime rule for any manager implementing Six Sigma
was that the manager should "understand Six Sigma is all
about customers winning in their marketplace and GE's
bottom line.“
 "Six Sigma should just be selectively applied” were his key
words in the Welch Way.
 Is Six Sigma on silent demise?
• Dr. Chris Trimble of Tuck School of Business suggests to B&E,
"The solution is not to kill Six Sigma, but to create 'safe
havens' where a company can pursue disciplined experiments
while simultaneously striving for excellence in day-to-day
business.”
• But empirical evidence cannot be ignored, and as much as we
may not want it, Six Sigma is going into oblivion.
 Thought for the day!

It is not the strongest of the species that survives,

nor the most intelligent, but the one
more responsive to change.
– Charles Darwin