SUMMARY
The Six Sigma strategy is a powerful quality methodology that brings significant benefits to the organization. It is “the only way to continue double-digit growth and retain a hold on shifting markets by constantly innovating and remaking the organization. Six Sigma creates the skills and culture for constant revival.”
With Six Sigma, the company will be able to:
1. generate sustained success
2. set performance goal for everyone
3. enhance value for customers
4. accelerate rates of improvement
5. promote learning; and
6. execute strategic change.
Six themes drive Six Sigma to achieve these benefits. These are:
1. genuine focus on the customer
2. data- and fact-driven management
3. process focus, management, and improvement
4. proactive management
5. limitless collaboration and drive for perfection; and
6. tolerance for failure.
Three of the biggest companies today are living examples of how Six Sigma benefits organizations. GE and Allied Signal used it to strengthen an already thriving business while Motorola turned to it to survive in an increasingly competitive industry. All three refocused their operations from within the organization, to meeting the end goal of satisfying the customers.
GE, for example, displayed outstanding results: from break-even efforts to $750 million by the end of 1998 and $5 billion in gains early in the decade, making the company’s current operating margins consistently above 15%. Motorola, for its part, began the quality journey through its initial ten-times improvement (10X) every two years to 100X improvement in four years, achieving five-fold growth in sales with profits increasing at almost 20% per year and cumulative savings pegged at $14 billion. Allied Signal, now Honeywell, made extraordinary leaps with a 6% productivity increase in 1998 and a market value of up to 27% per year.
These successes definitely created a ripple in the manufacturing industry, thus the term the “Six Sigma Wave.”
“Like most great inventions, Six Sigma is not all new. While some themes of Six Sigma arise out of fairly recent breakthroughs in management thinking, others have their foundation in common sense.”
COMMENTARY
Facing intense competition in a rapidly challenging world, today’s business leaders and managers are facing challenging times. In an age where The Customer is King, the question is not just how to succeed but how to remain competitive and successful. Many resort to “quick fixes” or to some business fads to become more competitive. Thus, many have failed.
After understanding Six Sigma, one realizes that this may be the answer to this question. Companies that have implemented it have experienced significant benefits and sustained success. Motorola, which started it all, General Electric, Honeywell, FedEx, Cisco Systems are just a few of Six Sigma’s success stories.
What makes Six Sigma different from past and old management systems and strategies is the shifting of its business paradigm from “customers beware” to “suppliers beware.” In short, in Six Sigma, the customer becomes the top priority. Everything begins and ends with the customer, not within the organization or within the business itself. All improvements in performance measures are therefore selected based on their impact on customer satisfaction.
Admittedly though, Six Sigma principles are not exactly new. They are built on established management ideas and practices, like TQM, SPC or SQC, P-D-C-A, among others. For you to find out why it succeeded where others have failed, you have to study the strategy further.
