CNN/Fortune (not to be confused with CNN/Business2.0, CNN/Money, CNN/Time… apparently CNN doesn’t do original content anymore) has an online article today on "Tearing Up the Jack Welch Playbook" that proposes that Welch’s rules are no longer appropriate. Some of them, such as "agile is best" trumping Welch’s old "big dogs own the street" make perfect sense, and have been known to us in the lean world for quite some time.
But one of them is worth thinking about… "look out, not in" replacing "be lean and mean". One quick glance at the detail for this change and you’ll notice a plethora of problems. For starters, it has nothing to do with "lean"… it’s all six sigma. In fact, the word "lean" isn’t even mentioned after the title. We bump into the misunderstanding of the two concepts quite often, and as we know some consultants are trying to combine the two into a new way to make a buck, with one even trying to trademark the term. Although in their defense they can be complementary methods.
Obviously the fundamental issue is that six sigma optimizes processes, and lean focuses on waste. Six sigma alone can lead to the danger of optimizing a process that lean might tell you is not required in the first place. Lean alone can remove waste but leave inefficient (but still value-added) processes in place.
So now we know that the article should really have been entitled "look out, not in" replacing "six sigma". Let’s look into that a bit more…
The article claims that more than a quarter of the Fortune 200 followed Welch’s lead and dived into six sigma. Of 58 large companies that announced six sigma programs, 91% have trailed the S&P 500 ever since. Ok… why were those 58 selected (ok, that is "more than a quarter" of 200), and if that’s the population on which the 91% is applied, then why does 91% of 58 not yield a nice number? Somebody apparently doesn’t know basic… err… stats. Somewhat concerning when thae data comes from Charles Holland of consulting firm Qualpro, which as the article points out "espouses a competing quality improvement process". Probably because they could no longer trademark "six sigma". Actually a look at their website seems to indicate a methodology remarkably similar to classic multivariable design of experiments.
And I won’t even start with the problems with basing the data off of companies that "announced" six sigma programs as opposed to those that actually did it… let alone did it well. Or all the other variables that could make a company trail the S&P 500 (but did they improve?). I could say the same about lean… if I only had a penny for every company that "announced" a lean program.
The article points out that six sigma "looks inward", which is true in a sense. So does lean. In both cases it’s called continuous improvement, and it’s a good thing.
But I don’t think six sigma can be blamed for creating "an inward-looking culture" as the article proposes. The article then links that supposed cultural malaise to a decline in innovation. Aha! "Innovation"! Any business article these days apparently must include at least one reference to that most magical of words. So… Jack Welch is now responsible for stifling innovation at all kinds of companies around the world? That’s a good one. From that great leap all kinds of canned quotes on innovation can suddenly be used to fill up the rest of the article.
Forget your wasteful and inefficient processes! Go forth and blindly innovate!
Jaime Escobar says
Another pathetic CNN article. No wonder they don’t claim to be fair and balanced. Isn’t using six sigma (and lean) in the design and development process forward or outward looking? Doesn’t improving quality improve cost which helps a company focus outward? The one-sided information from the Qualpro stooge is funny.
TimR says
This innovation focus is really getting on my last nerve. What the hell really is innovation. Did you catch all the references to “synergies” and other blabberwords in the articles? I should send a press release on my new company idea Design Du Experiments ™ to CNN and maybe they’ll give me a free promo too. Qualpro is probably swimming in calls from idiot lemming managers right now.
Karen Wilhelm says
How can lean be called “inward looking” when it starts with the customer when it defines value and starts looking at value streams?
“Lean Six Sigma” is going to be inescapable now that the military has adopted it as a mandate. There are some places where lean as been used effectively, like Anniston Army Depot and Warner Robins AFB, but with a war going on based entirely upon waste, it’s hard to get a good feeling about it.
Josef Horber says
I don´t hate SixSigma, I just hate, how many companies are abusing it to turn hot air into fancy statements that the illiterates from Wall Street want to hear. Some stories of 4 SixSigma Black Belt collegues, while I was a GreenBelt (God
forgive me).
6S BB No.1 – gathered information about what went wrong in previous
projects, then launched a “Risk Management Project”, which stated,
that those things would not go wrong in the next project. I
emphasize, he just stated it, he did not influence it, there was no
cause-and-effect relationship. The project finally went OK, due to
all the others, who did their jobs and not due to this BB. However,
he was rewarded with a nice financial bonus
6S BB No.2 – toured a warehouse once, then pulled me into the project
of improving that warehouse, which I did in 6 months hard work
together with the guys in that warehouse. During this he stayed out
so much of the project, that everybody forgot, that he was supposed
to lead it. So me + the warehouse guys were not only the ones doing
the work, but also the ones taking the beats, because it all went too
slow in the eyes of management. This BB has been promoted in the
meanwhile all the way up to a Master Black Belt.
6S BB No. 3 – saw me + the warehouse guys turning the above mentioned
warehouse upside down. My project´s goal was to reorganize the
warehouse, but once we found stock discrepancies, we audited and
counted the parts, so we cleaned up all the mess too, while we were
working. This BB launched a project aiming at improving record
accuracy in that warehouse. I got beaten up for loosing time on
counting (useless in the eyes of management). The BB got the credit +
the bonus, because record accuracy went up, and that was his
project´s goal. Unfortunately, nobody cared about cause-and-effect
relationships… again.
6S BB No. 4 – unfortunately, I can not tell You, what she was doing,
in fact nobody can, because she has locked herself into her office
for most of her time. The only thing, I remember was us filling out a
survey asking our overall job satisfaction, the bad results
disappeared in the bosses desk, and that was it.
All 4 guys were appointed to BlackBelts, because they worked so
badly, that nobody asked them to do project work, so they did not
bring in enough revenue to finance their own cost. Since BlackBelts
were pushed into projects from above, this was the only way of
getting revenues for their poor work… so in fact the only alternative
to firing them.
Maybe this company or business unit was especially bad, but if the
others were only half that bad, the whole institution of BlackBelts
would still be a great theater game with huge costs and almost no
real benefits. The only good thing about it was, that the Wall Street
analysts heard, that the company is making “tremendous quantum leaps”
in improving efficiency, quality, blablabla and so on and drove the
stock price up. In summary, it was hot air.
Regards,
Josef
Manny Sequeira says
Nike’s old mantra “Just Do It” comes to mind!
Many well read folks can talk up a good story – it’s the ones than can execute that really drive improvement.
Jonathan Allen says
> Ok… why were those 58 selected (ok, that is “more than a quarter” of 200), and if that’s the population on which the 91% is applied, then why does 91% of 58 not yield a nice number?
Lets see…
58 x 0.91 = 52.78 companies
Ok, lets try 53.
53 / 58 = 0.91379310344827586206896551724138
Round that to 2 places and you get…
91%
Math, it isn’t that hard.
True_Liberal says
Six Sigma can definitely improve a process or a product. However, you can wind up creating a perfect product (by SS definition) that no one wants or uses, that has little or no market.
So a touch of common sense may possibly help. ;)