Six Sigma is the most powerful breakthrough management tool ever devised, promising increased market share, cost reductions, and dramatic improvements in bottom-line profitability for companies of any size. Read more...
- Publisher: Penguin Random House Audio Publishing Gr
From the book
The Six Sigma Phenomenon
We believe that Six Sigma is the most powerful breakthrough management tool ever devised.
What is Six Sigma? It is a business process that allows companies to drastically improve their bottom line by designing and monitoring everyday business activities in ways that minimize waste and resources while increasing customer satisfaction. Six Sigma guides companies into making fewer mistakes in everything they do-from filling out a purchase order to manufacturing airplane engines-eliminating lapses in quality at the earliest possible occurrence. Quality-control programs have focused on detecting and correcting commercial, industrial, and design defects. Six Sigma encompasses something broader: It provides specific methods to re-create the process so that defects and errors never arise in the first place.
Throughout this book, you will encounter new ideas and principles-some of which will run contrary to what managers have learned in school or professional practice. Six Sigma represents extraordinary sense, not ordinary or common sense; common sense rarely produces extraordinary results. It is our belief that once managers and their companies understand what Six Sigma is and how it works, they will begin to see that many well-accepted past management practices and quality-control methods are less than optimal, or are even wrong.
Industries are desperate to find new ways to buoy profitability. That is why companies as diverse as AlliedSignal, General Electric, Sony, Honda, Maytag, Raytheon, Texas Instruments, Bombardier, Canon, Hitachi, Lockheed Martin, and Polaroid have adopted Six Sigma. Many of these companies are averse to management fads. But they have embraced Six Sigma because they believe the initiative will help them increase market share, decrease costs, and grow profit margins. As a result, they are beginning to tie quality directly to their bottom line.
Six Sigma produces superior financial results, using business strategies that not only revive companies but help them leapfrog ahead of their competition in terms of market share and profitability. By reaching for the seemingly impossible, companies achieve the impossible.
But the biggest reason for the incredible buzz about Six Sigma throughout the business community has been its astonishing success at dramatically improving a company's bottom-line profitability. As a result, Six Sigma has become the darling of Wall Street. Jennifer Murphy, an analyst with Morgan Stanley, Dean Witter, Discover & Co., spent three days at our ranch in Payson and at our Six Sigma Academy in Scottsdale, Arizona, a teaching facility we designed to educate and train executives in the principles of Six Sigma so that they can transform their companies into world-class organizations. Impatient with the negligible effect quality programs have had on the bottom line, Murphy was astonished by what she learned. "Six Sigma companies . . . achieve faster working capital turns; lower capital spending as capacity is freed up; more productive R&D spending; faster new product development; and greater customer satisfaction," she wrote upon her return. She estimates that by the year 2000, GE's gross annual benefit from Six Sigma could be as high as $6.6 billion, or 5.5 percent of sales.
Here are just a few reasons for the enthusiasm so many analysts on Wall Street voice:
General Electric's Jack Welch, a self-proclaimed cynic when it comes to quality programs, describes Six Sigma as "the most important initiative GE has ever undertaken." GE's operating income, a critical measure of business efficiency and profitability, hovered around the 10 percent level for...
"[Six Sigma] is the most important initiative GE has ever undertaken--it is part of the genetic code of our future leadership." - Jack Welch, CEO, GE
"We've taken the difficult but basic Six Sigma skill of reducing defects and applied it to every business process, from inventing and commercializing a new product all the way to billing and collections after the product is delivered. Just as we think we've generated the last dollar of profit out of a business, we uncover new ways to harvest cash as we reduce cycle times, lower inventories, increase output, and reduce scrap. The results are better and more competitively priced products, more satisfied customers who give us more business, and improved cash flow." - Larry Bossidy, CEO, AlliedSignal
"The [Six Sigma] Breakthrough Strategy gives new structure to the tools we already had. Structure has been the key element missing in Polaroid's drive for quality. I keep telling my people that the Breakthrough Strategy cookbook tells us how to use time-tested ingredients in new ways--For us, the results from the Breakthrough Strategy have been quick and powerful." - Mike Hart, Black Belt engineer, Polaroid
"Mikel Harry's innovation of Breakthrough Strategy has taken quality into America's boardrooms. While Dr. Deming's theory of profound knowledge built management awareness and Dr. Juran's trilogy helped to establish the foundation of a solid quality 'science,' Dr. Harry has demonstrated how to make theory become practice at companies like Motorola, ABB, AlliedSignal, and GE." - Gregory Watson, President, American Society for Quality