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Six Sigma-
Let’s know more about Six Sigma
Six Sigma is not only essential to solve chronic business problems but also practised as a management system. It is known to be a methodology, management and now a philosophy. Today, Yellow Belts, Green Belts, Black Belts, Master Black Belts learn Six Sigma as a structured methodology, however very few are skilled to pursue Six Sigma as an overall management system and a way of life. The journey starts by skilling in the metric and the methodology and simultaneously setting up a context for beginning to understand Six Sigma in the day to day culture.
Six Sigma is an organizational approach for excellence across all business functions, and its key objective is to reduce variation in the business process. It may be utilized for both increase in top-line growth as well as reduce bottom line costs. Broadly, Six Sigma can be practised in two ways in any organization i.e. Transformational change and Transactional change.
In case of Transformational change, we apply it across the board for large-scale fundamental changes throughout the organization like changing processes, cultures, and achieve breakthrough results.
However, in case of Transactional change, we apply tools and methodologies to reduce variation and defects and dramatically improve business results.
There are several punch lines in vogue in connection to Six Sigma viz.:
❖ To achieve the level of 3.4 defects per million opportunities
❖ A statistical approach for articulating and solving chronic business issues
❖ It’s a metric, methodology, management system and philosophy.
❖ A structured methodology to reduce variation in business processes
❖ A problem-solving system which focuses in bottom-line growth
❖ Always strive to improve in customer satisfaction
❖ An approach based on facts & data
We all know that a process is the basic unit for improvement in any business function. It may be a product or a service process that an organization provides to its customers, or it could be an internal process within the organization e.g. as invoice preparation or assembly process. Six Sigma is all about the process improvement to increase performance and decrease variation within that process. This leads to reduction of defects and increase in top-line and bottom-line of the company, it also boosts morale of employees, product or service quality.
In maths of standard X, we all learnt ‘Sigma’ means Standard Deviation. The same Sigma is also referred to in ‘Six Sigma’. Statistically ‘Six Sigma’ means a process is operating with such a high standard that there are chances of only 3.4 defects per million opportunities. This points towards a high degree of consistency and low variability in a process. Statistically, the process should be operating with very small standard deviation to achieve such a high level of operational efficiency.
Why Six Sigma?
One may wonder if there are various quality tools and methods available but still why Six Sigma is so popular? The answer is because of its wide spectrum usage i.e. it may be adequately applied not only into a manufacturing set-up like assembly of vehicles but also to a service set-up like medical insurance to clients. In fact it may be applied to any sort of possible business process in the world.
History of Six Sigma
The story started with an experimental use of statistics to solve some issues inside the Motorola company in the USA during the late 1970s. Realizing the benefits of this change, it was further developed and formulated during 1981 as a methodology for problem solving by Dr. Mikel Harry together with Bill Smith. Later, in 1987, Motorola started companywide implementation of this new problem solving methodology across all functions. The relentless work done by Bill Smith to seed, fertilize and popularize ‘Six Sigma’ methods crowned him as the father of Six Sigma.
Allied Signal (of USA, now known as Honeywell) was the first company after Motorola who realized Six Sigma’s benefits and started early implementation. Later, G.E (USA) under the renowned leadership of Jack Welch grabbed Six Sigma with both hands and implemented it throughout the organization.
The STATISTICS behind the Six Sigma methods are age old things, and were there from centuries e.g. Six Sigma relies a lot on the normal curve which was first cited by Abraham de Moivre in 1736 and later extensively used by Carl Friedrich Gauss in the decade 1810, and also known as Gaussian curve. However, the smart guys from Motorola bundled all statistics with logical reasoning and methodology to solve business problems and termed it as ‘Six Sigma’. Today, it has grown so much that it has become an area of study.
Motorola’s Focus on Defects
Though the basis for Six Sigma was laid in the late 19th and early 20th centuries, it wasn't until the mid- 1980s that these concepts saw large-scale success in the United States. Decades after Toyota developed its system, engineers at Motorola began to question how effective their quality management programs were. Those questions first arose after a Japanese company took over a Motorola television manufacturing plant. By applying Lean concepts, the new company began creating televisions that demonstrated 1/20th the amount of defects as Motorola’s own television sets.
At the time, departments across Motorola measured defects as a ratio of a thousand opportunities. Bob Galvin, the CEO of Motorola, issued a challenge to his team. He wanted to see an improvement in quality and production—not just any improvement; he wanted a ten-fold improvement in half a decade. Engineer Bill Smith and a new addition to the Motorola team – Dr. Mikel Harry – began to work on the problem.
The team realized that measuring errors against a thousand opportunities didn't provide the level of detail needed for true statistical process control. Instead, the engineers wanted to measure defects against a million opportunities. We know that sigma levels were already defined and the idea of using sigma levels as a measure of quality began with Shewhart. It wasn't a long jump for the Motorola engineers to make from their desire for more accurate data to the basic concepts of Six Sigma as both a goal and a methodology.
Throughout the next two decades, Motorola worked to perfect its Six Sigma methodology, seeing positive results along the way. In addition to statistical tools, the team created a step-by-step process by which any team--in almost any industry--could make gains and improvements. For the first time, this type of statistical process control was taken out of the manufacturing environment on a large scale company-wide. Motorola applied the method to customer service, engineering, and technical support. It used the process to create a collaborative environment between stakeholders inside and outside of the organization. It was highly successful; according to Motorola, the company saved more than $16 billion as a result of continuous process improvement initiatives within 12 years.
Motorola did more than improve its own systems and products, though. Galvin directed his team to share Six Sigma with the world. Motorola and its team published articles and books on the Six Sigma method and implemented efforts to train others. In this way, they created a methodology based on statistics that could be taught and implemented within any organization or industry.
ABB, Allied Signal, and General Electric
After leaving Motorola, Dr. Harry joined Asea Brown Boveri. At ABB, Harry worked with Richard Schroeder, who would also become a champion for Six Sigma. In fact, the two men later cofounded the Six Sigma Academy. At ABB, Harry came to realize a key idea in the evolution of Six Sigma: business, or profits, in some ways came before quality. Quality, in fact, was a driving factor of business. Customers didn’t make purchases if the quality was poor. Because the individuals with the ability to decide in favor of Six Sigma initiatives were highly motivated by dollars, Harry incorporated financial tactics into the Six Sigma methodology. For the first time, the method was focused on the bottom-line as a primary goal with other concerns and goals stemming from financially-led goals.
In 1993, both Schroeder and Harry changed jobs, joining the team at Allied Signal. Allied Signal’s CEO at the time was Larry Bossidy. He was interested in Six Sigma but realized that executives and other high- level leaders experienced knowledge barriers while attempting to interact and collaborate with analysts, process engineers, and Six Sigma experts. Bossidy suggested that leadership at a company had to be well-versed in Six Sigma to pick the right projects for success and support those projects on a company- wide basis to ensure success.
Harry, who is sometimes referred to as the father of Six Sigma, created a system for educating executive leaders. In conjunction with others at Allied Signal, he developed systems that allowed Six Sigma to be effectively deployed by leadership throughout an organization in its entirety.
Around the same time, GE CEO Jack Welch entered into the Six Sigma arena. Prior to learning about Six Sigma, Welch had stated he was not a proponent of quality measures. He’d previously criticized quality programs as heavy-handed approaches that did little to deliver results. Welch invited Larry Bossidy to speak at a GE corporate meeting in 1995. He also requested an analysis regarding the benefits of implementing Six Sigma at GE. At that time, GE was performing at between three and four sigma. The potential savings should the company rise to six sigma were enormous; estimates were $7 to $10 billion.
Welch is known as a champion of Six Sigma not because he contributed in major ways to the development of statistical process controls or the Six Sigma toolsets, but because he demonstrated exactly how leaders should approach Six Sigma. He also made GE a historically successful Six Sigma organization by tying Six Sigma goals to employee reward structures. Employees were no longer only compensated based on financial performance factors; they were also evaluated based on Six Sigma performance. Suddenly, employees at every level had a personal reason to become involved in continuous process improvement, and employees and managers were supplied with the Six Sigma training to succeed.
Continued Growth of Six Sigma
After the impressive success of corporations like GE and Motorola, organizations across the globe rushed to implement Six Sigma. However, in the rush to implement the process, many of them executed improvements poorly or failed to gain an adequate understanding of statistical process control before moving forward with improvements. Although Six Sigma methods have helped in saving millions and billions of dollars for the organizations apart from improved business processes, few companies walked away with a bad taste for the process. This resulted in the following misconceptions and myths about Six Sigma;
★ Six Sigma is solely concerned with metrics and ignores common sense:
The truth is that nothing in the world works without common sense. Six Sigma also
embraces traditional common sense ideas like brainstorming, but also validates them with data. The root causes and solutions of any problem are weighed considering the business process objectives and organization’s strategy.
★ Six Sigma is too expensive:
Slowly integrating the concepts into a company often costs very little in the long run. Organizations have to balance how they adopt Six Sigma with their financial status, one must keep in mind that when implemented correctly, Six Sigma generally leads to huge savings.
★ Six Sigma can fix anything:
While Six Sigma can be applied to any problem of process, it’s not always relevant to problems of culture or people. If morale or other human resource problems are at the root of an issue, statistics can’t help. However, if morale is low because a process is difficult to work with or is performing poorly, Six Sigma can be used to improve the process, thereby improving morale.
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