The pursuit of process efficiency
Let there be no misunderstandings: six sigma is a process improvement tool. It is a management tool to improve the efficiency of operations by reducing waste and cycle time. This post will focus on the philosophy and not the methodology of quality management.
The philosophy of process improvement
Six sigma emerged as the philosophical underpinning of production experts and is most popular among engineers (only Feigenbaum had an economics background). For many it is the strongest link between the quantitative part of measuring and analyzing and the business rationale of improving and controlling.
The underlying idea is that organizations are akin to machinery. In a mechanism just like in business, only moving parts shall move, energy shall be transferred with minimal loss, and unnecessary parts are just weight: the output-input ratio is the ultimate purpose of processes.
This model does not represent how humans operate. Non-conformity and balancing alignment with autonomy enable innovation (both historically and in recent management examples at e.g. Spotify); maximizing for efficiency has catastrophic consequences of system failures (e.g. in planned economies); and humans simply love choice (see behavioral economics and the nudge theory). All these valid points are rejected as nonsense with the zeal of the converts. In this theory efficiency drives prosperity.
Six Sigma is almost dogmatic in its relentless pursuit of efficiency. Three issues emerge (in semi-serious criticism):
- Every decision, action, and retrospective is seen as a step closer to perfection. In its maximalist goal it has an agenda of changing culture and people: everybody should work towards Total Quality. It is not so distant from Calvinist Geneva, where men are sinners and ministers are tasked with organizing a productive community.
- Six Sigma is the more process-oriented version of the same philosophy. It operationalizes Total Quality in a set of routine actions that shape improvement projects: define, measure, analyze, improve, and control. These are the rituals of efficiency to be performed at regular intervals.
- Six Sigma knowledge is structured into tiers, or ‘belts’: yellow belt for basic principles, green belt for math in production, and black belt for even greater statistical depth. This is oddly different from academia. A student will be taught statistics regardless of its knowledge of the philosophy of production; a yellow belt will be taught to have faith in statistics without much background. It is designed to not communicate downstream the black-belt secrets of production, as if the understanding standard deviation were a dangerous tool in the hand of the uninitiated.
Founding fathers
Six Sigma has been around for four decades. Motorola introduced quality management to keep up with competition as the Japanese were absurdly efficient in their production runs. Motorola turned her business practices around in 1986 thanks to Bill Smith and Mikel Harry who later went on to found the Six Sigma Academy with Rich Schroeder. Their radical approach was new, but their ideas have been around for more than a generation. They didn’t start the fire.
Philip Crosby’s 1980 book “Quality is Free” already sketches the four absolutes of quality. The definition of quality is conformance, its system is prevention, its standard is zero (defects), and its measure is the price to pay for not conforming. This constitutes “educational nourishment” that will guide managers towards their vision.
These approaches breathe new life into Armand Feigenbaum’s 1961 theories of Total Quality Control: quality is not a process outcome, but an organizational effort to maintain, improve and control quality. Building on this idea, Edward Deming formulated 14 points to ensure quality is core in the organization. Some of the 14 points still resonate nowadays: break down silos, improve collaboration, empower the employees, avoid KPIs, and train your managers. All these points have been later developed in more recent theories, yet Deming’ contribution puts an emphasis on people.
The eclectic genius Joseph Juran blended independently quality control with the Pareto principle, Taylorism, and Japanese management ideas (he bonded with Kaoru Ishikawa). The result was Juran’s Trilogy: responsible leadership uses quality planning, quality control, and quality improvement. While these concepts are taken from financial control, Juran puts customer satisfaction as the goal, and roasts overconfident managers for wanting to take immediate action without knowing much of their operations. In the 1988 video below he rightfully explains his views.
Contributions to the field abound from other practitioners:
- Dorian Shainin’s efforts to identify the dominant variable in defects (the Red X) is the blend of Pareto’s principle and Genichi Taguchi’s statistical experiments;
- Kaoru Ishikawa’s organizational theories are most known for the fishbone diagram for the identification of causes, and kaizen “change for better” approach to processes;
- Dean Stamatis since the 1990s focuses on risk management and the effects of failure as pivotal improvement points.
- Walter Shewhart for strongly influencing Deming’s plan-do-check-act wheel.
Variation is evil
The idea of sharing responsibility for quality, taking a systemic approach, and systematically measuring processes spread rapidly because.. it worked. Quality control was central in realizing productivity gains and better margins. Technology was ripe too: measuring quality went hand in hand with the adoption of computers. By the end of the 90s everything from manufacturing a car to the provision of health services was a problem of optimization.
Six Sigma became more than a rational approach to defects in the 90s. Emblematic of this shift is Jack Welch. As CEO of General Electrics, Welch escalated a quality management tool into a philosophy of change. He explains how “variation is evil” and you have to “feel it in your bones” to be customer driven. By the time he was done with his revolution, Welch transformed GE into a highly valuable company: Six Sigma won over the market.
GE spectacular financial success reflected on Welch. The ‘CEO of CEOs’ (Forbes) quadrupled his company valuation by cutting costs and aggressively diversifying its activities. As noted in a Quartz article by Oliver Staley, only in hindsight we can criticize the hype.
GE applied the most advanced effective theories to cut and streamline, finance and expand an empire. And Six Sigma was at the foundation of this movement. Welch ruled supreme in what were extreme conditions:
- a stable environment at home
- new markets abroad, globalization, and de-regulation
- rich capital networks
None of these conditions were sustained. What continued under GE’s new CEO Jeff Immelt (2001-17) were cuts, efficiency, and diversification. All three great tools, but highly situational and unsustainable in the long run. GE fell rapidly thereafter, and in 2018 it was pulled from the dow industrial average index. It has then split up in three: aerospace, healthcare, and power generation.
..And the Manager is His Messenger
Jack Welch has been hailed as the and is now a cautionary tale: Roger Martin on the HBR is caustic in its assessment; David Gelles sees him as the root of most issues in corporate America (here in Forbes); and Bill Gates reviews the book on GE‘s demise pondering if he too will have a similar legacy.
We can also read the radicalization and the extremism of another philosophy: that efficiency and business success is worth pursuing in its own. This connects Welch with Six Sigma and the philosophy of being relentless in the pursuit of greater business returns.
Six Sigma is a tool of the 80s which became its own dangerous set of ideas in the 90s and 2000s. The rationalization of processes can bring extreme benefits. Its method is solid and well tested. But as many other set of ideas it should never become an end in its own: “eliminate waste” is not a moral imperative. Welch too was a chemist with a passion for management who turned into a manager with a passion for finance. He was too good at both, and the latter would be the demise of GE.
I am preparing the Green Belt Six Sigma certification from Kennesaw State University. I am impressed by the production quality of the online materials and the simple, direct explanations in bite-sized servings. Highly recommended.
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