The Six Sigma Process Improvement Model, as defined by our textbook, is a five step procedure that leads to improvements in process performance. The following five steps compromise the model: Define, Measure, Analyze, Improve, and Control. This extremely popular and effective method of process analysis and improvement was first conceived by engineers at Motorola in 1981. Over 40 years later, the Six Sigma approach has been adopted by about half of all Fortune 500 companies. Its universal principles can be applied to any business anywhere on the globe. The company that famously made Six Sigma central to their business strategy and core processes was General Electric. More specifically, Jack Welch was the man who changed the entire culture of General Electric, starting in 1995, by insisting on a complete overhaul of General Electric’s process analysis techniques as well as fundamental changes to the company’s business operations.
Interview with Jack Welch:
Jack Welch became aware of a great deal of defects that had gone unnoticed and/or unreported which were costing the company a lot of money and hindering its productivity. Drawing inspiration from the process analysis pioneers at Motorola, Jack Welch underwent a five year process of implementing Six Sigma into General Electric’s core business processes. His monumental efforts saved the company a reported $12 billion in the first five years. Other companies, such as Samsung, Ford, Boeing, Amazon, and GlaxoSmithKline, took note of General Electric’s sudden culture change and staggering savings and began to implement Six Sigma into their own business models. Because of General Electric’s widely publicized success, “Six Sigma’s present day success is rooted in that of Jack Welch and General Electric.”
General Electric was so successful in its implementation of Six Sigma because it outlined and focused on four key steps: Training, Mentoring, Leadership, and Focused Implementation.
Starting in 1995, General Electric required its employees to complete a 100 hour course and complete a Six Sigma project by 1999. Throughout this training process that covered all five steps of Six Sigma, employees learned how to define and identify processes, measure process output, analyze criticality of process inputs, devise improvements through modifying the inputs, and finally, learn how to control processes by controlling the relevant inputs. Additionally, employees underwent follow-up training to sharpen and ingrain their newly acquired Six Sigma skills. General Electric also hired Six Sigma experts, known as Master Black Belts, to help implement Six Sigma within the company by training and mentoring employees. Strong leadership was critical to General Electric’s success in completing this operations overhaul. CEO Jack Welch made sure that he had full support amongst his fellow senior executives and also his lower-level managers in implementing this strategy. Lastly, General Electric utilized Focused Implementation, a term that encompassed three slogans: “’Show Me the Money’ meant GE focused on the bottom line, cutting costs to compete in price-sensitive markets. ‘Everybody Plays’ meant that even outsourced suppliers were expected to participate in the Six Sigma initiative to make sure that the quality was assured from start to finish for each product. ‘Specific Techniques’ meant GE used process maps and other Six Sigma tools to rank and associate projects to overarching business goals.”
In conclusion, the stories of General Electric’s success and Six Sigma’s rising popularity in the business world are intertwined as a result of the ambition and vision of General Electric CEO Jack Welch.
For more information on General Electric’s approach to Six Sigma, this PDF offers much more detail.