As boundaryless learning has defined how we behave, Six Sigma quality will . . . define how we work.
When Jack Welch embraces an idea, that idea becomes a passion. This was true when he embraced quality—specifically, “Six Sigma” quality—in the late 1990s. He was convinced that focusing on quality would make General Electric the most competitive company on earth.
A HIDDEN FACTORY
GE had long been associated with quality. But in the 1990s, it was becoming painfully clear that GE’s quality was not world class.
It’s gotten better with each succeeding generation of product and service. But it has not improved enough to get us to the quality levels of that small circle of excellent global companies that had survived the intense competitive assault by themselves, achieving new levels of quality.
It wasn’t as if Welch had ignored quality. But he had assumed that he could attack the issue of quality through other strategies. For example, the Work-Out program captured Welch’s most important “cultural” goals: openness, informality, boundarylessness, high involvement, self-confidence, productivity, and so on. Welch hoped that Work-Out (among other efforts) would help keep GE’s quality high.
But by the mid-1990s, employees were arguing that greater productivity was not possible without higher quality standards. Too much time was being spent on reworking products. One senior manager referred to the “hidden factory” in which all of that reworking went on.
So Welch gradually became convinced that being as good as the next guy, or even a little better, wasn’t good enough.
We want to be more than that. We want to change the competitive landscape by being not just better than our competitors but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success, that our products become their only real value choice.
The question was: How?
As it turned out, the answer was Six Sigma. Simply put, this measures mistakes per million operations. One sigma means that 68 percent of the products are acceptable. At six sigma, only 3.4 defects per million operations occur.
Pressure from Japanese competitors convinced American companies like Motorola that it was time to rethink things. The quality of American goods was then hovering at around four sigma levels. Japanese manufacturers of products like electric equipment, cars, and precision instruments were already at six sigma levels.
In the late 1980s and early 1990s, Motorola pioneered Six Sigma, increasing its quality from four sigma to five point five sigma. This yielded $2.2 billion in savings, and other companies soon launched their own Six Sigma programs.
A PHILOSOPHICAL PROBLEM
So Welch found himself in a dilemma.
He agreed that GE needed to push quality improvement. But he worried that Six Sigma was inconsistent with his business strategies. It was centrally managed. It seemed too bureaucratic with its reports and standard nomenclature. It assumed specific, agreed-upon measures.
Work-Out had been designed to eliminate reports, approvals, meetings, and measures. Six Sigma seemed likely to put them back in. “I don’t know that it’s us,” he told one colleague.
THE CONSENSUS: WE NEED QUALITY
In April 1995, a survey showed that GE employees were dissatisfied with the quality of the company’s products and processes. Many of them knew that a number of other companies had achieved dramatically higher quality levels through a disciplined, rigorous approach.
A few months later, Larry Bossidy reinforced the message. Bossidy had been a GE vice chairman, but he left in July 1991 to become CEO of AlliedSignal, where (in 1994) he launched a Six Sigma program.
“GE is a great company,” Bossidy told GE’s leaders. “I know. I worked there for 34 years. But there is a lot you can do to become greater. If GE decides to do it, you’ll write the book on quality.”
Welch was impressed. Ultimately, he and his colleagues decided that GE had to put together a serious quality program. But they also decided to do it in a way that was special.
As former Vice Chairman Paolo Fresco commented: “When GE decides to do something, it goes after its own objectives with a vengeance, with an intensity which is unique.”
Within a few years, Six Sigma had become more than a GE program.
It had become the new corporate mantra—a battle cry, as much as a quality initiative.
WELCH RULES
- Tackle quality head-on. Don’t rely on other company initiatives or strategies to tackle the problem of quality. Attack it directly.
- Find the “hidden factory.” Don’t let low quality standards necessitate endless reworking.
- Use quality to make sure that your products are your customers’ only actual value choice. Quality can be just as important as price, features, and so on.