Strategy

Deep Six for Six Sigma?

A program that encourages slow and steady growth is good ''for fixing problems, not for innovation,'' says one observer.
Stephen TaubMay 18, 2004

The relevance of Six Sigma, the corporate efficiency program made famous by General Electric, is being questioned by none other than one of its creators.

Jay Desai, who helped implement Six Sigma at the conglomerate, said in a recent Reuters story that when companies must demonstrate change through new products every couple of quarters, companies need to move beyond the 20-year-old method in order to compete. “Six Sigma does not create innovation,” he told the wire service.

Reuters noted that some of the largest companies still swear by the program. In a statement, Caterpillar chairman and chief executive officer Jim Owens said that “virtually all” company employees are involved with the program and that Caterpillar boasts 2,700 trained Six Sigma “black belts.”

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And Joan Abraham, a manager for the Six Sigma Academy, told the wire service that the training academy has seen “an expansion to mid-size companies, small companies and even private companies.”

Reuters pointed out, however, that the program encourages slow and steady growth while investors want top-line growth fueled by new products.

“If Lucent applies Six Sigma, they die,” said Desai, referring to the telecom giant trying to revive itself after racking up $30 billion in losses and suffering through an accounting scandal. “Six Sigma is not a solution for new products or a breakthrough strategy,” added Desai, who currently runs the Institute of Global Competitiveness, a management think tank.

“We’ve looked at Six Sigma,” said Lynn Mercer, Lucent’s vice president of quality, according to Reuters. “It would be an excellent tool set, but it’s too narrow a focus and rigid to allow some of the innovation, where some of the creativity occurs.”

And Michael Hammer, founder of management education firm Hammer and Co., insisted in the story that Six Sigma’s focus on the bottom line is its biggest drawback. “Six Sigma will get you to parity, but not ahead of your competition,” he told the wire service. “It’s for fixing problems, not for innovation.”