Magazine article CRM Magazine

Six Sigma: What Went Wrong? A 60 Percent Failure Rate Suggests Process Change Requires Behavior Change

Magazine article CRM Magazine

Six Sigma: What Went Wrong? A 60 Percent Failure Rate Suggests Process Change Requires Behavior Change

Article excerpt

SINCE JACK WELCH, the former chief executive officer of GE, popularized Six Sigma in the late 1990s, the business-management methodology has had a profound impact. Yet, amazingly, the majority of all corporate Six Sigma initiatives--60 percent--fail to yield the desired results, according to Praveen Gupta, a noted author who has been involved with the methodology since its origin in the 1980s.

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Amid rising concern regarding these failures, more corporations--across multiple industry sectors--are now pulling back on their Six Sigma initiatives, realizing that the methodology by itself is not the cure-all for corporate ills.

At Home Depot, for example, former CEO Robert Nardelli was ousted after his strict focus on Six Sigma negatively affected worker morale and consumer sentiment. In the American Customer Satisfaction Index rankings, the company dropped from a top spot among major retailers to the bottom in 2005. Profitability soared, but the stock price plummeted.

3M also struggled with Six Sigma, though it seemed promising when first implemented under CEO James McNerney, a former GE executive. Profits initially grew approximately 22 percent a year, but then languished. Experts questioned whether McNerney's--and Six Sigma's--unyielding emphasis on efficiency stifled 3M's creativity and innovation.

These examples show that companies cannot focus on implementing Six Sigma in isolation. But are there ways to supplement the methodology to improve its likelihood of success? Six Sigma is merely a set of process tools that should be only one part of a more holistic process-improvement strategy. Equal attention must be paid to people, innovation, and customer relationships.

We often note a behavior-change gap within companies that devote significant resources to the Six Sigma philosophies. The experts driving these initiatives tend to be extremely successful at developing technical changes that positively impact company performance. They typically excel in statistical analysis and in addressing specific parts of the process. Much less specific and robust, however, are their efforts regarding the workers upon whom the company depends. With any significant change in internal processes, just the initial talk of the intended change can be unsettling to a workforce comfortable in its current routine. …

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