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from the trademarked-thing-losing-its-luster dept.
Dave Lindorff reports via CounterPunch
Over a generation ago, engineer Bill Smith, working at Motorola, developed a management system called Six-Sigma, designed to help companies avoid quality problems in their products and business processes. His system caught morphed[sic] into a general theory of management, and became a catch-word and marketing goldmine at business schools as well as requirement for promotion at large corporations.
In 1995, Jack Welsh, CEO of GE, made Six-Sigma central to his company's whole management approach. If you wanted to be promoted at that leading Fortune 100 industrial firm, you needed to be certified in Six-Sigma. Other companies followed suit and today most large US corporations and many abroad, as well as some public organizations (including the US military), claim to adhere to the model, and to promote management personnel based upon their having achieved so-called "black belt" or "green belt" status in understanding its precepts.
Indeed, GE's success in growing rapidly and achieving record profits year after year made Welsh and Six-Sigma (a trademarked term owned by Motorola) a leading model for top-level managers everywhere.
Jump forward, though, and GE is now being called an epic management disaster by analysts. The company, with Welsh at the helm, famously expanded into banking and financial services, got caught with its corporate pants down in the Fiscal Crisis and Great Recession that hit in 2007, and is now going through a wrenching divestment and break-up process that has seen its stock price fall from a high of $87 a share in August of 2000, when everything seemed to be humming along nicely, to today's low of $12.88, a level that valued the company at 50% of what it had been worth just a year ago.
Last week, in a final indignity, the company, which had been one of the original Dow Industrial Average listings when that index was created back in 1896, was kicked off that widely followed list of Wall Street's largest and most important firms, embarrassingly replaced by the pharmacy chain Walgreens.
[...] Welsh noted that his performance as a manager would be judged not by what happened to the company under his watch, but by how it did in the decades after his departure.
The answer is now in: disastrously.
The same actually can be said about many of the US companies that adopted Welsh's vaunted Six-Sigma model for strategic management.
The question then, is why nobody in business journalism is questioning Six-Sigma.
[...] the company has become an object lesson in why both Six-Sigma and GE's approach to growth by acquisition and diversification should be viewed with great suspicion.
And yet, instead there is just silence.
[...] US politicians of both major parties, and especially Republicans, are quick to say that government agencies should be run more "like a business". The Trump administration has taken that even further, putting actual businesspeople in charge of many of the government's key departments and agencies. Are these department secretaries and agency heads going to be applying the discredited GE Six-Sigma model to the government operations they direct?
[...] It sure would be great if the Department of Defense, the National Security Agency, the CIA, the DEA, the FBI, the Department of Homeland Security, the Bureau of Land [Management], and the Commerce Department, at least, could get the GE treatment.
(Score: 4, Funny) by Runaway1956 on Monday July 02 2018, @07:24AM (14 children)
Ehhh, I never thought much of Sigma Six anyway. Old lessons, rephrased, really don't add a whole lot to the game. When they seem to poorly rephrased, something is lost. But, Sigma was all the rage with new college grads, a few top dogs in corporations decided they liked it - and Sigma becomes a big thing.
I guess what made Sigma so palatable is, it doesn't make much of ethics. The low ethical standards you mention fit Sigma well.
(Score: 5, Interesting) by anubi on Monday July 02 2018, @07:47AM (11 children)
I have a strong feeling it wasn't six-sigma that did them in... rather it was lousy implementation.
The concept of "doing a good job" has been around for ages... but it changes names about like we change fashion.
For me, it was first "a stitch in time saves nine", then "the Taguchi Method", where statistics and variances concerning production environments were introduced, which I think is obvious to any craftsman, but it needed a name. It seemed to morph into ISO-9001.
Then all the management models. Do any of them really work as a model, or is it the man? I have worked under excellent managers, and I have had those who rapidly killed off any enthusiasm I could generate on the job.
They seem to have a name for everything. Management by Objectives... Deming Methods... now Six Sigma.
From my chair, it looks like GE did the same as every large organization or political entity I have ever studied does... all the incompetence but Ferrengi-like behaviour rises to the top, gets in control, and steers the whole organization into incompetence, as political needs of the ruling class override the basic driving forces of the economics supporting the organization... that is meeting the needs of the customer.
A glaring example to me today is to look at our computational infrastructure, designed by those having a need to "lock in" ( business word meaning "to entrap") their customer.
It goes on for so long, like the Tower of Babel in the Bible, until sufficient stress builds up and it collapses.
Its the same thing, happening over and over and over.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 5, Insightful) by c0lo on Monday July 02 2018, @09:33AM (1 child)
FTFY.
Quality done right in an org require the knowledge on what actually the org is doing. A formal approach to process engineering helps, but is not sufficient.
Unfortunately, formal processes are absolutely sufficient for muddling the water with metrics complexity and, more important, for ass covering, blame games and other corporate olympic games.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1) by anubi on Monday July 02 2018, @10:09AM
That is a beautiful FTFY. Thanks!
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by MostCynical on Monday July 02 2018, @10:04AM (1 child)
They went from making stuff (computers, aero engines, power generation equipment) to finance.
They knew how to make stuff- good stuff.
They thought they could make more money being a bank.
Banks are good at that (well, not all of them)
GE.. wasn't.
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 2) by Phoenix666 on Monday July 02 2018, @04:33PM
They were no better or worse than other banks. They hired the same kind of people other banks and financial services firms did. Other such operations that were purely about banking/finance such as Washington Mutual or Lehman Brothers went under, too. Shit happens.
Washington DC delenda est.
(Score: 0) by Anonymous Coward on Monday July 02 2018, @01:26PM (2 children)
6-sigma means 1 error in a billion. This makes sense if you are building computer chips with 100million parts (gates), not so much when you are building widgets with 80 parts and a long supply chain with a bunch of humans involved at every step. Just try going about your day without making a mistake of any kind. A human lifespan is ~25,000 days. Now go through 40 lifespans without making a single mistake. Ever.
(Score: 4, Interesting) by anubi on Monday July 02 2018, @02:00PM (1 child)
Each thing may have hundreds, thousands, or tens of thousands of little parts.
Statistically, even though each individual part may look good, the assemblage may not look good at all.
Each part has to be made extremely consistent for the whole shebang to come out looking good.
If you control your inputs, keeping your stuff in tolerance, it isn't all that hard to make perfect product. But all it takes is one piece of crap somewhere and the whole load becomes crap.
Just one tiny connector in your car failing will really mess up your day.
When I was working at Chevron, my boss handed me a copy of "In Search of Excellence", and told me to read it, and if I would follow its teachings, he and I would get along together fine. I still have that copy.
Everything I have seen since looked like derivatives from that book, with mathematical augmentation to the common sense presented in it.
However, history records that the companies so glorified in the book did not fare all that well either. But still, personally, I sure feel a lot better knowing I earned my way by doing something useful. It gave me a much more peaceful outlook on life than knowing I got my stuff by swindling someone else. Its a personal thing with me, even if I cannot seem to find proof that doing something conscientiously beats pulling fast ones.
Its a "God Thing" with me. Somehow, I feel compelled to do things this way. Somehow, I feel accountable for what I have done, and don't wanna face the music for pulling fast ones. I'd rather die a pauper than be surrounded with swindled goods, and it looks like I'm gonna get my wish.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 0) by Anonymous Coward on Monday July 02 2018, @02:44PM
> ... Its a "God Thing" with me.
Have you read, "Round the Bend" by Nevil Shute? Based on your comment, I think you would enjoy it.
(Score: 4, Insightful) by bradley13 on Monday July 02 2018, @01:52PM (1 child)
"The concept of "doing a good job" has been around for ages... but it changes names about like we change fashion."
This. It's just like Scrum, or Devops, or Agile: stuff that any really good team already does, in one way or another. Maybe other good teams can copy an idea or two, and make themselves even better. But try to formalize "doing a good job" and impose in on bad teams? They're still bad, only now they're bad with a method.
Anyway, from what I can see, six-sigma is the same thing for management: take a good team, and it will work (because the team is good). Take a bad team, and G...it's still a bad team. GE's team today is not the same as it was decades ago.
Everyone is somebody else's weirdo.
(Score: 5, Funny) by DannyB on Monday July 02 2018, @03:33PM
If one of the production server's power supply has caught fire, best practice is to schedule a meeting to determine whether DevOps should fix this, or the software team should issue a software patch to correct the problem in order that we can close this ticket as quickly as possible.
To transfer files: right-click on file, pick Copy. Unplug mouse, plug mouse into other computer. Right-click, paste.
(Score: 2) by All Your Lawn Are Belong To Us on Monday July 02 2018, @02:55PM (1 child)
When you get to be the size of a GE, or a Motorola, or Verizon, etc. one of the biggest challenges is keeping the ship going forward in the "right" direction. ("Right" is complex and requires unpacking, but I won't digress.) Inconsistent management methodology is such an organization can be as damaging (if not more so) than lack of technical knowledge. A program like Six Sigma, Agile, Waterfall (management methodologies, all) when applied company-wide establish a framework that can apply across a company and give consistency to operational methods. But that requires buy-in not just on a "yep, we did the scrum" task level, but also a motivational/principle level. It is really tempting to forgo the management bullshit bingo and think "hey, just get good people who can manage their teams however they want...." But in the end those models do keep enterprise organizations operating with a degree of consistency that can't otherwise be achieved for longer periods than otherwise. (If it made more money and bonuses to let everyone do their own thing.... that's what you would see.)
This sig for rent.
(Score: 4, Insightful) by HiThere on Monday July 02 2018, @06:04PM
You've got one part of the problem, but consider:
Some tasks may be better managed by one management model, and other tasks by a different one.
I'm not sure that a unified management model is always a good idea. In fact, I think it may often be a terrible idea. But to judge each case, you need to understand each case.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: -1, Flamebait) by Anonymous Coward on Monday July 02 2018, @09:18AM (1 child)
We know, Runaway, it is obvious from your posts. Don't let that stop you, though! Think of SN as the Para-Olympics for you, after you have been banned from everywhere else.
(Score: 0) by Anonymous Coward on Monday July 02 2018, @10:56AM
Please, list the sites from which Runaway has been banned. Obviously, if we have the data available from those sites, we can have him committed. List the sites, and the reasons for being banned from them, give us some leverage!