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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: 2) by VLM on Monday July 02 2018, @02:37PM (1 child)
There's also an aspect of manly chest thumping going on with six sigma.
Someone who doesn't know whats going on MIGHT attribute success at my workplace to the really nice hotplate that keeps my breakfast tea hot but not boiling.
The reality is my workplace is successful enough that I can show off by wasting money on a really nice hot plate for my tea.
Confusing goals with effects. If you want a successful company where you can afford useless junk like a really nice hot plate for my tea pot, then work really friggin hard for a long time. If you're dumb, then if you want a successful company, you'll buy a really nice tea pot hot plate and wonder why the company didn't magically exceed expectations.
With a side dish of "look at me, I'm so frigging great we can waste 90% of our time on useless BS and still kick all you're all's butts". If you want to be as tough as the guy who wan whip someone's butt with one hand tied behind their back, training should be to train hard, not to tie your hand behind your back and then wonder why you're not winning fights. And that's six sigma in a nutshell, its an executive dick size contest to see who's got a department so incredible they can waste 90% of their labor and still kick everyone elses butt, as if the performance of that department has anything to do with today's short term seagull manager anyway.
(Score: 1, Informative) by Anonymous Coward on Monday July 02 2018, @03:30PM
> you'll buy a really nice tea pot hot plate and wonder why the company didn't magically exceed expectations.
A sad/amusing example of this (depending on your point of view) occurred in NASCAR racing over the last 20-30 years. Traditionally, NASCAR teams were led by charismatic (and often very clever) Crew Chiefs. Not college educated, they came up through the ranks of Saturday night racing and have more in common with an old style tough-as-nails football coach than with an engineer. The really smart team members might use a little bit of high school algebra to calculate very simple things like spring rates (Hooke's law), but much of the behavior of the car was beyond comprehension.
Then the tobacco money started pouring in, the sport went from regional to national and the owners started looking for an edge. They went to Detroit and got snippets of engineering assistance. Often the first toehold was a few trips to a wind tunnel. An open minded team member might cotton up to an engineer with a question about something that they couldn't make sense of. Then the most forward looking team owners hired some experienced engineers to support all of the trial and error learning in their organizations.
Sometime in the mid-90s, the word started to get around, teams with a few engineers were starting to consistently out-perform everyone else. All of a sudden, every team had to have an engineer...and many inexperienced people were hired, often directly out of university. This failed miserably, the young engineers didn't have the background to slip into a team that ran on back-slapping and superstition [1] and start making sense of things, so they never got into the in-group that had influence on the race car.
It's now to the point that some of the Crew Chiefs are engineers and all the larger teams have engineers on staff (perhaps 50-100 people), so the transition is nearly complete. 30 years ago, if there was a change in the rules, it might take the better teams a year or two to evolve a new setup that worked with the change. Now, there is so much advanced math modeling available that the top teams adapt to a rule change almost immediately--large experiments are run in simulation to determine a good compromise. Not to say that it is a solved problem, quite often one of the top teams manages to lose their way and drop off the podium for a year or more.
[1] The differences between lap times and the margins of victory are often so small that actually quantifying what makes one car setting/adjustment better than another is a very hard problem. It is easy to fall into superstitious or religious thinking, as opposed to doing your own thinking, running your own experiments and reasoning from first principles.