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posted by martyb on Monday July 02 2018, @06:26AM   Printer-friendly
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.


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  • (Score: 2) by Phoenix666 on Monday July 02 2018, @04:33PM

    by Phoenix666 (552) on Monday July 02 2018, @04:33PM (#701441) Journal

    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.

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