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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: 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.