Suspicious Results from Six Sigma
Companies have invested billions in Six Sigma and Lean programs, but have those investments really changed the system? Fortune in fact published an article with the statement that “of the 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since.” The statement is attributed to “an analysis by Charles Holland of consulting firm Qualpro (which espouses a competing quality-improvement process).” The gist of the article is that Six Sigma is effective at what it is intended to do, but that it is “narrowly designed to fix an existing process” and does not help in “coming up with new products or disruptive technologies.”
Economist Tor Dahl researched and compared two sets of business units, those that are considered quality-focused (six-sigma), and those that are considered performance-oriented (stable and consistent). What he found was that corporations that focused on quality encountered lower changes in productivity and lower net income. The net profit rate dropped by 7.65 percent per year.
The revelation of Dahl’s study is that over the same period, the performance-oriented corporations that focused on productivity are also associated with high quality. That is, those companies that primarily focused on increases in productivity produced high quality products and services to boot. Exceptional Performers differed from the Six Sigma companies in dramatic fashion. Productivity and net profit rate were extraordinarily higher.
Source: Productivity or Quality?
Source: New rule: Look out, not in. Old rule: Be lean and mean.
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