GE’s Problems – Strategy or Six Sigma?

The recent collapse of GE stock price has led to a lot of discussion. Here’s my two cents.

Jack Welch implemented Six Sigma at GE which drove many CEOs to do the same. From scuttlebutt I’ve picked up over the years, this lead to crazy rules like every employee had to do two Six Sigma projects a year. This would violate Pareto’s Rule: if  only 20% of the business is creating 80% of the defects, waste and rework, having employees try to fix the remaining 80% of the business is a waste of resources. Six Sigma needs focus, not spread.

Jeffery Immelt reduced leadership support for Six Sigma. So it slid.  Be warned: New leadership can and probably will kill Six Sigma. The only way to sustain Six Sigma is for the workers to embrace it.

New CEO Jack Flannery will have to “surrender to the reality that the strategy forged by his two predecessors has failed,” according to this article:

Six Sigma is great for reducing defects and deviation, but it won’t fix strategy.

Don’t confuse GE’s current problems with a failure of Six Sigma. Six Sigma will improve operational efficiency, but it won’t directly affect innovation or customer service. If you make cameras the use film, Six Sigma won’t help you when digital cameras arrive and it won’t help digital cameras when smart phones arrive.

This entry was posted by Jay Arthur in QI Macros, Six Sigma and tagged , , . Bookmark the permalink. Follow comments with the RSS feed for this post.