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Six Sigma: What Went Wrong?
A 60 percent failure rate suggests that process change requires behavior change.
For the rest of the November 2008 issue of CRM magazine please click here
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Since Jack Welch, the former chief execuive officer of GE, popularized Six Sigma in the late 1990s, the business-management methodology has had a profound impact. Yet, amazingly, the majority of all corporate Six Sigma initiatives—60 percent—fail to yield the desired results, according to Praveen Gupta, a noted author who has been involved with the methodology since its origin in the 1980s.

Amid rising concern regarding these failures, more corporations—across multiple industry sectors—are now pulling back on their Six Sigma initiatives, realizing that the methodology by itself is not the cure-all for corporate ills.

At Home Depot, for example, former CEO Robert Nardelli was ousted after his strict focus on Six Sigma negatively affected worker morale and consumer sentiment. In the American Customer Satisfaction Index rankings, the company dropped from a top spot among major retailers to the bottom in 2005. Profitability soared, but the stock price plummeted.

3M also struggled with Six Sigma, though it seemed promising when first implemented under CEO James McNerney, a former GE executive. Profits initially grew approximately 22 percent a year, but then languished. Experts questioned whether McNerney’s—and Six Sigma’s—unyielding emphasis on efficiency stifled 3M’s creativity and innovation.

These examples show that companies cannot focus on implementing Six Sigma in isolation. But are there ways to supplement the methodology to improve its likelihood of success? Six Sigma is merely a set of process tools that should be only one part of a more holistic process-improvement strategy. Equal attention must be paid to people, innovation, and customer relationships.

We often note a behavior-change gap within companies that devote significant resources to the Six Sigma philosophies. The experts driving these initiatives tend to be extremely successful at developing technical changes that positively impact company performance. They typically excel in statistical analysis and in addressing specific parts of the process. Much less specific and robust, however, are their efforts regarding the workers upon whom the company depends. With any significant change in internal processes, just the initial talk of the intended change can be unsettling to a workforce comfortable in its current routine. The situation is exacerbated if management fails to communicate the reasons behind the change and fails to demonstrate strong, visible support for it.

Thus, at Six Sigma locations, a sizable gap may exist: While it might be clear what type of change is needed to technically enhance throughput, the success of that effort hinges on whether that behavior is modified permanently. Process improvements may perfectly achieve their objectives, but the workforce may not be prepared to accept them as part of their daily routines.

Some of the aspects that make Six Sigma powerful may in fact reduce its overall effectiveness. The methodology employs rigorous statistical analysis to identify defect areas, the correction of which produces better quality, lower costs, and increased efficiency. But while Six Sigma may be very effective at controlling processes, elements that are harder to control, such as employee behavior and innovation/ideation, can hinder long-term success.

Implementing the Six Sigma methodology can still be a very successful approach to process improvement. Many companies have seen their product quality improve, their costs decline, and their efficiency levels increase, directly impacting bottom-line profitability. This success, however, often becomes a short-term phenomenon because companies fail to sufficiently recognize the many factors that impact the long-term sustainability of improvements.

A behavior-focused approach makes change sustainable. It helps workers modify the way they feel and think about their jobs by aligning attitudes and behaviors with the system and process changes, as well as with the overall direction of the company. Further, it keeps us ever-aware that a technically sound change designed by Six Sigma or similar applications could be at risk of failure unless supported by the appropriate behavioral change.

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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