ANALYSIS – Six Sigma mystique takes beating in downturn | Motoring | Reuters
Thanks to a former Toyota employee (and friend of mine) for sending this along.
There is a pretty glaring “defect” in this article about the demise (?) of the Six Sigma methodology:
U.S. companies have spent hundreds of millions of dollars adopting Six Sigma, the popular business management system inspired by Toyota Motor Corp's legendary approach to manufacturing.
If you want to say “inspired by,” that's a very loose inspiration. Motorola is typically credited with “inventing” Six Sigma and GE helped popularize it through Jack Welch's evangelism. Toyota, according to different publications (including this web post), doesn't use Six Sigma.
A less egregious example of the media not getting it is this other article (thanks, Scott):
The pioneer of efficient manufacturing is Toyota, which was the early adopter of lean manufacturing and kaizen techniques.
Now Toyota learned from others (including Ford and American supermarkets), but saying Toyota is an “early adopter” undersells their contribution, I'd say. The book The Machine That Changed the World called Toyota the company that “invented Lean Production.” That's more correct.
Back to the Six Sigma article… not trying to fan the “Lean vs. Six Sigma” battle flames, but the Reuters piece asks:
So why are companies that embraced Six Sigma — like General Electric Co, Caterpillar Inc and Motorola Inc — doing no better in this downturn than the companies that ignored it?
Reuters analysis shows that the leading Six Sigma companies didn't outperform the stock market as a whole.
The hit piece on Six Sigma continues:
In his new book “Enough,” John Bogle, the legendary investor and founder of the Vanguard Group, partially blames the focus on metrics — a hallmark of Six Sigma — for the disastrous business decisions that led to the current crisis.
“With Six Sigma,” Bogle told Reuters this week, “you're counting just about everything that can be counted. And my problem is that process triumphs over judgment.”
Tom Peters, the management guru, agrees. “You can measure everything except what's important,” he said. “And you could say that it was exactly that which couldn't be quantified, that which wasn't real, that got us in this trouble.”
,” John Bogle, the legendary investor and founder of the Vanguard Group, partially blames the focus on metrics — a hallmark of Six Sigma — for the disastrous business decisions that led to the current crisis.Now Lean also uses metrics to gauge whether a process is meeting the customer's needs and how the business is performing. Metrics aren't inherently bad. The question is what you do with them. Do you beat people up and create fear (treating the goal as a quota as Deming would warn against) or do you use the goal as a way of drawing a team together to solve a problem in a constructive way?
Tom Peters echoes a point often made by Dr. Deming that sometimes the most important things are not measurable. Companies often measure what's easy to measure instead of what's meaningful. Dr. Deming is often misquoted as saying “You can't manage what you can't measure.” I remember a Tom Peters rant from the late 90's where he said he realized Motorola had gone off the deep end when their cafeteria was bragging about the number of chocolate chips in a cookie being controlled to Six Sigma levels. Crazy!
While I'm personally not the biggest fan of Six Sigma, it seems a bit ill-considered to look at the downturn and blame that (or even Lean, as somebody could have also done):
Defenders say the current downturn, far from denting Six Sigma's reputation, is enhancing it.
While they acknowledge Six Sigma did not help them predict and avoid the downturn, they insist no one ever claimed it would.
Has Lean (the Toyota Production System) prevented Toyota from experiencing a huge drop in sales? Hell, it didn't even keep them from overproducing parking lots and boats full of cars that customers don't want right now. Should we blame Lean?
Final thought on Caterpillar from the story:
While Caterpillar reported a first-quarter loss because of more than $550 million in layoff charges, it actually reported a better-than-expected profit on an operating basis.
Even more remarkably, it managed to increase gross margins and reduce inventories, even as sales slumped.
“In the past it would have gone the other way. The company would have increased inventories when sales went down because it couldn't reduce its production fast enough,” Blanton said.
Doesn't that sound more like the benefits of the Lean component of Cat's Lean Six Sigma program that would have kept inventory from exploding? Would it have been worse at Toyota without Lean?
Does the Reuters piece turn you against Six Sigma? Is the methodology becoming less popular where you sit/stand?
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Not noticing more Six Sigma popularity but noticing more Lean popularity. This is in corporate IT, financial services, and software product development.
Mark,
Being a Lean facilitator and a Six Sigma Black Belt, the problem as I see it is a matter of approach and scope.
In my opinion, Lean is a culture of continuous improvement that uses certain tools to help identify and eliminate waste. Six Sigma is a structured methodology (like the scientific method) to drive out variation in a process. Both have the mindset of continuous improvement, and have some overlap. The problem comes in application.
Take an assembly process. If I have a work balance / product mix problem, Lean tools would be more applicable. But if I have a problem with bolts shearing off, especially after assemble, then six sigma tools may be more appropriate. (Very simple examples)
I have always felt six sigma tools were best applied when the scope of the problem was VERY well defined and narrow (not trying to solve world hunger). I believe Six Sigma gets a bad rap when people try to use the tool for something it wasn’t intended for.
Both methodologies have application and can be used together, if used correctly.
You can’t manage what you can’t measure doesn’t infer that you check your brain at the door.
We love to blame the system, however, we need to take responsibility for our decisions regardless of the management system that led us to the conclusion.
Great post. A friend of mine sent this article last week and I was about to write a similar post on my blog. The writer of this article even went a step further by calling Six Sigma as “Sick Sigma”. Being a Six Sigma Black Belt and in GE, I can see the both sides of the story. The metric based methodology is sometimes taken to an extreme which in turn looses its intended purpose.
Ultimately, it is up to the leadership team to decide what needs to be measured and how it is tied up with the business performance and improvement objective. As Glenn said above, Six Sigma projects have to be very carefully scoped and should be assigned dedicated resources in order to be successful. And the focus should be on improvement rather than mimicking others and making up numbers.
Dear Lean Blog Readers:
Don’t let Mark fool you… he is really a closet six sigma guru but doesn’t want to admit it: http://tinyurl.com/d3yd3e
Hee hee. Just messing with you Mark.
Six Sigma and Lean suffer from the same malady…overpromise. I would agree that part of the “overpromise” are inaccurate representations by the media when these concepts were in their early ascendency. But we practitioners bear part of the blame, I expect. How often do we talk a potential client out of implementing lean or six sigma when it’s clear they don’t have a real business case in mind for doing so?
The problem comes with application and execution. If your company is willing to put the customer first and work backwards from there, you can pick whichever one you want. If the company isn’t willing to look at what they are serving, it doesn’t really matter. If the company is run by poor metrics before, there’s little chance that will change after a program implementation.
Personally, I think the lean methodology can work best in a long term focused culture, but I think Six Sigma fits in to the Hero Complex of American culture more.
I agree with Joe W above about lean working best in a long-term focused culture. I personally love the Six Sigma approach, especially if it’s used in the framework of a Lean culture.
In other words, I see Lean as the methodology and Six Sigma as one of the tools in the Lean toolbox, but that’s just me. One more analogy…Lean is how you manage the war and Six Sigma is your battle plan for invading the beach at Normandy (a particularly difficult project).
Lean and SS are the same thing, and, both will never be popular.
L&SS are process improvement methods: time-based units of the process are the focus of lean; product-quality based units are the focus of SS (in my world, and in general, I propose). Both require a definition of the process and the product, understanding of present performance of the process and definition of gap between present and desired performance.
Improving processes requires discipline of the people owning and conducting them. People tire easily of and often hate discipline. Continuous process improvement (CPI) will always be hard, and people hate hard; they want hard to go away. Math is used in CPI to support/refute logical propositions made from measured data. People hate math too.
Improving processes does not promise business longevity, product viability, financial success or happiness. Improving processes promises better processes and the results show it does that, and it yields better and better transfer functions that allow rational predictions to be made.
L and SS are true, effective and good. How a company manages it's processes is only one independent variable in the transfer function for the dependent variable called "business success." There are other independent variables and therefore two conclusions:
a) failure/poor performance of a company who have splendid process management is not evidence against CPI or any particular type of CPI methodology
b) Businesses are organic systems, and are subject to natural law. Even when knowing that process improvement is one independent variable, it does not mean that you can act on that variable to drive the dependent variable to infinity.
L and SS are good and right: this is irrefutable, as far as I am concerned.
L and SS are hard: similarly irrefutable.
And we know how people feel about hard.
BTW: the definition of nirvana is that place where L and SS are no longer hard.
Nirvana can only be in the afterlife, I suppose, as I have seen no evidence of it here. Have you?
Gerbuddy – great comments.
About the only thing we are in disagreement on is that Lean and Six Sigma are the "same thing".
Maybe at a very high level, but I see Lean and Six Sigma as different methodologies with some overlap, they can certainly be used together.
Lean alone won't guarantee success, you are right.
Mark,
I admire what you do with your lean blog. It is a good thing. You are what Jamie Flinchbaugh calls a "zealot."
I admire Jamie too. And Jeffrey Liker and Mike Hoseaus and Steven Spear and about 1000 other good folks I've met or read since I got the bug in Nov of 2007 when I bought a Handbook of Industrial Engineering from Amazon and just started reading it.
When I read the good writings and hear the good war stories of change that really made a difference in the lives of men and women slogging along in the grand enigma, I'm moved.
Keep the faith brother. You inspire, whether you know it or not.
Thanks Gerbuddy. "Zealot" often has negative overtones… but I'm glad you meant it in a positive way.
Mark
[…] I’ll hand it to NPR, they generally do a much better job understanding and covering Toyota than the Wall Street Journal, NY Times, or Reuters. […]