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GOING FOR SIX SIGMA
Prior to Six Sigma, GE’s typical processes generated about 35,000 defects per million operations, or three point five sigma. GE’s goal through the Six Sigma program was to cut defects to fewer than four per million operations. To reach six sigma, therefore, GE needed to reduce its defect rates by 10,000 times. And to hit this goal by 2000, it would have to reduce defect levels an average of 84 percent a year. But Welch was optimistic:
Very little of this requires invention. We have taken a proven methodology, adapted it to a boundaryless culture, and are providing our teams every resource they will need to win. . . .
Motorola had gotten to six sigma in 10 years. Welch wanted to get there in 5. Was this possible? Again, Welch was optimistic.
Motorola had to pioneer the program. GE could learn from Mo-torola’s experience and also had a Work-Out culture to reinforce the quality initiative.
There is no company in the world that has ever been bet-ter positioned to undertake an initiative as massive and transforming as this one. Every cultural change we’ve made over the past couple of decades positions us to take on this exciting and rewarding challenge.
The Six Sigma program relied on the creation of a new “war-rior class” within the company. This group—comprising Green Belts, Black Belts, and Master Black Belts—would be made up of managers who had undergone the complex statistical training of Six Sigma and could implement its procedures.
Despite Welch’s enthusiasm, Six Sigma was at first considered by many to be another new management fad. So Welch turned up the heat. At the GE operating managers’ meeting in January 1997, he hammered away at the importance of the quality pro-gram:
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You’ve got to be lunatics about this subject. You’ve got to be passionate lunatics about the quality issue. You’ve got to be out on the fringe of demand, and pressure and push to make this happen. This has to be central to everything you do every day.
Only the quality-minded individual, Welch warned, would prevail at GE:
In the next century, we expect the leadership of this com-pany to have been Black Belt–trained people. They will just naturally only hire Black Belt–trained people. They will be the leaders who will insist only on seeing people like that in the company . . .
Welch also put teeth behind his words. In March 1997, he sent a fax to GE managers around the world directly linking advancement opportunities to Six Sigma. Effective January 1, 1998, Welch wrote, one must have started Green Belt or Black Belt training to be promoted to a senior middle-management or senior management position. Effective January 1, 1999, all of GE’s “professional” employees, numbering between 80,000 and 90,000, and including all officers, must have begun Green Belt or Black Belt training. And in case anyone still missed the point, Welch tied 40 percent of his 120 vice presidents’ bonuses to progress toward quality results.
After Welch’s fax, the number of applicants for Six Sigma training programs skyrocketed.
BACK TO THE LEARNING ORGANIZATION
A reporter asked Welch what the quality program meant to the average GE factory employee.
“Job security,” Welch replied. “Enhanced satisfaction. Not wasteful rework. Growth.” Without the quality program, he con-tinued, the factory employee might get laid off. And because the
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quality program focused in part on finding out what customers wanted, the employee could increase his or her long-term job security.
This is a key point: Welch believes that quality is, at its heart, about the customer. When customers think they derive more value from your products and services, they remain your cus-tomers.
The drive for quality is not some GE drive. The only reason for the quality is to make your customers more competi-tive . . .
It has nothing to do with what you want. All these things are done in a way that the customer drives them. The cus-tomer manages your factory.
Welch insisted that the quality initiative was simply the next step in creating the learning organization:
Quality is the next act of productivity . . . Out of quality you eliminate reworking. You get salesmen’s time improved dra-matically. They’re not spending 30 percent of their time on invoice errors. . . .
Quality is the next step in the learning process. Getting rid of layers. Getting rid of fat. Involving everyone. All that did was to get more ideas. The whole thing here is to create the learning organization.
WELCH RULES
➤ Think about quality universally. When implementing a Six Sigmalike quality program, look at all products and processes.
➤ Start with a quality cadre. Welch identified a core group, with clear qualifications and characteristics, to lead the quality charge. Then he broadened the base.
➤ Link compensation to quality performance. As soon as pay and promotion prospects were linked to Six Sigma, participation soared and change took root.
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