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INTRODUCTION
Six Sigma is a concept that was originated by Motorola, Inc. in the U.S.A in about
1985. At the time, they were facing the threat of Japanese competition in the electronics
industry and needed to make drastic improvements in their quality levels (Harry and
Schroeder, 2000). Six Sigma was a way for Motorola to express its quality goal of 3.4
parts per million (ppm) defect rate. This goal was far beyond normal quality levels and
required very aggressive improvement efforts. For example, three sigma is 66,810 ppm
defective or 93.3% process yield, while Six Sigma is only 3.4 ppm defects and 99.99966 %
process yield. A comparison of defects and yields for various process sigma levels is
shown in Table 1.
Process Sigma
6
5
4
3
2
1
In the U.S., interest in Six Sigma has been increasing at an accelerating rate. After
Motorolas initial efforts in 1985, only a few companies adopted Six Sigma improvement
programs. Allied Signal was one of the first followers of Motorola. Then General Electric
(GE) decided to adopt Six Sigma in about 1995. The adoption of Six Sigma by CEO Jack
Welch at GE has attracted world-wide attention (Slater, 1999). GE has aggressively
implemented Six Sigma not only in its manufacturing businesses, but in service operations
such as GE Capital (Hendricks and Kelbaugh, 1998). General Electric has made Six Sigma
training and experience a requirement for all managers in the company and a prerequisite
for promotion in managerial ranks. In GE the impact of Six Sigma on net income is
significant and has encouraged many other U.S. and international companies to adopt Six
Sigma practices, as well. A partial list of Six Sigma adopters is shown in Table 2.
General Electric
ABB Vetco Gray
Citigroup
Dupont
Bombardier
Ceridian
Johnson & Johnson
Polaroid
Carlson Companies
Sony Electronics
IBM
Allied Signal
Seagate Technology
3M
Toshiba
Navistar
Raytheon
Lockheed Martin
U.S. Bank
Eaton
Texas Instruments
Iomega
weeks of training and hands-on experience in conducting one or more projects. Many
organizations also have Green Belts who are part-time improvement specialists and Master
Black Belts who serve as instructors. Quality teams are formed for each Six Sigma project
consisting of employees who operate the process, with Green Belt training, and at least one
full-time Black Belt specialist. It is critical to have full-time employees working on
improvement projects, and not just part-time efforts of regular employees. Full-time
improvement specialists are expected to return between $300,000 and $500,000 in net
income improvement per year.
WHAT IS NEW?
What is new about Six Sigma has been widely debated. Using the above definition,
several new things can be observed. First, Six Sigma is not new by insisting on top
management leadership or in being customer driven. These elements are important in
every type of quality improvement initiative including Six Sigma.
The focus on financial and business results is to some extent new. Deming (1986)
warned against focusing on results and instead preferred a process focus. On the other
hand, the Baldrige Award and derivative quality awards around the world have focused
extensively on results (National Institute of Standards and Technology, 1999). The
difference is that Six Sigma requires financial returns from all projects and from each fulltime Six Sigma specialist. Thus the financial focus is at the project level, not the
organization level as it is with the Baldrige, and the results are tracked on a pre-project and
post-project audit basis by the financial organization. It is the aggressive insistence on a
financial return from each project that is new to Six Sigma.
Use of a structured method for process improvement or new product introduction is
also not entirely new. However, the degree of insistence on following the structured
method, the intense training of the full-time specialists and the full integration of statistical
and other tools is new. In the past, quality improvement teams have been formed with little
or no training (perhaps one week) and set out to improve a process with little emphasis on
the use of data or a well-structured method. Often these teams were formed more for
employee involvement than for improvement. So the intensity of using the specialized
method is worthy of note.
Use of specific metrics is new with Six Sigma. Processes have not been measured in
terms of their DPMO, or process sigma. Nor, have aggressive targets such as ten-times
improvement been set. The effect of these measures is to highlight the importance of
improvement and to state difficult, but attainable, goals for improvement. Six Sigma
requires a discipline toward measurement and improvement that has not been evident in
previous quality improvement efforts.
Finally, the use of a significant number of full-time improvement specialists is new to
many organizations. Heretofore, organizations have been reluctant to make the investment
in full-time specialists and instead have assigned the improvement task to already
overworked staff on a part-time basis. Even when full-time specialists were used, there
were not many of them and they were not highly trained in a common structured
deployment method. For example, in 1997, GE invested $250 million is training nearly
4,000 Black Belts and 60,000 Green Belts out of a workforce of 220,000 employees (Harry
and Schroeder, 2000). This large investment paid off in 1997 alone by adding $300 million
to the bottom line. Since investments are converted immediately to bottom line results,
explains why management is able to relatively easily justify the commitment of extensive
training and full-time employees (Fuller, 2000).
In summary, much of what is being done in Six Sigma is not entirely new, but is a
matter of emphasis and commitment. For some organizations, however, many of the six
elements described above are new, since they have not implemented previous quality
efforts in this way. Six Sigma has been attractive to many CEOs and executives precisely
4
This would form an initial theory and definition that could then be subjected to further
statistical sampling and testing. It is important to build good theory and definitions from
practice in this area before starting on large-scale statistical work (Yin, 1981,1994; Miles
and Huberman, 1994).
Another area of useful research is to understand the benefits and costs of Six Sigma.
This could be directed at the types of processes that need to be improved in organizations
and the typical magnitude of improvements that are possible for each type of process
(Hendricks and Singhal, 1997; Itter and Larcker, 1997). Such research could help guide the
selection of Six Sigma projects and provide an approach for estimating the benefits that
could accrue. In this research, consideration should be given to the use of Six Sigma for
manufacturing processes, transactional processes, product design efforts and service
processes. This research project would help convince skeptics that Six Sigma is indeed
beneficial, if used in the right way on the right projects in the right kind of organization.
The contextual influence on the results obtained would be interesting to study and would
define the conditions for achievement of certain results. In this research study it would also
be beneficial to proceed with a small sample to initially define the scope of the work
followed by a larger statistical sample to test appropriate hypotheses (Eisenhart, 1989; Jick,
1979).
Another research project is to carefully track Six Sigma projects on a real-time basis.
This would permit the researchers to observe the dynamics of each project as it unfolds
(Sanders and Hild, 2000). As a result, some interesting cause-and-effect changes could be
studied. Research questions such as the role of project leadership, changing team
composition, the use of specialists, outside support of the project and other dynamics could
be studied. The research literature on teams, innovation and project management could be
useful in forming theories and hypotheses for testing. But, the unique characteristics of Six
Sigma would enrich the available literature on innovation and project management, while
adding to the Six Sigma literature.
Six Sigma could take on an international flavor, by observing the use of Six Sigma in
different national cultural contexts. This research could build on the work of Hofstede
(1991) and others by first understanding cross-country differences. These differences could
be used to hypothesize the types of adaptations of Six Sigma that might be required in
different countries along with the potential results. These studies could be done in the
international divisions of companies such as GE or Motorola to provide some control for
uniform implementation of the same method within different countries. The resulting
acceptance and adaptation could then be observed in different national cultural contexts.
This research would contribute not only to our understanding of Six Sigma, but its
deployment in remarkably different cultural contexts (Kostova, 1999).
There are also many opportunities for improving the statistical tools used with Six
Sigma (Box and Luceno, 2000). Some of the improvements might include the use of
simulation analysis to predict process or product improvement effects, use of non-normal
distributions, and advanced DOE methods (Hahn, Doganaksoy and Hoerl, 2000).
Research on Six Sigma should not concentrate on empirical field research alone, but could
investigate the development of new tools coupled with field research to test their
effectiveness in actual use.
We could go on with many other possibilities, but will mention just one more. This
research project concerns the role of Six Sigma in knowledge creation and diffusion. It is
possible that a highly structured method such as Six Sigma could be very useful in adding
to both individual and organizational knowledge (Kim, 1993: Kogut and Zander, 1992;
Cohen and Levinthal, 1990). Since little is known about knowledge creation and diffusion
by structured methods such as Six Sigma, the opportunity exists to contribute to both the
knowledge and Six Sigma literatures. The author is currently engaged in a study of this
type in the U.S.
6
CONCLUSIONS
The use of Six Sigma methods has recently accelerated in business circles. Yet, the
academic community is largely unaware of these methods and has not initiated research on
the phenomena. What is needed is a concerted effort to understand Six Sigma methods,
their benefits and their limitations in actual use. This research would not only lead to
theory enrichment and development, but could help practitioners gain a better
understanding of Six Sigma.
A preliminary definition of Six Sigma has been provided as a starting point for further
research. This definition attempts to identify the six critical elements of Six Sigma along
with some comparisons to other quality methods and to the literature. What is needed is an
evaluation of the definition of Six Sigma methods based on field research relating different
uses of Six Sigma methods to different organizational contexts.
Another area of promising research is to carefully study the cost and benefits of Six
Sigma along with the factors that influence variation in cost or benefits. This would help
academics understand the economic impact of Six Sigma and assist practitioners in
evaluating their Six Sigma efforts.
There are a variety of other research projects that could be undertaken. Some of these
have been suggested along with an appeal to start with qualitative case-based research
approaches aimed at theory development, before launching into large-scale statistical
studies. A better understanding is needed of the Six Sigma phenomena that will come only
through carefully constructed small-scale studies aimed at enriching our initial
understandings of Six Sigma.
This is a fruitful area of research and one that is in need of careful studies. It is an
opportune area for academics to join with practitioners in research that is of mutual interest.
It is my hope that we will see the results of Six Sigma studies forthcoming at future
meetings.
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