arp report final version

Proceedings of the 2014/15 Course on Advanced Resource Planning

W.J.A.M. van den Heuvel (ed.)

ADVANCED RESOURCE PLANNING: A COMPARATIVE CASE STUDY OF SIX SIGMA METHODOLOGY, SUCCESS, AND FAILURE

Marti Masters

Daria Timoschenko

Tilburg University, TiSEM

P.O. Box 90153

5000 LE, Tilburg

The Netherlands.

October 24, 2014

Masters & Timoschenko

ABSTRACT

This comparative case study focuses on enterprise-wide Six Sigma initiatives in two large global

corporations. Data obtained from the study will be used to identify critical success factors (CSF) in order

to develop a decision model which illustrate the phases of a Six Sigma initiative where the CSF come into

play.

In order to achieve this objective, the following research questions have been framed:

1. What milestones can be identified during a successful Six Sigma implementation?

2.

3. What are the root causes of a Six Sigma failure and do indicators exist that a failure is

imminent?

A limitation of this study is the absence of proof by testing for our proposed CSF and decision model, thus

inviting future research.


Table of Contents

1 INTRODUCTION 4 1.1 Statement of the Problem 4 1.2 Statement of Purpose 4 1.3 Research Questions 4 1.4 Notation 4

2 RESEARCH METHODOLOGY 5 3 LITERATURE REVIEW 6 3.1 General Overview of Leading Enterprise-wide CQI Management

Systems 6 3.2 General Overview of Six Sigma in Enterprise Resource Planning 6 3.3 Root Causes of Six Sigma Failure 8 3.4 Identifying Critical Success Factors in the Literature 8

4 CASE STUDY : GENERAL ELECTRIC AND SIX SIGMA 11 4.1 History 11 4.2 GE Six Sigma Critical Success Factors (CSF) 13

5 CASE STUDY: 3M and SIX SIGMA 15 5.1 Historical Overview 15 5.2 Introduction of Six Sigma at 3M 16 5.3 3M Six Sigma Controversy: Success or Failure? 17

6 DATA COLLECTION AND DATA ANALYSIS 20 7 COMPARATIVE CASE STUDY ANALYSIS: RESEARCH FINDINGS 21 8 CONCLUSION 23 A APPENDIX: DATA COLLECTION 24 B APPENDIX: MATURITY MODEL (PENDING ADDENDUM) 27 REFERENCES 28


1 INTRODUCTION

1.1 Statement of the Problem

―After Motorola won the Malcolm Baldrige National Quality Award in 1988 the secret of their success

became public knowledge and the Six Sigma revolution was on.‖ (Pyzdek, 2014). Becoming firmly

entrenched in organizations spanning the globe, enterprise-wide Six Sigma promised substantial benefits:

increased operating margins; improved customer relations; and a significant return on investment (ROI),

with General Electric (GE) touted as the flagship (Watson, 2001). Over the last decade, reports of Six

Sigma failures have made occasional headlines in trade journals, but academic research has lagged behind

(Brady & Allen, 2006). The authors of this study suggest that an objective common base has to be

established which enables organizations to evaluate whether enterprise-wide Six Sigma methodology is

an appropriate framework for achieving these benefits.

1.2 Statement of Purpose

This qualitative research comparative case study focuses on the Six Sigma initiatives of two large global

companies which experienced the contrasting results of success and failure. Initially heralded by industry

as an innovative approach to enterprise-wide continuous quality improvement (CQI) and enterprise

resource planning (ERP), our review of the literature suggests that Six Sigma failures are widespread.

Data obtained from the two case studies will be used to identify the reasons for Six Sigma success and

root cause of failure. A critical success factor (CSF) model, which may be used for evaluating whether

Six Sigma is a viable enterprise-wide methodology for uniform deployment in a large-scale organization

or better suited to specific business divisions, will be proposed. The research findings will also be

characterized by the construction of a decision model, which illustrates the phases during a Six Sigma

initiative where the CSF come into play. Empirical testing of our proposed CSF and decision models is

beyond the scope of this report, thus inviting future research.

1.3 Research Questions

In order to achieve the objectives for this study, the following research questions have been framed:

1. What CSF can be identified as essential for a successful Six Sigma implementation?

2. What were the root causes of Six Sigma failure at 3M and did indicators exist that a failure was

imminent?

1.4 Notation

All figures are expressed according to the American-French Numerical Standard 2014. For example, $12

million is written 12 M USD, and 12,360 million is reported as 12.360 B (12.360 B = twelve billion, 360

million). The table below provides a conversion between the American-French and British-German

systems of numerical notation:

Table 1: Mathematical Notation

Name American-French English-German

million 1,000,000 1,000,000

billion 1,000,000,000 (a thousand millions) 1,000,000,000,000 (a million millions)

trillion 1 with 12 zeros 1 with 18 zeros

(source: http://math.com/tables/general/numnotation.htm)


2 RESEARCH METHODOLOGY

Qualitative research methodology provides a framework for this study, which includes a general overview

of leading CQI systems, Six Sigma methodology, and a comparative case study of GE and 3M Six Sigma

initiatives. The goal of this study is to answer the research questions and propose a CSF model which can

be used to forecast the success of an enterprise-wide Six Sigma implementation for a large company.

Exploratory research involved canvassing available literature, online websites, and company artefacts

because creating surveys and conducting interviews were not possible within the scope of this project.

The nature of the research questions lend themselves well to post positivist qualitative research as an

objective analysis can be determined from historical facts and proven theories governing the socio-

technical aspects of advanced resource planning, change management, and human behavior. An

interpretive component also exists in the author‘s selection of scholarly books, peer-reviewed research

papers, professional trade journals, and recent commentaries published by Six Sigma experts/

practitioners. Data collection and analysis are based on a selective review of the literature, Six Sigma

practitioner forums, meeting criteria described in Appendix A, along with available company artefacts.

Conclusions drawn from the comparative case studies of GE and 3M are based on the authors‘

interpretation of the events which unfolded and a limited application of leadership theory, which may

offer opportunities for further research to expand the theoretical basis for each CSF identified in our

study.

According to Eriksson and Kovalainen (2008), ―the business researcher is an interpreter who

both constructs the case and analyses [sic] it‖ To some extent, constructionism could be employed as a

philosophy in this study because analysis of the data provided by the literature might yield different

meanings based on the target audiences‘ level of Six Sigma expertise, professional bias (for example, a

Six Sigma consulting firm would be expected to be a proponent, not an adversary, of Six Sigma

methodology), and nationality (case in point: Six Sigma originated at Motorola in Japan, where the

company culture is significantly different than in the American company, GE, which further developed

Six Sigma.)

Data collection methods involved sorting available literature based on author bias towards Six Sigma

and the year of publication as Six Sigma gained popularity in the last 1990‘s before difficulty during

implementation and likelihood of failure were clearly understood. In addition, the scope of Six Sigma

studies in the literature cover a broad range and our preference was given to studies concerning

enterprise-wide Six Sigma initiatives in large companies. To a certain extent, Grounded Theory

methodology was used in the literature review and the construction of our case studies of GE and 3M, by

identifying themes as they emerged and refining key word searches. This led to formulating the research

questions regarding the success and failure of enterprise-wide Six Sigma deployment with the goal of

creating a guideline stipulating the minimum requirements for Six Sigma success in hopes of developing

a more complex decision model and a maturity model.

Empirical data was collected from the literature regarding financial statements and various statistics

relevant to the case studies of GE and 3M. Although a portion of the statistical data gathered was

quantitative in nature, qualitative interpretive analysis and triangulation were employed to discover the

meaning of the data and its relevance to this study. Overall, an iterative process of analysis leading to

further data collection was followed until the research question(s) could be answered. Due to the scope of

this project, the answers obtained are limited, thus inviting future research.


3 LITERATURE REVIEW

3.1 General Overview of Leading Enterprise-wide CQI Management Systems

Generally speaking, enterprise-wide CQI methodologies provide a universal template for standardizing

business processes within an organization through change management and providing the backbone for

advanced resource planning with the goal of achieving operational excellence. Our survey of the

literature, however, suggests that success rates have been disappointing.

Kotter (1995) concludes that a meager 30% of change management initiatives succeed. Apparently,

rapid advancements in computer technology have not offset these rates. Miller (2002) confirmed that 70%

of CQI implementations result in failure. His findings are consistent with the results of a global survey by

Isern and Pung (2006) involving 1,546 executives. Similarly, Higgs and Rowland (2005) found that

roughly one in four change management initiatives reaches a happy conclusion. Overall, our literature

review suggests that a general consensus among academic scholars and industry practitioners views the

failure rates as disproportionately large with serious ramifications for the future.

Nonetheless, a dominant theme in the literature review suggests that ERP is essential for keeping

pace with technology and competing effectively in today‘s global markets. Bowersox, Closs, Cooper, and

Bowersox (2014) define EPR objectives in terms of excellent customer relations through optimization of

automated business processes and boosting productivity of human actors in their work roles. Benner and

Tushman (2001) identify three main processes: mapping, improving, and adhering which support these

views. Citing previous studies by Garvin (1995), Harry & Schroeder (2000), and Renpenning (1999),

Benner and Tushman conclude that rationalizing individual work processes and streamlining the handoffs

between processes provide the necessary tools for enterprise-wide standards to ―integrate and coordinate a

broad set of activities throughout the organization.‖ (Benner & Tushman, 2001).

3.2 General Overview of Six Sigma in Enterprise Resource Planning

Originally developed by Motorola as a strategy to boost profit margins through CQI, the fundamental

principles of Six Sigma can be traced to the standard deviation model put forth by the German

mathematician, Carl Frederick Gauss, in the 18th century (Harris, 1998). By using metrics based on

rigorous statistical analysis to define quality control, Six Sigma attempts to reduce costs through the

prevention of defects. The resultant quality improvement and risk minimization enabled Motorola to

maximize profit margins while providing optimal customer service to foster market growth.

(www.isixsigma.com)

According to Brady and Allen (2006), the term ―Six Sigma‖ was coined by in 1985 by Bill Smith, a

Motorola engineer empowered by the thought that statistics provide a good tool to measure quality (Basu,

2009). Six Sigma, also written, 6σ, refers to the number of standard deviations away from the arithmetic

mean of a normal shaped bell curve. In the 1920‘s, Walter Shewhart demonstrated that three sigma from

the mean is the point where a process requires correction (www.isixsigma.com). In practice, increasing

the value of sigma (σ) reduces the number defects. Compared to a value of 3σ, which represents 66,807

defects per million opportunities or roughly 7%, error rate, 6σ represents a quality control level of 3.4 /1

M. (Lucier & Seshadari, 2001). The mathematical model is illustrated on the following page:


Fig. 1: Six Sigma Deviation

(source: www.epo-innovation.com)

Motorola University defines Six Sigma on three levels: Metric, Improvement Methodology, and

Management System, which serve as the foundation for the three Six Sigma models:

DMAIC Define, Measure, Analyze, Improve, Control

DMADV Define, Measure, Analyze, Define, Verify

DFSS Design For Six Sigma (Stojan, 2011)

where the Management System ―is the philosophical definition and typically has the greatest business

impact...It refers to Six Sigma as a cultural change as well as a change in the mind-sets at all levels of the

organization.‖ (Stojan, 2011). According to Parast (2010): ―The fundamental difference between Six

Sigma and other process improvements programs (such as TQM, Lean, and the Baldrige Model) is related

to the ability of Six Sigma in providing an organizational context that facilitates problem solving and

exploration across the organization.‖ Parast‘s conclusions are backed by a previous study, in which

Ansari, Lockwood, Thies, and Modarress (2009) conclude that Six Sigma is not limited to manufacturing

and service companies. The study found that Six Sigma reduces numerous errors, eliminates duplicated

data entry, and cuts costs by routing out inefficient processes, thereby improving financial reporting

processes.

In the book, The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their

Performance, published in the year 2000, Pande, Neuman, and Cavanagh identify six core themes of Six

Sigma philosophy: 1. Focus on the customer; 2) Data-and fact-driven management; 3) Process focus,

management, and improvement; 4) Proactive management; 5) Boundaryless collaboration; and 6) Drive

for perfection, tolerance for failure, which became the framework for Six Sigma initiatives at GE. Strong

leadership as proactive management is discussed by Creveling, Slutzkey, and Davis (2003) in their

comprehensive book, Design for Six Sigman and Product Development. Advocating DFSS as a model,

the authors conclude that strong executive leadership is imperative for organization-wide adoption of Six

Sigma. This view is supported in a 2012 study, ―Six Sigma at Crossroads‖, conducted by Professor


Thong N. Goh at the National University of Singapore, who advocates involving C-suite executives in

every phase of Six Sigma initiatives from design to deployment.

3.3 Root Causes of Six Sigma Failure

In a recent study at the Massachusetts Institute of Technology‘s Engineering Systems Division, Kirkor

Bozdogan predicted the downfall of Six Sigma because the benefits are short-lived and combining

LEAN‘s waste reduction model with Six Sigma DMIAC has not resulted in hoped-for longevity: ―These

disappointing results explain the basic motivation for... an urgent need to start working towards the

development of a more effective enterprise management system.‖ (Bozdogan, 2010).

Marvin Wurtzel, engineer and principle consultant at Wurtzel and Associates, concludes that the

relative scarcity of Six Sigma failures in academic literature and trade journals has been a deliberate

cover-up and provides two reasons: 1) Organizations downplay Six Sigma failures due to their large

capital outlay and time commitment, and 2) Consultants involved in ongoing Six Sigma projects remain

silent (Wurtzel, 2014). Wurtzel concludes that Six Sigma disasters result from an organization‘s failure

to conduct thorough and objective feasibilities studies during the evaluation phase because they are lured

by ―exaggerated promises of huge ROI from trusted consultants.‖ (Wurtzel, 2014).

Carly Barry (2013), a leading developer with Minitab, consolidated seven reasons for the failure of

Six Sigma projects observed at client organizations: 1) Project solutions were never implemented; 2) The

scope of the project is too large; 3) The project is not linked to finances; 4) Forcing the wrong projects

into the Six Sigma DMAIC model; 5) Unable to obtain data or using bad data; 6) Insufficient training;

and 7) Lack of management support.

In a published interview (Diesing, 2013), Praveen Gupta, who is generally regarded as a Six Sigma

guru, zeros in on the main cause of Six Sigma failures: ―…as the Six Sigma certification process has

blossomed, it has also incorporated more room for errors…leaders and employees get lost in the

statistics…we should concentrate on process knowledge and… on the design phase (D of the DMIAC

model) because planning is half of a project.‖ (Diesing, 2013)

3.4 Identifying Critical Success Factors in the Literature

A survey of Six Sigma literature conducted by Brady and Allen in 2006 concluded that 27% of the 201

articles reviewed contained at least one CSF for a happy Six Sigma implementation with support from top

management as the most important factor. The table of critical success factors compiled by Brady and

Allen is reproduced below:


Fig. 2 Six Sigma Critical Success Factors

(Brady and Allen, 2006)

A recent case study by Chakrabarty, Ayon and Chauan (2010), focusing on the application of Six Sigma

in industrial manufacturing environments, found that support of top management, cultural change,

communication, organization infrastructure, and training are the top five CSF. According to one

participant in the study, ―… for Six Sigma to succeed, management commitment is very important.

Management must not only support Six Sigma but they must show that they are into it.‖ (Chakrabarty,

Avon, & Tan, 2010).

―Innovation, Project Management, and Six Sigma Methodology”, written in 2004 by Frank Anbari, a

leading scholar and professor at the University of Washington and Drexel University, was selected for

inclusion in Current Topics in Management 2005 from a competitive review of 76 papers. Anbari

identifies the following critical success factors:

Executive management commitment

Involvement and commitment of resources, time, money, and effort by the entire organization,

based on clear mandates from senior executives to ensure the alignment of project objectives with

organizational culture, environment, and other constraints.

Effective project governance with Six Sigma jutaxpositioned as a strong matrix within the

overall structure of the organization as part of normal business activities and not as a separate

initiative super-imposed on the organization.

Rigorous project selection, careful planning, focused project management, and full evaluation of

each project upon its completion, which includes meeting duration targets and staying within

project scope.

Common implementation methodology based on widely-used Six Sigma practices to facilitate

learning and communication between organizational units

Knowledge management and experience sharing, particularly from master black belts to other

people in the organization

Appropriate education and training for Six Sigma project participants to understand and apply

the tools and techniques of the Six Sigma method.

Encouraging acceptance of cultural change, based on honest, meaningful communications

about the results of Six Sigma projects, including successes, obstacles, and challenges.


Identification of critical success factors for Six Sigma lays the foundation for the comparative case

study analysis presented in this report. Two global companies, GE and 3M, were selected in order

examine the differences between a Six Sigma success story and a failure. After presenting each case

study, CSF will be further refined in order to formulate a list of those which had the greatest impact on

Six Sigma success.


4 CASE STUDY : GENERAL ELECTRIC AND SIX SIGMA

4.1 History

Incorporated in Schenactady, New York as The General Electric Company (GE) by Thomas Edison in

1982, the company has undergone several reincorporations, the latest in November 2011 (Certificate of

Incorporation 2011, U.S. Securities & Exchange Commission) Today, GE employs 307,000 people led

by Jeff Immelt, who became Chairman of the Board and CEO in November 2000 (Hoover‘s Company

Profiles, 2014). Headquarter in Fairfield Connecticut, GE is a multinational conglomerate with a

landmark building at the Rockefeller Center in NYC (Wikipedia: General Electric, 2014). Another key

location is the John F. Welch Leadership Center in Crotonville, NY (GE Crotonville, 2014). The 2014

GE Fact Sheet describes the facility as ―the epicenter of GE culture and our future – our heritage and our

vision.‖ (GE Fact Sheer, 2014). The company‘s major divisions include: Aviation, Capital (finance),

Energy Management, Healthcare, Home & Business Solutions, Appliances and Lighting, Oil and Gas

Power, and Water. The sheer size of GE is mind-boggling with each of its divisions having enough clout

to rank as Fortune 500 companies (GDCH, 2014). GE‘s major competitors include American

International Group, BASF, Citigroup, General Motors, Halliburton, JP Morgan & Chase, Matsushita

Electrical Industrial Co., Maytag, MBNA, Siemens AG, Time Warner, Toshiba, Viacom, Walt Disney

and Whirlpool. (Hoover‘s, 2014, GDHC, 2014).

At the end of 2013, GE reported 146.045 B USD in sales with a net income of 13.057 B USD. The

annual growth rate was just under 1%, with a respectable income growth of 4.3% over the previous year

(Hoover‘s, 2014). According to GDHC (2014), GE is only the company from the founding list of Dow

Jones Index entities which is still in business today, celebrating its centennial anniversary in 1996. In the

2013 GE Annual report, the company‘s financial profile is summarized by the scorecard shown below:

:

Fig. 3 GE 2013 Annual Report Financial Profile

(source: www.ge.com)

Additional statistics provided in the GE 2013 Annual Report shed light on the enormity of the

conglomerate and its main activities:

43B USD in R&D investments over the last decade

Total of 6 global research centers


35,800 patents filed since the year 2000

45,000 engineers currently employed

50,000 sales & service personnel

100+ factories in growth markets

50+ service centers in growth markets

10,500 customers using Access GE, an online financial module for investors

(sauce: GE 2013 Annual report, retrieved from www.ge.com)

With offices, laboratories, and manufacturing facilities in over 170 countries worldwide (GE Fact

Sheet, 2014), the hierarchy of GE has been carefully planned to ensure coordination of company

operations with strategic objectives while minimizing bureaucracy, backed by employee education

programs (GE Website: Governance 2014). According to Raghu Krishnamoorthy, GE Vice President,

Executive Development and Chief Learning Officer, ―We develop employees at every level and career

stage, and we share our approach with customers. We create learning experiences that are global, local,

personal, digital, and - above all - transformational.‖ (GE Crotonville, 2014). The Crotonville document

indicates that GE spent over one billion dollars in 2013 educating over 40,000 GE employees and 3000

customers to facilitate productivity and communication. .

GE‘s organizational structure as a boundaryless vertical hierarchy, where communication travels in

both directions between the C-suite and floor-level employees without road blocks, is attributed to the

Work-Out and Six Sigma initiatives introduced by John F. (Jack) Welch. (Froud, Johal, Leaver, &

Williams, 2005). An engineer with twenty years as a GE employee, Welch was elected Chairman of the

Board and CEO in 1981 (GE Website: Leadership). That Welch viewed managers and subordinates as

equally valuable to the success of an organization is supported by Tichy and Sherman (1993).

According to Abetti (2006), Welch‘s reign as CEO can be characterized by three waves of

management strategy:

1. 1981 first wave (hard): create a new vision and strategy to drive reorganization,

mass dismissals, divestments and acquisitions

2. 1985 second wave (soft): revolutionize GE to gain the strengths of a big company

with the leanness and agility of a small company

3. 1996 third wave (soft and hard); develop and integrated, boundaryless, stretched

total quality company with A-players. (Abetti, 2006)

The hard aspect of the third wave was GE‘s Six Sigma initiative for quality objectives and controls to

permeate all levels of the organization. According to Barlett and Wozny‘s 2005 study on Jack Welch‘s

leadership, Six Sigma applied to all everyone in the organization and nearly half an employee‘s bonus

was contingent on achieving specific Six Sigma objectives. With a half billion dollar stake in training

85,000 white collar workers, along with 5000 managers dedicated to master black belt and black belt

certification, the ROI was 759 M USD with an expected increase of 1.5 B USD in 1999 (Barlett &

Wozny, 2005). According to Zu, Fredendall, and Douglas, (2008), Human Resource Management

(HRM) plays a key role in the success of Six Sigma implementation and the most critical factors to ensure

success are employee participation, training, and recognition.

The year 1999 marked two company milestones. First, Jack Welch made a public statement that he

would retire in 2001. Secondly, GE had become ―one of the world's fastest growing and most profitable

companies‖ with revenues up 11% for a total of 111.63 B USD and a net income of 10.72 B USD,

representing a 15% gain over the previous year (GDCH, 2014).

Welch‘s legacy has been viewed from different perspectives in the literature. Hazy (2006) suggests

that leadership-of-convergence typifies organizational leadership strongly advocating for quality


initiatives and that Six Sigma may be viewed as an incremental adaptive walk... Convergence leadership

is recognized by signals, which ―operate to organize the activities of the agents by focusing attention,

clarifying roles, organizing tasks, providing access to information and resources…‖ (Hazy, 2006),

Chakrabarty, Ayon and Chauan (2010) point out that the traditional view of restructuring an

organization is a two-phase process: authoritarian restructuring followed by participative revitalization.

If leadership loses legitimacy by slashing jobs, employee trust can become irreversibly eroded. GDCH

(21014) reports that Welch terminated 127,000 of 400,000 employees and sold off long-cherished GE

subsidiaries if they failed to maintain a number one or number two position in the marketplace. Welch‘s

ability to maintain legitimacy after aggressive restructuring is suggested by Ghosal and Bartlett (1999):

―Welch evolved from a traditional hard-edged authoritarian who had earned his nickname of 'Neutron

Jack' to a more people-sensitive manager who understood the importance of treating his employees as

sources of initiative, energy, and creativity rather than just as controllable costs.‖ This view is supported

by business analyst, Andrew Beattie (Infopedia, 2014): ―Welch's housecleaning cleared away layers of

bureaucracy that had built up at the organization and made way for a quicker flow of ideas…GE soon

became one of the most coveted places to work and attracted the best in the world.‖

Welch‘s leadership may also be characterized by leadership-of-unity, described as ―.Leadership that

balances tension and catalyzes coherence and a sense of oneness in the system over time.‖ (Hazy, 2006).

By proactively setting goals for top management, insisting on comprehensive Six Sigma training across

the entire organization, and advocating boundaryless communication, Welch created a unified company

culture at GE. In 2005, Welch made the following statement: ―Six Sigma must permeate every part of a

business to be successful. It applies to how well you close your books as well as to how a company does

appraisals‖ (Welch, 2005).

. In summary, GE succeeded in implementing Six Sigma because it actively addressed these risks,

liabilities, and limitations. The company focused on the customer, identifying improvement critical to

quality versus simply working on cost reduction initiatives. GE‘s implementation of Six Sigma had the

enthusiastic support of the most senior person in the organization, the CEO. Boundaryless communication

stimulated shared learning, which carried on to future project. GE expanded the quality program to

address environmental impact and launched the Ecomagination 2011 effort to build on the innovative

potential of its employees and customers (GDCH, 2014). During Welch‘s reign, GE became a success

story in terms of profitability and efficiency with Six Sigma positioned as an enterprise-wide philosophy

and business process methodology. According to Lucier and Seshardi (2001), during the first five years

of Six Sigma implementation, operating margin increased from 14.4% to 18.4%. and generated 7-digit

annual savings. Welch (2005) cautions against attributing these results to Six Sigma efforts alone because

the economy was strong, and GE was seeing positive returns on globalization initiatives and its service-

oriented businesses. Welch credits Design for Six Sigma as a key methodology underpinning GE‘s

success: ―Using Design for Six Sigma, we brought new engines, appliances and other products to market

in a period of months instead of years. That makes for a happier customer who just may shift more of a

share of his business towards you.‖ When Jeffery R. Immelt took the helm of GE after Welch‘s

resignation, Six Sigma was scaled back, but remained a significant driver within the organization.

(GDCH, 2014).

4.2 GE Six Sigma Critical Success Factors (CSF)

CSF identified in the GE case study include the following:

Strong leadership: Mobilization of the C-suite and leaders of GE‘s business divisions to drive and

safeguard the project, under the direction of Jack Welch, who was remarkably skilled in motivating all

stakeholders involved, played key role in the successful implementation of Six Sigma. Welch‘s

outstanding leadership skills encouraged boundaryless communication and his straight-forward policies


routed out and eliminated opposition. For Welch, Six Sigma, ―…is not the program of the month. This is

a discipline. This will be forever.‖ (Kotelnikov, 2014)

Cross-functional Expertise Development (Black Belts): Empowering employees with Six Sigma

certification enabled GE to enjoy in-house expertise, as previously described in this report. In ―The Six

Sigma Approach‖, published in the year2000, Herman Urdwarheshe warns that failing to estimate the cost

of Six Sigma training for certified Six Sigma experts (master black belt and black belt) will ultimately

lead to failure.

Project Suitability: In order to implement Six Sigma across the entire organization, GE chose projects

based on clear objectives, beginning with a pilot project under the guidance of Dr: Harry and adopting an

incremental approach to walk Six Sigma across the entire company, as previously described in this report.

With three Six Sigma models to choose from, function and fit were carefully studied for each business

unit to determine work habits in the context of culture.

Support from the Decision-makers: Jack Welch empowered key decision-makers by demanding that

every manager must achieve a minimum certification of Six Sigma Green Belt by the end of 1998.

Furthermore, ``no one would be considered for management job without at least a Green Belt``, (Smith &

Blakeslee, 2002).

Extrinsic & Intrinsic Reward System: Employee engagement in Six Sigma implementation was enforced

through reward systems. According to Kumar (2009), the incentive compensation constituted 60% bonus

derived from financial gains, whereas a remarkable 40% were received in line with Six Sigma

achievements. Intrinsic rewards were measurable throughout every stage of the project and evaluated by a

financial analyst, Kumar (2009).

Result-driven Transparency: According to Kumar (2009), setting feasible key performance indicators

(KPI) for evaluation criteria is essential to monitor progress and GE excelled in this regard.

Customer-Centric View & Decreased Complexity: To enhance customer service, GE created the At the

Customer, For the Customer program (Kumar, 2009), where GE certified Six Sigma Black Belts and

Green Belts made on-site visits, engaging with customers to understand their needs. Six Sigma metrics

were revised to reflect those needs.

Six Sigma CSF for GE, as identified by the authors of this report, are illustrated below:

Fig. 4 Six Sigma CSF


5 CASE STUDY: 3M AND SIX SIGMA

5.1 Historical Overview

Incorporated in St. Paul, Minnesota USA as the Minnesota Mining and Manufacturing Company in 1902,

3M is well-known today for its innovative household products such as Scotch tape and Post-It Notes.

Currently, 3M employs over 88,000 people led by Inge G. Thulin, a longtime executive who became

Chairman of the Board and CEO in 2008 (Twin Cities Power Press, 2008). The major business divisions

include Consumer and Office, Display and Graphics, Electro and Communications, Health Care,

Industrial Safety/Security /Protection Services, and Transportation with over 45 subsidiaries operating on

6 continents (Hoover‘s, 2014). Major competitors in the marketplace include Avery Dennison

Corporation, Henkel KgaA, and Johnson & Johnson (Hoover‘s, 2014). At the end of 2013, 3M reported

30.871 B USD in sales with a net income of 4.468 B USD, enjoying a 3.2% growth rate with a 4.8%

income growth over the previous year (Hoover‘s, 2014).

In 2012, 3M celebrated its 100th year anniversary (Twin Cities Press, 2013), recalling its humble

beginnings as a dream by five businessmen from northern Minnesota, who cooked up the idea to open a

mine and sell the minerals for grinding wheel abrasives without a clear understanding of the market.

When the venture proved unsuccessful, the quintet persevered, enduring a decade-long ramp-up to attain

viable manufacturing through the innovation of new mechanical processes, stabilization of supply chain

logistics, and creative marketing. The hard work paid off and in 1916, the investors received a dividend

of 6 cents per share (solutions.3m.com), which roughly equals 1.36 USD in 2014, adjusting for inflation

(www.dollartimes.com).

According to the NYSE, the price of 3M stock at the close of October 6, 2014 was 140.34 USD per

share with a trading volume of 41,643 shares (www.marketwatch.com). 3M is listed as of nine companies

which has paid uninterrupted dividends for over 68 years. According to Brian Richards (2012), 3M raised

its dividend payout ―7%, marking the 54th straight year it has increased the payout. Big Picture S&P

Senior Index Analyst, Howard Silverblat, expects dividends to rise a remarkable 11% this year.‖ (www.d

Investors in 3M also enjoyed stock splits of 2 for 1 ten times from 1920 to 2003, with a 4 for 1 split in

1951 (www.phx.corporate-ir.net).

Primarily an innovator of materials technology for home and industrial use, analysis of 3M product

milestones from 1920 to 2012 indicates consistent growth in the number of new products created during

each decade (solutions.3m.com). The invention of waterproof sandpaper in 1920, followed by the

introduction of masking tape in 1925, enabled the company to progress to manufacture of cellophane.

Scotch tape became a leading brand as people found many ways to enjoy the novelty of using the new

tape in their households, places of work and in schools (GDCH, 2014). From that point on, 3M debuted

numerous new products – even during the WWII years when industrialists were compelled to convert

their normal operations into factories for America‘s war machine. (GDCH, 2014).

It was shortly thereafter when 3M entered the graphics arts market and media for sound recordings.

By the 1960‘s, the company diversified its product line to include healthcare products, adding radiological

radiology and pharmaceutical innovations to its growing list of achievements (GDCH, 2014). In 1980,

the introduction of Post-It Notes received widespread acceptance. According to the 3M Solutions

website, the new sticky notes ―created a whole new category in the marketplace and changed people‘s

communication and organization behavior forever.‖ (solutions.3m.com).

In addition to the seemingly endless list of product inventions, 3M also invested in energy-related

research. Beginning in 1960, the company earned the Energy Star Award in 2005 and every year

thereafter until 2010 inclusive (GDCH, 2014)

The 1990‘s saw a dip in 3M‘s profitability, resulting in the CEO, L.D. DeSimone , to restructure the

company, making business processes linked with production of existing products a priority because R&D

was not spitting out new products fast enough to prevent loss of market share in a depressed economy

(GDCH, 2014). When he retired at the end of the year 2000, an outsider was elected as Chairman of the

http://www.dollartimes.com/

http://www.marketwatch.com/

http://www.phx.corporate-ir.net/

http://www.3msolutions.com/


Board and CEO for the first time in 3M‘s history. The man of the hour was W. James (Jim) McNerney,

Jr., the former head of GE Aircraft Engines with 20 years experience in various positions at GE under his

belt (GDCH, 2014) with Jack Welch as his mentor.

5.2 Introduction of Six Sigma at 3M

On January 1, 2001, McNernry took the reigns of 3M and the dramatic change in leadership hit 3M like a

whirlwind, which would result in the destruction of the existing corporate culture with devastating results

for Research and Development (R&D). According to Hill and Linderman (2007), McNerney revealed his

leadership strategy at the first annual shareholders meeting in May: ―At the top of my agenda is a

headlong and companywide implementation of the Six Sigma approach to process and business

improvement… I‘ve seen firsthand how Six Sigma can energize an organization…‖ According to the

Gale Directory of Company Histories: 3M (2014), McNerny rolled out a Six Sigma, terminated 6500 of

the 75,000.strong 3M workforce, and assaulted the much cherished 15% Rule, which allowed employees

to enjoy 15% of their time engaging in independent projects.

Although McNerny‘s efforts continued to produce favorable financial gains over the previous year, in

the autumn of 2003, he undertook the complete overhaul of R&D, where former CEO‘s had invested

heavily for the innovation of new products and fostered a relaxed atmosphere of scientific autonomy in

the laboratories (GDCH, 2014). Faced with Six Sigma‘s mechanistic workflow control, senior scientists

felt frustrated. Geoff Nicholson, 3M Ambassador and former VP of International Technical Operations –

better known as the Father of the Post-It Note – offers the following insight, “The Six Sigma process

killed innovation at 3M.‖ (Huang, 2013). According to Asefesco (2013), ―Experts questioned whether

McNeryney‘s and Six Sigma‘s unyielding emphasis on efficiency stifled 3M‘s creativity and innovation.‖

Bloomberg Business Week (July 2007), reported that under McNerny‘s leadership, 3M scientists were

confounded by the metric and accompanying paperwork required under the Six Sigma method: ―Steven

Boyd, a PhD who had worked as a researcher at 3M for 32 years before his job was eliminated in 2004,

was one of them. .. he would have to fill in a "red book" with scores of pages worth of charts and tables,

analyzing everything from the potential commercial application, to the size of the market, to possible

manufacturing concerns.‖ (Bloomberg Businessweek, July 2007). Leading scholars at the MIT Sloan

School of Management and the Tuck School of Business at Dartmouth University concur that Six Sigma

models are not conducive to new product innovation because one of the primary Six Sigma metrics is

based on outcomes, which is impossible to calculate before introducing a new product to market

(Bloomberg Businessweek, 2007).

Six Sigma implementation at 3M yielded an annual increase of 22% in the early years under

McNervey‘s leadership, but the associated ROI eventually tapered off (Asefeso, 2013). Nonetheless, by

the time McNerny surrendered the helm of 3M in 2005, company profits had reached a record high.

According to the 2004 3M Annual Report, net sales were 20 B USD, up 9.8%, operating income was 4.6

B USD, a 23.3% increase, and the total net income was 3 B USD, up an amazing 24.4%. Earning per

share also enjoyed a 24+% increase with a closing value of 3.75 USD Cash generated from operating

activities was recorded as 4.3 B USD, representing a 13.5% increase. (3M Annual Report, 2004)

McNerny‘s letter to the shareholders in the 3M 2004 Annual Report promoted Six Sigma as the way

we work, with 700 3M global leaders responsible for 16,000 completed projects and another 16,000

projects underway. In addition, four hundred Six Sigma with Our Customers projects had been launched,

described as ―teams of employees from 3M and other companies work side by side to solve pressing

problems‖ (3M Annual Report, 2004). In a survey by Boston Consulting, 323 executives across the globe

ranked 3M as the world‘s most innovative company (3M 2004 Annual Report).

According to Mark Zdechlik‘s broadcast at Minnesota Public Radio (MNPR) in 2005, ―Analysts say

McNerney leaves 3M much stronger than he found it when he arrived nearly five years ago. 3M stock

took a beating Thursday on news of his departure. 3M chief McNerney leaves for top job at Boeing.‖

(Zdechlik MNPR, 2005). Merrill Lynch & Co. labeled McNerney‘s resignation ―a major blow to 3M‖

and Zdechlik describes investors as ―unhappy‖. Despite culture clashes with 3M R&D, McNerny‘s


management policies increased 3M revenues during periods when new product development had

stagnated (Zdechlik MNPR, 2005).

George W. Buckley was named Chairman of the Board and CEO and over the next two years, he

would loosen the chokehold of Six Sigma perceived by R&D and allocated an additional 1.5 B USD to

the annual R&D budget, representing a 20% increase (Design News, 2007). Known for his candid nature,

Buckley stated in an interview,

―Perhaps one of the mistakes that we made as a company—it's one of the dangers

of Six Sigma—is that when you value sameness more than you value creativity,

I think you potentially undermine the heart and soul of a company like 3M… You

can't put a Six Sigma process into that area and say, well, I'm getting behind on

invention, so I'm going to schedule myself for three good ideas on Wednesday and

two on Friday. That's not how creativity works. ― (Bloomberg Businessweek, 2007).

Nonetheless, Buckley observed that Six Sigma was working well in production and supply chain

logistics, which he supported wholeheartedly (Design News, 2007). That Buckley removed Six Sigma

from R&D is confirmed in 2010 by Marc Gunther, contributing editor for Fortune. Gunther reports that

the laboratories within each 3M business unit, employing a total of 7500 researchers, were no longer

under the Six Sigma umbrella, although other departments in 3M were actively engaged in Six Sigma

projects (Gunther, 2010) 9/14/2010 Fortune)

Inge Thulin, originally from Sweden and 3M employee since 1979, succeeded Buckley in the year

2012 (Reuters, February 2012). According to a newspaper article by Christopher Snowbeck, Thulin

previously served as COO and Executive VP, during which time he was credited with an overseas annual

sales of approximately 20 B USD, representing 67% of 3M‘s revenues prior to taking the helm as

Chairman of the Board and CEO (Twin Cities Pioneer Press, February 2012).

The 3M 2013 Annual Report showcases Thulin‘s top priorities as Portfolio Management, Investment

in Research & Development, and Business Transformation. At the end of 2013, earning per share were

valued at 6.72 USD, up 6.72%. with sales posted at 31 B USD, a 3.4 increase. Operating income was

reported as 6.7 B USD, up 2.8 % with operating income margins remaining strong at 21.6%, and four of

the five business divisions reporting margins over 21%. (3M 2013 Annual Report),

5.3 3M Six Sigma Controversy: Success or Failure?

The question of whether Six Sigma at 3M may be definitively viewed as a success or failure is the subject

of intense debate among Six Sigma practitioners. Data gathered from several Six Sigma forums

(www.bloombergbusinessweek.com, www.qualitydigest.com www.linkedin.com, www.isixsigma.com,

www.globalproductsolutions.com www.forbes.com, www.zdnet.com) suggests an even mix of opinion

(see A Appendix: Data Collection).

According to Brady and Allen (2006), articles written by industry practitioners tend to appear in

significant numbers before academic studies. On the following page, a chart is reproduced from their Six

Sigma literature review of 201 scholarly articles during the years 1990-2003, which illustrates the trend in

Six Sigma literature publications over time.


Fig. 5 Academic versus Industry Practitioner Literature

(Brady & Allen, 2006)

Mikel Harry, suggests that innovation at 3M may have been stifled, but Six Sigma did not fail of its own

accord. Instead, poor project selection and hubristic leadership are singled out as the root causes:

―Sigma was NEVER intended or otherwise designed to improve PRODUCT innovation;

however, it was designed to facilitate PROCESS innovation. Second, the executive

management of 3M…believed [they] could innovate their own Six Sigma initiative without

regard to "lessons learned" from previous deployments in other companies . In short, the

failure of Six Sigma at 3M was due to their own arrogance. As would be expected, such

arrogance started at the top.‖ (Harry, 2014 [LinkedIn])

Harry‘s views are supported by Benner and Tushman (2003), who conclude that organizational leaders

must distinguish between exploitation and exploratory activities, otherwise the emphasis on improving

processes will have a detrimental effect on innovation. 3M, R&D focused on invention of never-before-seen

products, much like cellophane tape decades earlier. Parast (2010) points to studies by Garvin (1991) and Hill

(1993), who caution against emphasizing product improvement for existing customers at the expense of giving

inventors free reign to create products for a future customer base. According to Parast, implementing Six

Sigma enterprise-wide without regard to R&D has negative consequences for scientific creativity and

invention: ―Six Sigma programs have a bi-polar effect on radical innovation of the firm. The customer

orientation of the firm (existing vs. emerging customers) moderates the effect of Six Sigma on radical

innovation.‖ (Parast, 2010). The fundamental paradox, Parast concludes, is identified by Garvin (1998),

who demonstrated that Six Sigma is not designed to handle behavioral processes. The means that

decision-making, communication, and learning processes do not lend themselves to the statistical metrics

and rigid forecasting required by Six Sigma methodology (Parast, 2010).

Having identified strong leadership as a Six Sigma CSF in our case study of GE, McNerny‘s failure

to recognize the relative freedom required for creative invention at 3M demonstrates that strong

leadership must also include flexible thinking. Hazy (2006) determined that innovation is a work activity

―born largely with highly uncertain or ambiguous objectives..that requires a different kind of leadership‖.

Defining leadership-of-variety as a ―different ensemble of leadership signals‖, Hazy concludes that

leadership-of-variety recognizes the need for diversity and alternatives within the management strategy.


Clearly, McNerny lacked the vision to foster diversity within 3M. His announcement at the annual

shareholders meeting that 3M would be transformed into an enterprise driven by Six Sigma, as previously

quoted in this report, reveals a straight-forward approach with no diversion from the main path. In

contrast, by scaling back Six Sigma protocols from the R&D labs to promote a more relaxed, creative

atmosphere, Buckley and Thulin demonstrated qualities attributed to leadership-of-variety. Both leaders

generated substantial revenues for 3M, which indicates that flexible deployment of enterprise-wide Six

Sigma yields financial gain and its uniform application across all departments within an organization is

not required to reap benefits. The implication is that the CSF‘s for strong leadership and project

selection must be properly aligned.

Cross-functional expertise development and support from the decision-makers were highly valued at

3M. According to Hill and Linderman (2007), senior executives spearheaded Six Sigma education for

middle management and were required to identity 100 crucial Six Sigma projects. A 2006 slide

presentation by 3M SVP CFO Patrick Campbell (currently retired) indicates that 3M trained more than

40,000 employees in Six Sigma. Bloomberg Businessweek (2007) reports that ―thousands of staffers‖

received Six Sigma black belt training and ―nearly every employee participated in a several-day "green-

belt" training regimen.‖ Campbell‘s slide presentation provides convincing evidence that Six Sigma has

flourished at 3M using both the DMAIC and DFSS models to spur company net income and provide

handsome dividends for investors (Campbell, 2006).

Support from the decision-makers was built-

Whether extrinsic and intrinsic rewards at 3M were linked to Six Sigma performance in

individual work roles is unclear. Evidently, McNerny missed at least one opportunity to blend 3M perks

with Six Sigma performance, specifically the 15% allocation of work time to independent projects.

Unlike Welch‘s incentive plan, where bonuses were contingent on individual Six Sigma performance,

McNerny simply cancelled the 15%, which negatively impacted employee morale (Bloomberg, 2007).

Result-driven transparency at 3M may be inferred from the practitioner literature. According to

Bloomberg (2007), 3M employees were trained on the Minitab computer system, which tracked KPI,

performed Six Sigma statistical calculations, and provided performance charts. According to

DesignNews (2007), Six Sigma metrics include performance accountability and subsequent review,

which rankled R&D scientists at 3M. A 6% increase in operation margins in the years from 2001 to

2005 my be indicative that Six Sigma worked well in other departments (Bloomberg, 2007)

Customer-centric view and decreased complexity: According to Six Sigma practitioner Michael

Marx, ―The tell-tale sign of a mature Six Sigma program is one that spreads Six Sigma to customers and

suppliers.‖ (www.isixsigma.com). Similar to GE‘s At the Customer, For the Customer program, 3M

initiated Six Sigma with our Customers. Marx reports that as of 2004, ―[3M] partnered on more than 250

projects, with customers such as Grainger, DuPont, Ford, Estee Lauder, The Home Depot, Motorola,

Procter & Gamble, Land Rover, Toyota, and Wal-Mart.‖‘(www.isixsigma.com)


6 DATA COLLECTION AND DATA ANALYSIS

A literature review was initiated using key words and chosen based on specific criteria, which are listed in

Appendix I. Six Sigma CSF emerged as a major theme. Because GE is generally considered to be the

flagship implementation of Six Sigma outside Japan, the top factor (strong leadership) was explored in

the literature to identify leadership qualities based on academic research. Hazy‘s Theory of Leadership in

Complex Systems was chosen as the best fit for this report because it addresses executive management‘s

influence across an entire organization. Expanding the literature review to search for theories describing

the other critical success factors in depth was beyond the scope of this report and invites further research.

Because the focus of this report is the success or failure of Six Sigma with emphasis on the case

studies of GE and 3M, a cursory overview of Six Sigma is provided without a detailed explanation of

DMAIC, DMADV, and DFSS as these models are extremely complex and by themselves would provide a

framework for relatively large study.

Several literature reviews of Six Sigma by academic scholars provide an overview of Six Sigma

literature by author and type of study, along with general charts and analysis for the different components

of Six Sigma philosophy, methodology, and critical success factors, which are explained in Appendix I.

Because qualitative analysis is inherently subjective, care was taken to analyze opposing views in the

literature regarding Six Sigma success and failure in order to provide a balanced approach to the GE and

3M case studies. Opposing views were most prevalent in the literature regarding the success or failure of

Six Sigma at 3M.

The list of critical success factors developed by the authors of this report are key factors based on the

GE and 3M case studies and do not include secondary factors. Using the CSF framework, a decision

model was created, which is presented in the conclusion of this report.


7 COMPARATIVE CASE STUDY ANALYSIS: RESEARCH FINDINGS

Six Sigma is a quality improvement methodology which consists of both a philosophy and a quantitative

model based on mathematical statistics. Three methods support the model: DMAIC, DMADV, and

DFSS. According to Praveen Gupta, getting lost in the statistics can lead to a complete breakdown

during a Six Sigma initiative (Diesing, 2013). Mikel Harry advocates concentration on the ―D for design‖

in the DFSS model for business processes which do not lend themselves well to consistent repetitive

behavior, such as human resources and inventing products for new customers (Harry, 2014).

Both GE and 3M were born of invention over 100 years ago, the former with Thomas Edison‘s light

bulb and the latter with an industrial process after an initial failure. They represent two of the few

companies who remain publicly traded as foundation members of the Dow Jones Industrial Average

(DJIA), which is a weighted average used by the New York Stock Exchange (NYSE) and the NASDAQ.

Over time, both companies prospered and became global behemoths, particularly GE, which is one of the

largest and most profitable companies in the world today.

Six Sigma was implemented across all business divisions of GE under the auspices of Jack Welch, a

charismatic leader who was named Fortune‘s Manager of the Century in 1999 among his many other

lifetime achievement awards (GDCH, 2014). Similarly, McNerny, who worked closely with Welch at

GE, initiated an enterprise-wide Six Sigma program at 3M. Whereas Welch expanded the Crotonville

education center, pursued a philosophy of boundaryless communication to foster employee growth, and

conducted a pilot Six Sigma project before expanding the implementation, McNerny pushed for quick

results and failed to identify the conflict between Six Sigma‘s rigid metrics and creativity in the 3M R&D

labs. Both Welch and McNerny slashed jobs in restructuring initiatives and cut costs by selling off entities

which did not meet their performance criteria. Known as Neutron Jack, Welch eventually modified his

approach and is credited with becoming a personable, communicative leader, whereas McNerny infringed

on 3M cultural feelings by eliminating the 15% Rule and burdening scientists in R&D with mechanistic

reporting. Both CEO‘s poured millions into Six Sigma training and initiated Six Sigma customer partner

programs. Welch tied employee bonuses to Six Sigma performance and made Green Belt Certification a

pre-requisite for manager promotions or promotion to an entry-level management position. While GE

became known as a good place to work, no references were found to indicate that 3M enjoyed a similar

reputation under McNerny‘s command.

After the initial Six Sigma initiative, both Welch and McNerny moved onto other companies and

were replaced by executives who scaled back some Six Sigma initiatives to make room for new ideas.

While Welch‘s tenure at GE spanned nearly two decades, McNerny left 3M after only 5 years for a

position at Boeing. Because it addresses executive management‘s influence across an entire organization,

Hazy‘s Theory of Leadership in Complex Systems was chosen as the best fit for this report in analyzing

the characteristics of strong leadership, a Six Sigma CSF identified in this study. Whereas Welch and

McNerny exhibited leadership-of-convergence and leadership-of-unity, their successors demonstrated

leadership-of-variety. Expanding the literature review to search for theories describing the other critical

success factors in depth was beyond the scope of this report and thus invites further research.

Both GE and 3M experienced significant growth, increased revenues, decreased operating costs, and

initiated customer partnering programs as a result of Six Sigma implementation. Although Six Sigma has

been scaled back, both companies continue to enjoy Six Sigma as a core enterprise-wide philosophy and

methodology.

An illustration of Six Sigma CSF was created after analysis of the GE case study and compared to the

3M case study. The theme of corporate culture emerged from the 3M case study as a significant factor

related to project selection. Specifically, Six Sigma metrics disrupted the workflow and general

atmosphere of R&D. Although a separate CSF for culture may have proposed, defining culture is

inherently problematic because it may refer to the cultural norms in a particular region or company

culture inside an organization. This is further complicated by the fact that company cultures of

organizations in the same region may be significantly different. Because Six Sigma has been successfully


implemented worldwide in many organizations, we concluded that project selection takes both culture

and work roles into account when a holistic approach to enterprise-wide Six Sigma is envisioned by the

leadership of an organization as demonstrated by 3M CEO‘s Buckley and Thulin. Therefore, we did not

create a separate CSF for culture. From our CSF model, a flowchart was established to illustrate the steps

of a successful enterprise-wide Six Sigma implementation, which is presented in the conclusion of this

report.


8 CONCLUSION

The research questions framed for this study appear straightforward: 1) What milestones can be

identified during a successful Six Sigma implementation? and 2) What are the root causes of a Six Sigma

failure and do indicators exist that a failure is imminent? but the answers are complex. Our study

demonstrates that CSF must be established at the beginning of a Six Sigma imitative to ensure success

during implementation and deployment. An important first milestone is the outcome of the pilot project.

For a large organization with diverse business units, a pilot project for each type of unit may indicate

whether Six Sigma can be uniformly applied across the entire organization, as in the case of GE, or

whether specific departments should be excluded, as in the case of 3M R&D.

While achieving a quality standard of 6ϭ represents the ultimate achievement of Six Sigma

deployment, ongoing evaluation of individual employee performance terms of Six Sigma metrics and

reporting, which GE integrated into its intrinsic rewards program, provides an ongoing measurement of

how well the people responsible for the implementation are progressing. After implementation, ROI,

operating margins, and revenues provide financial measures to evaluate the effectiveness of the Six Sigma

implementation. Finally, improved customer relations resulting from a Six Sigma implementation

represent a milestone of achievement.

To out specific factors indicative that Six Sigma failure is imminent depends on the specific

circumstances of the organization‘s objectives and the type of projects underway. In the case of 3M,

identifying the root causes for Six Sigma failure in R&D is relatively simple: inappropriate project

selection and problematic leadership. The primary indicator that a Six Sigma failure was imminent at the

3M R&D laboratories was the frustration of senior scientists who viewed Six Sigma as a burden rather

than an embedded tool designed to enhance their work roles. Recognizing that a failure is imminent does

not correlate to correction unless top management embraces leadership-of-variety. The authors conclude

that an inherent difficulty in determining whether a Six Sigma implementation is proceeding towards

success or failure may be the reason a disproportionately large number of Six Sigma initiatives never

reach a happy conclusion.

Based on the CSF identified in the case studies of GE and 3M, the following decision model is

proposed by the authors of this report as primary tool to facilitate successful implementation of

enterprise-wide Six Sigma in large global companies. In order to validate this model, a separate study

could be initiated, which is beyond the scope of this report, thus inviting further research.

Fig. 6 Six Sigma Model for Successful Implementation


A APPENDIX: DATA COLLECTION

A literature review was initiated using the following key words:

CQI Methodology

Six Sigma Advanced Resource Planning

Six Sigma ERP

Enterprise-wide Six Sigma

Six Sigma Method or Six Sigma Methodology

Six Sigma Metrics

Six Sigma Models

DMIAC, DMADV, DFSS

GE History or General Electric History

3M History

GE and Six Sigma

3M and Six Sigma

GE Six Sigma Case Study

3M Six Sigma Case Study

Six Sigma Failure

Six Sigma and Innovation

Six Sigma Critical Success Factors

Leadership or Leadership Theory

Six Sigma Certification

Six Sigma Practitioners

Literature was selected based on the following criteria:

Enterprise-wide Six Sigma case studies were included, but studies for small- to medium-sized

enterprises were excluded because small- and medium-scale implementation may have different

constraints than those required for large global companies such as GE and 3M.

Authors of contemporary articles for and by Six Sigma practitioners were evaluated for their

expertise and reputation in the industry as well as subject content regarding Six Sigma, GE, and

3M. Peer-reviewed papers were preferred over news articles.

Gale Directory of Company Histories and Hoover‘s Company Profiles were preferred over

Wikipedia due to their generally accepted reliability and accuracy of information.

Artefacts, such as company annual reports, slide presentations by company executives, and field

work performed by Six Sigma experts or practitioners, such as surveys and interviews, were

collected whenever possible.

Several literature reviews of Six Sigma by academic scholars provide an overview of Six Sigma

literature by author and type of study, along with general charts and analysis for the different components

of Six Sigma philosophy, methodology, and CSF. The following were selected by the authors of this

report based on the type of Six Sigma literature selected in each study and relevance to enterprise-wide

Six Sigma.

Brady J.E. and Allen T.T., (2006). Six Sigma Literature: A Review and Agenda for Future Research.

Quality and Reliability Engineering International. Wiley InterScience 22:335–367

(www.interscience.wiley.com DOI: 10.1002/qre.769)


Chakrabarty, Ayon and Chauan Tan Kay (2009). An Exploratory Qualitative And Quantitative Analysis

of Six Sigma in Service Organizations in Singapore. Management Research News, (Vol. 32 No. 7).

Goh, Thong N., (2012), Six Sigma at a Crossroads, Verslo ir teisės aktualijos / Current Issues of

Business and Law. ISSN 1822-9530.

Hahn, G. J. (2005). Six Sigma: 20 key lessons learned. Quality and Reliability Engineering International,

21(3), 225-233.

Weihong, Zhaang, Hill, Arthur V., Gilbreath, Glenn H., (2009), Six Sigma: A Retrospective and

Prospective Study, POMS 20th Annual Conference

Data gathered from Six Sigma forums to analyze practitioner opinions whether Six Sigma at 3M stifled

creativity and is generally regarded as a failure was coded as follows: Multiple posts by a commenter on

single forum thread were counted as one. If a commenter changed his/her opinion after multiple posts,

the most recent post was selected for inclusion in our data set. Whether to assign a greater weighted

average to commenters on forums where the identity of participants is disclosed was resolved by dividing

the data into two group: identified and anonymous. Commenters with known identities were not assigned

a greater weighted-average than those who were anonymous based on our reasoning that commenters who

expressed candid, negative opinions may fear disclosing their identities. By comparing known

commenters to anonymous commenters, it was found that more negative comments were made by

anonymous commenters. The following is a typical example of a negative comment: ―Six Sigma control

is great for standard or routine processes in manufacturing as well as scale-up of new products. Six Sigma

was a disaster for innovative new products at 3M. Buckley inherited a great company that was damaged

by McNerney.‖ (Bloomberg, July 2007) Generally speaking, advocates of Six Sigma maintain that

product innovation impairment at 3M can be attributed to poor project selection and suggest that DFSS

rather than DMAIC was incorrectly applied. Their view is that Six Sigma itself is not to blame. In

contrast, the overwhelming majority of negative commenters attributed leadership insensitivity to

corporate culture and inappropriate application of rigid metrics to R&D hurt creativity at 3M.

A total of seven Six Sigma and Six Sigma-related practitioner forums were searched using the

following key words and phrases: Six Sigma; Six Sigma 3M, Six Sigma 3M success or failure at the

following websites:

www.bloombergbusinessweek.com

www.qualitydigest.com

www.linkedin.com

www.isixsigma.com

www.globalproductsolutions.com

www.forbes.com

www.zdnet.com

Eighty-two comments were tallied with 44 indicating that Six Sigma at 3M was a failure in R&D,

citing poor project selection, inappropriate project selection, destructive leadership (McNerney), failure

to communicate with top leadership, inappropriate metrics, irrelevance to product creation, and waste of

time. Thirty-eight commenters did not regard Six Sigma at 3M as a failure. In this group, 20 commenters

cited poor project selection and using the wrong Six Sigma model as reasons for 3M R&D frustration with

Six Sigma metrics. Eighteen commenters did not provide any reasons Of the 18 commenters, fifteen

related their positive experiences with Six Sigma at their places of work.

Online company artefacts used in this report include:


Slide presentations by 3M executives

GE and 3M Annual Reports


B APPENDIX: MATURITY MODEL (PENDING ADDENDUM)


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