A Google™ search for “Six Sigma” (in quotation marks) yields 73 pages of results showing the popularity of this methodology. In evaluating tools for strategy formulation, one must consider what has been successful in other companies. Jack Welch, the former CEO of General Electric, openly endorsed Six Sigma and GE’s success with it inspired many other Fortune 500 companies such as 3M, Home Depot, and Ford to adopt the strategic methodology (Barakat, 2002).
Started at Motorola in the 1980s, Six Sigma, which translates into 3.4 defects per million opportunities, uses a variety of statistical models to measure the company’s performance on a slew of internal processes (Barakat, 2002). The reason that this management system is being included as a tool for strategy formulation is because of its implications for company strategists. To adopt the program, there is a significant cost to the corporation to hire or train quality experts, namely the green and black belts. The strategy of the corporation will be adjusted based on the statistical analyses of the company’s processes.
Since it became popular, Six Sigma philosophies have been adapted to other industries outside of manufacturing and become part of executing strategy.
The City of Fort Wayne, Indiana claims that it was Six Sigma management practices that have improved the response time of their public works department, which now patches 95% of all of the city’s potholes within 24 hours of being reported.
But as Jack Welch said – about 70% of Six Sigma is covered by just knowing one statement: “Variation is evil.”
If it was only so simple!