Why Were GE Successful?
GE is a name recognized throughout the world, and its 2001 revenues were about $130 billion. Both the giant conglomerate and its previous CEO, Jack Welch, have been studied and reported on by business schools and journals for 20 years.
Grace is a small company focused in a few niche markets. Many consumers, not to mention business scholars, are likely to be unfamiliar with it.
Yet, both firms achieved remarkable financial results from Six Sigma. In fact, on some metrics Grace might be considered even more successful than GE. What did they have in common that led to such success?
Some Common Misconceptions
We should first note what the two companies do not have in common:
• They are at opposite ends of the size spectrum
• They are not in the same industry
• They did not use the same Six Sigma deployment provider
The myth that Six Sigma works only for large companies like GE ($130 billion in revenue) has likely persisted because business journals, books, and articles tend to focus on large companies like GE or AlliedSignal, so the successes of small companies, like Grace ($2 billion in revenue), are not visible to the general public. In reality, big companies have more layers of middle management, which may make it more difficult to implement Six Sigma effectively. Change is often easier to introduce in smaller companies.
Another misconception is that Six Sigma applies to only certain industries, such as electronics. This theory is also inconsistent with the available evidence. As of this writing, successful implementations have occurred in all major areas of the economy, from electronics to health care to insurance to power generation to consumer credit, and so on.
Six Sigma is a methodology for improving processes, to make them more efficient internally (bottom-line benefits), and more effective at satisfying customers (top-line growth). All businesses need to improve their processes to achieve,...