Yahoo! News - Six Sigma Is No Longer Enough
http://story.news.yahoo.com/news?tmpl=story&;cid=568&ncid=749&e=3&u=/nm/20040515/bs_nm/column_lifting_dc

Sat May 15, 9:08 AM ET

By Michael Flaherty

"Six Sigma will get you to parity, but not ahead of your competition," said Michael Hammer, founder of Hammer and Co., a management education firm.. "It's for fixing problems, not for innovation

Summary:

NEW YORK (Reuters) - Impatient investors and demanding industry analysts are pushing Corporate America's best-known efficiency program deeper into history.

The program, known as Six Sigma, still retains a loyal, if not cult-like following among executives and some of their staff, who earn black belts and green belts as they study its methods.

But in an era when a new product is old news in two fiscal quarters, critics of Six Sigma say companies need to move beyond the 20-year-old method in order to compete.

"Six Sigma does not create innovation," said Corporate strategist Jay Desai, who helped implement Six Sigma at conglomerate General Electric Co. (NYSE:GE - news).

That's not to say Six Sigma will ever go away.

Its methods are a virtual religion at GE, where Six Sigma is said to have saved the company billions of dollars over the years.

Dow Chemical Co. (NYSE:DOW - news), the largest U.S. maker of chemicals, swears by the program.

And Heavy equipment maker Caterpillar Inc. (NYSE:CAT - news) said it reaped $500 million through Six Sigma in 2002.

But the days of investors favoring slow and steady growth are waning.

Investors want top-line growth fueled by new products.

"If Lucent applies Six Sigma, they die," Desai said, pointing to Lucent Technologies Inc. (NYSE:LU - news), one of the world's largest makers of telecommunications equipment that has recovered after ringing up $30 billion in cumulative losses during the technology downturn.

"Six Sigma is not a solution for new products or a break-through strategy," said Desai, who now runs the Institute of Global Competitiveness, a management think-tank.

Still, Six Sigma is in place at several of the world's top companies and has led to many profit turnarounds.

"We will continue to rely on our Six Sigma culture to ensure we are growing profitably," said Caterpillar Chairman and CEO Jim Owens in a statement.

Owens added that "virtually all" company employees are involved with the program and that Caterpillar boasts 2,700 trained Six Sigma black belts.

Six Sigma Academy, a Scottsdale, Arizona training organization, has taught 10,000 people in 20 countries and 6 continents in the methods of Six Sigma, according to its Web site.

"What we've seen is an expansion to mid-size companies, small companies and even private companies," said Abraham.

Six Sigma won't go away and indeed its followers have seen positive results, said Larry Keeley, president of Doblin Inc., an innovation strategy firm.

It's this focus on the bottom line that hinders Six Sigma disciples, said Michael Hammer, founder of Hammer and Co., a management education firm.

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