Quality Management:

Six Sigma

Case Study:  General Electric (GE)

Six Sigma and the Quality Revolution at GE

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

"This is not the program of the month. This is a discipline. This will be forever." ~ Jack Welch

Quality Management Six Sigma Six Sigma at GE (case study) Jack Welch (case study)

Impact of Six Sigma Implementation at GE

Results achieved over the first two years (1996-1998):

  • Revenues have risen to $100 billion, up 11%

  • Earnings have increased to $9.3 billion, up 13%

  • Earnings per share have grown to $2.80, up 14%

  • Operating margin has risen to a record 16.7%

  • Working capital turns have risen sharply to 9.2%, up from 1997's record of 7.4

 

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The Toughest Stretch Goal

Jack Welch was told that Six Sigma, the quality program pioneered by Motorola, could have a profound effect on GE quality.

 

Although skeptical at first, the GE Chairman initiated a huge campaign in the GE Way, a way that had never been done before to infuse quality in every corner of the company. Welch called six sigma the most difficult stretch goal GE had ever undertaken. Within four years, "we want to be not just better in quality, but a company 10,000 times better than its competitors," he announced. "We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice."7

The Biggest Opportunity for Growth

Welch made an official announcement launching the quality initiative at GE's annual gathering of 500 top managers in January 1996, He called the program "the biggest opportunity for growth, increased profitability, and individual employee satisfaction in the history of our company." He has set itself a goal of becoming a six sigma quality company producing nearly defect-free products, services, and transactions by the year 2000.

Setting Individual Performance Standards

In his letter to all Corporate Executive Council attendees in 1997, Jack Welch described what he felt should be the five characteristics of the people who steer the quality program through its rigors:

  1. Enormous energy and passion for the job a real leader sees it operationally, not as a "staffer."

  2. Ability to excite, energize, and mobilize organization around six sigma benefits not a bureaucrat.

  3. Understands six sigma is all about customers winning in their marketplace and GE bottom line.

  4. Has technical grasp of six sigma, which is equal to or bettered by strong financial background and capability.

  5. Has a real edge to deliver bottom-line results and not just technical solutions.

Making the Six Sigma Process Work...

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Everyday Six Sigma...

... Discover much more in this Ten3 Mini-course

 

 

 

 

References:

  1. "Six Sigma", Mikel Harry and Richard Schroeder

  2. "The Welch Way", Jeffrey A. Krames

  3. "Jack Welch and the GE Way", Robert Slater

  4. Jack Welch, speech to the GE Annual Meeting, Charlottesville, Virginia, April 24, 1996

  5. "The Lean Six Sigma Pocket Toolbook," Michael L. George, John Maxey

  6. "The Six Sigma Way," Peter S. Pande et al

  7. "Leading Six Sigma," Ronald D. Snee, Roger W. Hoerl

  8. "Lean Six Sigma : Combining Six Sigma Quality with Lean Production Speed," Michael L. George

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