GE’s CIO and Lean Results

GE’s CEO controls information worth billions – July 21, 2008

It’s always interesting to read about GE’s shift from a Six Sigma company to a Lean Six Sigma company. Their CIO, Gary Reiner, is responsible for their Lean Six Sigma program, which is unique for a Chief Information Officer.

From the FORTUNE article:

You’ve been in charge of GE’s Six Sigma initiative since it started, in 1996. Are you still getting value out of it?

We’ve been aggressively trying to migrate away from talking about tools and instead to talking about outcomes. Six Sigma is a tool. It is a wonderful tool, but it is a tool. What we’re talking more about as a company is outcomes, and the two outcomes we really want are product reliability and customer responsiveness.

So we start with that and work our way back to what tools are needed to make that happen. For product reliability, the Six Sigma tools are sensational. On the responsiveness side, it’s often less about using Six Sigma and more about getting the right people in the room to map out how long it takes for us to do something in front of customers and, using mostly common sense, take out those things that get in the way of meeting our customer needs responsibly.

That’s great that they are focusing on outcomes, not just tools. He’s right about Six Sigma, but it would also be true to say that you shouldn’t just focus on tools with Lean either. Are you doing the right things for the customers and for the business? That’s the real point of any of it. What Reiner describes above sounds very much like a Value Stream Mapping exercise to identify waste and waiting time through the whole process, not just any one area.

For example?

In our GE Money business we offer private-label finance to retailers. We are the financing behind jewelry stores and pharmacies and the like. Sad to say, it was taking 63 days from when a retailer contacted us saying it wanted to consider using us as a private-label financier until it could conduct the first transaction with our financing. No one had calculated this before we went on this journey.

We did a number of what we call lean workouts, where we get everybody in the room to map out the process, and they got it down from 63 days to one day. The leader of that business was able to go out and have as his marketing campaign, “Enroll today. Transact tomorrow.” When we did that, sales doubled. And there are 30 examples of that throughout the company.

That’s a wonderful example of using the Lean approach to take non-value-added time out of a process. Look how they used Lean to drive sales and revenue, not just as a “cost cutting” exercise. Nice stuff.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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4 Comments on "GE’s CIO and Lean Results"

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  1. David says:

    “it was taking 63 days from when a retailer contacted us saying it wanted to consider using us as a private-label financier until it could conduct the first transaction with our financing. No one had calculated this before we went on this journey”…well, I would say that’s fairly pathetic. When did Mike Hammer (in his book on reengineering) first suggest the mantra “staple yourself to an invoice” (or whatever document or action–so you can see how it flows across various parts of the organization and how cycle time can be taken out)–1986? Why did GE Money management have to wait for a new corporate religion in order to do a process flow map on an obviously important transaction type?

    As a GE shareholder, this does not make me happy.

  2. Mark Graban says:

    David – I think “Reengineering” was 1993. So 15 years.

    I know, “waste” seems so obvious except to those who don’t see it. Right or wrong, the Lean approach *does* help people see waste and delay… driving them to improve value streams instead of functions.

    Should GE have realized this earlier? Maybe, but isn’t that the case of anyone implementing anything?

    Or do you hold GE to a higher standard because of their size, reputation, and the collection of brainpower they have?

  3. David says:

    This seems to me to be very basic management stuff. What *should* have happened is (a)the GE Money sales organization should have complained that this process was taking too long, (b)the person at the general managment level should have paid attention to the complaint, and (c)asked someone to take a look at the process, after which the process should have been redesigned to fix the problem.

    In the spirit of “ask why N times,” Gary Reiner should investigate why this wasn’t done much earlier. For instance, did sales complain and get ignored? Did the problem get identified but did IT refuse to do the work required to fix it? Dealing with issues such as these would likely do more good than fixing a particular broken process.

    I also wonder if the earlier focus on Six Sigma was so intense that people were so busy supporting that top-down initiative that they didn’t have time to address certain issues actually critical to their business.

  4. SiggySig says:

    Here’s what that looked like from inside GE – I’ve recently joined as a BB.

    For starters, the tools available from a software and information perspective are circa 2000. Minitab 12 is on my laptop. Excel 2000. Enterprise systems are from the 1990’s. Evidently GE doesn’t invest much in these sorts of technologies – ironic to see an article touting a CIO.

    More importantly, lean and six sigma are being quietly eschewed for “traditional quality” – ISO compliance, audits, procedure writing, work instructions, etc. In fact, the quality leader for Energy is staffing up heavily in compliance functions, while my group of 1 MBB and 3 BBs support a 1500 person organization. A senior leader recently responded to a question about quality problems by saying basically that workers just need to pay more attention to what they’re doing. I threw up in my mouth a little when I heard that one.

    I agree that achieving results is far more important than what tools are used, what certifications are granted, etc. Let’s just say that I was shocked to see the level of opportunity for improvement in a company that’s been doing Six Sigma for as long as GE has.

    I will be looking forward to leaving lss roles behind.

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