Hey, Reuters, Six Sigma Did Not Start at Toyota!
Thanks to a former Toyota employee (and friend of mine) for sending this along.
Pretty glaring “defect” in this article about the demise (?) of the Six Sigma methodology:
U.S. companies have spent hundreds of millions of dollars adopting Six Sigma, the popular business management system inspired by Toyota Motor Corp's legendary approach to manufacturing.
If you want to say “inspired by,” that's a very loose inspiration. Motorola is typically credited with “inventing” Six Sigma and GE helped popularize it through Jack Welch's evangelism. Toyota, according to different publications (including this web post), doesn't use Six Sigma.
A less egregious example of the media not getting it is this other article (thanks, Scott):
The pioneer of efficient manufacturing is Toyota, which was the early adopter of lean manufacturing and kaizen techniques.
Now Toyota learned from others (including Ford and American supermarkets), but saying Toyota is an “early adopter” undersells their contribution, I'd say. The book The Machine That Changed the World called Toyota the company that “invented Lean Production.” That's more correct.
Back to the Six Sigma article… not trying to fan the “Lean vs. Six Sigma” battle flames, but the Reuters piece asks:
So why are companies that embraced Six Sigma — like General Electric Co, Caterpillar Inc and Motorola Inc — doing no better in this downturn than the companies that ignored it?
Reuters analysis shows that the leading Six Sigma companies didn't outperform the stock market as a whole.
The hit piece on Six Sigma continues:
In his new book “Enough,” John Bogle, the legendary investor and founder of the Vanguard Group, partially blames the focus on metrics — a hallmark of Six Sigma — for the disastrous business decisions that led to the current crisis.
“With Six Sigma,” Bogle told Reuters this week, “you're counting just about everything that can be counted. And my problem is that process triumphs over judgment.”
Tom Peters, the management guru, agrees. “You can measure everything except what's important,” he said. “And you could say that it was exactly that which couldn't be quantified, that which wasn't real, that got us in this trouble.”
Now Lean also uses metrics to gauge whether a process is meeting the customer's needs and how the business is performing. Metrics aren't inherently bad. The question is what you do with them. Do you beat people up and create fear (treating the goal as a quota as Deming and John Seddon would warn against) or do you use the goal as a way of drawing a team together to solve a problem in a constructive way?
Tom Peters echoes a point often made by Dr. Deming that sometimes the most important things are not measurable. Companies often measure what's easy to measure instead of what's meaningful. Dr. Deming is often misquoted as saying “You can't manage what you can't measure.” I remember a Tom Peters rant from the late 90's where he said he realized Motorola had gone off the deep end when their cafeteria was bragging about the number of chocolate chips in a cookie being controlled to Six Sigma levels. Crazy!
While I'm personally not the biggest fan of Six Sigma, it seems a bit ill-considered to look at the downturn and blame that (or even Lean, as somebody could have also done):
Defenders say the current downturn, far from denting Six Sigma's reputation, is enhancing it.
While they acknowledge Six Sigma did not help them predict and avoid the downturn, they insist no one ever claimed it would.
Has Lean (the Toyota Production System) prevented Toyota from experiencing a huge drop in sales? Hell, it didn't even keep them from overproducing parking lots and boats full of cars that customers don't want right now. Should we blame Lean?
Final thought on Caterpillar from the story:
While Caterpillar reported a first-quarter loss because of more than $550 million in layoff charges, it actually reported a better-than-expected profit on an operating basis.
Even more remarkably, it managed to increase gross margins and reduce inventories, even as sales slumped.
“In the past it would have gone the other way. The company would have increased inventories when sales went down because it couldn't reduce its production fast enough,” Blanton said.
Doesn't that sound more like the benefits of the Lean component of Cat's Lean Six Sigma program that would have kept inventory from exploding? Would it have been worse at Toyota without Lean?
Does the Reuters piece turn you against Six Sigma? Is the methodology becoming less popular where you sit/stand?