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Former-General Electric CEO Jack Welch either inspires or frustrates. His "shoot from the hip" management causes anger or admiration and esteem. There is no middle ground. In the quality world he was, and still is, a champion for Six Sigma. He credits Six Sigma with not only making better product, but with making better leaders inside GE.
At the recent Six Sigma Summit in Miami, FL, Jack Welch spoke to a standing room-only crowd. Dan Quinn, president of Rath & Strong (Lexington, MA), sponsor of Welch's appearance, moderated a one-on-one discussion with Welch. Quality magazine was in attendance and recounts some of Welch's views on Six Sigma, leadership and his management of GE.
The decision to go with Six Sigma.
Jack Welch: We went with Six Sigma, in part, because of employee surveys. We had been accused of a "shift-and-fix" mode where we would move problems around instead of addressing them. The topic of Six Sigma as a solution to this mentality showed up at one of our board meetings and we decided to go with it. In the beginning, you have to measure cost reduction to sell management on Six Sigma, but you need to get beyond that way of measuring success. We wasted almost one year measuring cost reductions only. Then we threw the charts and graphs out and were able to really see the benefits of Six Sigma. We found out it was all about being better for the customer. The metrics are good for the inside, but Six Sigma success shows in how well you can please your customer.
Six Sigma as a leadership tool.
JW: Six Sigma is one of those things that can separate companies. One of the best things we did at GE was not leave Six Sigma to the quality professionals. We gave it as a tool to the best people in our company, regardless of their position. By giving Six Sigma training to your best people, it sends a message to others in the company. They see who is getting promoted, who is getting stock options. It helps create that critical mass of people skilled in Six Sigma that is necessary for it to be in a company's blood. If you aren't doing that, you are wasting opportunities. And, of course, you can't even think of starting it without having the CEO behind it.
Growth at General Electric because of Six Sigma.
JW: The markets were good at the time we were implementing Six Sigma, and it was a good time to be a CEO. We had massive increases in market share and profit margin. How much was due to Six Sigma? I don't know. Those in Six Sigma thought they were responsible for the increases. Those in globalization thought they were the reason for the increases. The services group played a role too. However, I can say, in the case of Six Sigma, specifically Design for Six Sigma, we brought new engines, appliances and other products to market in a period of months instead of years. That makes for a happier customer who just may shift more of a share of his business toward you.
Driving a company culture change toward Six Sigma.
JW: You try and make Six Sigma a leadership tool that changes a company. If it [Six Sigma] is used as a mere quality tool, it doesn't change the culture and you won't have the success you need. Six Sigma must permeate every part of a business to be successful. It applies to how well you close your books as well as to how a company does appraisals.
Implementing Six Sigma in unionized shops.
JW: Six Sigma has to be made real. What are the advantages and benefits for the associate who's paying his monthly dues? You have to show what's in it for him. Better products and better customers mean more market share for your company and more security for that associate. Six Sigma works best when associates and shop stewards are made a part of the process rather than left out of it.
The time spent on Six Sigma at GE board meetings.
JW: Every executive came every quarter with an example. We pressed every single meeting for every executive to have a story. Every year we highlighted the top people, gave them a chance to present their results and their story to the company, and gave them stock options and other rewards. You want to do these things to galvanize and energize people about Six Sigma. You have to back up your decision to go with Six Sigma with the right people and rewards. You need to celebrate it.
Is Six Sigma for everyone?
JW: It's not for everyone. It's not for one-up transactions nor is it for Hollywood. However, it did work at NBC. We were losing one or two million dollars a day in off-air time that could have been used to generate advertising revenue. Six Sigma helped us recover that revenue.
Changing the implementation of Six Sigma at GE.
JW: I wouldn't do anything different. We never had more than two people at corporate headquarters who had Six Sigma training. You can't have Six Sigma centralized. It's not a program for specialists. It has to be in the field with your best and brightest, and be used as a leadership tool. It has to be in the blood of all the associates.