Six Sigma, a data-driven approach to solving problems, has come under fire. The craze peaked in the late 1990s, but George Buckley, CEO of 3M mmm, was the latest to de-emphasize Six Sigma last year as he wondered if it hurt creativity. Yet, just as it was losing favor, Textron txt launched a major Six Sigma initiative in 2002. Stock in the conglomerate whose products include Cessna jets and E-Z-Go golf carts has climbed 173% since, although it has tumbled in 2008. Textron is holding fast. It will soon have trained nearly 10,000 in-house experts known as black belts and green belts. Why? USA TODAY corporate management reporter Del Jones asked Textron CEO Lewis Campbell, 61, who is a Six Sigma green belt.
Q: To those of us who still don't understand Six Sigma, do you have an elevator speech to define it?
A: You define a problem, take measurements to be crystal clear on what you're trying to improve and analyze the data using statistical tools to sort through the noise. The last piece is control, so that once you fix something, it's fixed for the last time. The idea is to create output so predictable that there are only three defects per million.
Q: Critics say that Six Sigma becomes an exercise in counting how many employees are trained as black belts and green belts rather than solving real problems. Do they have a point?
A: Textron keeps a count. I hope that one day every man and woman who is willing to be trained will hold a belt. That includes hourly workers. A mistake companies make is they don't aim projects at solving problems for the last time or create some bodacious way to satisfy customers better than anyone else. They have projects that are convenient. Even though Cessna has been producing planes for 89 years and jets since 1972, they recently took 17% of the labor hours out of their single-piston aircraft. That's a big number. They've taken the inspection time from 10 days to five. Textron financial used to take 320 hours each month collecting interest from customers. They've got that down to 56 hours.
Q: Six Sigma was designed for manufacturing. Does it work in the service sector?
A: Our legal department has been one of the most aggressive to touch Six Sigma. I came here in 1992, and as chief operating officer developed a set of financial schedules to understand the company. I got wedded to them. When my CFO was in the process of getting belt-certified, he told me we could eliminate 40% of those schedules if I would accept some changes. How could I say no? Six Sigma allows you to question the boss about the way he or she manages. You can also use it to help your customers eliminate waste, although I would caution not to do that when launching a program. We're mature enough to do that now. With a Six Sigma project, we were able to transfer employees in and out of a center in India, and it's worked extremely well. We seamlessly hand off data from someone working on it in the United States to someone in India.
Q: Bain, a respected consulting company, tracks the 25 most popular business tools, such as benchmarking and customer relationship management. Of those, Six Sigma ranks 21st, near the bottom in popularity. Usage is low and satisfaction mediocre. If Six Sigma is so great, are other companies botching it?
A: Yes. That's a bold statement for me to make. You must take the approach we've taken and do it right. We're maybe 30 yards down a 100-yard football field. We're going all the way.
Q: So you're saying that every employee at Textron is happily drinking the Six Sigma Kool-Aid. No grumbling, no resistance?
A: Initially, some wondered if this was the fad of the day. Are we going to stick with this or not? Everyone was busy, and this is an added piece of work. I flunked the test early on when I got a call from the head of a business unit who said he didn't want to put six people into the Six Sigma class because they were too busy. The corporation depended on the unit, so I agreed. A day later, my vice president of Six Sigma came and said, "Are you nuts? You can't tell people they don't have to attend class. If they've got big problems, they need trained people to solve those problems." I made a mistake.
Q: You touched on a common complaint about Six Sigma. Doesn't the tremendous outlay of time and money siphon away manpower?
A: It's added work until you get traction. But that's true of anything. Detractors at Textron use that as an excuse rather than facing up to major change. Even when our earnings per share went down, we continued to invest in Six Sigma at the strongest level. We knew we were investing for our future.
Q: Any other disruptions?
A: Workers can be content the way things are. They may work side by side for years. They take their lunch together. Now, one is moved four bays down. You have to take these things into consideration, but we are seeing hourly employees who want to be trained in Six Sigma. I believe everybody wants to do a better job tomorrow than they did yesterday.
Q: Until recently, your stock had a nice five-year run. General Electric ge stock also rallied for five years after Jack Welch launched Six Sigma in 1995. Today, GE stock is lower than it was seven years ago. Does that make you pause?
A: Hmmm. Nope, it does not. I'm bullish on our long-term success for a variety of reasons. The transformation of our company is very broad. It entails a variety of things all supported by Six Sigma. If earnings per share needs to improve year over year, eventually you run out of gas if you don't have a strategy of transformation.
Q: QualPro did a study and found that of 58 publicly traded companies who announced a Six Sigma initiative, 52 underperformed the S&P 500.
A: I bet if you did a Six Sigma project on that study, you would find that Six Sigma was often used as a "Hail Mary" pass. Six Sigma is not enough. Implementing it at Textron was absolutely necessary, but there are other things that must be done to drive continuous improvement. It's bodacious, but we said we're going to become known and recognized as the premier multi-industry company. Not a premier company, but the premier company, which means establishing a track record of years and years of performance. Somebody out there has to be the premier company. Why can't we? Once you make that statement, you have the license to walk in and ask what are we doing to create a premier legal department, or finance department or production line. If you get enough premiers, pretty soon you'll be known as the premier company.