Six Sigma–Towards a New Cost of Quality Metric


In the third chapter of the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Mikel Harry, Ph.D., and Richard Schroeder talk about how being better is cheaper.

There is old dictum about trade-offs on a project:  “Faster, Cheaper, or Better:  Pick Two”.   This means that of the three constraints on a project–time, cost, and quality–you cannot demand improvement on all three at the same time.   If you want a project done in less time, you may have to add more people to it, because if you don’t, they may rush and be more prone to mistakes, which will lower the quality.   Likewise, if you want to raise the quality, you will have to raise the cost to achieve that, correct?

Well, here’s where the authors challenge that conventional wisdom.   In the traditional view of the cost of quality, if you improve the quality, up to a certain point the costs you spend on those improvements will “pay for themselves” in terms of the lowered cost of poor quality, i.e., the cost the company will have to pay because of defects.    But the idea was that at some point there would be diminished returns, as each level of Sigma that you improve costs more and more to implement.    It was generally thought that this would occur around the 4 Sigma level, above which point Six Sigma techniques are said to be effective.

However, the authors say there are three problems with conventional wisdom.

1)  First of all, these notions of the “cost of quality”, meaning the cost of implementing quality improvements, usually come from considering improvements along the lines of detecting and fixing defects, not preventing them as far back as the design stage.  If you prevent defects in the first place, then you end up saving money by not having to create inspection (detection) systems later on in the manufacturing process.

2)  Many costs of poor quality are not captured adequately by most types of accounting systems, which include not just warranty claims, but product liability claims, for example.

3)  The conventional thinking of cost of quality usually centers around inefficiencies in the manufacturing process, but Six Sigma also can deal with inefficiencies in other parts of the business, such as the engineering, accounting and service sectors of companies.  What happens if the product is defect-free, but is delivered late to the customer?  The customer won’t be satisfied by getting a product after the time it is needed.

All three of these reasons are why the actual picture is that the cost of quality decreases as you increase the level of quality as measured in terms of Sigma levels.   Although this has the aura of a revelation about it, it’s not too different from Deming’s original thoughts on quality that increased quality results in lowered overall costs of manufacture.

In the next post, I go into more detail about what the newer cost-of-quality metric entails.  Understanding these details helps one understand why Six Sigma should be considered a business initiative and not just a quality initiative.

Six Sigma–Not Just Another Management Fad


At the end of the second chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporation, Ikel Harry, Ph.D. and Richard Schroeder talk about the difference between Six Sigma and other quality initiatives that have been popular in the past two decades in a section called Learning From Past Mistakes.

What are the differences that make Six Sigma stand out as a business initiative?

Some of the business improvement initiatives that companies have tried in the past two decades include such initiatives as:

  • downsizing
  • outsourcing
  • activity-based costing
  • new-product development
  • re-engineering
  • material requirements planning
  • Kaizen
  • creation of world-class factories

Some are designed to improve the companies bottom line, and some are designed to improve quality and performance, but few are designed to improve both at the same time.   Six Sigma is designed to do just that.   How is it designed to do that?   Because it aligns the needs of the corporation and the customer with the needs of the individual worker.   The Six Sigma breakthrough strategy makes every employee throughout the corporation accountable for understanding and implementing its methodology, so it is not something which feels imposed by management but rather owned by all departments.

Some of the other business initiatives mentioned above, although beneficial to a company, do not create lasting changes in an organization if they are not adopted and owned by the entire company.    That may be one of the explanations for the 1.5-Sigma drift, where processes that achieve an increase of Sigma level often “backtrack” by as much as 1.5 Sigma over the long haul.   This is because the process was changed and improved, but the improvement was not really owned and adopted in a heartfelt way by those who owned the process, and they gradually slipped back into previous bad habits.

It is important to get management involved so that those quality initiatives are chosen which essentially “give the customers what they want” and not what the engineers think they want.    This is the alignment between the corporation and the customer mentioned above.   And the workers in the various departments must get involved so that, in confronting problems that they are often the first ones to see, they often times are the first ones to come up with solutions.   This makes the individual worker align with the needs of the corporation, to create a product that is profitable and which customers demand.

This is why Six Sigma is not just another management fad.

Six Sigma and Statistics


In a previous post covering the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations by Mikel Harry, Ph.D., and Richard Schroeder, I mentioned that Kaizen and Six Sigma are both predicated on the improvement of processes, but that Six Sigma has the statistical rigor that Kaizen does not necessarily have.   That is why Kaizen is suitable for improving quality up to about the 3-3.5 Sigma level, but once a company’s processes reach the 3.5 Sigma level, Six Sigma is the only way to reliably improve beyond that point.

The statistical rigor of Six Sigma is something I want to discuss in this post.   Sometimes statistics seems very mysterious to many Americans, but that is only because it is taught in college, and only in certain curricula.   In Japan, however, calculus and probability/statistics are taught in high school, which is why a high school graduate in Japan can handle the mathematics behind quality control, whereas a high school graduate in the U.S. needs additional training to be able to handle it.   The difference between the educational systems in Japan and the U.S. was one of the realities Japanese companies needed to face when hiring American workers for their manufacturing plants in the U.S.

As an example of how mysterious it is to American students, I can relate a time when I was in graduate school at the University of Illinois at Urbana-Champaign, and I met a fellow graduate school student at our Friday night “graduate student support group”, which we jokingly referred to our group that met at a local bar to unwind.    One Friday, he looked kind of glum, and I asked him what happened.   He said, “our statistics professor said today that up to 50% of us in the class were doing below average work–I really thought we were doing better than that.”   I told him honestly that I didn’t think the professor was maligning the students’ academic performance as much as he was giving a definition of the word “average” in a tongue-and-cheek way (one which my friend obviously failed to detect).   That considerably brightened his mood, although it firmed up my resolve to never go with my friend to Las Vegas.

But for those who work with statistics know that it is a way of teasing out of the apparent chaos of individual data measurements the coherence of explanation.   It allows one to make the invisible visible.   How do you do that?  Well, as Galileo Gallilei once said:   “Measure what is measurable, and make measurable what is not so.”    In fact, the power of statistics is so compelling that a famous science fiction writer H.G. Wells wrote in 1935, “Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.”

In fact, the authors of the book go so far as to say that “statistical knowledge is to the information and technological age what fossil fuel was to the industrial age.”   Fossil fuel is what makes engines go, and statistical knowledge is what makes industrial processes which create those engines improve.

However, Six Sigma is not without its detractors, and one the reason why people are skeptical of Six Sigma is because they perceive it to be yet another quality initiative, another fad that gets hyped by management every time there is a new CEO at the helm.   Although this skepticism is healthy to a point, it is caused by a misunderstanding–Six Sigma is not just a quality initiative, but rather it is a business initiative which can affect the entire enterprise, and not just operations.   That topic is the subject of the next post.

Sacred Communication–The Two Kinds of Compassion


In her Sacred Communication workshop series that has given at our Unitarian Universalist Church in Park Forest, Rev. Henrietta Byrd has given the main theme of the series:  in order to communicate in a sacred manner, which means to communicate in a way that recognizes the divine spark in others, you need to first be able to recognize that you yourself have that same divine spark, and therefore you need to communicate with yourself in a sacred manner as well.

Spiritual evolution, at least in the sense that is captured in the system called Spiral Dynamics, means expanding one’s “unit of concern” or compassion outward from ourselves, to our family members, to members of our own “tribe” (however it be defined ethnically, politically, or otherwise), to all of the members of the human race, and even to the other lifeforms on the planet.   But somewhere along the way, even those of us who strive everyday to be compassionate towards others need to receive some of that compassion for ourselves.

Now, compassion actually comes in two types, what one normally thinks of as compassion, which in Integral Theory is referred to as “yin” or “female” compassion, and “tough love”, which is “yang” or “male” compassion.   This is the kind of compassion that does not offer help directly, but essentially strengthens the other person’s own capacity to help themselves.    Democrats tend to focus on “yin” compassion, and Republicans on “yang” compassion, but in reality, both are required in life.   The real wisdom comes from knowing under what circumstances to apply the right type of compassion.

Given that there are two kinds of compassion towards others, it follows as a part of the Sacred Communication workshop, that we must treat ourselves with compassion, which means knowing when to give help to ourselves even at the cost of giving help to others, and when it is time to strengthen our ability to help ourselves through encouragement and self-discipline.   Everyone who has ridden in an airplane in the past few years knows that the safety instructions at the beginning of the flight include the instruction that, in the event of a cabin depressurization, oxygen masks will descend automatically, but that if you are travelling with a small child, you must put on your own mask first before assisting the child.   Well, wait a minute, how compassionate is that?   It’s actually very compassionate from a practical standpoint, because since you are caring for the child and you pass out from lack of oxygen, you are not going to be in a position to give any further assistance to the child, including putting that child’s oxygen mask on.

So there are sometimes when you will have to forego helping others because you need help yourself.   And in the same way, this is compassionate towards others because you cannot give of your own substance to others when you have no substance left to give.

Now, when you help others, you need to make sure you are giving the help that they want and need, and not just helping them from a disguised egoistic impulse to be perceived as a candidate for sainthood.   Don’t say “how can I help” with the emphasis on the word “I”–rather say “what do you need?” or “how would you like to be helped?”   If the person says “nothing at the moment”, accept that.   Don’t worry about your frustrated desire about not being able to give them anything; just by inquiring about their needs, you will already given something precious, namely, your time and attention.   For many people, that may be enough.   Once you have offered that help, then later if the situation gets worse and they really do need help, you will already made it easier for them to ask by helping them overcome their reticence about asking someone else for assistance.

But you need to have “tough love” for yourself as well.   If getting up a half-hour earlier than you normally do in order to do a regimen of stretching, yoga, and meditation, is something that will give you long lasting benefit, then you need to be able to give yourself a pep talk when you set the alarm for 6:30 rather than for 7:00 AM.   Because of the the nature of mental momentum, a part of you will prefer to remain in bed for that half an hour to get an additional dose of sleep, and you need to be able to use that “yang” compassion and say, “okay, time to get out of bed.”   But don’t say it as if you are scolding a child, rather use some positive self-talk, like “time to get up and get your body, mind and spirit ready for the day!”

These techniques, which Henrietta Byrd discussed in her Sacred Communication workshop, are helpful in creating a better relationship with yourself, a prerequisite for creating better relationships with others.   And in fact, the very fact that I went to the workshop at all shows the power of self-help.   You see, I’m working on a project that has been going on since the beginning of the year, and it culminates in an event that is happening in two weeks.   So since it is in the final phase of the project, it is necessarily a busy and, at times, stressful period.   I’ve had meetings during the day, evening, and on weekends to make sure the project completes successfully and this last Saturday was my first FREE DAY in WEEKS.   I wanted to do absolutely nothing all day but relax and unwind.   But at 7:30 AM when I woke up, I said, “I’ve got the whole day TO MYSELF.”  What a luxury, I thought.   Well then, if it is a luxury to have the whole day to myself, I should use it on something for myself.   I remembered that there was the Sacred Communication workshop at 9:00 AM, which I didn’t commit to going to at first because I wanted to see if I would have the energy to do so after a long and exhausting week.

But the very fact that the workshop was designed to be for myself and nobody else, made me suddenly want to go and do it, even if it meant that I had to leap out of bed, get ready and out the door in order to make it on time (which I did).   And because I did something special for myself on my first free day I’ve had in weeks, I have been in such a good mood all weekend.   Because doing something good for yourself like that means that underneath, you believe you are worthwhile enough that you deserve it.   And that knowledge has fueled even further my sense of self-worth, and has made me a better communicator.

So just remember, if you are going to help others, you are going to have to first learn how to help yourself.

The Difference between Kaizen and Six Sigma


I’m sure that most readers have heard of Six Sigma and know that it is about improving processes in order to reduce defects and therefore improve quality.   Some who are familiar with Japanese companies like Toyota know about the concept of kaizen or “continuous improvement”, with the emphasis on improvement that takes smaller, incremental steps rather than giant leaps of innovation.

How are these two different?   Well, aside from their cultural origins, Six Sigma originating in the US and kaizen originating in Japan, they both have two features in common.   Yes, they both operate on processes and they work on improvement of those processes to reach increasing higher standards.

But Six Sigma uses a rigorous statistical methodology for one, and it also emphasizes that the improvement of processes done under Six Sigma must be owned by those who carry out those processes.    The reason for this is that if a solution is reached and a process is improved, but the improvement is not owned by those who are doing the process, then they have no sense of responsibility to make sure that solution is maintained on a permanent basis.   This may be one of the explanations of something called the “1.5-Sigma Shift”, where a process that has been improved to a certain level of Sigma may, over the long run, have a certain amount of “slippage” or “regression” where the Sigma levels by about 1.5 Sigma on average.    If the solution is implemented on a temporary basis, but is not kept up, this could be one thing that accounts for the slippage in Sigma level over time.

The company Bombardier Aerospace Inc. has done internal studies that show that Kaizen initiatives may benefit a company initially, but only to about the 3 and 3.5 Sigma level.   To raise a company’s processes further, it requires more statistically rigorous techniques from Six Sigma to achieve 4 Sigma level or further.   It is when you get to the 5 Sigma level that it is not just the improvement of existing processes, but the creation or elimination of processes, particularly in the design phase, that take a company to the point of achieving quantum leaps of performance that take it beyond this stage, something that Kaizen alone is not equipped to deliver.

So rather than saying that Six Sigma is better than Kaizen, it is probably fairer to say that Kaizen is an attitude towards process improvement that can yield benefits to any company up to a certain point, but to improve beyond that point (in particular, beyond the 3 to 3.5-Sigma level) it is necessary to add a statistical rigor into process improvement that of the two, only Six Sigma can deliver.

The next post deals with how the methodology of Six Sigma and the science of statistics are inseparable.

The Four Core Phases of the Six Sigma Breakthrough Strategy


Dr. Mikel Harry, Ph.D., was a senior staff engineer at Motorola’s Government Electronics Group (GEG), and he created a detailed road map for improving product design and reducing production time and costs within GEG.   This road map involved implementing Six Sigma within Motorola, something he called the “Six Sigma Breakthrough Strategy”.   In his book he co-wrote with Richard Schroeder, a former Vice President of Motorola,  called Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, he explains in the second chapter of the book what the four core phases of the Six Sigma Breakthrough Strategy.

These phases are as follows.

1.  Measure Phase

In this phase, the company reviews the types of measurements systems and their key features, including how data is collected and reported.   If the company’s measurements are in error, this can prevent a company from being able to correctly analyze whether solutions to correct defects have actually worked or not.

2.  Analyze Phase

Here business problems are analyzed into statistical problems, in terms of how frequently they occur, or how they are correlated with specific technologies or processes.   This is essential in terms of isolating what the problem is that you need to solve in order to correct defects.

3.  Improve Phase

This is the process of discovering the key variables which are causing the problem responsible for creating defects.  Eventually, rather than changing industrial processes to reduce defects, companies should be striving for designing processes which create defect-free products in the first place.

4.  Control Phase

Once the problems are solved in the improve phase, the control phase is where such solutions are continuously monitored to make sure they stay in place.

The short term strategy is removing defects by improving existing processes; the long term strategy is refining the processes so that defects no longer occur.

In order to implement the Six Sigma strategy, however, there is one indispensable mathematical tool and that is the mathematical framework of statistics.    In the next post, I discuss how this is an essential tool of Six Sigma.

Six Sigma and the Cost of Quality


In the first chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, by Ikel Harry, Ph.D., and Richard Schroeder, the authors relate the sigma level of a company’s processes to what the costs are of achieving that level of quality.

First of all, what are the costs of quality?   In a way, this is a misleading term.    As the American Society for Quality (ASQ) website points out, it’s not how much it costs to create a quality product, but how much it costs NOT to produce a quality product.   In other words, it’s the costs of lack of quality, also known as the costs of nonconformance.

Nonconformance vs. Defect

Before going into the cost of quality or the cost of nonconformance, I wanted to take a little detour to discuss the word “nonconformance.”   Although the word “defect” and “nonconformance” are sometimes used interchangeably, there’s an important difference between the two in terms of semantics.    Companies tend to use the word “nonconformance” rather than the word “defect” because the word “nonconformance” means that the product or result of a process has strayed outside of the specification limits set by the company.

The part itself may still be usable, and may not end up failing when it gets to the customer, so it may not be “defective” in the common, every-day usage of the word as “unable to be used.”   In producing an automobile, chipped paint on a door and a missing engine may both be considered “defects” because they are not supposed to occur during the manufacturing process.  However, one defect is truly catastrophic in that it prevents the car from even being used, i.e., the missing engine.   A paint chip is a cosmetic blemish that does not effect the performance of the car, but it does effect the customer’s emotional reaction to the car.

Having worked for a car company managing product liability litigation, I can tell you that plaintiff attorneys LOVE the word “defect” because it implies something is seriously wrong with a product from a safety standpoint.   So if documents say the word “defect”, you know that attorney will want to make sure that the jury sees that document, even if they don’t understand the context.    Now the engineers may be using the term in its more benign meaning of “lies outside of specification limits”, but not in the sense of “unusable by the customer” or worse, “dangerous to the consumer.”   To avoid this linguistic bait-and-switch by attorneys who may want to cloud juries’ minds with the wide range of meanings behind the word “defect”, many companies use the more linguistically neutral term “nonconformance.”   It’s less likely to be used out of context than the word “defect.”

Okay, with that out of the way, let’s go back to the discussion of the cost of nonconformance.

Cost of quality

There are three categories in the cost of quality:

1)  Prevention Costs–costs of all activities specifically designed to prevent poor quality in products and services

The first cost is that of trying to prevent a defect.   This can be done in the design phase by creating a design that is easier to manufacture without defects, or by educating the manufacturing line workers in the importance of quality to try to prevent defects that are used by human error.   Of course, a Six Sigma project, which is designed to reduce defects by eliminating their root cause, would be another important category of prevention costs.

2)  Appraisal Costs–costs associated with measuring, evaluating or auditing products or services to assure conformance with quality standards and performance standards.

After prevention, you must work on detection of defects, which means inspection of a product or auditing of processes in order to find out whether defects are occurring, and if so, what their root cause is of those defects that are detected.

3)  Failure Costs (Internal and External)

Let’s say that a defect does occur.   This is a quality failure.  What do you do now?  You must of course try to repair or rework those products which are found to have defects before sending them out to the consumer.  The cost of this repair or rework is an internal failure cost, meaning a cost of correcting a quality failure that is detected while the product is internal to the company.

There is the off chance that your detection methods may miss a product with defects, and those defects may be found out by the customer.   In those cases, the costs are handled through a warranty program.   However, if the defective product, such as an automobile, causes property damage to another vehicle or causes injury to another driver, it can become a product liability issue.    Both of these costs are examples of an external failure cost, meaning a cost of correcting a quality failure that is detected while the product is external to the company, i.e., in the customer’s possession.

All three of these cost categories, prevention, appraisal, and failure costs, are what make the sum total of cost of quality.

Here’s a chart taken from the first chapter of their book which shows the relationship between the Sigma level of a company’s processes, what this translates into in terms of number of defects, and what the cost of quality is to create that sigma level expressed in terms of the percentage of sales revenue.

COST OF QUALITY
Sigma Level Defects per million opportunities Cost of Quality (% of sales)
2 (noncompetitive) 308,537 N.A.
3 66,807 25-40%
4 (industry average) 6,210 15-25%
5 233 5-15%
6 (world class) 3.4 < 1%

Note that, for each increase in sigma level, the cost to a company of nonconformance, what we have been calling, the “cost of quality”, gets reduced by about 10%, meaning that the net income of a company increases about 10% for each Sigma level.

So if you ask why so many companies put effort into raising their sigma level, the above chart tells the story:   because it is one of the most readily available ways for any company to increase its income.   So rather than asking a company why it is incorporating Six Sigma methods in its manufacturing and/or commercial processes, the better question is, why isn’t a company doing it?    Now just because it is readily available, doesn’t mean that is it easy.   Jack Welch, the CEO of GE for 20 years from 1981-2001, said that incorporating Six Sigma into GE’s processes was one of the most difficult “stretch goals” the company had ever undertaken.   But it definitely ended up being one of the most rewarding.

The next post starts the material in the second chapter, where we open up the mysterious black box of the “Six Sigma process” and look at what lies inside.

Six Sigma is A Performance Target


In their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikil Harry, Ph.D., and Richard Schroeder describe what Six Sigma is, namely a performance target, but they first disabuse the reader from some common notions that exist about what Six Sigma is.

False Notion #1:   Six Sigma describes an organization.   To say such-and-such company is a Six Sigma company may be misleading.   It probably means that the company’s industrial processes and commercial processes are operating at the Six Sigma level.

False Notion #2:   Six Sigma describes a product.   To say such such-and-such product is a six Sigma product may imply that it is relatively free of defects.

However, to use the most narrow, technically correct definition, Six Sigma ultimately specifies a performance target for a single critical-to-quality characteristic of a product.   It is stated in terms of “defects per million opportunities”.   What does the word opportunities mean in this context?    Basically, the more complex a product is, the greater the likelihood a defect will exist somewhere within the product because a) the product will contain more parts that in themselves may contain defects, and b) the parts of the product will be connected to each other in ways that may be defective.   So rather than saying an automobile is Six Sigma, it is technically more correct to say the average opportunity for a defect within a product is Six Sigma.

What is the difference between three Sigma and six Sigma?   In a terrific analogy, let’s say your house was flooded and the receding flood waters left mud on the carpet of your 1,500-square-foot home.   If the company you hired to clean the carpet operated at a three Sigma level, then it might leave as much as a four square-foot space in the carpet covered with mud–something bound to be noticed.  However, at the six Sigma level, the area of the carpet covered with mud would only be the size of a pinhead, and virtually invisible.

In another analogy that hits closer to home for business travelers, the airline industry’s record in getting passengers safely from one city to another exceeds Six sigma, but its record in getting those passengers’ bags safely to the same destination is closer to between 3.5 to 4 sigma (i.e., between 0.6 and 2.3% defect rate).   This is the difference between the high Sigma level of a complex manufacturing process that creates the airplane itself and the service operation that transports the baggage carried in the airplane.

The Sigma level affects the company’s bottom line because it effects the cost of quality that the company spends in its manufacturing or industrial processes.   The next post discusses this topic, which once understood, explains why in turn the Sigma level of a company’s processes is of such vital importance.

Six Sigma–The Unit of Change is the Process


In Six Sigma, you figure out which processes are causing defects, you then go to the root causes of those defects and change the processes in order to eliminate them.   That is the Six Sigma program in a nutshell.

This post talks about what a process is.   How is it defined?    A process, according to the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, by Ikel harry, Ph.D., and Richard Schroeder, is defined as follows:

a process is any activity or group of activities that a) takes an input, b) adds value to it, and c) provides an output to an internal or external customer.   

There are two kinds of processes:   industrial processes which depend on machinery for its creation and require the processing of physical materials, and commercial processes, which depend on human activities.   No company has only industrial processes, because those activities such as the ordering of the physical materials, or the processing of customer orders, support the industrial processes but are not themselves industrial because they involve people, and not machines.

Both need to be taken into account in Six Sigma, but there is one categorical difference between the two.   There is a lot more variability and unpredictability when it comes to humans as compared to machines, so commercial processes are more difficult to tame under the tutelage of Six Sigma.    But commercial processes do yield, nonetheless, to improvement using Six Sigma, as long as one understands this.

Most processes of course, have other processes as inputs and have other processes as outputs, so isolating which process is the one that is causing the problem is part of the detective work that is involved in Six Sigma.   In many cases, Six Sigma may not only alter a process, but it may eliminate it altogether as being unnecessary because it is not adding value.   The adding value is an important defining virtue of a process and when it doesn’t add value, Six Sigma will seek to eliminate it.

The next post deals with how improving an organization’s processes can sometimes improve the organization itself.

The Origins of Six Sigma


In the very first chapter of the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, by Ikel Harry, Ph.D., and Richard Schroeder, the origins of Six Sigma are related and this post is a summary of that portion of the chapter.

It was born in 1979, when an executive named Art Sundry complained about the bad quality of products made by Motorola, and the search into the root causes was started.    At a time when the conventional wisdom was such that increasing quality of one’s products would increase costs, Motorola took hold of the fundamental insight of Edward Deming, who believed the opposite, that improving quality would actually reduce costs.    Correcting poor quality, it was estimated, was causing Motorola to spend anywhere from 5 to 10 percent of its annual revenues on average, and with some products, that figure climbed to 20 percent.

The first focus was on trying to achieve quality by detecting defects on the manufacturing assembly line and then repairing them.  However, an engineer in their Communications Sector named Bill Smith proposed in 1985 that a product should be designed to be defect-free from the very start.   In the language of Six Sigma, detecting and repairing defects would only lead Motorola to the four Sigma level, putting it only slightly higher than the average American company.    To achieve a higher rate of quality, Motorola would have to take to heart Bill Smith’s ideas of designing in quality.

Within four years, Six Sigma ended up saving the company $2.2 billion, and it was operating at nearly six Sigma in many of its manufacturing operations.    With such an impressive achievement accredited to the Six Sigma program, it began to spread to other industries within the manufacturing sector, and then beyond to other divisions than just manufacturing.

So why did Six Sigma spread like wildfire?   Because of the wildly successful results it produced!