Jack Welch and Six Sigma: Getting Movement in the Needle

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    It’s fun to be at an IQPC Six Sigma event in which Jack Welch, former god at GE, is the keynote, because everyone you talk to has a “Jack” story to tell (since surely half of them got their Six Sigma training at GE).

    Like the guy from a major diagnostics laboratory firm who shared a tale with me he’d heard from somebody else who “was there” when it happened. It seems GE was holding its November gathering of business divisions to share their financial goals for the coming year — involving the individual leaders of GE’s various multi-billion dollar operations. A new manager stated his goal, and Mr. Welch proclaimed that it wasn’t enough and the number would need to be raised. But rather than taking it into the back room to negotiate, the newbie said in front of everybody, “No, that’s not possible.” Come Christmas Eve, the newbie was invited to meet with Mr. Welch near the top of the Empire State Building, where he was summarily fired. Apparently, you didn’t cross Mr. Welch.

    Others told me the story was just that, that Mr. Welch had his — shall we say? — brusque side, but he’d never fire a guy in that manner. Yet, they’d talk about his cussing, his take-no-prisoners style, his piercing ability to find and expose the vulnerabilities in a business case, a complaint, a manager.

    So I enjoyed hearing the famous man — who is currently on a book tour for his newest title, Winning, co-written with his wife, Suzy Welch. The Jack Welch of this decade resembles (and sounds like) not much more than a lobsterman settled in at the cafe to chew the fat with his fellows.

    The format of the talk was question and answer. People in the audience asked questions or made comments, and Mr. Welch addressed them — typically asking questions of his own. (It was all done by satellite.)

    Let’s start with why Six Sigma was brought into GE in the first place. According to Mr. Welch, employee surveys were coming back stating that customer complaints were on the rise in a dramatic way — that GE had a “ship and fix mentality.”

    Former GE Vice-Chairman Lawrence Bossidy shared the success AlliedSignal was having with Six Sigma, and, as he recalled, “I had no better idea, so I grabbed it.”

    Whether the story is true or not, GE became the Mecca of the quality improvement movement. That initiative, launched in 1995, contributed heavily to making the company the biggest of marketcap winners of the ’90s.

    The commitment required massive investment in training of thousands of staffers in the methodologies (which are complex and stats-laden). He set ambitious goals for the company, which tended to meet, and then wildly exceed them.

    As he recalled in his talk, “My view of large organizations [is], if you don’t go to the lunatic fringe in your demands, you don’t get movement in the needle.”

    Of course, it’s not just about process. “It’s all about people first,” Mr. Welch said. “Just think about sports as a business… The team that fields the best players wins. That’s just the way it works. It works the same way in business. If you want to get a culture, you want to get the best people in place first. They’ll define the culture. The top management sets the mission, gets the top people in place. The top people set the culture, then they’re rewarded for meeting that mission… You can have all the culture discussions in the world, [but] if you have a bunch of turkeys running the place, you don’t stand a chance.”

    What about that propensity to fire the folks who are in the “bottom 10%” of the company in terms of performance? As Mr. Welch explained, “Taking 100% of people, looking at top 20% at any one point in time, then making sure you don’t lose any of them, you want to make sure they’re happy, they’re excited… both in wallet and soul… In the middle 70%, you try to get people to get motivated. The bottom 10%, you don’t want to waste your time. You want to tell them, ‘You are in the bottom 10. We want you to find a [different] job in the next year.’” If that conversation doesn’t happen, he said, “What happens when a slowdown occurs, and you walk down that hall, and you have to cut costs?” Better to do it before times are hard and finding a new job at a different company tough.

    He considers peer pressure an effective way to get buy-in from skeptics. In terms of Six Sigma, that means CEOs hearing from CEOs, business managers hearing from other business managers. (Of course, not everybody can be pressured. The topic came up in the context of improving the effectiveness of the Department of Defense. As Mr. Welch pointed out, “Peer pressure on Don Rumsfeld I’m not sure would go so well.”

    What if you can’t effect the change you want to see? Time to move on. “I see too many Six Sigma people toiling, who whine about lack of support,” said Mr. Welch. “Step back. If you don’t have support, how do you get it? You don’t get it from input; you get it from output. If that doesn’t work, get out of there. Go to a place where you have buy-in.”

    So, maybe by now you’re asking, why the coverage of Six Sigma on a sourcing site? Here’s why: What’s more transformative in a company than strategic outsourcing? Six Sigma can supply useful tools for working on the many problems you face in getting “movement of the needle” — turning around attitudes and achieving corporate-wide buy-in, sorting through the strategies, selecting service providers and managing them well, developing a new breed of internal leader, introducing method to activities that traditionally lack them.

    Mostly, though, Six Sigma brings a passion to the job that, frankly, sourcing lacks. As long as we stay in the shadows and avoid open sharing of our experiences and our advice — until we can get crazed about what we’re doing — we’ll never renovate our organizations to be constantly innovative. Or, as Jack put it, “Without all the proclamations about green belts and black belts, without that passion and crash, you don’t get above the noise level of the company.”