What is Lean Six Sigma 2.0?
- The Expansion to Lean Six Sigma
- Macro Societal Shifts Since 1987
- Current State of the Art
- The Limitations of Lean Six Sigma 1.3
- A New Paradigm Is Needed
- References
A brief review the evolution of Six Sigma since 1987 and explanation of what is Lean Six Sigma 2.0.
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This chapter is from the book
This chapter is from the book
This chapter is from the book
“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”
—Albert Einstein
The history of Six Sigma goes back to Motorola in about the year 1987 (Harry and Schroeder, 2000). Motorola was facing stiff foreign competition in the pager market and desperately needed to both improve quality and lower costs to stay in business. By applying Six Sigma, the company was able to do both. Other electronics manufacturing companies, including Honeywell and AlliedSignal, saw Motorola’s success and soon launched their own initiatives. In late 1995, GE CEO Jack Welch publicly announced that Six Sigma would be the biggest initiative in GE’s history—and would be his own personal number one priority for the next five years (Snee and Hoerl, 2003). GE reported billions of dollars of savings in its annual reports over the next several years, resulting in a significant increase in GE stock price and prompting many more organizations to adopt Six Sigma.
Honeywell, GE, and others realized that a different approach was needed for designing new products and services. That is, when designing a new process, there’s nothing to improve because the process itself doesn’t exist yet. Based on earlier design work by Honeywell, GE developed the Define, Measure, Analyze, Design, Verify (DMADV) approach to design for Six Sigma (Snee and Hoerl, 2003). The GE LightSpeed CT scanner was the first new product GE developed using the DMADV process. The product, introduced in 1998, used multislice technology to reduce typical scanning time from about 3 minutes to 30 seconds. This was a big win for patients as well as hospitals because it significantly enhanced throughput in CT scanning. GE gained $60 million in sales during the first 90 days (GE, 1999).
Several major health networks launched Six Sigma initiatives during this time frame. Commonwealth Health Corporation reported $1.6 million in savings in the radiology department alone during the first year (Snee and Hoerl, 2005). Among other innovations to the Six Sigma methodology, GE developed an approach to applying Six Sigma outside of manufacturing, including to financial processes at GE Capital. Partly because of the success GE Capital demonstrated with Six Sigma, Bank of America became the first major bank to launch a Six Sigma initiative in 2001 (Snee and Hoerl, 2005). By the end of 2003, its cumulative financial benefits exceeded $2 billion (Jones, 2004). This development was important in demonstrating the universal application of Six Sigma: It is not simply a manufacturing initiative, but instead is a generic improvement methodology.
The Expansion to Lean Six Sigma
As early as 2003, practitioners were noticing limitations of Six Sigma (we return to this shortly). For example, Toyota had developed generally accepted principles of manufacturing excellence over several decades of intense improvement efforts on the assembly line. These principles, referred to as Lean Manufacturing, were often overlooked in Six Sigma projects because they were simply not well known. George (2002) suggested integrating Lean principles with Six Sigma to create the broader improvement initiative Lean Six Sigma. GE and others quickly transitioned their Six Sigma initiatives to Lean Six Sigma. Results continued to roll in.
Through deployments across diverse organizations, Six Sigma practitioners and researchers have deepened the body of knowledge driving continuous improvement in both theory and practice. For example, several journals have emerged to focus specifically on extending research on Six Sigma and continuous improvements; these include the International Journal of Six Sigma and Competitive Advantage (http://www.inderscience.com/jhome.php?jcode=ijssca), Six Sigma Forum Magazine (http://asq.org/pub/sixsigma/), and the International Journal of Lean Six Sigma (http://www.emeraldinsight.com/journal/ijlss).
Extending the theory and practice of continuous improvement is important, but the most easily quantifiable impact of Lean Six Sigma is financial. A diverse array of organizations spanning the globe have added billions of dollars to their bottom lines. Of course, financial results are perhaps more easily quantified than others; the impact on the quality of healthcare, safety of products and food supply, and even protection of the environment should not be overlooked. We argue that Lean Six Sigma applications have saved countless lives.
In short, based on the documented results in healthcare, finance, manufacturing, and other organizational areas, Lean Six Sigma clearly is the single most impactful improvement methodology in history. Therefore, we might logically ask, why change anything? As the old saying goes, “If it ain’t broke, don’t fix it.” We answer this question in the next section.
