Jack Welsh Did Not Understand the Math of Six Sigma

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Executive Summary

Jack Welsh pushed Six Sigma aggressively both at GE and outside of GE.
Unknown to most was that Jack Welsh did not understand the statistics of Six Sigma.

Introduction

This story seems to have been hidden, even though it is published in a book by Jack Welsh and something he readily admitted, but it is incredible what Jack Welsh did when he first heard Six Sigma.

Jack Welsh’s Conversion to Six Sigma

While reading through the article Whatever Happened to Six Sigma on Quartz, I found the statement by Jack Welsh astounding.

“Once everything came together, I went nuts about Six Sigma,” Welch wrote in his 2001 autobiography Jack: Straight from the Gut. “With that opportunity [for savings], it wasn’t rocket science for us to take a big swing.”

Welch admitted that much of the statistical underpinning of the system went over his head, but he hired the Motorola manager who ran that company’s Six Sigma Academy to make it work at GE. To drive home its importance, Welch determined that 40% of employees’ bonuses would be tied to Six Sigma, and that stock options would be reserved only for managers in black belt training. – Quartz

Jack Welsh’s Bizarre Response to Six Sigma

Jack Welsh did not understand Six Sigma’s statistics; other evidence outside of Motorola using the program was not presented. However, rather than contacting a statistician within GE to evaluate and explain the statistics to him, Jack Welsh rolls out an aggressive Six Sigma program. He penalizes employees who don’t follow Six Sigma. This means that Jack Welsh aggressively promoted something inside, and outside of GE, he had no idea if it was true.

How Cults are Created

The following explains how much Jack Welsh required people to follow something he had no idea worked.

In Welch’s telling, fealty to the doctrine of Six Sigma became paramount. No one could be promoted to management without at least green belt training, and candidates could be rejected if their faith wavered. When one internal applicant to run GE’s nuclear power services division seemed less than devoted, he had to fly from San Jose, California, to company headquarters in Connecticut “to talk to us about his Six Sigma qualifications,” Welch wrote. Eventually, the manager “convinced us that he was deeply committed to Six Sigma” and got the job.

By 2001, GE boasted that some 80,000 employees had received Six Sigma training (pdf), and completed 500,000 Six Sigma projects since the system was adopted. – Quartz

One has to wonder how serious US manufacturers were about unreachable high-quality levels proposed by Six Sigma when they outsourced so much production to China that they fraudulently label products as meeting US health and safety standards. And when these companies fight with regulators to keep having unsafe products imported into the US.

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Conclusion

This is a significant story of how little people often require evidence before making up their minds. To find out more about the decline of GM and Six Sigma, see the article How Will GE’s Decline Impact the Cult of Six Sigma?

References

https://qz.com/work/1635960/whatever-happened-to-six-sigma/