Despite the popularity of Six Sigma, Robert Heller of www.thinkingmanagers.com questions whether it is all it is cracked up to be.
Quality Management or Quality Company
I was struck recently by a quote in Business Week from Babson College management professor Tom Davenport: “Process management is a good thing. But…it always has to be leavened a lot with a focus on innovation and [customer relationships].”
Surely, though, customer care and the sustaining of both that relationship and the corporation’s health and wealth with a stream of new products and processes always has been at the forefront of a company’s policy?
Davenport believes that this might not be the case with many big companies (82% of the 100 largest US firms according to a survey conducted by the American Society for Quality) embracing six sigma as a management process.
Six Sigma is derived from Total Quality Management, or TQM, and both hold that every business process can be improved: you can always manage or produce more efficiently if you understand the process at work and calibrate where improvement can be made.
Once again, quoting Business Week: “The discipline was developed as a systematic way to improve quality, but the reason it caught fire was its effectiveness in cutting costs and improving profitability. That makes it a powerful tool – if those are a company’s goals.”
Going back to the 82%, if improving profitability is their primary goal, there is no doubt that six sigma is a useful tool, but unfortunately improving profitability by those means is subject to the law of diminishing returns.
A more robust approach is provided by The Excellence Model of The European Foundation for Quality Management (EFQM) who use the following nine questions as a basis for judging a company:
The Thinking Managers website publishes The Thinking CEO internet business magazine, which includes an article by Derek Medhurst reporting the results obtained by award-winning companies which ranked high on the very demanding criteria applied by the EFQM. The studies conclude that if performance is measured before and after a company wins its first quality award, there is a very strong correlation with good results.
Over the whole post-implementation period the award winners showed improved outcomes over five years in five key performance areas where every company should wish to excel:
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