The Downside of Six Sigma
Revered for decades as one of the world’s most innovative companies, 3M lost its innovative mojo when it began using Six Sigma to try to improve its operational efficiency. James McNerney, the CEO named in 2000, was a Jack Welch protégé from GE. He introduced the Six Sigma discipline as soon as he took the helm of the firm, streamlining work processes, eliminating 10% of the workforce, and earning praise (initially) from Wall Street, as operating margins grew from 17% in 2001 to 23% by 2005.
But when McNerney tried to apply the Six Sigma discipline to 3M’s research and development processes it led to a dramatic fall-off in the number of innovative products developed by the company during those years. And 3M had been famous for its innovations, in a wide variety of areas, from Scotch tape to Post-it Notes.
Many breakthrough innovations come by happy, unanticipated accident rather than by plan, but Six Sigma is all about planning, predicting, documenting, adjusting, and improving. Applied to R&D, Six Sigma attempts to turn the innovation process into a repeatable routine, which ends up favoring incremental improvements over disruptive innovations and breakthroughs.
Many of the researchers and scientists at 3M bridled at the requirement to fill out constant reports and justifications for doing the kind of “tinkering around with things” that usually led to the more important creative ideas. According to one participant in the process, after a briefing on how the Six Sigma program was to be applied to R&D, “we all came to the conclusion that there was no way in the world that anything like a Post-it note would ever emerge from this new system.”
In his book Seeing What Others Don’t: The Remarkable Ways We Gain Insight, cognitive psychologist Gary Klein argues strongly that the Six Sigma discipline, eventually embraced by 58 of the Fortune 200 companies, has a significant and often overlooked downside: it does tend to reduce a company’s innovative capabilities. Innovation is a creative endeavor, and creativity is inherently unpredictable and un-plannable. If you could plan and schedule creativity, it wouldn’t really be creative, would it?
By 2006, Fortune Magazine reported that 91% of the large enterprises that had implemented Six Sigma had fallen behind the growth rate of the S&P 500, and blaming the phenomenon on a significant falloff in innovation at these firms.
In July 2005, 3M appointed a new CEO, George Buckley, a British business executive with an engineering background. Buckley worked to preserve the benefits of Six Sigma’s cost-cutting and efficiency-improvement efforts while simultaneously re-stimulating the creative and innovative juices at 3M. His solution was in part to exempt a lot of the research process from the more formal Six Sigma forms and reports. According to Buckley,
Buckley remained CEO at 3M until he retired in 2012, and restored the company’s innovative luster. By 2010, in fact, in a Booz & Company survey of the world’s most innovative firms, 3M was the third-most cited company, just behind Apple and Google.
Everyone wants more innovation. But you can’t make innovation happen, no matter how hard you try or how many resources you put on it. Your most effective strategy will be to create a climate of innovation and let it happen. Invention is a disorderly process—a process of experiment and failure, accident and coincidence, bad luck and good fortune. Often, success comes simply from being in the right place at the right time. Or not.
The downside of Six Sigma is that despite all its cost-efficiency and quality-control benefits, it also hampers the more random, unplanned chaos of the creative process.