Six Sigma.

• Author: ELLIG, BRUCE R.
• Position: Review

by Mikel Harry and Richard Schroeder

Published by Currency/Doubleday, New York, 300 pages, $27.50

THE AUTHORS set the stage for their book with the opening words of their preface: "We believe that Six Sigma is the most powerful breakthrough management tool ever devised." Not an immodest claim. However, they have an apparent avid supporter in General Electric CEO Jack Welch, a "self-proclaimed cynic when it comes to quality programs" who nonetheless describes Six Sigma as "the most important initiative GE has ever undertaken." Larry Bossidy, the just-retired CEO of AlliedSignal and another corporate giant, is also cited as a major supporter of Six Sigma.

Well, how could even a skeptical executive resist at least examining a process, based on what one might identify as the five pillars of Six Sigma:

* We don't know what we don't know.

* We can't do what we don't know.

* We won't know until we measure.

* We don't measure what we don't value.

* We don't value what we don't measure.

Rather catchy. With a little imagination one could turn it into a corporate chant if not a rap tempo. All right, but what is Six Sigma? These two words have been added to the business lexicon but few can define it, much less indicate why it may be important.

Quickly the authors come to the rescue. Six Sigma means producing a product virtually defect-free: more specifically, only 3.4 defects per million opportunities, or 99.99966% perfect. To put this in perspective, most companies are apparently operating at 3.5 or 4 sigma with defects in the 6,000 to 23,000 range. (Note: the authors choose only to initial capitalize Six Sigma.)

If this is not sufficiently impressive, the authors go on to state that "At three sigma, the cost of quality is roughly 2540% of sales revenue" versus 15-25% of sales at 4 sigma, whereas the cost of Six Sigma is less than 1% of sales dollars. It is easy to see why those at Six Sigma -- or even 5 sigma, with 233 defects per million opportunities and a cost of 515% of sales -- can provide a significant profit opportunity.

The goal of Six Sigma is not simply detecting and correcting mistakes; the goal is changing the processes so that mistakes never occur. Six Sigma is about effectiveness more than efficiency: "Efficiency means turning the crank right. Effectiveness is turning the right crank."

Having been given a good reason as to "why" Six Sigma is an important business objective, it is easy to see why managers would be interested in learning...