Would Six Sigma Have Killed Apple?

One of the perennial criticisms of Six Sigma, or Lean Six Sigma as others call it, or indeed of continuous improvement in general as it is practiced today, is that most incarnations of these programs are overly analytical, often mechanistic in their application, and far too “left-brained” with a short-term focus on cost savings rather than on growth, innovation, or breakthrough thinking.

In my career as a conceiver and leader of such deployments it has always been my dream and desire to create performance improvement groups that could indeed meld the right and left sides of the brain, to bring the analytical rigor of the classic process improvement tools and concepts, along with holistic design and systemic, strategic thinking. In my view the best Black Belts embody both of these aspects; when this is not feasible, I have tried to consciously recruit a balanced team of people, some of whom bring the left brain and others the right brain in a collaborative synergy.

I have posted a number of articles (Rise of Corporate Artistry, Taking Imagination Seriously) that reflects my own opinion that among other things, a successful business is in many ways a question of design and artistry. The relevancy of design and aesthetics is clear in the case of consumer-oriented businesses such as Apple, Sony, IKEA, or Starbucks. But the elements of good design is also relevant in business strategy in general regardless of the industry: simplicity, coherency, boldness.

To answer the question I posed, would the deployment of Six Sigma have hurt Apple more than it helped, I would have to say yes, assuming that what we are talking about is the kind of Lean Six Sigma (LSS) program practiced by the vast majority of organizations. No doubt LSS would have a role in improving some of the more transactional and operationally intensive aspects of Apple (its administrative areas, its contract manufacturing processes, its various supply chain elements) but none of these things give Apple its unique and powerful competitive advantage in terms of product innovation and design.

One case cited by many concerned about the effect of LSS on innovation and creativity is that of 3M.

In a June 2007 Business Week article, “At 3M, a struggle between creativity and efficiency: How CEO George Buckley is managing the yin and yang of discipline and imagination”, Brian Hindo wrote:

Not too many years ago, the temple of management was General Electric. Former CEO Jack Welch was the high priest, and his disciples spread the word to executive suites throughout the land. One of his most highly regarded followers, James McNerney, was quickly snatched up by 3M after falling short in the closely watched race to succeed Welch. 3M’s board considered McNerney a huge prize, and the company’s stock jumped nearly 20% in the days after Dec. 5, 2000, when his selection as CEO was announced. The mere mention of his name made everyone richer.

McNerney was the first outsider to lead the insular St. Paul, Minnesota company in its 100-year history. He had barely stepped off the plane before he announced he would change the DNA of the place. His playbook was vintage GE. McNerney axed 8,000 workers (about 11% of the workforce), intensified the performance-review process, and tightened the purse strings at a company that had become a profligate spender. He also imported GE’s vaunted Six Sigma program–a series of management techniques designed to decrease production defects and increase efficiency. Thousands of staffers became trained as Six Sigma “black belts.” The plan appeared to work: McNerney jolted 3M’s moribund stock back to life and won accolades for bringing discipline to an organization that had become unwieldy, erratic, and sluggish.

Then, four and a half years after arriving, McNerney abruptly left for a bigger opportunity, the top job at Boeing. Now his successors face a challenging question: whether the relentless emphasis on efficiency had made 3M a less creative company. That’s a vitally important issue for a company whose very identity is built on innovation. After all, 3M is the birthplace of masking tape, Thinsulate, and the Post-it note. It is the invention machine whose methods were consecrated in the influential 1994 best seller Built to Last by Jim Collins and Jerry I. Porras. But those old hits have become distant memories. It has been a long time since the debut of 3M’s last game-changing technology: the multilayered optical films that coat liquid-crystal display screens. At the company that has always prided itself on drawing at least one-third of sales from products released in the past five years, today that fraction has slipped to only one-quarter.

Those results are not coincidental. Efficiency programs such as Six Sigma are designed to identify problems in work processes–and then use rigorous measurement to reduce variation and eliminate defects. When these types of initiatives become ingrained in a company’s culture, as they did at 3M, creativity can easily get squelched. After all, a breakthrough innovation is something that challenges existing procedures and norms. “Invention is by its very nature a disorderly process,” says current CEO George Buckley, who has dialed back many of McNerney’s initiatives. “You can’t put a Six Sigma process into that area and say, well, I’m getting behind on invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday. That’s not how creativity works.”

Whereas 3M has struggled with combining Six Sigma and innovation, apparently Starwood Hotels has had more success. In an August 2007 Business Week article titled “Six Sigma Kick-Starts Starwood,” the headline reads “The hotel chain says Six Sigma doesn’t have to stifle creativity, and points to its success in developing profitable new programs for guests.” The article goes on to describe how

3M embraced it—with mixed results. The program hurt the inventive Minnesota company’s creativity, which is precisely the rap it has among companies trying to innovate. So when Starwood Hotels & Resorts Worldwide (HOT), Westin’s parent company, introduced Six Sigma in 2001, “there was tremendous skepticism,” admits Geoff Ballotti, president of Starwood’s North America Div.

But under Ballotti, the company is using Six Sigma’s strengths to promote innovation–and generate tens of millions in new revenue. Combining creativity and efficiency is a delicate managerial maneuver that few service companies can pull off.

Starwood succeeded, in large part, because it began with a culture of creativity before introducing the management tool. Design has long played a major role in the company, with noted architect David Rockwell designing its hip W Hotels brand back in the ’90s.

Today, by harnessing Six Sigma processes to the creativity that bubbles up from its hotel units, Starwood is able to quickly turn concepts into reality. Hundreds of projects have been done this way, including a “menu engineering” program that rejiggers the contents of an in-room refrigerator based on their popularity to drive higher profits, and the development several years ago of a pool concierge who helps guests in Latin American resorts book spa appointments and restaurant reservations. “Everybody admires them for how they do this,” says Jeneanne Rae, president of Peer Insight, an innovation consulting firm based in Alexandria, Va.

Starwood gets a boost out of Six Sigma by using its techniques to dream up projects across the company. Massage is just one of hundreds of ventures done this way. This year’s food and beverage engineering program, which rejiggers the choices on room-service and catering menus based on their popularity, has generated $20 million in extra revenue.

In 2006, programs developed under Six Sigma delivered more than $100 million in profit to its bottom line. As a result, the White Plains (N.Y.) company is one of the world’s most profitable hotel operators: Its net margin is nearly 15%, higher than those of rivals Hilton Hotels Corp. and Marriott International Inc. “We have been driving our margin growth faster than our competitors,” says Ballotti. “When people ask why, I point to Six Sigma.”

It is entirely possible that the way different organizations have defined Six Sigma, or in the way they have implemented it, has indeed stifled innovation. That said, there are about as many ways to define and implement “Six Sigma” as there are organizations out there. In fact, “Six Sigma” is about as standardized as “continuous improvement” or “high performance,” which is to say, Six Sigma is not at all standardized in terms of philosophy, approaches, and methods from company to company.

One of the other difficulties in figuring out if Six Sigma hinders innovation is that there isn’t any one definition of “innovation”.

Some argue that tools and methods such Six Sigma can help with innovation by reducing the amount of time spent on non value-added activities. Process and discipline can also play a role in translating ideas into something manufacturable, saleable, and profitable. Thomas Edison, for example, is at least as famous for his “factory approach” to invention as he is for his intuitive sparks of insight, summarized by his quote “success is 99% perspiration and 1% inspiration.”

Intuition, in the form of Steve Jobs personal judgment of what products would succeed rather than rely on analytical market research methods, is one example of where narrow definitions of Six Sigma can fall down: 99% of the time analytical methods are useful to find counter-intuitive solutions the ordinary executive cannot fathom, but there is always that 1%, the Steve Jobs, that defies that rule and that LSS or anything like it not very relevant. The problem, of course, is that many senior executives fancy themselves as belonging to that 1% genius category when clearly they do not, but part of the failing of many Six Sigma deployments is its inability to understand or act upon the possibility that the 1% exists and arises in subtle and unpredictable ways.

That said, when defined and deployed in ways that marry right brain and left brain thinking, a performance improvement effort that instills discipline, process capability, and executional consistency is crucial even to businesses that would appear to involve so much creativity that the value of something like LSS is hard to fathom. For example, while the world of fashion design might appear one of the artistic/design genius, no less than Bernard Arnault, chairman and controlling owner of LVMH, the world’s biggest fashion and luxury-goods group, has said “It’s the capacity to make opposing forces work, a bit like fire and water. It’s not enough to have a talented designer; the management must be inspired, too. The creative process is very disorganised; the production process has to be very rational.”

Other clothing firms such as Benneton and Zara have borrowed liberally from the playbook of Toyota in creating highly sophisticated, “just-in-time,” process-driven organizations that are a model of analysis, process, and discipline. To quote fashion designer Karl Laderfeld, “fashion is about creativity, but it is also a business.”

Published authors (that is to say authors who actually get themselves published rather than just talk about writing a book) are disciplined in their writing habits. Their particular methods may vary widely, but listening to a range of authors one is struck by the fact that they use some sort of disciplined process. For example, Canadian author Richard Wright, who has just published his 11th novel and who has also won the Giller Prize and the Governor General’s Award. In a recent story in the National Post, writer Mark Medley wrote:

Spend any time with Wright and it becomes clear he is a man devoted to his craft, a writer in the romantic sense of the word. He still writes on an old IBM Selectric typewriter and edits by hand. He is a disciplined worker, still drawing on habits from when he taught English at Ridley College and would rise at 3:30 a.m. to write before classes.

“There’s no secret to it,” he explains. “You have to get up and [write] everyday. You can’t just go when you feel like it. Even when it isn’t a particularly good day for you, you still have to be there to wait for the customers just like a storekeeper.”

Frank Lloyd Wright said that it was his making hundreds and thousands of architectural drawings early in his career that later made it seem like he could just pull an architectural concept from “out of his sleeve.” The same stories appear in relation to successful painters and musicians. What we often do not see are the many months and years honing basic skills so that later in life they can do things “off the cuff,” seemingly without process or effort. What lay people often see as “inspired” or the result of pure inspiration and creativity, is often the result of months and years of incredibly repetitious and disciplined work, practice, and process.

Another example: the great artistry of ballet dancers seem free-flowing and without process or structure, and yet behind their effortless skills lies years of repetitious practice of basic foot movements and fanatical discipline.

Forever the optimist, I believe that a grand unification is possible, that the right and left brain approaches can be brought together, that we can and must marry the arts and sciences of organization. It is important because so many of the complex problems facing society, not just business, require this kind of unified approach.