In business today, you often hear the term Six Sigma and how companies like GE or Toyota apply a Six Sigma approach to business and their stock value skyrockets. And then you think, was Six Sigma one of those chapters I didn’t pay attention to in Calculus 101 back in college? Most likely your college math course covered polynomials, not Six Sigma which is grounded in the field of statistics. Developed in the 80s by Bill Smith and Bob Glavin to support a quality management program at Motorola, the goal of this program was to produce no more than 3.4 defects per million opportunities or more simply to give the customer a high quality product in the most economical way. So, herein is the first reason why you should develop a Six Sigma methodology.

How many defects do you have? In the 1980s, Motorola was one of many companies in the United States that was suffering from serious competition from Japanese businesses. Japanese companies were bringing more products to market cheaper and with higher quality, which resulted in a revolution among American consumers. Motorola recognized that they didn’t have a quality program, and initiated a streamlined Six Sigma approach under the executive leadership of Bob Glavin. Motorola’s approach set goals of “100X improvement in four years.” But, first the quality measures for their products didn’t exist. Motorola’s electronics customers were defecting at a rapid pace to Japanese manufactures because of the high quality. The Six Sigma methodology launched by Motorola identified facts about the manufacturing process and attached detailed metrics about each measurable fact. The boon for Motorola was a very clear picture of the number of defects generated by their manufacturing process which led to a five-fold growth in sales per year. But, in the process Motorola also realized it wasn’t savvy about what quality the customer expected.

What does the customer want? At the core of a Six Sigma methodology is learning what value means to a customer. When GE implemented Six Sigma in the 1990s, Jack Welsh stated that “we want to make our quality so special, so valuable to our customers, so important to their success that our products become their only real value choice (GE Annual Address, 1997)”. And Jack saw that the methods and practices of Six Sigma focused on collecting what has become known as the “Voice of the Customer”. These customer requirements become the design requirements for new existing products, which foster metrics to measure the quality of the product. In fact, Motorola’s stock price rose annually by 21% after implementing their Six Sigma methodology.

The bottom line is that Six Sigma generates sustained success. The impact to Motorola’s profits after implementing their Six Sigma methodology was significant, climbing nearly 20% per year. GE, Toyota, and many others all reported remarkable growth. And the simple reason for this turnaround is that companies who develop effective Six Sigma methodologies change their business approach to deliver a significant strategic advantage.