Nov 26, 2006

Six sigma comes in the way of innovation?

Fortune says:
"In fact, of 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since, according to an analysis by Charles Holland of consulting firm Qualpro (which espouses a competing quality-improvement process).

One of the chief problems of Six Sigma, say Holland and other critics, is that it is narrowly designed to fix an existing process, allowing little room for new ideas or an entirely different approach. All that talent - all those best and brightest - were devoted to, say, driving defects down to 3.4 per million and not on coming up with new products or disruptive technologies."

Six sigma appeals to organization because it is the search for order in chaos, for controlling, planning and measuring. It's the classic roots of traditional management practices.

Innovation however, means letting go of controls, of relaxing the variability, of being tolerant of mistakes, of coming up with new perspectives for existing goods and services.

The article goes on to say:

An inward-looking culture can leave firms vulnerable in a business world that is changing at a breakneck pace - whether it's Craigslist stealing classified ads from local newspapers or VoIP threatening to make phone calls virtually free.
The paradox of business leaders is that they have got to do the trade-offs on building today's business or to prepare for the unknown tomorrow. Where to put resources would depend on the following:

1. What kind of market/markets are you competing in?
2. How are your customers changing?
3. What is the cost of entry in your market?