Last of the True Believers

We can't manufacture our way out of this mess, but we can invent our way out.


I have been fascinated all of my professional life by the multitude of trends that have hit the world of business over the last fifty years.

I remember from my days teaching at the Graduate B School at UT-San Antonio those magical mantras: Management By Objectives, Theory Y, Theory of Constraints, TQM, and Quality Function Deployment, Leadership By Walking  Around, etc. 

We were in awe of the Deming method and just learning about the wonders of JIT, Toyota, and Lean. Then along came Six Sigma. It started small, like all such "social movements in business."

No one could anticipate the impact, or the unintended consequences of Jack Welch's wholesale embrace of Six Sigma, not only on GE (which they are still paying for) but on every aspect of American business. Lesson learned, beware the unintended consequences of the business solution du jour because at least one will almost inevitably come around to bite you on the ass.

Lest you accuse me of being a Neanderthal, I want to say that I fully embrace the notion of continuous improvement, Poke`yoke, and the underlying concepts of Kaizen. Just about anything that improves the quality of the goods and services that we produce was, and is, dearly needed, especially as globalization becomes the final nail in the coffin of American manufacturing. 

One can only wonder if the demise of Detroit could have been avoided had the yutzes who run those companies actually embraced "quality" back in the '80s instead of turning it into a PR buzzword. Do you remember "Quality is Job One!"? 

Back to reality; enter Six Sigma. We can probably all agree that GE set the standard of adoption of the Six Sigma model. It succeeded because GE's top dog, specifically Jack Welch, ordered it, adopted it, and stuck with it through its entire adoption cycle. 

Welch deserves credit for understanding that only with his direct, day-to-day embrace of the Six Sigma program would it be promulgated from top to bottom in the organization. He clearly understood that without the big boss as champion, Six Sigma would have been adopted in a spotty way and would have most likely died when he departed the scene. 

He knew, as we all should know by now, that almost all organizational change attempts fail because of the lack of absolute, dictatorial support from on high, and he understood well the Machiavellian dictate: Change will be fought by all who stand to lose, and half that stand to gain, because of fear of change. He had to fight for it, and he beat those who opposed it into oblivion.

Welch was so successful at implementing Six Sigma that it has become the formula for success for big business, or at least that is a common belief. Jack and his acolytes were so good at preaching the gospel of Six Sigma that the de rigor strategy for corporate growth and glory was to hire a Jack clone to run the business. 

Bob Nardelli went to Home Depot and then Chrysler; John Trani went to Stanley Works; James McNerney went to 3M and then to Boeing a year later. They were at the top, and throughout the land, even more GE alumni were given top billing, with the expectation that only their kind of discipline could rescue a company or branch or division from the clutches of chaos and disaster. It was going to take Six Sigma and the GE model to standardize our processes. Like Metamucil, it was going to make us regular, make us predictable, pacified and of course, profitable.

Without trying, I can count on both hands and feet the number of former GE' ers who flopped miserably at governance and failed to bring about the joyous resurrection for which they were hired. What a surprise! Who'd a thunk it? A Jack clone failed miserably? Is Six Sigma not the answer to all of our troubles? Create a stage-gate, make a checklist, get the shrinkage under control! And if so much of their leadership had not been so ham-handed, it might have worked. Certainly, Six Sigma has been good for us, in general. 

I don't care about in general. My focus in corporate America has been through the lens of new product development, and no place does the failure of Six Sigma shine brighter than in NPD.

The aim of Six Sigma is continuous improvement, not leaps. However, making incremental improvements is not the recipe for creating better and more innovative new products. 

Through the rigorous discipline and metrics of Six Sigma, one can make orderly improvement in products, but no one should count incremental improvement as the true innovation that is at the core of NPD. (No, I don't count a stupid packaging change a true innovation.) True innovation changes the paradigm for a market. 

A new technology applied to an old problem, a solution that makes other NPD engineers smack themselves in the head and say, "Why didn't I think of that?" That is real innovation.

Six Sigma reinforced with a "bean counter" mentality dictates that incrementally better NPD requires going after low hanging fruit. However, we all know that low hanging fruit has been picked over, or has been rotting on the ground. This is not a strategy for success; it is an excuse for corporate laziness; it's an aversion to risk that causes us to take the easy road. 

The low hanging fruit strategy fits hand-in-glove with the notion of "inorganic" corporate growth. Find something on the ground that is easy to copy, and let someone else reach for the bright fruit at the top of the tree. Wait for a start-up to demonstrate value by creating the innovative new products that big companies can't develop, then buy it up on the promise of current and future innovation. 

I challenge you to think of any successful integration of a start-up into a big organization. By successful, I mean that the division retains its spirit, its innovation, and its drive to create. 

The reason this strategy fails is simple: the inventive folk who made it work in the first place leave. Most great creators cannot stand the stifling corporate environment that the swallowed-up entity becomes. 

Those who stay are not the ones the company needs to create brilliant new products; they are the ones who are afraid of risk; they are the ones that you cannot innovate.

To be successful at real NPD, it takes an agile, flexible, well-coordinated corporate structure. It requires a dedicated and, above all, patient management team that is not averse to risk, to pull off real innovation over the long haul. 

Unfortunately, doing so on a long term, reliable basis in this era of quarterly reporting and continuous profit improvement is almost impossible. Truly innovative NPD is not a fad or a Six Sigma-like trend. It's risky, messy, and excitingly unpredictable, and it doesn't necessarily follow a straight line. 

Long after Six Sigma becomes an adopted standard, and the consultants are selling another trend, we will still have to deal with messy new product development, without checklists, without formulae, and without metrics.

It can be done, but it takes more than continuous, incremental improvement and endless stage-gates. I genuinely believe that those who master true innovation are the ones who will lead this country into the future, and back into first place in innovation. We can't manufacture our way out of this mess, but we can invent our way out.

*With a tip of the hat to Eric Hoffer's The True Believer

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