GE: A Six Sigma Success Story
When GE CEO Jack Welch first considered implementing the Breakthrough Strategy in 1996, he discovered the company’s operations were running at somewhere between three and four sigma, or about 35,000 defects per million — a number consistent with the defect levels at most successful companies. At a company the size of GE, that translated to a cost of $7 billion to $10 billion each year in scrap, reworking of parts, and correction of inefficiencies.
Welch committed the company to reaching Six Sigma status (3.4 defects per million) by the year 2000. Recognizing that the initiative would go nowhere without training and vision, he committed an
astounding $450 million in 1996 and 1997 to train
The company used Six Sigma strategies to poll customers on the most critical-to-quality (CTQ) measurements of their business. It also used the Breakthrough Strategy to raise the quality of their service divisions, such as Capital Services (where Six Sigma efforts helped achieve a 62 percent reduction in turnaround time for repairs) and international divisions
like GE Aircraft Engines (the Canadian division that reduced border delays by 50 percent through following the Breakthrough Strategy). 5,000 executives and managers and 80,000 engineers and other employees in the Breakthrough Strategy. Welch also made Six Sigma training a requirement for any kind of advancement at GE.
The result: In 1998, revenues rose 11 percent, to $100 billion; earnings increased 13 percent, to $9.3 billion; working capital turns rose from 7.4 percent in 1997 to 9.2 percent. Even more encouraging, though, is the company’s continued eagerness to invest in its most important asset — its intellectual capital — and the resulting dedication from its employees to achieve each new challenge and objective.