Six Sigma Black Belt: What the ROI Data Actually Shows

Six Sigma Black Belt: What the ROI Data Actually Shows Six Sigma was developed at Motorola in the 1980s and popularised globally by Jack Welch at GE in the 1990s. At GE, Welch described Six Sigma as "the most important initiative GE has ever undertaken" and credited it with saving the company $12 billion over five years. Motorola claimed $16 billion in savings over the first decade of implementation. Allied Signal now Honeywell reported $1.5 billion in savings in the first three years. These numbers are extraordinary. They are also, in important ways, misleading — not because they are false, but because they represent the upper end of Six Sigma outcomes, achieved by organisations that implemented it with exceptional commitment and rigour. The average Six Sigma implementation produces more modest results, and a significant proportion produce no measurable benefit at all. Understanding why the outcomes vary so dramatically is more useful than citing the headline numbers. What the Aggregate Data Shows A 2009 study published in the Journal of Operations Management analysed the stock market performance of 55 companies that had publicly announced Six Sigma programmes. The findings were mixed: companies that implemented Six Sigma showed, on average, modest improvements in return on assets and sales growth compared to control groups. But the variance was enormous — some companies showed dramatic improvements, others showed no improvement or negative effects. A 2010 metaanalysis of Six Sigma research by Zu, Fredendall, and Douglas found that Six Sigma's effectiveness was strongly moderated by implementation quality. Organisations that implemented Six Sigma with strong leadership commitment, adequate training investment, and a culture of datadriven decisionmaking showed significantly better outcomes than those that implemented it as a compliance exercise or a costcutting initiative. The pattern that emerges from the aggregate data is consistent: Six Sigma produces excellent