Chapter 2: Six Sigma History and Application

While the roots of Six Sigma are commonly attributed to companies such as Toyota and Motorola, the
methodology is actually grounded in concepts that date as far back as the 19th century. Before delving
into the history of Six Sigma, it’s important to understand the difference between traditional quality
programs, such as Total Quality Management, and continuous process improvement methods, such as
Six Sigma.

Most modern quality and improvement programs can be traced back to the same roots. Both quality
programs and continuous process improvement methods look to achieve goals such as reducing errors
and defects, making processes more efficient, improving customer satisfaction, and boosting profits. But
quality programs are concerned with achieving a specific goal. The program either runs forever,
constantly working toward the same goal, or it achieves the end goal and must be reset for a new goal.

Six Sigma seeks to instill a culture of continuous improvement and quality that optimizes performance of
an organization from the inside out. It’s the cultural element inherent in Six Sigma that lets organizations
enact both small and sweeping improvements that drastically impact efficiencies and costs. Six Sigma
does work toward individual goals with regard to each project, but the projects are part of the overall
culture of improvement that, in practice, is never done. Six Sigma creates safeguards and tactics so that,
even after a project is considered complete, controls are in place to ensure progress continues and it is
impossible to revert to old ways.

The Development of Statistical Process Control

Six Sigma applies statistics to define, measure, analyze, verify, and control processes. In fact, Six Sigma
teams usually use methodologies known as DMAIC or DMADV to accomplish improvements and develop
controls for processes. DMAIC stands for Define, Measure, Analyze, Improve, and Control. These are the
five phases of a Six Sigma project to improve a process that already exists. When developing a new
process, teams use DMADV, which stands for Define, Measure, Analyze, Design, and Verify. Both
methods are discussed in Chapter 11, and Unit 3 provides in-depth information about each phase of
DMAIC.

The roots of statistical process control, which provide a backbone for Six Sigma methods, began with the
development of the normal curve by Carl Friedrich Gauss in the 19th century. We know today that the
normal curve is just one of several possible probability
distribution models. It is perhaps the most widely used model,
and the other models developed from the normal curve.
Probability distribution models are discussed in later chapters
on statistics

In the early part of the 20th century, statistical process control

received another big boost thanks to contributions from an
engineer and scholar named Walter Shewhart. Shewhart's
contributions to quality are many, but two specific ideas stand out. First, Shewhart was the first person
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to closely relate sigma level and quality. He defined a process in need of correction as one that is
performing at three sigma. If you look back to Chapter 1 and the theoretical Amazon example, the cost
difference between four sigma and three sigma is over $78 million; in comparison, the difference
between five and four sigma is only approximately $7.6 million. Because errors and costs exponentially
increase as sigma level decreases, Shewhart’s definition has very practical applications in business.
While Six Sigma as a method seeks to move ever toward less than 3.4 defects per million opportunities
(dpmo), it is also true that if the quality of a process decreases, as it approaches three sigma, the costs
associated with errors increase substantially.

Second, Shewhart is considered the father of control charts. Control charts, which are covered in depth
in the chapters on advanced statistics, are a critical component of statistical process control that lets
organizations maintain improved performance after a Six Sigma initiative. At a time when scholars were
writing about the theoretical application of statistics in a growing number of fields, Shewhart developed
ways to apply these concepts to manufacturing and industrial processes specifically.

During the same time period, W. Edwards Deming was working for the U.S. Department of Agriculture. A
physicist and mathematician, Deming was in charge of teaching courses at the agency’s graduate school
and he arranged for Shewhart to come and speak there. Later, Deming brought Shewhart's statistical
concepts to the United States Census Bureau, applying his theories outside of an industrial or
manufacturing environment for possibly the first time.

One of Deming’s ideas is called the PDCA cycle, or plan-do-check-act cycle. The idea is that improvement
comes when you recognize there is a need for change and make a plan to create improvement. Next,
you do something by testing your ideas. Using the results of the test, you
check or verify that your improvements are working. Then you act, bringing
your improvements to a production environment or scaling improvements Act Plan
outside of the test environment. The fact that PDCA is a cycle means it never
ends; there are always improvements to be made. This is a core tenet of Six
Sigma.

Check Do
Following World War II, Deming worked in Japan on behalf of the United
States government in several capacities. While in post-war Japan, Deming
befriended statisticians and convinced at least one notable engineer that
statistical process control was relevant to Japan's need to drastically drive economic and production
performance to overcome damage from the war. In the end, Deming became a valued teacher and
consultant to manufacturing companies in Japan, planting the ideas and concepts that would soon
become the Toyota Production System, or Lean Six Sigma.

Continuous Process Improvement: Toyota and Lean

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Deming's teachings and the need for Japanese industry to
make a successful comeback following a catastrophic war What is Jidoka?
combined to bear fruit for Toyota. Toyota’s leadership had Jidoka is a principle that creates
visited the concepts of quality prior to WWII, but improved control of defects inside a business
performance and efficiency became a more critical goal given process. Instead of identifying defects
the nature of Japan's economy and resources in the 1940s at the end of the production line and
and 50s. Taking manufacturing ideas attributed to Henry attempting to trace errors back to a
Ford, Toyota leaders applied statistics and new quality source, jidoka demands that a
concepts to create a system they felt would increase process stop as soon as errors are
production and allow for variable products while reducing detected so improvements or
costs and ensuring quality. troubleshooting can happen
Several individuals were instrumental in the ultimate immediately.
development of the Toyota Production System. They infused For jidoka to work properly, machines
the process with automated machinery, quality controls to are often equipped to recognize bad
keep defects from occurring, and efficiency tools that had not outputs from good outputs; the
yet been applied with such detail and consistency. One man, machines are also equipped with a
Kiichiro Toyoda, had previous factory experience. In his notification of some type to spark
previous jobs, he added efficiencies to processes in textile human interaction in the process
mills through conveyor and other automated systems. when things go awry.
Toyoda introduced the same concepts on certain lines in the
Toyota manufacturing process. Later, Eiji Toyoda and Taiichi
Ohno introduced concepts known as Just-in-Time and jidoka, which are the pillars of the Toyota
Production System.

The principles driving Toyota's system, and later, the foundation of Lean Process Management or Lean
Six Sigma, include:

• Defining customer values

• Identifying the value stream for customer needs and desires
• Identifying waste in the process
• Creation of a continuous process flow
• Continually working to reduce the number of steps and time it takes to reach customer
satisfaction

Lean management is highly concerned with removing waste from any process. Waste increases costs
and time spent on a process, making it undesirable in any form.

Motorola’s Focus on Defects

Though the basis for Six Sigma was laid in the late 19th and early 20th centuries, it wasn't until the mid-
1980s that these concepts saw large-scale success in the United States. Decades after Toyota developed
its system, engineers at Motorola began to question how effective their quality management programs
were. Those questions first arose after a Japanese company took over a Motorola television

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manufacturing plant. By applying Lean concepts, the new company began creating televisions that
demonstrated 1/20th the amount of defects as Motorola’s own television sets.

At the time, departments across Motorola measured defects as a ratio of a thousand opportunities. Bob
Galvin, the CEO of Motorola, issued a challenge to his team. He wanted to see an improvement in
quality and production—not just any improvement; he wanted a ten-fold improvement in half a decade.
Engineer Bill Smith and a new addition to the Motorola team – Dr. Mikel Harry – began to work on the
problem.

The team realized that measuring errors against a thousand opportunities didn't provide the level of
detail needed for true statistical process control. Instead, the engineers wanted to measure defects
against a million opportunities. We know that sigma levels were already defined and the idea of using
sigma levels as a measure of quality began with Shewhart. It wasn't a long jump for the Motorola
engineers to make from their desire for more accurate data to the basic concepts of Six Sigma as both a
goal and a methodology.

Throughout the next two decades, Motorola worked to perfect its Six Sigma methodology, seeing
positive results along the way. In addition to statistical tools, the team created a step-by-step process by
which any team--in almost any industry--could make gains and improvements. For the first time, this
type of statistical process control was taken out of the manufacturing environment on a large scale
company-wide. Motorola applied the method to customer service, engineering, and technical support. It
used the process to create a collaborative environment between stakeholders inside and outside of the
organization. It was highly successful; according to Motorola, the company saved more than $16 billion
as a result of continuous process improvement initiatives within 12 years. 5

Motorola did more than improve its own systems and products, though. Galvin directed his team to
share Six Sigma with the world. Motorola and its team published articles and books on the Six Sigma
method and implemented efforts to train others. In this way, they created a methodology based on
statistics that could be taught and implemented within any organization or industry.

ABB, Allied Signal, and General Electric

After leaving Motorola, Dr. Harry joined Asea Brown Boveri. At ABB, Harry worked with Richard
Schroeder, who would also become a champion for Six Sigma. In fact, the two men later cofounded the
Six Sigma Academy. At ABB, Harry came to realize a key idea in the evolution of Six Sigma: business, or
profits, in some ways came before quality. Quality, in fact, was a driving factor of business. Customers
didn’t make purchases if quality was poor. Because the individuals with the ability to decide in favor of
Six Sigma initiatives were highly motivated by dollars, Harry incorporated financial tactics into the Six
Sigma methodology. For the first time, the method was focused on the bottom-line as a primary goal
with other concerns and goals stemming from financially-led goals.

In 1993, both Schroeder and Harry changed jobs, joining the team at Allied Signal. Allied Signal’s CEO at
the time was Larry Bossidy. He was interested in Six Sigma but realized that executives and other high-
level leaders experienced knowledge barriers while attempting to interact and collaborate with analysts,
process engineers, and Six Sigma experts. Bossidy suggested that leadership at a company had to be

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well-versed in Six Sigma to pick the right projects for success and support those projects on a company-
wide basis to ensure success.

Harry, who is sometimes referred to as the father of Six Sigma, created a system for educating executive
leaders. In conjunction with others at Allied Signal, he developed systems that allowed Six Sigma to be
effectively deployed by leadership throughout an organization in its entirety.

Around the same time, GE CEO Jack Welch entered into the Six Sigma arena. Prior to learning about Six
Sigma, Welch had stated he was not a proponent of quality measures. He’d previously criticized quality
programs as heavy-handed approaches that did little to deliver results. Welch invited Larry Bossidy to
speak at a GE corporate meeting in 1995. He also requested an analysis regarding the benefits of
implementing Six Sigma at GE. At that time, GE was performing at between three and four sigma. The
potential savings should the company rise to six sigma were enormous; estimates were $7 to $10
billion. 6

Welch is known as a champion of Six Sigma not because he contributed in major ways to the
development of statistical process controls or the Six Sigma toolsets, but because he demonstrated
exactly how leaders should approach Six Sigma. He also made GE a historically successful Six Sigma
organization by tying Six Sigma goals to employee reward structures. Employees were no longer only
compensated based on financial performance factors; they were also evaluated based on Six Sigma
performance. Suddenly, employees at every level had a personal reason to become involved in
continuous process improvement, and employees and managers were supplied with the Six Sigma
training to succeed.

Continued Growth of Six Sigma

Following the success of corporations such as GE and Motorola, companies across the country rushed to
implement Six Sigma. Unfortunately, in the rush to implement the process, many organizations executed
improvements poorly or failed to gain an adequate understanding of statistical process control before
moving forward with improvements. Although Six Sigma methods have been used by organizations to
gain millions—even billions—in savings and efficiencies, some companies walked away with a bad taste
for the process. That bad taste has resulted in the following misconceptions and myths that are still
prevalent today in many industries:

• Six Sigma is solely concerned with metrics and ignores common sense. The opposite is actually
true: Six Sigma often starts with traditional common sense ideas, often arrived at through
brainstorming, and validates those assumptions with data. The reason for this myth is twofold.
First, managers and others who are used to making calls without being questioned are suddenly
questioned in a Six Sigma environment. Not only are they questioned, but hard data sometimes
proves them wrong. Second, in some cases data is improperly used to support conclusions that
are against common sense or tradition. When those conclusions turn out to be faulty, it’s easy
to blame the process of Six Sigma there is a lack of adequate understanding of the statistical
theories involved.
• Six Sigma is too expensive. While enterprise-wide adoption of Six Sigma can be costly at first,
due in part to training needs, slowly integrating the concepts into a company often costs very

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 little in the long run. Organizations have to balance how they adopt Six Sigma with budgetary
concerns—but when implemented correctly, Six Sigma generally leads to savings that more than
cover its initial investment.
• Six Sigma can fix anything. Opposite the nay-sayers are Six Sigma cheerleaders who believe they
can apply the method like a salve to any problem. While Six Sigma can be applied to any
problem of process, it’s not always relevant to problems of culture or people. If morale or other
human resource problems are at the root of an issue, statistics can’t help. However, if morale is
low because a process is difficult to work with or is performing poorly, Six Sigma can be used to
improve the process, thereby improving morale.

Applying Six Sigma Knowledge

Six Sigma is applied via a controlled project selection and management process. Once areas of concern
are identified, leaders usually turn to analysts, Six Sigma experts, and subject-matter-experts for cost-
benefit analyses. Six Sigma teams attempt to quantify how broken a process is (by calculating sigma
level, costs of defects, downtime, and other metrics) and how much it might cost to address the
problem. Problems are then prioritized according to severity as well as an organization’s ability to
address the issue. Teams begin working through the priority list, returning to the analysis from time to
time to ensure the list has not changed. The majority of this book covers the methods by which teams
identify and address problems using Six Sigma.

The Levels of Six Sigma Certification

Possessing a Six Sigma certification proves that an individual has demonstrated practical applications
and knowledge of Six Sigma. Some organizations offer in-house certification processes. Most people
seek certification by enrolling in online or onsite Six Sigma training course. Most organizations that offer
Six Sigma education also offer a path to certification. You can take courses for certification at various
levels; Six Sigma levels are differentiated by belt level.

White Belt
A certified Six Sigma White belt is familiar with the basic tenets of the Six Sigma methodology, though
they aren’t often regular members of process improvement teams. White belt training is a good
introduction to Six Sigma for auxiliary staff members within an organization and can provide the
information necessary for understanding why project teams do what they do. The training lets
employees review project processes, understand information presented in milestone meetings, and
better participate in project selection processes. White belt training can also be used across all levels of
employees when organizations are attempting to implement a Six Sigma culture. It is worth noting that
White Belt training usually only provides a very basic introduction and overview of Six Sigma, so much so
that not all Six Sigma professionals recognize it as a true Six Sigma certification.

Yellow Belt
A yellow belt certification is a step above white belt: it is still considered a basic introduction to the
concepts of Six Sigma, but a yellow belt learns basic information about the DMAIC method often used to
improve processes. The following concepts are often included in Six Sigma yellow belt training:

• Six Sigma roles

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 • Team development and management
• Basic quality tools such as Pareto charts, run charts, scatter diagrams and histograms
• Common Six Sigma metrics
• Data collection
• Measurement system analysis
• Root cause analysis
• An introduction to hypothesis testing

At the yellow belt level, training is often geared toward understanding of the overall methodology and
basic data collection. Yellow belts don’t need to know how to conduct hypothesis testing, but they must
understand the language of hypothesis testing and the conclusions that are drawn from such tests.
Yellow belts are often employees who need to know about the overall process and why it is being
implemented.

Green Belt
Certified green belts work within Six Sigma teams, usually under the supervision of a black belt or
master black belt. In some cases, green belts might lead or handle smaller projects on their own. Green
belts are generally equipped with intermediate statistical analysis capabilities; they might address data
and analysis concerns, help Black Belts apply Six Sigma tools to a project, or teach others within an
organization about the overall Six Sigma methodology.

Green Belts can be middle managers, business analysts, project managers, and others who have a
reason to be involved regularly with process improvement initiatives but who might not be a full-time
Six Sigma expert within an organization. Sometimes, Green Belts are considered the worker bees of the
Six Sigma methodology because they undertake most of the statistical data collection and analysis under
the supervision of certified Black Belts.

The following concepts are often included in Green Belt training:

• All of the information listed for yellow belt certification

• Failure mode and effects analysis
• Project and team management
• Probability and the Central Limit Theorem
• Statistical distributions
• Descriptive statistics
• How to perform basic hypothesis testing
• Waste elimination and Kaizen
• Basic control charts

Black Belt
A certified Six Sigma Black Belt usually works as the project leader on process improvement projects.
They might also work within management, analyst, or planning roles throughout a company. Common
minimum requirements for black belt certification include everything listed for yellow and green belts in
addition to:

• Advanced project and team management skills

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 • Knowledge of the expansive list of Six Sigma brainstorming and project tools
• Intermediate to advanced statistics
• An understanding of other process improvement and quality programs, including Lean and Total
Quality Management
• An ability to design processes
• Advanced capabilities for diagraming processes, including flow charts and value stream maps
• Use of software to conduct analysis, such as Excel or Minitab

Master Black Belt

A Master Black Belt is the highest certification level achievable for Six Sigma. Within a business
organization, Master Black Belts usually manage Black Belts and Green Belts, consult on especially
difficult project concerns, offer advice and education about challenging statistical concepts, and train
others in Six Sigma methodology.

Certification Exams
Most certification programs require individuals to pass an exam for certification; some require that
green and black belt candidates also demonstrate their knowledge in the form of Six Sigma project
experience.

If an exam is required for white or yellow belt certification, it is usually fairly short and covers basic
concepts about the methodology. Green belt exams are longer and might include questions about
statistics and some basic calculations. Black belt exams often take up to four hours to complete; they
test for understanding and application. Exams might include difficult statistical problems or questions
about how a project leader might handle various situations. While exams differ by organization, this
book is designed based on The Council for Six Sigma Certification’s (CSSC) published body-of-knowledge
requirements.

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