At the most recent Quality Expo, industry leaders H. James Harrington and Praveen Gupta met in front of a packed house to deliver a friendly, Quality Digest -sponsored debate on the virtues of total quality management (TQM) vs. Six Sigma. Harrington, a long-time proponent of TQM as well as a Six Sigma Grand Master Black Belt, agreed to present the case for TQM, while Gupta, author of six books on Six Sigma, defended the Six Sigma methodology.
Following is a recap of the key points touched upon by Harrington and Gupta; the TQM portions are taken from Harrington's presentation, and Gupta's perspective is represented in the Six Sigma sections. In the end, it was clear that both methods have something to offer industry; they have something to offer each other, as well. As one member of the audience succinctly put it in the question-and-answer session following the debate, "These topics shouldn't be presented as mutually exclusive because certainly they are not."
On that note, it's important to mention that Harrington and Gupta each see the value of the opposing viewpoint. They are, first and foremost, strong supporters of all the tools in the quality manager's toolkit.
You can listen to the entire debate at http://reedshows.com/qualityaudio.
Total quality management was an evolutionary rather than a revolutionary development. It evolved over a hundred years to be what it is today. We need to look at that development and at how the methodology started, evolving from fair quality up to a very robust level of quality in products and services. Where's it going in the future? I think beyond TQM is total improvement management, which will take the concept even further.
Terms change, but methodologies don't. The Juran Institute points out that TQM is a set of management processes that create delighted customers and empowered employees. That's what TQM is about today. Where did it come from? One only need look at the Ford Motor Co. at the beginning of this past century. Ford was able to take raw materials and turn them into a delivered car in five days--the best just-in-time (JIT) program that has ever been developed anyplace in the world. Modern concepts such as continuous flow, lean and error-proofing were all part of that success.
The next step forward came in the period from the 1920s to the 1940s, when the focus was driven by AT&T. Here's where we first saw statistical process control, when Walter A. Shewhart developed his control charts, and the plan-do-check-act (PDCA) problem-solving tools came into existence. All this helped establish professions such as data analysts and quality engineers.
The period from the 1940s to the 1960s was driven by the government and the World War II. This is when reliability engineering and sample plans came into the picture. For operational qualifications, the requirement at that time from the government standpoint was that you qualified your processes at a Cpk of 1.4. Training and education for everyone in the organization, as well failure mode and effects analysis, all became part of the quality discipline.
The 1960s through the 1980s was a period of intensive customer focus, led by General Electric. Here we saw quality from womb to tomb. Concurrent engineering become part of the practice. Cost of poor quality became a very important measurement. Phil Crosby's concept of zero defects became prevalent at that time as well. This methodology said that we can make perfect products, so zero defects must be the ultimate measurement.
The evolution from quality assurance to total quality control eventually led to total quality management. In looking at the period from the 1980s until today, you see a big focus on teamwork. Ideas such as reengineering, redesign and benchmarking became part of the quality practitioner's skill set. Employee involvement became a major part of the quality movement. Ownership and self-managed work teams played a large role in TQM activities. The focus was on managing by fact, not guess.
Japanese manufacturers and engineers were having great success with lean, as exemplified by the Toyota Production System, which set new standards for excellence and quality. All of that rolled into the TQM system. ISO 9001 came out and set up some of the basic ground rules of quality as it now operates today.
So, when we talk about TQM, it's not something new--it's a building of ideas and concepts. With each generation, through each period, something new comes along and adds to it. TQM provides a total picture of the evolution in quality over the last hundred years.
When Six Sigma was developed in 1986, we were tired of improving quality by using traditional methods. Managers spent time preparing charts showing quality performance, but the customers never saw any result, and the employees never saw any improvement. In my opinion, TQM really is all talk and no walk. This is because people don't know what it is. It can't be everything--it has to be something that's meaningful. That's why TQM is obsolete today.
One way to look at Six Sigma and TQM is that TQM is like walking and Six Sigma is like running. In this technology, in this global economy, in the virtual professions, we can't afford to walk--we have to run. We have a race to win.
My objective is to clarify Six Sigma, because there's a lot of misunderstanding about it, and to review Six Sigma vs. TQM to show the differences. In any quality program, you don't implement TQM, Six Sigma, control charts, SPC or anything else unless it makes economic sense. To achieve this requires the tools of Six Sigma, leadership, professionalism, a supportive corporate culture and performance management. But Six Sigma is only suitable to companies that want to achieve industry leadership--companies that will not or cannot afford "acceptable" performance because acceptability using inspections, checks and PDCA isn't good enough in today's economy and global environment.
For those who have to be the best, innovation itself isn't enough; The question is how to accelerate innovation. Every company and country is improving, so how do you differentiate yourself compared to other improving management systems? By bringing a bottom-line sense to improvement and quality, and relating it to the bottom-line numbers.
We have to do things that have bottom-line and top-line effects. Six Sigma corresponds to virtual perfection. I think that zero defects programs have done damage because people really rebelled against the idea of perfection as the standard. We have to bring some reality to what we do.
So what is Six Sigma? I think a lot of people identify Black Belts and Green Belts with Six Sigma. Interestingly, when I first worked with Six Sigma at Motorola from 1987 to 1992, there were no Belts, period. We took a common-sense technical approach. Six Sigma was developed in the mid-1980s, and it was intended to accelerate improvement. I was in the semiconductor industry, and the first memory chips were made in 1981 or 1982. We couldn't make money on our first generation of chips, at least not enough. The chips manufactured by our Japanese competitors had far greater yield. How did we improve enough to compete? We accelerated improvement.
Six Sigma does two things: It creates a lot of improvement, and it does it very fast. If you have a moderate goal for yourself--say, you want to increase your salary by 10 percent this year--you might ask your boss for a raise, maybe work 10 percent more overtime or something else. But if you want to improve your income by 50 percent or 60 percent, that makes you think. Now you really have to stretch.
As TQM developed, a number of different improvement cycles focusing on PDCA and its modifications became popular. Dorian Shainin's statistical engineering became a very important part of how we treat statistics. Genichi Taguchi's loss function became part of it. Stretch goals became a standard thing. Ten times the improvement was the target, first from Hewlett-Packard, which targeted a tenfold improvement in ten years. Motorola needed more improvement faster, so it aimed for a tenfold improvement in five years. Stretch goals were part of the TQM effort then and are part of the TQM methodology today.
The big focus is that top management must lead--it's not a bottom-up movement; it's a top-down movement. If you don't have top management involvement, forget about it. You cannot sweep your stairs starting at the bottom and sweeping up; you've got to start at the top and sweep down. That's what we've seen in TQM systems.
TQM sets error-free performance standards, focusing on the reliability of our products not only in manufacturing processes, but also as they're delivered to the customer. The focus is on reliability and long-range strategic plans--not developing short-term plans but figuring out how you're going to run your transformation program over five to 10 years.
TQM embraces several important disciplines. For example, project management became a very important part of TQM. Change management, which is all about changing behavioral patterns, is another. A very important part of TQM programs are suggestion systems. With TQM, every employee should turn in a minimum of two suggestions per month. Another element is creativity training. The question of how you inspire creativity became part of TQM. Even information technology (IT) solutions became an important part because you cannot reengineer or redesign a process without getting into the IT solution areas. TQM is growing to the point where knowledge management, risk management, theory of constraints, total productivity, maintenance and robust design are all part of the equation.
Jim mentioned sweeping stairs from the top down because you can't sweep from the bottom up. This is true; however, you can vacuum stairs from the bottom up. I don't sweep my stairs anymore, but I do vacuum them and when I do, I vacuum from the bottom step up, and it works just fine. We have to be innovative, and we have to think differently. We really don't have to keep doing the same things in the same way.
It's interesting to consider the value proposition of Six Sigma. The thirty companies on the Dow Industrials Index average about 3.62 sigma in their processes. Three sigma means an error rate of about 66,807 PPM, or about 6.7 percent. Four sigma means 0.5 percent.
Cost of quality is presented as a measurement in terms of percent of sales, which is a waste. We should instead look at cost of quality as a percent of profit. Companies suffer not because they don't sell enough--General Motors had sales of almost $200 billion last year--but because of how much (or little) profit they make. Again, the chief benefit of Six Sigma is accelerated improvement. With every sigma level you can improve your income by 10 percent, net. Those are pretty big numbers. Six Sigma, in the right context, leads to accelerated improvement and very fast change. It's not a luxury; it's a requirement.
Improving from the three sigma level of performance to the six sigma level of performance requires an improvement factor of approximately 20,000. I don't think that the U.S. auto industry is aware that it has to improve by a factor of 20,000. It's huge. If fuel efficiency would improve at the same rate, you would be able to drive from San Francisco to New York on one teaspoon of gas. We must look at rapidly improving our performance, and the Six Sigma methodology for doing so is very clear: define, measure, analyze, improve and control.
Let me say that I like Six Sigma. It's a methodology for quality that management is listening to right now. It provides a good framework with a very good basis. What I don't like about it is that it establishes a separate group. I don't like Black Belts and Green Belts; I want everybody to be problem solvers. I like the quality circle idea; let's bring everybody up so that they can solve problems together.
Six Sigma has a financial focus, not a customer focus. Six Sigma should be run by the chief financial officer, not by quality personnel, because the methodology is focused on reducing cost, not improving customer satisfaction. Six Sigma practitioners have been throwing TQM activities into the mix--they tossed in lean, and they tossed in reengineering and redesign and called it design for Six Sigma. In reality, all of this is just process streamlining. I predict that by the end of 2020, we'll have Six Sigma up to the point that it is good as TQM is today.
Six Sigma really focuses on variation and statistics rather than the behavioral changes that are required to bring about a cultural shift within a company. Six Sigma's objective is to improve customer satisfaction by reducing variation. Certainly we want to reduce variation--let's get the variation down to 50 percent of the specification. That's really good for manufacturing, but maybe it's much better to change the center line and reduce the cycle time. When you start focusing on just variation, you are focusing on the wrong thing.
Look at Motorola and General Electric. Both claimed millions in savings from Six Sigma, but when you start looking at the examples, very little concerns variation reduction. They're all talking about process simplification and reducing nonvalue- added activities. Process redesign and process reengineering is where they saved most of their dollars.
So what happened? Motorola couldn't live with the basic purpose of Six Sigma and began outsourcing. In 1955, Motorola had 60 percent of its market; as of 2003, it had 15 percent. Motorola's operating margin today is 50 percent of its competitors'. As for GE, former CEO Jack Welch spoke about using Six Sigma to save $53,000 per project over a period of time, but the company also planned to outsource 70 percent of its manufacturing overseas to increase profits. Customer satisfaction at GE was higher before it started Six Sigma, and the company never got back to that same level using the methodology. When Jack Welch left the company, so did Six Sigma.
Meanwhile, more than 60 percent of the companies in the United States are now using TQM, and greater than 80 percent are familiar with the concept. TQM is the No. 1 approach to winning the Baldrige Award, which sets the national standard for excellence in the United States.
As Tom Peters points out, almost all improvement comes by simplifying design, manufacturing, layout, and processes and procedures, not from reducing variations. TQM is the best tool to accomplish this.
Defining a problem is the most critical part of the Six Sigma methodology. A problem defined is a problem half-solved. You can dance around a problem as much as you want, but if you don't define it properly, you will run around in circles, writing corrective action reports and working on keeping people busy.
The distinctive feature of Six Sigma is its integrated approach. Jim has said that TQM has evolved. Six Sigma takes all those tools that have been developed and integrates them into a structured approach. You can use all those tools and define it as a methodology and clarify the intent. Six Sigma requires aggressive goal setting. Six Sigma is about innovation because we must learn to be intellectually engaged with our processes.
Again, Six Sigma is like running, and TQM is like walking. Six Sigma is results-oriented and learnable, and TQM is ill-defined, philosophy-driven and, overall, very questionable. The methodology still needs to find a way to simplify and clarify its approach so that people can do something with it. We need systems that are performance-driven.
I think that the fundamental difference is the intent. TQM is for incremental and continual change, and Six Sigma represents rapid, radical and dramatic change through innovation. It's not about behavioral or cultural change; it's about intellectual engagement. The question is, how do you get people intellectually involved to drive dramatic improvement? Jim mentioned Tom Peters earlier. Peters said that it's not difficult to learn new things; what's difficult is forgetting old things. If you're having difficulty forgetting the old method of TQM, then move beyond TQM to Six Sigma.
Six Sigma works; TQM has not worked. To summarize, Six Sigma is a TQM baseline system powered by a new approach. Six Sigma has been the most successful methodology to date in introducing corporate improvement. Six Sigma provides focused, real-world results.
H. James Harrington is CEO of the Harrington Institute Inc. and chairman of the board of Harrington Group. He has more than 55 years of experience as a quality professional and is the author of 26 books. Visit his Web site at www.harrington-institute.com.
Praveen Gupta, president of Accelper Consulting, consults with organizations in the fundamental business strategy of sustained, profitable growth. He has co-authored several books, and teaches business innovation at the Illinois Institute of Technology. Visit his Web site at www.accelper.com.