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Most business initiatives have the shelf life of cottage cheese, suggests Evan Miller, CEO of Goshen, Indiana-based Hertzler Systems which manufactures GainSeeker Software.

Six Sigma has had remarkable staying power in the face of that, but there are enough detractors with an axe to grind of one sort or another who stand to benefit from criticizing it.

“One type of detractor is the voice of status quo which rather cynically says 'there is no new thing under the sun. This too shall pass and we can go back to normal life,” Miller says. “Then there are the people within the business improvement arena who want to distinguish themselves and proclaim that they have the next big thing…. to do that they have to dethrone the aging king, Six Sigma.”

As a Midwesterner originally, this journalist can attest to a unique and extraordinary culture, work ethic and business ethic. While interviewing Miller this week, he asserted that has a huge impact on the way Midwesterners view things like Six Sigma and Statistical Process Control (SPC.) There are some divisions of large FORTUNE 500 companies around here that have formal Six Sigma programs, but most companies will use good ideas from every source they can, and avoid the labels. In other words Midwesterners are not about hype and buzzwords. “We're pragmatic, no-BS type folk who just want to do a good job and go home at night feeling like we've made the world a little better,” Miller said.

Hertzler Systems VP of Sales ran into the same experience the other day talking with a guy from Pennsylvania during a visit his plant in Phoenix. They guy was kind of cold and stand-offish until he started asking the VP about where he was from. Somehow Tom's small town roots (he grew up in Woodburn, Indiana – a town of about 500 people east of Fort Wayne) and the firm's base in Goshen, gave this guy comfort that the company is real and could be trusted. This is not that unusual.

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"In my neck of the woods there are a lot of small, family owned businesses," Miller said. "Some of them have been rolled up into bigger corporations as the founders have hit retirement age, but most of them retain a kind of local ethos. There are also some world-class companies that grew up in this area, such as Whirlpool.”

In the Statistical Process Control world, there is an enormous gap in understanding about the use of statistics. Miller notes people start talking about real-time alarms and catching problems early. "But if you let them go on long enough you'll hear them talk about being outside the specification limits," he said. "Many remember 25 years ago with Ford's "Quality is Job 1" motto, permeated the environment. The fact that we got away from it is unfortunate, but it's not too late to get back on the right track.”

Perception of ROI on Six Sigma Projects

"Believers perceive value is there…critics don't," says Miller. "Six Sigma is supposed to include finance people on each project to validate results. That is a huge deal. But, he add, the ROI calculation is fundamentally flawed because it promotes local optimization. Ultimately people don't trust the ROI because if you add up all the savings in all the companies projects delivered, you don't see the results on the bottom line. Profitability doesn't go up by the same amount that is claimed by the projects. There are lots of ways to argue this topic, but even Jack Welch shrugged off the ROI claims of projects when speaking at a Six Sigma conference a couple months ago.”

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Role of Six Sigma today

One arena for Six Sigma growth is among smaller organizations which are now deriving value from the program. Small organizations can get a lot of value from Six Sigma implementations, but they have to be really smart about how they execute, Miller said.

“While you'd be hard pressed to find a Black Belt who would say that data is not important, our actions often speak louder than words. So often, projects are scoped using estimates, Black Belts and Green Belts are left scrambling to find data to quantify the problem,” argues Miller. Six Sigma successes always require a focus on data systems.

Differentiation: Lean Six Sigma

Lean is an essential component of any process improvement effort. Peter Drucker said, “Nothing is less productive than to make more efficient that which should not be done at all.” Six Sigma may well make an organization more efficient, but it does not “instruct” whether something should be done. Lean is a discipline that addresses what should be done.

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While one would have to travel a long way to find a business leader who would argue against the need to create a data driven organization, a dozen leaders in a room would end up with nearly a dozen definitions of the 'data driven organization'. Lacking a common understanding of the data driven organization, leaders sometimes accept the status quo as something less than a true data driven organization. Six Sigma or Lean Six Sigma, the need to focus on data for business process management and continuous improvement is absolutely critical.

Data Driven Ideal is Worth the Effort

Miller encounters senior managers who frequently say 'Data is not the problem. I have tons of data. But I have no knowledge.' He suggests imagining an organization where this is the norm: “We always know exactly what is happening in our organization. We have up-to-the-minute knowledge because I get warnings of trends and anomalies in real-time. At the same time, I don't have to wade through a lot of noise; only the significant issues rise to the top. Summary information is easy to understand, and supporting details are available instantly. We know where to focus our precious resources to get the best results. We pay almost nothing for the data that gives us this knowledge.”

The Data Driven organization has the right data, in the right form, and it has it right now. Moreover, the data costs nothing.

No matter what it is called or what methods are used, companies need data and must turn data into knowledge. Nobody will seriously disagree with the fundamental importance of creating a data driven business. The Six Sigma methodology works in practice because the typical company hires a consulting firm to teach their first wave of black belts. They do this in a four week course spread over four months. Some also add a fifth week for Lean training. The course teaches the five phases of Six Sigma (Define, Measure, Analyze, Improve, and Control) by guiding the trainees through their first project.

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These courses are usually rolled out with a great deal of fanfare and high expectations; translation according to Miller, “High visibility that darn well better yield huge results. Usually projects are cherry picked - low hanging fruit - and typically they have very little data. The belts in training are usually bright people with a strong work ethic who really want to succeed. So there is a lot of pressure. When faced with no data, they do what any hero would do in this situation: they strap on their armor, get out a pencil and clipboard and go out and collect data.” Miller admits to being only slightly facetious, saying “I've seen it happen. I've also seen people spend days extracting and massaging data in spreadsheets and access databases and minitab so they have something defensible. Because these belts are miracle workers they usually find something to improve and it actually works.”

There is usually very little attention paid to the Control phase and many projects do not culminate with a viable control plan where a process owner can easily monitor process performance with data. Often the belt is the only one who can collect or manage the data. They are under a lot of pressure to move on to the next project and they know the first project will not hold unless somebody is monitoring.

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Midwestern organizations are focusing on becoming data driven, and paying attention to real-time data and turning that into knowledge. Whether SPC or Six Sigma, the values of the Midwest permeate the demeanor, values, and commitment to running better organizations even in tough economic times.

Author Profile:

Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based TR Cutler, Inc, (http://www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium of three thousand journalists and editors writing about trends in manufacturing. Cutler is a member of the Society of Professional Journalists, Online News Association, and American Society of Business Publication Editors, as well as author of more than 300 feature articles annually regarding the manufacturing sector. Cutler can be contacted at trcutler@trcutlerinc.com.