Six Sigma and DIminishing Returns
Posted by Pete Hanik on Sun, Feb 07, 2010 @ 03:29 PM
Many companies find that their returns on six sigma decline over time (see figure below). Some speculate that this results from a loss of commitment, a Hawthorne effect or a structural failure of six sigma itself.
A more rational explanation can be found in the very nature of problems and solutions. We can consider problems at one of five levels as shown in the figure below.
Level 1 problems are Inspection problems.
No innovation is required.
For example, if we remember the quadratic formula, we can find the roots of a quadratic equation.
Period.
Level 2 problems are Engineering problems.
While the problems are more complex and more than one solution is possible, there is minimal innovation involved. For example, if we are to design a system to pump 100 gallons of water per minute to the top of a building, there is some room for creativity, but the design alternatives are generally known.
Level 3 problems are Improvement problems.
In this case, problem solution requires innovation but innovation within the current paradigm is sufficient.
For example, going from rotary dial telephones to touch tone dialing is innovation within the paradigm.
There is a technology difference, but we are still dialing a number.
Level 4 problems are Invention problems.
Here, problem solution requires innovation outside the paradigm. For example, the development of GSM phone systems is innovation outside the paradigm. The technology is radically different (digital versus analog, satellite versus land line, and the application is extremely different (voice only versus text, video, internet access, in-phone cameras, mp3 players, etc).
Finally, Level 5 problems are Discovery problems.
In this case, we have new to the world technologies and products. For example, Albert Einstein discovered the principle of coherent light in 1905.
Charles Hard Townes, Nicolay Gennadiyevich Basov, Aleksandr Mikhailovich Prokhorov received the Nobel Prize in Physics for their pioneering work in the 1950’s in the design of lasers.
Theodore Maiman built the first operating laser in 1960. The first commercial application of lasers took place in the 1980’s.
While new to the world discoveries can radically change things, these discoveries often require decades to commercialize.
In the beginning of a six sigma initiative, high impact, level 3 and 4 problem solutions are relatively easy to find.
Once this low hanging fruit is picked, the solutions tend to be much more incremental. It is precisely this situation where inventive problem solutions are needed. Please share your experiences with six sigma initiatives as they mature. Thanks.