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Do Six Sigma, TQM stifle innovation?news
02 February 2006

Too much process management across all levels of an organisation makes for easier implementation, but it can strangle bold, breakthrough innovations.

Stephen ManallackAs more businesses and organisations adopt process management programs such as Six Sigma and Total Quality Management, a warning has come that the overzealous application of these programmes can stifle creativity, reducing innovation and the exploration for new services and markets for the future.

USA's Wharton School (University of Pennsylvania) Management professor, Mary Brenner, advises organisations to reassess the use of process management programmes and to apply them with more discrimination. The warning was carried in a recently published paper under Wharton's innovation and entrepreneurship category, titled TQM, ISO 9000, Six Sigma: Do Process Management Programmes Discourage Innovation?

Urging firms to understand the limitations of process management programmes, professor Brenner said, "Our message is this: companies that have process management in one area must realise that it can bleed into other areas of the company, and you must prevent that from happening. Use these approaches where they make sense - and deliberately do not have them in areas that are focused on innovation."

TQM is a strategy that focuses the entire organisation on continuous improvement. It arose in the 1980's in response to the Japanese competition with the US, and the writings of W Edwards Deming. Six Sigma started in the US at Motorola and became prominent in the mid 1990's due to its adoption by General Electric. The goal of Six Sigma is to improve a company's quality to only three defects per million, through incremental change in processes and statistical measurement of outcomes.

Birlasoft, one of India's leading commercial houses, with equity participation by GE Capital, uses Six Sigma technique in its governance framework to increase efficiency, reduce costs and improve customer satisfaction. Monthly defects have decreased from 11 per cent to 3 per cent.

While both TQM and Six Sigma focus on techniques for solving problems and rely on statistical assessment, TQM encourages firm-wide employee involvement but Six Sigma's approach is to train experts (green belts and black belts) who work on solving problems and teaching others in the company.

The focus of ISO 9000 which started in 1987 by the International Organisation for Standardisation, is to make sure companies have standard processes and it involves a third-party registration programme to certify that you are following documented processes.

But people are taking another look and Professor Benner believes this is because "I suspect that many companies with widespread process management initiatives over the past few years have reached the limits of improvement." She claims the ability to gain competitive advantage via cost and efficiency gains also has limits.

Benner points to companies like IBM, Procter and Gamble and Unilever who have shifted focus to gain advantage via innovation. Bennner says "Even General Electric is looking to grow through exploratory innovation".

GE's chief executive, Jeffrey Immelt, has set GE on a course of growing more revenue from existing operations, with growth fuelled by technological innovation or what Immelt calls "imagination breakthroughs". He has tied senior executive team annual remuneration to meeting idea-generation goals. He has invested $100 million and more on research centres in Bangalore, Munich, New York and Shanghai.

Benner sees the danger of too much process management this way: "You can get stuck with being very, very good at something you were good at yesterday."

She warns against trying to tie innovation down with measurement. "Measuring innovation is not easy because there is no yardstick. Rewarding innovation makes compensation a tricky exercise. Managing those who innovate is also challenging."

But Benner does not suggest that companies abandon process management, but rather apply them where they are most appropriate. The aim would be to have an organisation that can "celebrate both variance reduction in the service of exploitation and variance creation in the service of exploration."

Companies should balance improving current operations to be competitive in the short term with exploring for new knowledge for the future. "Too much process management across all levels of an organisation makes it easier to implement, but can strangle bolder, breakthrough innovations."

Professor Benner urges organisations to become "ambidextrous", managing process management and innovation simultaneously. Innovation can happen in both the research and development department, where companies generate new ideas or create new products, and in marketing, where companies search for new markets and new customers.

She warns against companies trying to apply process management to how they innovate or how they find new markets. Innovation, she says, may not lend itself to strict processes with measures.

also see : Other articles by Stephen Manallack

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Do Six Sigma, TQM stifle innovation?