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Monday, September 17, 20071190042566

Two-sigma and Six-sigma solutions

ERMB's recent article on two-sigma solutions deserves a look, as well as a short discussion the whole "sigma" model generally.

Sigma, from a symbol for standard deviation, is a way of talking about variability. In business speak, low variability is high quality and high variablility is low quality. Therefore, when someone talks about a six sigma solution, they want to see something with that doesn't change much from one time or place to another. Likewise, when someone speaks about a two sigma solution, they are saying that it is ok if there's more chaos in the system.

Six sigma, like the zip code, is a way to copeting with the dumbing down of available labor. Or, put more politely, a way of surviving as a business in spite of the ever increasing cost of workers. As real incomes have skyrocketed around the world in the past few centuries -- now surpassing the real income of cavemen for the first time in 10,000 years -- it's harder and harder to find good workers. Once upon a time, you could simply fire a farmhand, leading to the starvation of his family and his extinction from the gene pool. Now workers not only get a 2,000 calorie diet, they get health care, vacations, and even internet for use during breaks (sometimes).

By reducing the worker's freedom of action, six sigma gets around pushy know-it-all workers by letting them be replaced by know-it-less workers. This can be done directly, through scientific management, or indirectly, like when the zip code ended the need of postmaster's to memorize complicated train schedules.

While "six sigma" is sometimes used as a synonym for "high quality," this is only true in the businespeak meaning of "quality" as "lack of variation." Through much of the Gap, intelligences are far, far below globalized levels, and six-sigma solutions will be vital to many mission-critical operations. (The alternative is trusting the locals!) On the other hand, many things are not missino critical, and it will be wise to allow "two sigma" solutions (loyalty militias instead of national security courts, etc.) because getting the job done at all is more important than assuring it is done in a hygenic, globalized, or even humane manner.

In shrinking the gap, the focus is not on quality-as-variability but quality-as-progress.

Comments

"now surpassing the real income of cavemen for the first time in 10,000 years"

Huh?

While "six sigma" is a statistical term, "Six Sigma" is actually a Quality Program (first used at Motorola, best know for widespread later use at GE....though that is waning now) that is much more then just a statistical tool. That is why the terms get interchanged. At GE, Six Sigma got bigger then just quality too (shudder...sorry flashback to my time as a GE IT Project Manager).

Quality (lack of waste in effort and material and closeness to specification) and Productivity are strongly coupled.

SixSigma was about delivering products and services that external customers truly wanted as efficiently as possible on spec. For internal customers, six sigma was about stripping away waste (time, human effort, resources) from business processes to increase productivity.

When the PNM guys talk about 2Sigma versus 6Sigma think "perfect is the enemy of good enough".

Posted by: purpleslog | Monday, September 17, 2007

The 2,000-3,000 calorie diet is a recent reinvention. It was common for our early ancestors 10,000 years ago, and is common throughout the Core now. It was rare during historical times, forever. Most of human history seems to have featured Malthusian downward mobility [1,2,3].

"When the PNM guys talk about 2Sigma versus 6Sigma think "perfect is the enemy of good enough"."

That's how the shorthand is used, and certainly when you circularly define quality and efficiency you'll see a correlation, but it's not always that way in practice.

As I write, for instance, a Dell technician is replacing the motherboard on my primary laptop. Why? Because the litle black plastic piece that covers the prongs of one of my USB ports fell out. Now, it would be cheaper for them and more convenient for me for then to send me, say, a USB hub. However, such a response would directly introduce variation and indirectly open the door to the typical six-sigma boogeymen, "waste, fraud, and abuse." So instead, because Dell is unable to hire employees it trusts to make decisions on the fly, they've chosen a much more expensive and less satisfactory option.

[1] http://tdaxp.blogspirit.com/archive/2007/08/07/what-if-group-ancestry-matters.html
[2] http://www.nytimes.com/2007/08/07/science/07indu.html?ei=5124&en=ee9b904001eb910b&ex=1344139200&partner=permalink&exprod=permalink&pagewanted=all
[3] http://www.amazon.com/Farewell-Alms-Economic-History-Princeton/dp/product-description/0691121354

Posted by: Dan tdaxp | Monday, September 17, 2007

One more book for my to-read list!

Posted by: Abu PurpleSlog | Monday, September 17, 2007

Will "Abu PurpleSlog" be sticking around as a nom de guerre? (Or, even better, will be pull a "K.S.M." and insist on being known as "A.P.S."?)

Posted by: Dan tdaxp | Monday, September 17, 2007

Heh. No, my browser auto-filled in the Abu PurpleSlog.

Abu PurpleSlog will be reserved for special occasions.

Posted by: PurpleSlog | Monday, September 17, 2007

Two Abu's, no waiting
http://abumuqawama.blogspot.com/
COIN Tactics and strategy

Posted by: Dan | Monday, September 17, 2007

There was an interesting article -- I'll have to find it and forward -- from the Harvard Business Review on the problems with taking 6S too far (e.g., loss of creativity and product innovation). The same can be said I'm sure for 5GW.

Posted by: David Hallowell | Wednesday, September 19, 2007

David,

I remember reading a Business Week cover-story on the harm that 3M felt after trying six-sigma. Seems like a misapplication of a technique designed for low-skill workers to a high-skill environment.

5GW, as a tool, can also be overapplied. Sometime's its best to change the rules of the game to get what you want. Other times, take the gun, shoot the thug, and be on your way.

Dan,

I'm glad A.P.S. will have some company with Abu Muqawama. Enjoy the death threats!

Posted by: Dan tdaxp | Wednesday, September 19, 2007

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