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What are your thoughts on the different types of bottom line benefits of Six Sigma?

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The first generation of Six Sigma (1984 – 1994) was initiated at Motorola.  At this time, Six Sigma was primarily focused on the reduction of defects (quality improvements).  It was widely believed that the reduction of defects would naturally and invariably offer certain economic benefits – even though such benefit could not often be directly verified by commonly accepted accounting conventions.

The second generation of Six Sigma (1994 – 2001) was initiated at Asea Brown Boveri (within their large-scale transformer business).  Here, we clearly focused the purpose of Six Sigma on cost reduction, but in an acceptably verifiable way.  Thus, we launched Six Sigma as a business tool – using cost reduction as the battle cry for quality improvement.  Essentially, this form of reasoning was inversely related to that of the previous generation.  Obviously, it worked – as evidenced by the wide adoption of Six Sigma since that time.

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Interestingly, the third generation of Six Sigma (2001 – current) is focused on the creation of value.  This mantra emerged from a careful examination of the many “lessons learned” gleamed from the past 20 years of Six Sigma application, in the context of over 30 full-scale global deployments.  From this perspective, we come to understand that business improvement is much akin to filling a bucket with water – you not only have to stop the leaks, but you also have to make the bucket bigger, increase the flow rate, or some combination thereof.  In other words, the idea of value creation moves the power of quality even closer to the customer (and provider).  Such a shift in power is fully enabled by the concurrent focus on utility, availability, and worth – the key dimensions of quality.

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