JACK WELCH AND SIX SIGMA

       Most of you probably know Jack Welch. He is one of the successful CEO in business life. This article is about Jack Welch and his famous strategy ‘six sigma’.
        First of all we define who is Jack Welch and how did start his successful business life.
      Welch, a native of Salem, Massachusetts, served as Chairman and Chief Executive Officer of General Electric (GE) from 1981-2001. During his 20 years of leadership in this position, Welch increased the value of the company from $13 billion to several hundred billion.
       Welch was born in 1935. He received his B.S. degree in chemical engineering from the University of Massachusetts in 1957 and his M.S and Ph.D degrees in chemical engineering from the University of Llinois in 1960. Welch joined GE as a chemical engineer for its Plastics division in Pittsfield, Massachusetts. After lots of success, he became the 8th Chairman and CEO in April 1981. He served in that position until he retired in September 2001.
       As CEO of GE, Welch’s management skills became almost legendary. First, he introduced a strategy that demanded each division should set out to be the number one or two in its market (fix it, sell it or close it). In the 90's six sigma became very popular, after Welch adopted it at GE.
      During his 20 year tenure as CEO of GE, Welch has been credited with changing the corporation around and inflating the company’s market value from 12$ billion in 1981 to approximately 280$ billion in 2001.
       You see how did the six sigma make the company successful. Okay but what is ‘the six sigma’ ?
First we understand what is sigma mean ?. The word is a statistical term that measures how far a given process deviates from perfection. And the central idea behind six sigma is that if you can measure how many ‘defects’ you have in a process, you can systematically figure out how to eliminate them and get as close to ‘zero defects’ as possible. To achieve six sigma quality, a process must produce no more than 3,4 defects per million opportunities. An ‘opportunity’ is defined as a chance for nonconformance, or not meeting the required specifications.This means we need to be nearly flawless in executing our key process. For example, if a company’s sigma level is 1, it means that the company has approximately 700 billion mistakes in a thousand of process. If the company’s sigma level is 2, it means that the company has approximately 300 billion mistakes. If we think that most of companies’ sigma level are between 3 and 4 it means that their mistake number is between 66.800 and 6210.
        If a company works %99 trueness this company’s sigma level is 3.8 but even %1 mistake rate is not acceptable sometimes. For example, think that an airport which has a 200 plane. If this airport has %1 rate of mistake it means that two plane crash in everyday.
       Now, we better understand how Welch increased the success rate of GE.