Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
Synopsis and Purpose
1
The purpose of this case is to expose students to the issues involved in implementing Lean Six
Sigma at 3M, a large multinational corporation. The case tells us that the new 3M CEO and
Board of Directors had already decided to implement Six Sigma. It is just a question of how the
program will be rolled out, what challenges are being faced, and what benefits will be achieved.
Later in the evolution, 3M also decides to adopt Lean and to integrate it with Six Sigma.
The case describes some of the key features of the 3M Lean Six Sigma program, since it is
assumed that most students are not familiar with Lean or Six Sigma. The discussion questions
then focus on understanding the potential benefits and costs to 3M, the relationship of Lean Six
to all functions, the questions of the skeptics and its effect on innovation.
Students should come away with not only an understanding of what Lean Six Sigma is, but also
an awareness of the pitfalls and the implementation problems that might be encountered. At
the end of the teaching note, we raise the question whether Lean Six Sigma is enough and does
it interfere with innovation?
Discussion Questions
1. What are the benefits and costs of a Lean Six Sigma program and how should they be
tracked?
Benefits will be increased earnings growth, improved quality, a common language for suppliers,
employees and customers, accelerated product commercialization, and leadership development
for employees.
Finance people from each division will be assigned to validate projected financial results and will
1
Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
2
Six Sigma with increasing operating income by $500 million in 2002, and an additional $400 in
2003 with a similar projection of 400 million for 2004. McNerney said, ‘3M is in the midst of a
transformation… Six Sigma, 3M Acceleration and our other corporate initiatives are now
integrated into every business, every function and every subsidiary of 3M, and we expect they
will generate both productivity improvements and revenue growth for years to come.”
Risks are spending large amounts of money and achieving marginal results from the
improvements. For example, savings might be documented on a project basis, but won’t show
up on the bottom line due to overall company loss of sales or increasing costs that are not
subject to Six Sigma projects.
2. How should the various functional areas in the organization be included in the Lean Six
Sigma initiative, and what role should senior and middle management play in this change
initiative?
Some argue that all functions should be included in the Six Sigma initiative. It’s important that
all areas of the company improve and get more efficient and better at meeting the needs of
internal and external customers to support the corporate goals. Legal, for example may run a
project to reduce the cycle time for filing patents or to reduce the variability in this process. HR
3. Do you agree with any of the points made by skeptics about the original Six Sigma
program at 3M?
a. The first skeptic point was, “we can’t afford to improve our processes to 3.4 parts per
million defects as implied by Six Sigma. Also, our customers don’t need this level of quality.”
Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
3
The quality level required by every process is not necessarily 3.4 ppm. Every improvement in
improvement effort.
b. The second point from the skeptics is, “Six Sigma is too complicated and involves too much
statistics for our people. We need a simpler approach to process improvement.”
This point was ultimately recognized when 3M evolved to a Lean Six Sigma program that has
four different approaches with various levels of complication. The right approach depends on
c. The third point is, “Six Sigma doesn’t work very well for service processes…..”
Measurement can be a problem for Service and Transaction processes. But, the fundamental
measure for Six Sigma is yield, the % of services provided that meets the standards. It seems
d. The fourth point is, “Six Sigma is just the latest quality fad—it too will pass.”
Whether Six Sigma will fail or “pass” depends on how it is implemented. If the management and
4. How will Lean Six Sigma affect the innovative culture at 3M and is Lean Six Sigma
enough?”
Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
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radical innovation. Six Sigma might be more useful in product development activities after the
basic technology is understood or the invention has been made. While Six Sigma won’t
generate the next breakthrough idea, it can help bring new products to the market faster and
reduce the risk in doing so by using a well-defined process of commercialization. Even then,
some would argue that Six Sigma should be restricted to repetitive processes and cannot be
used in R&D. Note, that Buckley eliminated Six Sigma in the Corporate Research function and
to some extent in product development in the divisions. He also increased spending on R&D
since he felt new product introductions had lagged under McNerney. These changes was
probably a reflection that Six Sigma wasn’t working in R&D.
A delicate balance must be maintained between innovation and improvement. Top
management needs to be ambidextrous in switching between them. Top managers should not
stress variance reduction too much and therefore drown out new ideas which often result in
more variance, at least for a while. On the other hand they should insist on improving present
products and processes while searching for better ways. This has been called “creative
destruction” and “the innovators dilemma” – destroying what you currently have in order to
replace it with something radically new. This occurs even outside the R&D departments.
This question can generate a lot of discussion about whether radical innovation and incremental
improvements (usually associated with Six Sigma) can co-exist in the same organization. Also,
if they can co-exist how does management balance the two types of activities, one being aimed
at destroying the status quo and the other improving it?
Some ideas to interject might be to separate R from D. A company might have a separate
corporate research group that is charged with generating radical new ideas. The development
groups are located in the divisions and take the new technologies and ideas from the research
group and push them into new products that are commercialized. In this case the research
groups might be largely excluded from Six Sigma, but the development groups use Six Sigma to
commercialize new products. This seems to have happened in 3M under their new CEO,
George Buckley, while McNerney pushed for applying Six Sigma to the entire organization.
Students may also suggest other interesting answers to this question.
Is Six Sigma enough? This has been answered at 3M by its evolution to Lean Six Sigma. As a
5. How does Lean Six Sigma in 3M differ from traditional TQM programs?
TQM was used by many groups in 3M. TQM has most, or all, of the tools that Six Sigma has
but it differs in how the corporation ran the programs. TQM was implemented by staff quality
groups, targeting specific projects around the company. These folks were not always the most
aggressive high achievers in the company.
Six Sigma was set up by the CEO and driven by him using the new organization made up the
best people. These high achievers were selected from all functional areas and were pulled out
of their existing jobs, given intense training, and then supported by top management. These
master blackbelts and blackbelts work in each functional area along side of their fellow
Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
employees to solve the most critical strategic issues for the corporation as they relate to each
division.
Six Sigma deploys full-time people (2 to 4%) in 3M to work on projects. Process improvement
becomes an essential activity of each division in 3M, not an optional part-time effort.
3M is also tracking the savings and net income improvement from Six Sigma. This is very
critical in that the skeptics will focus on the financial results or lack thereof. Significant
demonstrated improvements in net income monitored by the finance organization help to
demonstrate the worth of the Six Sigma approach to everyone.
Six Sigma was supported by Top Management and management at all levels in 3M. It was an
essential part of improvement efforts in all divisions of the company and international
subsidiaries.
An Update: How did 3M evolve its Six Sigma program over time?
Evolution of Lean Six Sigma at 3M, Inc.
Teaching Notes
6
before attempting to improve them. Other situations where Six Sigma should not be attempted
is when the organization is likely to be sold to another company, when there is imminent turmoil
in their markets or the possibility of bankruptcy. Six Sigma is for the stable company that
already has the basics of quality management in place and wants to move to a higher level.
Finally, the CEO and senior management must support Six Sigma and have enough time to
implement the changes. If there is lack of commitment or instability in top management, Six
Sigma is likely to fail.
It is probably also important to note that the important part of Six Sigma is not the tools. Many
organizations have trained their people in the tools and still not achieved good results. A Six
Sigma program must be strategic in nature, led by the CEO, use dedicated BB’s and track the
financial results to be successful. Without these organizational changes, results will be meager
to negative.