The Fortune 500 has seen it all – mergers and acquisitions, cultural evolutions, the rise of the Internet, globalization, bankruptcy, and fraud. Amid all these changes, and some- times because of them, the Fortune 500 companies have experienced significant financial growth. Between 1987 and 2005, total revenues for these businesses grew more than 450 percent – from $1.9 trillion to $9.1 trillion.
During that same period, the business process improvement methodology Six Sigma contributed to the perform- ance of many of these companies.
Six Sigma in the Beginning
After Six Sigma’s official start at Motorola in 1987, the methodology developed modestly – in just a few companies – but it steadily won converts with the results it produced. The first significant growth spurt came in the mid-1990s when Larry Bossidy (then-CEO of AlliedSignal) and Jack Welch (then-CEO of General Electric) adopted Six Sigma into their business operations. Since then, thousands of companies world- wide have embraced the methodology.
Although some detractors have labeled it a “management fad,” Six Sigma has saved Fortune 500 companies alone…well, a fortune. Twenty years and an estimated $427 billion in savings later, can anyone really still call it a fad?
Six Sigma Saves $427 Billion
From 1987 until 2007, use of Six Sigma, the popular business improvement methodology, has saved Fortune 500 companies an estimated $427 billion, according to research published by iSixSigma.
The estimate is based on reported savings linked to Six Sigma in public documents. “Our data also showed that corporate-wide Six Sigma deployments save an average 2 percent of total revenue per year,” added Michael Marx, research manager for iSixSigma.
These numbers help explain why Six Sigma adoption has increased phenomenally in recent years. “Our figures show that Six Sigma started out slowly in the late 1980s but then took off in the mid-1990s once people started seeing successes at companies like GE and AlliedSignal,” said Marx.
Six Sigma Goes Beyond Large, US-based Companies
As an indicator of its success, he added, “About 53 percent of Fortune 500 companies are currently using Six Sigma — and that figure rises to 82 percent when you look at just the Fortune 100.”
Today, tens of thousands of companies and organizations of every size continue to practice the tenants of Lean Manufacturing and Six Sigma, what is referred to today as Lean Six Sigma.
The research study also breaks down the Fortune 500 industries by Six Sigma saturation level, listing those industries in which all companies have adopted Six Sigma (e.g., aerospace and defense) as well as those industries where the majority of companies have not yet embraced the methodology (e.g., food and drug stores).
“Clearly the market for Six Sigma training and consulting is very much open,” said Marx, referring to the 47 percent of the Fortune 500 that have not yet embraced the methodology.
“For years, people have been calling Six Sigma a fad,” commented Marx. “But that label doesn’t seem to fit something that has a 20-year track record of impressive results and is still expanding.”
The award-winning original research can be founder at the iSixSigma Marketplace: Six Sigma Saves a Fortune Research Report
Why Six Sigma?
There are many reasons you should consider implementing Lean and/or Six Sigma within your organization, which may also include you personally becoming certified in Lean and/or Six Sigma: