Is It Greek To You?

Simon Dolan first heard of Six Sigma in a 1994 book recounting chairman John F. Welch's revitalization of General Electric. It sounded awesome--a quality measurement goal that allows just 3.4 defects per million units. (For comparison, 99 percent accuracy allows for 10,000 failures per million.)

At the time, that quality level seemed almost unimaginable at Dolan Industries Inc., a 41-person fastener manufacturing company founded by Dolan's father. But within a few years, after strenuous effort, the Clinton, Massachusetts, company began successfully meeting the rigorous requirements of the ISO 9000 quality standard, which is comparable to Six Sigma.

Six Sigma came up again more recently at Dolan Industries, this time at a meeting of suppliers for one of the company's large customers. All the suppliers were told they must embrace the Six Sigma goal to keep selling to the company. Suddenly, achieving Six Sigma was no longer a choice--if Dolan Industries wants to keep selling to one of its largest customers, that is. Says Dolan, "Inevitably, we're going to have to achieve Six Sigma."

More and more small companies will be chasing Six Sigma quality as large corporations increasingly endorse the goal as a requirement for doing business with them. In addition to GE, Allied-Signal and Motorola are among the other corporate leaders using Six Sigma as a quality objective.

Reported benefits include better-performing products and happier customers, which can turn into higher profits. At GE, Welch says the sky-high quality goal has helped raise overall profit margins by nearly 2 percent.

Not everyone feels Six Sigma is a panacea, especially for the small companies that will soon have to toe the line. But as Dolan says, "By and large, it's going to be a requirement in the coming years to have a Six Sigma mindset."

Mark Henricks is an Austin, Texas, writer who specializes in business topics and has written for Entrepreneur for nine years.

This article was originally published in the July 1999 print edition of Entrepreneur with the headline: Is It Greek To You?.