Show and Tell

The success of the program was evident in 1998 at Boca Raton, where Welch kicked off each year with a meeting for the top 500 executives. That year, 29 managers spoke about their Six Sigma projects describing how they used new ideas to squeeze still more profit out of the lean machine that is GE. One after another explained how quality efforts cut costs and mistakes, enhanced productivity, and eliminated the need for investment in new plant and equipment.

William Woodburn, who headed GE’s industrial diamonds business, was one of the 1998 heroes at Boca. In just 4 years, Woodburn had increased the operation’s return on investment fourfold and halved the cost structure.

Employing Six Sigma ideas, he and his team have squeezed so much efficiency out of their existing facilities that they believed they have eliminated the need for all investment in plant and equipment for a decade. Some 300 other managers from GE have visited the plant to learn directly how Woodburn has done it.

But the main event was Welch’s wrap-up comments. Even though GE had just ended a record year, with earnings up 13%, Welch wanted more. Most CEOs would give a feel-good, congratulatory chat. But Welch warned the group that it would face one of the toughest years in a decade. It’s no time to be complacent, he said, not with the Asian economic crisis, not with deflation in the air.

Then, the ideas tumbled out of him for how they can combat deflation. «Don’t add costs,» he advised. «Increase inventory turns. Use intellectual capital to replace plant and equipment investment. Raise approvals for price decisions.»

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