Companies that are successful in implementing corporate change have a few things in common. They involve employees early in the planning process and apply analysis of strengths, weaknesses, opportunities and threats—known as SWOT analysis—to assess the company’s present situation, capabilities, problems and underlying mind-sets that must change for the transformation to succeed. Motorola,General Electric and Nissan-Renault, all textbook examples of Six Sigma management strategy, are leading examples of successful change management.
To understand the success of Motorola, General Electric and Nissan-Renault in initiating and managing change in their huge organizations, consider their Six Sigma management philosophy. Six Sigma is a meticulous evaluation of every process and procedure in a company, with the goal of finding and eliminating defects. Defects and errors can bog down the operations of a company and waste time and money. The detailed nature of Six Sigma naturally encourages many of the key elements found in successful change management across companies.
Six Sigma was developed at Motorola in 1986 by Bill Smith, an engineer with the firm. It is estimated that the process has saved the company more than $18 billion since its inception. Its origination was the result of refining the technology research-and-development process that went into the creation of new products. Its success in improving quality and cost efficiencies in the product cycle was adapted to evaluate inefficiencies in operational processes and procedures. Jeff Summers, director of quality and Six Sigma learning at Motorola University, summarizes how the company achieved successful change: "Have a process to discover who is involved, what is changing and the relevant internal/external context."
Jack Welch, former chairman and chief executive of General Electric, moved the company from a market value of just $12 billion in 1981 to about $280 billion in 1998, before he retired. He is one of the most visible proponents of Six Sigma. He launched the Six Sigma transformation at General Electric in 1995 and delivered $320 million in productivity gains and profits. Welch owes the success to highly involved employees. He claims to spend 50 percent of his time on people issues. "This place runs by its great people," says Welch. "The biggest accomplishment I've had is to find great people."
In June 1999, Renault acquired failing Japanese car manufacturer Nissan. One year after its biggest loss ever, in May 2001 the Nissan Motor Company reported the largest net profit in its history. This was accomplished by a detailed review of its processes and procedures, followed by shifting resources from where they were not effective to more beneficial use. It involved cost reduction, sales of assets and the elimination of the traditional keiretsu system of cross-shareholdings, close and long-term business relationships, and strong ties among management of manufacturers and suppliers. It was a major business and culture change, but it was successful.