What drives companies to implement Six Sigma? Contrary to what some believe, the goal of Six Sigma is not to achieve six sigma levels of quality. Six Sigma is about improving profitability, although improved quality and efficiency are immediate by-products of Six Sigma. Companies that implement Six Sigma do so with the goal of improving their margins. Prior to Six Sigma, improvements brought about by quality programs usually had no visible impact on a company's net income. Organizations that can't track the effect of quality improvements on profitability don't know what changes need to be made to improve their profit margins. To date, every company that has implemented Six Sigma under our guidance has seen profit margins grow 20 percent year after year for each sigma shift(up to 4.8 to 5 sigma). Companies ranging from AlliedSignal to Dupont Chemical have come to us because despite improvements they made in quality, their profit margins were stagnating, if not shrinking. These companies could no longer afford to reduce prices to increase market share, and market competition would not allow them to raise to improve profit margins. They found themselves boxed into a corner. When they offered products and services with new features at no extra charge to consumer, market share might increase but profit margins would shrink.
