Told You So!

"Told you so" is really stupid, a sign of senility and petulance; so I retract. But I will nonetheless quote from page 307 of my 1997 book, The Circle of Innovation. I was riffing on the problems associated with ISO 9000 certification, and unearthed the perfect quote to match my sentiments, courtesy Richard Buetow, then director of corporate quality for business systems at Motorola:

"With ISO 9000 you can still have terrible processes and products. You can certify a manufacturer that makes life jackets from concrete, as long as those jackets are made according to the documented procedures and the company provides next of kin with instructions on how to complain about defects. That's absurd."

What's particularly interesting about that, in addition to the amusing-but-deadly-serious content, is that the speaker is a Motorolan. Long before Welch at GE, Motorola was the poster child for wholesale adoption of Six Sigma quality processes. And, though the process worked wonders on quality in the short term, it apparently starved innovation, an under-tended priority for historically innovative Motorola—until the RAZR signified a return to corporate roots.

Searching Circle of Innovation for that vaguely remembered quote was in response to the June 11 BusinessWeek cover story, "3M's Innovation Crisis: How Six Sigma Almost Smothered Its Idea Culture." When Jim McNerney lost out to Jeff Immelt in the race to replace the retiring Welch, he immediately landed the CEO job at 3M. (He's subsequently moved on to Boeing.) As GE-ers tend to do almost mechanically, he instantly implanted GE's powerful systems—powerful in GE's odd culture, a point never to be forgotten. Six Sigma led the way, was of enormous value—and in the process more or less closed the lid on entrepreneurial behavior. Six Sigma = Tight Controls and rigid copying of "benchmark" entities within the firm.

The story is not unique—Motorola is a case in point, as mentioned. So was Florida Power & Light, which became, about 20 years ago, the first American company to win Japan's tip-top quality award, ironically the Deming Award. (After W. Edwards Deming, the Yank who brought quality fanaticism to Japan, having been dismissed as a nutter at home.) Upshot: FP&L de-installed most of its vaunted quality systems just a couple of years later because, apparently, they were choking the firm to death.

That was then, and the Welch Era is more or less now. Repeat: McNerney's fellow "loser," my pal Bob Nardelli, took the helm at Home Depot, discovered Gordian knots galore—and immediately (!!!) installed GE systems with the zeal that is his trademark, though not with Six Sigma in the pole position. You couldn't go two minutes at HD without hearing the word "metric." Again, the discipline was necessary and brought needed order to the monster firm. Nardelli is gone now, struggling to make do with his roughly $210 million "get out of town now" pay packet. And the reason in part was those damn systems, which strangled the previously energetic firm and whacked morale and retail customer service along the way.

Then there's Immelt's GE itself. Jeff inherited a 20 year operational excellence obsession from Welch, with Six Sigma at or near its heart. But what about the firm's vaunted Edisonian spirit of innovation? More or less M.I.A. (I was on Welch's shit list for a while, along with Michael Porter, for a quote in the Wall Street Journal asking, "What happened to Edison?" ) Immelt, like 3M's post-McNerny team, is trying to preserve the best of Six Sigma, etc., but clearly betting his legacy, and even his short-term hold on his job, on Big Bet Organic Innovation.

So from FP&L to Motorola to GE, 3M, and Home Depot we see the value of "system madness"—but also the devastation of an innovation "culture," à la 3M, that seems to accompany it. I, for one, have staked my own legacy on decentralization and innovation—and railed against ISO 9000, Six Sigma, Benchmarking, and Best Practices for 20 plus years. (Of course "learning" is essential—but rigid application of Best Practices in the spirit of "my way or the highway" is disastrous. So, too, benchmarking taken too far—as it usually is.)

"Balance" is as always the answer—and the real theme of the BW cover story. But an injunction to "do both" doesn't cut it for me—it's a first class cop-out as I see it. So, I am no fan of balance. And, in short, as I look at the pitiful (understatement!) performance of Giant Companies (think, of late, of our giant pharmaceutical firms), I say "Vote for—with purposeful imbalance—innovation and an ingrained entrepreneurial spirit."