Six Sigma - A Brief History

I specialise in recruiting investment banking finance change professionals. Some change specialists from outside the banking industry think that this is irony in itself.

Compared to other industries I hear that making change within banking is a slower process than others such as telecoms, manufacturing, MOD, health services, etc. Perhaps this is down to the powers of regulation or the detailed processes that need to be followed to ensure security and quality of service is adhered to. Maybe it is down to the customer who doesn’t like change. Late in November, the news stated that people are apprehensive about branch closures in small villages, worried that they will not have the usual banking services. I can’t comprehend this as I do all my banking online and over the telephone.
In 1986, the Six Sigma methodology was created by Bill Smith who was an engineer at Motorola. It is evident that there were similar methodologies in the 1800s, but Bill Smith formulised Six Sigma with the Chairman of Motorola, Bob Galvin, who wanted more granularity around defects and quality issues within his production. Galvin teamed up with Mikel Harry, another employee, who lead the development and globalisation of Six Sigma. Both being lovers of martial arts, they formatted the Six Sigma academy on the basis of martial arts:
“People in martial arts are incredibly skilled, have a precise command of tools, are very dedicated, and are very humble to learn”, states PQA on their analysis of The Evolution of Six Sigma. Based on this insight, Harry decided to designate those with Six Sigma skills as “Black Belt.”
The methodology was adopted across industry sectors and for a while seen as a “manufacturing” methodology. Soon, leaders realised that this could be applied to any industry sector with certain modifications. According to, Citi Bank were the first major bank to use the methodology in 1997, where they hired Motorola University Consulting and Training Services to teach six sigma to its employees, In the beginning, Citibank established the Citibank Cross-Functional Performance Challenge within its banking divisions by using the Six Sigma methodology to identify defects, to map steps for improvement and empowered teams to correct the defects. Since then, the success of Six Sigma within banking and investment banking has been great.
There has been negative feedback from some business leaders within the banking sector, claiming that the methodology can’t be applied to some of  the complex processes.  Bain & Company don’t believe this to be true, as demonstrated in a white paper by Peter Gurraia and Andrew Schwedel. It is evident that if the methodology can be adapted to the relative environment then implemented correctly with people embracing the changes, the outcome will be effective.

Reported by Dr Wole Akpose for, a key point made by Edward Deming around quality versus cost, is highly relevant to the industry today. Constant demand of high quality service versus cost reduction is a challenge the banking industry faces. The following equation defines Deming’s philosophical outlook:

a.    When people and organisations focus primarily on quality as defined by

Quality = (Results of work efforts)/(Total costs)

quality tends to increase and costs fall over time

b.   When people and organizations focus primarily on costs, cost tends to rise and quality declines over time.  describes Six Sigma as  a “disciplined, data-driven approach and methodology for eliminating defects which can help increase quality and reduce cost.” Over the last year within the UK, I have noticed an increase in demand for Six Sigma professionals with tier 1 investment banks. Companies are looking for Green, Yellow, Black and Master Black Belts. In many cases, they will consider people from other industry sectors. Some companies are training departments so that the employees take ownership and become more efficient. This is a fantastic approach. If embraced and delivered effectively, maybe we will see in years to come an impact on our economy as locals have seen the impact of retail banking changes on the high street.

Victoria Walmsley's picture
Managing Director


A Tier 1 Investment Bank has an excellent opportunity to join their Traded Risk Team on a contract basis.
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