Tyco’s Turnaround Due to Efficiency Achieved via Six Sigma

When Edward D. Breen took over Tyco three years ago he faced a seemingly insurmountable wall of destruction to overcome left by his predecessor.  Today the company has a market capitalization of $62 billion, over three times its lowest mark achieved shortly after the former head was convicted of securities fraud, conspiracy and larceny.  The company’s growth has been driven in part to a major efficiency push, led of course by the implementation of Six Sigma.  The efficiency program has saved the company some $600 million and has helped triple the company’s operating margins from 8.5% in 2003 to 13.2%.  BusinessWeek Reports:

As Breen continues to look for more efficiencies — $600 million in cost cuts are targeted in fiscal 2006 — he’s also seeking to get rid of the worst-performing units.  “He wants to sell the leaky boats before they take on too much water,” says Nicholas P. Heymann, an analyst at Prudential Equity Group.