Motorola is the pioneer in introducing the 'Six Sigma' quality program. The company has won the Malcolm Baldrige National Quality Award twice in 1988 and 2002. The case discusses the circumstances that led to the evolution of Six Sigma in Motorola. It explains in detail how Six Sigma was implemented at Motorola and the results achieved by the company after its implementation.
The case also throws light on the recent developments in the Six Sigma concept including Motorola's 'New Generation Six Sigma' program and explains how the company intends to use it for bottomline improvement and better business performance.
Issues:
» The circumstances behind the evolution of Six Sigma program at Motorola
» The approach, methodology and process of implementation of Six Sigma by Motorola
» The benefits reaped from Six Sigma and its contribution to the company's sustained superior financial performance and competitive advantage
» Motorola's efforts to give a new shape to the Six Sigma concept to achieve better financial performance in the new millennium
"In 1981, we developed, as one of the top 10 goals of the company, the Five Year, Tenfold Improvement Program. This meant that, no matter the operation you were in or your present level of quality performance, or whether you were a service organization or a manufacturing arm, management's goal was to have you improve that level by an order of magnitude in five years. Today, we carry this forward with a program called Six Sigma…It's the next major step toward 100-percent-perfect performance, which is the only acceptable goal."1
- William J. Weisz, CEO of Motorola 1993-1997.
"In 1986 Motorola invented Six Sigma, a quality and business improvement methodology that is revolutionizing industry. Two decades and two Malcolm Baldridge Quality Awards later, Motorola is still finding new ways to reinvent itself using this technique."2
- Dan Tegel, Global Director, Digital Six Sigma Business Improvement, Motorola and Rick Kriva, Vice President, Product Management, Motorola.
Thrust on Quality
In 2002, the US based Motorola Inc. (Motorola)3 achieved the unique distinction of receiving the Malcolm Baldrige National Quality Award4 for the second time. Motorola became the only company in the world to have received this award twice, having won it earlier in 1988.
Commenting on Motorola's quality standards, the Baldrige National Quality Program had stated in 1988, "Like an Olympic athlete seeking to score better than determined world rivals, Motorola Inc. seeks sales victories in world markets for electronic components and equipment by improving the quality of its own performance. For Motorola, quality improvement leading to total customer satisfaction is the key."5
Motorola had earned accolades and recognition from the corporate world for its 'Six Sigma' initiatives, which had its origin in the quality drive launched by the company in the early 1980s (Refer Exhibit I for a brief note on the Six Sigma concept).
In 1981, the company launched an ambitious and innovative quality drive for a ten-fold improvement in the quality of its products and services, after the company lost business to its Japanese competitors.
Motorola's Six Sigma quality target aimed at achieving not more than 3.4 defects per million products. The company aimed to achieve total customer satisfaction by providing the best quality products and services.
These efforts were rewarded with the Malcolm Baldrige Award and significant increase in company's sales.
Thrust on Quality Contd...
After Motorola's success, various other corporates6 across the world implemented Six Sigma in their organizations. Motorola acquired the reputation of being the quality leader, not just in manufacturing but in every process including customer relations.
Between 1986 and 1988 alone, Motorola received 50 quality awards. Six Sigma was not just a quality standard at Motorola but the guiding force of Motorola's work philosophy. Commenting on Six Sigma, Dennis Sester, Motorola's senior corporate Vice President and Quality Director, said, "Six Sigma is not a product you can buy. It's a commitment."7
The Six Sigma Initiative
The term 'Six Sigma' comes from the field of Statistics. Its origin as a measurement standard can be traced back to Carl Frederick Gauss (1777-1855) who introduced the concept of the normal curve. Six Sigma as a measurement standard in product variation could be traced back to the 1920s. Bill Smith (Smith), a Motorola engineer, was responsible for linking the term with the company's quality initiatives.
The US economy was experiencing a downtrend in the 1980s. As a technology-based company, Motorola faced several problems. Competition was intense and a few products like semiconductor chips were being sold at half their manufacturing cost in 1981. Motorola's financial performance was under pressure.
Most worrying of all, the company started receiving an increasing number of complaints from its sales department about warranty claims for defective products. Despite its reputation as market leader, Motorola started losing market share to foreign competitors that sold products of better quality at lower prices.
Excerpts
The Implementation
On January 15, 1987, Galvin launched a long term quality program, called "The Six Sigma Quality Program," with the goal of achieving no more than 3.4 defective parts per million. The Corporate Policy Committee of Motorola updated its quality goal to "Improve product and service quality ten times by 1989, and at least one hundred fold by 1991." It aimed at achieving Six Sigma quality by 1992. Galvin initiated measures to develop a culture that focused on continuous improvement to assure total customer satisfaction. He said, "There is only one ultimate goal: zero defects in everything we do." The new quality standard was used in all products, processes, services and administration.
The Benefits
The first five years of Six Sigma implementation were highly rewarding for Motorola as sales grew dramatically and products of better quality were introduced. The company regained its reputation of developing high quality products...
Next Generation Six Sigma
Six Sigma was originally created as a continuous quality management and quality improvement technique (Refer Table IV for differences between Six Sigma and Quality Management) but over a period of time, it evolved into a new way of doing business. In the fifteen years after its launch, Motorola transformed its initial approach of counting defects in product manufacturing to managing variation and systematically improving not just manufacturing but all its business processes. Most importantly, by 2002, Motorola transformed Six Sigma from a tool for improving product quality to an overall business improvement methodology...
Exhibits
Exhibit I: The Six Sigma Concept
Exhibit II: Five Year Financial Summary (1990 - 94)
Exhibit III: Region Wise Market Share of Motorola (Immediately after Six Sigma Implementation)
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