Wednesday, April 25, 2007

The History of Six Sigma: How Motorola Contributed to Making Six Sigma a Management Philosophy

Victory has a thousand fathers, but defeat is an orphan (John F. Kennedy’s)

John F. Kennedy’s words at a press conference after the failed Bay of Pigs invasion remind me of the history of Six Sigma. It reminds me, of course, in the opposite way that prompted JFK’s now famous quote, uttered in 1961 after he blindly trusted the CIA and Defense Department experts claiming that a group of Cuban insurgent could overthrow the communist regime of Fidel Castro without U.S. military involvement. Of course, it wasn’t that simple. JFK balked at providing the military assistance of the United States, which ultimately led to the Cuban invasion and a huge political and military failure.

Instead, Six Sigma is like the first part of JFK’s quote. A study of Six Sigma’s 1980’s beginning shows many people taking credit for its inception. Originally a set of disciplined quality tools to reduce defect rates at Motorola, Six Sigma evolved both within Motorola and later at AlliedSignal and General Electric. This chapter will show that this evolution has resulted in Six Sigma becoming more than a quality toolbox, instead becoming a management philosophy and a cultural phenomenon when properly implemented.

There is the parable of the three blind men and the elephant. Each is asked to identify what they are touching. The first touches the tusk of the elephant and identifies he is touching a spear. The second touches the torso and claim what he is touching is a wall. The third touches the tail and thinks it’s a snake.

This parable parallel Six Sigma. As its popularity has grown, different “experts” have marketed Six Sigma to fit their needs, not necessarily that of their customers. Of course, Six Sigma includes significant amounts of statistical tools. But many see Six Sigma as only statistics. They are wrong. Touch part of the work that constitutes Six Sigma and it will look eerily similar to other quality approaches. Touch another part of Six Sigma and it only vaguely resembles a quality approach at all. This chapter is aimed at enlightening the reader to seeing that as Six Sigma has evolved during the last 20 years, it has been modified, adapted, and augmented into more than a quality toolbox. Our goal with this chapter is to see how three different organizations helped to create and change Six Sigma so that your implementation efforts don’t repeat the mistakes of others.

The Origin of Six Sigma – The Motorola Story
In the mid 1980s Motorola quality was considered poor by any measure. A meeting was held among the top executives with Bob Galvin, their CEO at the helm, discussing a company in chaos. Reject rates among customers were high and internal defect rates were bleeding the electronics company of badly needed profit.

Galvin had responded well to an internal memo written by Bill Smith, an engineer at Motorola. Bob Galvin was a visionary leader who believed strongly in the concept of customer satisfaction and never-ending improvement. Smith’s memo, written in 1985, statistically proved the relationship between product field life and how much rework occurred in the manufacturing process.

Ted Zucconi worked at Motorola in the 1990’s as a business leader in their computer group, as technical director. He went on to Motorola University before retiring in 2002. In a July 2004 interview with Andrea Price and me he recalls that critical meeting among management.

“I don’t know if you heard the famous story about the vote we had at that senior meeting. Everybody was giving their reports and saying how well everything was going and someone stood up and said, ‘No, you are all wrong, our quality sucks.’” Zucconi continues by saying a spirited discussion followed with Galvin finally asking for a vote among the 12 senior managers present. The vote centered on whether they were going to start a formal quality initiative. The vote was 11-1 against with the one positive vote generated by the only one that counted, Galvin himself. Six Sigma as a formal initiative was ready to be conceived.

The initial formula used by Motorola was MAIC, which stood for measure, analyze, improve, and control. An underlying assumption was that a project was already well defined and chartered, the right people had been assigned, and that proper sponsorship was in place to ensure success of the project. Sadly, that was not always the case.

Nonetheless, Motorola reduced manufacturing costs from the inception of Six Sigma in 1987 through 1994 by 1.5 billion dollars. Through the summer of 2004, Motorola claimed cost savings of 15 billion dollars. This is in keeping with experts who claim that an organization can save anywhere from 1.2 percent to 4.5 percent of the organization’s revenue.

Much discussion has centered on the true originator of Six Sigma. Mikel Harry must be given major credit for packaging and commercializing Six Sigma as a vibrant quality-improvement methodology. To Harry’s credit, he claims it is Bill Smith who should be given the moniker of Six Sigma founder. But it was Harry who formulated much of the details of Six Sigma methodology. Harry first published The Nature of Six Sigma in 1986. it was also Harry that went on to publish The Strategic Vision for Accelerating Six Sigma within Motorola and was later appointed the first head of Motorola Six Sigma Research Institute.

While much discussion centers around who created Six Sigma, little has been said about the deployment of Six Sigma, first within Motorola, and then later at AlliedSignal, and then General Electric.

Much credit should be given to Motorola for their efforts in pioneering Six Sigma. However, the approach Motorola took toward implementing Six Sigma was virtually all at the tactical level. This means that Six Sigma was primarily used as a defect reduction tool, not the ultimate management philosophy championed by AlliedSignal and GE. Further, because defect reduction was the goal of Six Sigma at Motorola, the focus was on the manufacturing floor. Virtually ignored was the waste and inefficiency generated by other areas of the business, from backroom operations like accounting to more prominent areas such as sales and marketing. This “find and fix it” approach to Six Sigma utilization totally ignored the design areas of Motorola. This failure to address both the backroom operations and design elements of Six Sigma tactical application ultimately resulted in the complaints about Motorola and Six Sigma in the late 1990’s and early twenty-first century. It wasn’t that Motorola had abandoned Six Sigma as some suggested. Instead, it simply never reach certain hallmark of Six Sigma deployment.

Further, Motorola did not use Six Sigma strategically. As we shall see shortly, organizations like AlliedSignal and General Electric eventually saw the power of utilizing Six Sigma strategically. This included but was not limited to using Six Sigma as an enabler to enhancing revenue, growth goals, and ultimately customer satisfaction.

When I questioned Ted Zucconi about how much Six Sigma pervaded the culture of Motorola, he answer highlighted the above.

It became part of the culture, but more at a tactical level. The focus was so much on growth, numbers, and manufacturing. Six Sigma never directly dealt with customers or how we designed things even though designers were educated. Even though people sent reports up to corporate, it doesn’t mean that they truly embraced it as a part of doing business.
Sometimes certain business units did absolutely the minimum. There wasn’t a uniform set of expectations and if you were meeting your numbers the corporate expectations seemed voluntary.

One aspects of Six Sigma that General Electric brought to the table was the emphasis of it being an expectation of every business unit. I asked Ted Zucconi to what extent that was the case at Motorola.

There was a corporate edict that you had to do Six Sigma but you had the option of doing it your way. For example, our semiconductor business caught up in the boom-or-bust business cycle. In the boom they were busy increasing capacity and figuring out allocations. During the period of excess capacity, they worried about cost reductions, some of which were quality improvements. Having worked for more than one semiconductor company I observed that apparently sometimes it is difficult for managers to see the connection between quality, yield, and capacity. I know Intel does, but most don’t.

I inquired into what comprised the corporate edict.

The corporate edict was centered on education and reporting of defect levels. I never saw an edict around expectations of number of projects or so many master black belts or black belts.

Another Motorola business leader, Arnold Klugman, agrees. The Chief Manufacturing Officer for the Motorola computer group in Tempe, Arizona, Klugman notes that Six Sigma’s focus on manufacturing could be explained by its being an engineering company. “Since it was an engineering driven corporation the tag line was, ‘We don’t want to minimize creativity.’ Thus the factor was driving out defects, not building quality in at the design stage.”
As it relates to corporate edicts, Klugman also agrees with Zucconi. “At GE with Jack Welch it was truly top-down driven. There was no optionality. At Motorola there was massive optionality.”
Klugman then goes on to talk of this optionality. “There was no doubt that Bob Galvin was a believer and pushed it. But if a business unit was very successful and returning the revenue plan and achieving their numbers and growing market share he business leader has no difficulty saying leave me alone and I will do Six Sigma the way I choose. The optionality was pervasive.”

Source: Eckes, George. “Six Sigma Execution: How the World’s Greatest Companies Live and Breathe Six Sigma”. McGraw-Hill, USA, 2005.

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