Bob Galvin & Motorola
...ritten case analysis should be well organized and well written. Charts, graphs or tables can be included. Sources should be cited. Use the following format for written cases: Section 1: Statement of the Problem This should not be an exhaustive list of everything that is wrong. Rather, this should be one or two central issue(s) around which all else is organized. To do this, you will have to a) combine related problems, and b) establish priorities. You will not be able to address everything in the case analysis. Section 2: Problem Analysis This is where you identify relevant facts from the case and apply a conceptual model to diagnose the problem. This is where theory and practice come together. Suggestions: • Analyze the problem you identified in step 1 (and not some other problem). • Organize the facts into a coherent whole as if you were presenting evidence to persuade a skeptic to accept your point of view. Clearly state any assumptions that you’ve made. Provide evidence from the case to support your analysis. Cite the case as needed or use direct quotations. Cite other sources that are applicable. • Identify the type of change relevant to the case. • Clearly identify what levers of change and what barriers to change are relevant in the case. • Identify the conceptual model(s) that you are using – without explaining the model itself except as absolutely necessary for your argument. • Apply the conceptual model fully and explicitly. Cite your sources. Section 3: Conclusions and Implications Six Sigma at Motorola Motorola learned about quality the hard way: by being consistently beaten in the competitive marketplace. When a Japanese firm took over a Motorola factory that manufactured television sets in the United States, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. In the late 1970s and early 1980s the company responded to the competitive pressure by engaging in a publicity campaign decrying "unfair" competition and calling for political protection solutions. Finally, even Motorola's own executives had to admit "our quality stinks," (Main, 1994) and Motorola decided to take quality seriously. Motorola's CEO at the time, Bob Galvin, started the company on the quality path and became a business icon largely as a result of what he accomplished in quality at Motorola. Today, Motorola is known worldwide as a quality leader. To accomplish its quality and total customer satisfaction goals, Motorola concentrates on several key operational initiatives. At the top of the list is "Six Sigma Quality," a statistical measure of variation from a desired result. In concrete terms, Six Sigma translates into a target of no more than 3.4 defects per million products, customer services included. At the manufacturing end, this requires "robust designs" that accommodate reasonable variation in component parts while providing consistently uniform final products. Motorola employees record the defects found in every function of the business, and statistical technologies are made a part of each and every employee's job. Reducing the "total cycle time"-the time from when a Motorola customer places an order until it is delivered-is another vital part of the company's quality initiatives. In fact, in the case of new products, Motorola's cycle-time reduction is even more ambitious; the clock starts ticking the moment the product is conceived. This calls for an examination of the total system, including design, manufacturing, marketing, and administration. Motorola management demonstrates its quality leadership in a variety of ways, including top-level meetings to review quality programs with results passed on through the organization. But all levels of the company are involved. Non-executive employees contribute directly through Motorola's Participative Management Program (PMP). Composed of employees who work in the same area or are assigned to achieve a specific aim, PMP teams meet often to assess progress toward meeting quality goals, to identify new initiatives, and to work on problems. To reward high-quality work, savings that stem from team recommendations are shared. To ensure that employees have the skills necessary to achieve company objectives, Motorola spent in excess of $170 million on worker education between 1983 and 1987. About 40 percent of the worker training provided by the company is devoted to quality matters, ranging from general principles of quality improvement to designing for manufacturability. Motorola knows what levels of quality its products must achieve to top its competitors. Each of the firm's six major groups and sectors has benchmarking programs that analyze all aspects of a competitor's products to assess their manufacturability, reliability, manufacturing cost, and performance. Motorola has measured the products of some 125 companies against its own standards, verifying that many Motorola products rank as best in their class. Motorola acknowledges that they made many mistakes. One of the most serious was to start the training for quality at the bottom of the company. Many workers were unable to understand statistical process controls and other techniques without remedial education, and they couldn't turn to their untrained bosses for help. Even those who understood the concepts completely were not able to apply them in the unreceptive workplace. Motorola's director of training and education estimates that Motorola wasted $7 million trying to train from the bottom up. Recognizing their mistake, the company established "Motorola University" and put thousands of Motorola executives through executive training. Bob Galvin himself spent time in the classroom. By 1992 the company was spending $110 million per year on instruction. As a result of these efforts, Motorola can now perform such feats as building pagers and cell phones in lots ranging from one unit to 100,000. Through mass customization the factory can fill a precise order within minutes of receiving it. Thanks in large part to its six sigma activities, the company dominates such key high-tech industries as pagers, cell phones, and mobile communications, and is a significant force in many others. In this section, provide the results of your analysis. This is not a summary. In this section you should: • Describe potential solutions (or alternative actions) from which to choose. • Evaluate the potential solutions against a set of criteria. • Describe the probable outcomes associated with the implementation of the different alternatives. Section 4: Recommendations for Action Not all cases call for action. However, most at least call for “what you would have done in this situation.” Based on your statement of the problem, problem analysis, conclusions and implications, what do you recommend? Be specific. Abstract In the late 1970s, Motorola CEO Bob Galvin knew that the electronics industry was growing increasingly competitive. Though Motorola was faring well in the battle, technology was sprinting ahead. In fact, most technical knowledge was obsolete within a five-year time frame. In an attempt to embrace the change, Galvin proposed to his board of directors an extraordinary commitment to the training of Motorola's entire workforce--from executives to shop floor employees. He was met with strong resistance, however, due to the time and financial resources such training would require. Galvin was faced with a dilemma: if he accepted the board's counsel, the company might fall behind as the velocity of technological change increased; if he pushed for the investment in training, he might jeopardize short-term performance and competitive position. Teaching Purpose: Allows students to think strategically about the struggle of maintaining a competitive edge in a fast-changing industry and to discuss the real-life benefits that can result from investing in employees. Supplements available (from Harvard Business School Publishing). Robert Galvin: Good day and may you have the superb meeting you are bound to have, because you are going to be marching shoulder to shoulder with two of our country’s greatest leaders—Dr. Joseph Juran and Paul O’Neill. Joe Juran is the inspiration on quality. I hope Joe will add to our vigor and our spirit of rejuvenation of the quality movement. Paul O’Neill hosted the first meeting of those of us who have seeded the idea for this meeting. I expect Paul, as Secretary of Treasury, will go down in history as an equal to the best of those who serve this wonderful administration. Here he is again showing us the leadership needed to stir the vigor of quality. Jim Buckman has asked that I accentuate a couple of issues with regard to leadership that you already know. So these comments are punctuations. Each of our institutions has its natural culture and character. In Motorola’s case, back in the 70’s, we had a couple of processes that were adding to our culture and character—participative management, quality circles and things of that nature. We were investing, rather liberally, in what ultimately became “Motorola University.” What is the significance of having factors like that at our institution? These are the tools and the mediums by which our people, who have the line of sight responsibility and who know what’s right and what’s good, augmented their skills so that they, as the root of the institution can bring the real strength to a quality movement. Well, we taught our people particulars, things like mapping the job or the Pareto diagram, etc. But it took the wisdom and the energy of our people to seed what became a quality movement in our company. The leaders have to do, among other things, the important job of role-modeling the act of listening. If there is any skill that I did possess, it was one of listening. I had so much to learn. It was well known in the organization that you could speak up in my presence and that’s why one of our officers challenged us one day in 1979 by stating that our quality stunk. From this point on, we started to build on the root factors that I’ve just described. Gradually we self-organized bits of a quality program until finally a pivotal idea came from one of our engineers who knew he could speak up. He called me one morning and said I’d like to see you. I cleared the afternoon, he came over and explained to me the theory of latent defects—the beginning of a statistical system. I didn’t understand it enough the first time through, the second day I got it better. My associates caught on right away. And then they were able to weave these very salient ideas of Bill Smith into what ultimately became known as Six Sigma. The role of leaders is to provide our wonderful associates, who are in the line of sight responsibilities, an opportunity to bring to the table solutions to day-to-day and long-term issues. And then, if we listen, we can add our leverage. I think I did contribute one significant thing to our quality program and each of us has to contribute to quality. I became impatient with the fact that my senior associates, who were doing a remarkable job as fine general managers, were focused all too much on budgets, forecast, etc. These are essential. But quality was not being given the same amount of attention and finally I became very impatient with that fact. Quality deserved equal status. So, I proclaimed to our President and our Executive Vice President that from that point forward, quality would be the first subject on every agenda. At the Board of Directors meeting, the management meeting, the policy meeting, all of the operating meetings, every other meeting in the company, quality was to be the first subject on the agenda. I think that before nightfall, the people in Malaysia had heard that Bob said quality is first on the agenda. These are all bits and pieces to leadership, but they’re very important bits and pieces that we, the leaders, need to nourish and to contribute to. I encourage that the distinguished participants in this meeting find all of the recipes that will energize us to go forward as the evangelists that Joe Juran wants us to be in the practice of quality in our institutions; so we inspire our competitors, our customers, and to those that we serve to take a renewed and a higher interest in quality processes. All the best. Thank you. "Profits are what make a business survive". Right? -Wrong. "Customers are what make the business happen and satisfied customers are what make a business survive." Profits are simply the by-products of these satisfied customers. Customer focus, customer orientation are the buzzwords today in the industry, but barring a few companies who actually know how to go about this, it is a classic example of a man standing on one side of a deep river wanting to go to the other side but doesn't know how to do it. Most of the companies today know that the business objective is to provide a high quality product or service to a customer at a lower cost and as quickly as possible as to increase only the sales, revenue and profits somehow. However the question is how to achieve this goal of customer satisfaction or to put it more aptly how to WOO the customers? The answer is through lower cost that is converted into lower price, fast delivery and most of all high quality. Various quality management tools or quality control techniques such as TQM viz., Affinity diagrams, Tree Diagrams, Gantt Chart, Relationship Diagram, PDPC (Process Decision Program Chart), Cause & Effect Diagram, other tools such as Kaizen, TPM (Total Productivity Management), ISO, BPR (Business Process Reengineering) and many more are there in the market but all these tools aim at one common objective - increased profits through enhanced quality. However the means adopted to achieve this end are different for different tools. For example Kaizen and TQM adopt the method of gradual and continuous improvement whereas BPR goes for radical redesign. Both are relevant and good methods and have given results in the past. Six Sigma is a methodology that combines both, the gradual & continuous improvement and radical redesign. GE has combined these two through it's breakthrough improvements: DMAIC methodology (for existing processes) and DMADV methodology (for new processes), which will be explained later. Six Sigma has gained a lot of importance in the past few years. One third of the exhibitors at American Quality Congress, 2000 focused solely on this concept. Worldwide industry average today is 3-4 Sigma and Indian industry average is at a dismal 2 Sigma. Some companies that have adopted this methodology are - Wipro, Hero Motors, Modi Xerox and the number is increasing rapidly. On the global front varied companies like Motorola, GE (but of course), Allied Signal, Canon, Sony, Raytheon, Texas Instruments and many more, the list is unending. HISTORY The seed for the birth of Six Sigma was sowed when in 1979, Art Sundry, an executive at Motorola had the courage to stand up and question the quality of the Motorola products. This was followed by an extensive statistical study done by Bill Smith, an engineer at Motorola's Communications Sector, who studied the correlation between a product's field life (i.e.; product life in reality) and the number of times the product was repaired during it's manufacturing process. In 1984, Dr. Mikel Harry, a senior staff at Motorola's Government Electronics Group (GEG) created a detailed road map that took the approach of problem solving through statistical analysis to improve the design of the product, reduce the production time and reduce costs as well. Company saved $ 2.2 bn over a period of 4 years. Dr. Mikel Harry was joined by Richard Schroeder, VP and GM of customer services of Motorola's Codex Subsidiary to further enhance the implementation of this concept in other companies. In 1994, they together founded the Six Sigma Academy Incorporate at Scottsdale, Arizona and their first clients were GE and Allied Signal. GE had Six Sigma related savings of $2 bn in 1999 alone and Allied Signal had $1.4 bn (1992-96). Though the concept originated at Motorola, implemented in various companies but GE is related the most with this concept simply because has adopted this concept as a religion across the organization. GE expanded the scope of Six Sigma; it applied this concept not only to the manufacturing activities but also to the commercial ones. GE had savings of $ 750 mn in 1998 alone and annual savings up to 2000 are estimated at $6.6 bn. Bob Galvin, former President and CEO, Motorola confesses that a lack of emphasis of Six Sigma on activities outside the shop floor cost the company $ 5 bn over 4 years. BENEFITS Everything that the organization does, is aimed at benefiting the organization, it's stakeholders and all the individuals as such. However it is not easy to satisfy all the conflicting interests of these groups simultaneously, but Six Sigma is a concept that succeeds in providing benefits to all of them Benefits to an organization • Six Sigma helps the organization to achieve improved process flows and better communication. • With Six Sigma an organization has enhanced productivity and improved capacity thereby resulting in increased amount of output. • Reduction in total number of defects in any activity is the main thrust of Six Sigma therefore we get better quality products which contribute straight to the bottomline. • Since we have better quality thus we have reliable products that again contribute straight to the bottomline and not to mention the elevated image the company gains. • There is decreased Work-in-Progress. • Cycle time for every activity/process is reduced. • There is a decrease in unit costs since cycle time is reduced and more time is available to produce more thereby allowing the company to have more Price flexibility. Benefits to stakeholders (shareholders, customers, suppliers, employees): • Shareholders end up receiving more profits (dividends) due to millions of dollars of additional savings per year. "Six Sigma Projects" generate an average of $250,000 in reduced costs or increased revenues. • Customers are delighted with, now, higher quality products and services. • Suppliers are able to supply higher quality inputs. (Otherwise also they are pulled up and asked to get rid of their complacent attitude as the case may be). • Benefits to an individual: • Employees experience higher morale and more satisfaction form the challenging opportunities provided during the course of work. • Individuals with Six Sigma Black Belt (designation of some of the team members) certification can expect an increase in their starting salaries by $10000 to $20000. Six Sigma affects 6 fundamental areas: • Process improvements; • Product and Services improvement; • Investor relations; • Supplier improvement; • Design Methodology; • Training and improvement. What is Six Sigma? Six Sigma is a: • A Quality Philosophy. It's a philosophy that talks about attainable short-term goals while striving for long term objective. • A Tool. Six sigma is a statistical and problem solving tool. • A Management Strategy or a Business Process. That allows companies to design, operate, control and monitor everyday processes. • A Concept or an Idea. Which has to be first understood and then merged into the organization's culture. • A Process. Business revolves around processes. A process is any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or an external customer. Six Sigma provides it's inputs in the form of measurements of the company's existing set standards, working on them to get the desired output i.e.; less number of defects and higher quality. • A Measurement. Of total quality as well as the defects that might have been overlooked till now. • A Performance Target. that applies to CTQ's (Critical To Quality) parameters (Parameters that play a pivotal role in determining the quality of any product or any service). GE made two new breakthroughs - DMAIC and DMADV methodologies that had a sequence of steps that were tailor-made for improvements in existing as well as new processes respectively in any organization. DMAIC stands for Define; Measure; Analysis; Improving and Control. DMADV stands for Define; Measure; Analysis; Design; Verify. DMAIC methodology is used for improving the existing processes whereas DMADV aka DFSS (Design For Six Sigma) is used for creating new processes. Since they are used for different purposes therefore, accordingly they define or measure or analyze different parameters. THEORY The whole process of Six Sigma can be explained with the help of the following triangle. The original aim of the Six Sigma methodology is to reduce costs by reducing the number of defects as much as possible or by streamlining processes (i.e., cutting down on irrelevant procedures to complete any activity) so that the given product or service nears perfection This 'reduced costs' is the first angle of the Six Sigma Triangle (as I have named it). Focusing on reducing the number of defects results in enhanced quality and focusing on streamlining processes results in increased efficiency. This 'increased quality and efficiency' is the second angle of the Triangle. The automatic result of the first and second angles is the third angle that is 'enhanced profits'. There are increased profits through reduced savings or through satisfied customers. TECHNICAL Six Sigma is a very statistics heavy technique. This points to it being an esoteric technique, but then it also means that it provides mathematical precision to everything that we do thus enabling us to look at any problem not only subjectively but also objectively with clear cut and properly defined measurements of defects or standards and steps that are to be taken. Six Sigma is essentially a variance-reduction technique. Sigma denoted as is the Greek denotation for standard deviation. It is the statistical measure of standard deviation. While executing any operation (manufacturing or non-manufacturing), a certain standard is speci...