The New Six Sigma In Action?A Case Study

design for six sigma

Ron Brown is the general manager of a fully integrated business unit responsible for the development, production, and sales of products and services used in high-tech electronics applications. Ron recently replaced a general manager who had been managing the business for the past 10 years, and he found himself facing a number of challenges.

With a solid reputation as technology wizards, Apex and its employees built their success on a formula of one new technology breakthrough after another. As a result, Apex has sustained a 20 percent growth rate for the past 10 years. But after 10 years of growth, Apex customers have lost their appetite for investment in speculative technologies; they are demanding more performance at a lower price and more responsive service on currently installed products and systems. New competitors are finding ways to copy Apex products and deliver them at a lower price. As customer order rates dramatically decline, inventories quickly build, and Apex is finding it difficult to reduce product costs or attract new customers for its higher margin products. Cash flow is suffering, and Apex cannot fund new product development opportunities the way it had in the past. Needless to say, Ron is not sleeping very well these days.

Ron had noticed stories about companies like Motorola, GE, and Caterpillar that turned their businesses around with Six Sigma, and he wondered if the Six Sigma methodology could be applied to his situation. For assistance in applying Six Sigma, Ron went directly to the folks who invented and refined the methodology?Motorola University. He sought us out because of our experience, and he found it encouraging that we had faced situations similar to his in the same markets. He also liked that Motorola, unlike a consulting firm that gives advice it doesn't use, lives and breathes the methods we recommend to others. During a visit to Motorola University, Ron learned about how New Six Sigma techniques have dramatically turned around businesses just like his; as a result, he decided to enlist the Motorola University consulting services in his business improvement campaign.

Ron felt excited but apprehensive when he called a staff meeting to secure sponsorship support for the launch of the Apex Six Sigma business improvement campaign. He quickly found that staff members did not share his enthusiasm. Harold, the vice-president of Engineering, was no stranger to Six Sigma; he related the fact that, while he had successfully applied Six Sigma in several production areas, it seemed too complicated to some. He mistakenly thought it required a Ph.D. in Statistics to successfully implement. Harold's experience was that a Six Sigma project could tie up a team for six months with no certainty that the fix would be sustainable.

Barbara, the vice-president of Human Resources, voiced concern about the effect another initiative would have on employees' morale. Already experiencing initiative overload, employees were spread too thin with various team assignments. While Mary, the vice-president of Sales, was happy to hear that the engineers might finally clean up their product quality problems, she didn't feel that Six Sigma would do anything to boost her sales force's productivity. She had already invested too much in sales automation and customer resource management tools, and was patiently waiting to see a return on those investments. Mary also felt that Six Sigma, like other cost-reduction initiatives, could deflect attention from her efforts to improve overall customer satisfaction. Finally, Jack, the chief financial officer, expressed his reservations. He had seen too many dollars invested in total quality management programs that got organizations all whipped up with quality rhetoric while financial results continued to decline. In his view, Apex didn't have time to run another program?it simply needed to solve its obvious problems within the next 90 days.

Ron wanted to deal with these perceptions before moving forward, so he took out a flip chart and listed the concerns that had been expressed. He then countered with what he had learned about ways the New Six Sigma methodology could address these issues (Table 2.3).

Table 2.3. Ways the New Six Sigma Addresses Common Concerns

Common Misperceptions about Six Sigma	The New Six Sigma Approach
Six Sigma only applies in a manufacturing environment.	Six Sigma provides tools that enable teams to improve any type of process, both continuous and transactional.
Six Sigma is too complicated and requires a Ph.D. in Statistics.	Breakthroughs in desktop software and improved courseware enable teams to complete complex analysis and experiments quickly and easily.
Six Sigma projects can go on for months with no clear gains assured.	Clear project charters, upfront financial benefits analysis, and executive accountability ensure timely completion of projects as well as significant financial returns on every project.
Six Sigma projects add to employee overload.	Project prioritization and continuous management review ensure the optimization of team resources.
Six Sigma primarily focuses on cost reduction.	While cost reduction is usually an important outcome, all projects first focus on meeting critical customer requirements.
Six Sigma programs create more "initiative of the month" confusion.	Six Sigma can be the integrating force that brings current initiatives into alignment and focuses all initiatives on breakthrough business improvement.
Six Sigma is just another name for TQM.	While Six Sigma utilizes many TQM tools, these tools are applied for breakthrough business improvement and sustainable financial returns.
Six Sigma requires heavy investment, with no clear line of sight to return on investment.	Investments in Six Sigma projects are accretive?all projects are selected based on their ability to achieve clear return-on-investment goals

Ron's stories were persuasive enough that his team, while still reluctant, agreed to move forward with launching a Six Sigma business improvement campaign. He recommended that team members, along with some of their key reports, should spend at least two days in an offsite workshop, learning more about the Six Sigma methodology and taking a hard look at their business to select their most significant improvement opportunities. Ron brought in an experienced Six Sigma executive coach to help the team through a leadership jumpstart workshop.

The Apex Business Group Leadership Jumpstart

The team spent a few hours learning about the New Six Sigma and hearing some of the same stories that Ron had heard about how similar businesses had turned themselves around using this methodology. By 9:30, they began to name potential projects that could benefit from Six Sigma tools. At this point, the executive coach reminded them of the first Six Sigma leadership principle?Alignment. To ensure the success of a Six Sigma business improvement campaign, the leadership team must step back from drilling directly into projects and instead make sure they are in agreement and clear on the winning strategy for their business. With no shortage of improvement project opportunities in this business, teams must only launch the projects that are most likely to improve Apex's chances of winning this year and then sustaining that winning edge for years to come. The team agreed to spend some time working on a winning strategy, which meant clarifying which customers Apex was trying to serve and what those customers were expecting from Apex. At the same time, team members needed to understand the expectations of other key stakeholders, like investors and employees. Once the team agreed on the expectations of Apex's customers and other key stakeholders, it would be in a position to articulate its mission, analyze its current environment, prioritize its strategic objectives, agree on some critical metrics, and finally begin the analysis of Apex's critical performance drivers and key processes for delivering on expectations. Team members now understood that all these activities would help them develop a shared understanding of their winning strategy and provide an integrating framework for identifying the higher-impact improvement projects. The task seemed daunting, but they were energized thinking about the possibilities.

Understanding the Voice of the Customer

The executive coach introduced the team to its first activity, designed to bring team members to a shared understanding regarding the expectations of their most important customers.

At first team members were surprised to find how disparate their views were regarding what was truly important to their customers. Many had not had direct contact with customers and found it difficult to relate expectation in real customer terms. They found that technical specifications and generic terms like "low-cost, reliable product" didn't capture their customers' true feelings. The team had been making many assumptions about what customers wanted that hadn't been validated with the actual customers. The exercise, outlined in Table 2.4, ultimately led team members to a prioritized set of statements that they believed accurately reflected customers' expectations.

Table 2.4. The Apex Business Group Voice of the Customer Exercise

"In Order to Meet My Expectations, You Must Provide…"
The right technology at the right time for production application
Leading, enabling technologies for research applications
Reliable products
All deliverables on time with no surprises
Global, high-quality customer support
Industry leadership in cost of ownership

Team members agreed that as a follow up to this activity they would test and validate these expectations with their customers and convert the expectations into measurable requirements. They also agreed that they would broadly communicate these prioritized customer statements across the organization to ensure that all Apex employees would be guided in their thinking and actions by the Voice of the Customer (VOC).

Developing the Mission Statement

The voice of the customer discussion also helped the team reflect on Apex's true mission?serving key customers by providing a set of products and services essential to those customers' success. Apex's ability to secure and sustain those customers would result from the company's ability to maintain a lead over competitors. The group then developed the specifics of those insights into a draft mission statement (Table 2.5).

Table 2.5. The Apex Business Group's Mission Statement

"Who Do We Serve?"

Customers in wireless, data storage, and semiconductor businesses

"What Services Do We Provide?"

Leading-edge/state-of-the-art, enabling Micro technology, combined with responsive global customer support

"What Is Our Unique Competitive Advantage?"

Proprietary source technology

In-depth application knowledge

Material expertise

Installed base of loyal customers

Breadth of leading-edge technology

Flexibility and cooperativeness in tailoring R&D solutions

A core of good, talented people

Team members commented that the mission statement would be useful for keeping them focused on key activities and also for helping communicate a consistent message to employees.

Getting to Alignment on Strategic Objectives

The team was now prepared to take a critical look at the Apex business. They wanted to ensure that Apex's broad business objectives stayed in alignment with stakeholder expectations and that these objectives would truly help the company win in the market the team had described.

Team members began by seeking to identify documents that articulated Apex's strategic objectives. The first insight came when various team members specified six different documents, ranging from a presentation for the investment community to department-level goal sheets. They wondered aloud how employees could determine the best means of helping Apex when they were receiving multiple messages about Apex's objectives.

Fortunately, the documents had common theme, and the team agreed on Apex's top strategic objectives (Table 2.6).

Table 2.6. The Apex Business Group's Strategic Objections

"What Are the Key Business Objectives Your Organization Must Achieve in the Next 3?5 Years?"
Number	Objectives
1	Become market-share leader in Micro device Alpha Maintain market-share leader position in components for Micro device Beta applications
2	Secure alliance on advanced silicon chip
3	Establish responsive product development process
4	Achieve effective and complete integration, particularly with sales and service
5	Improve business systems
6	Attract, retain, and develop key employees

Going forward, the team agreed it would work from this common set of objectives, and department-level goals and individual goals would all flow from these objectives

Analyzing the Environment

Having reached consensus on customer expectations, mission, and key objectives, the team began to wonder if Apex could meet these expectations and achieve its objectives. The executive coach suggested that a quick scan of Apex's business environment might help the team build a common understanding of the company's current state and achieve consensus on areas needing improvement.

A situation analysis followed; the ensuing discussion and the resulting summary helped team members understand just how much things had changed in just the past 12 months (Table 2.7). In an environment characterized by rapid change in customer, competitor, and landscape, Apex was busy maintaining its internal status quo.

The team agreed that the situation analysis helped build the case for change within Apex, and that those changes needed to occur soon.

Table 2.7. The Apex Business Group's Situation Analysis

"What Is Happening in Your Environment?"
Customer	Internal
Emerging applications Increasingly demanding business environment Excess capacity Lack of venture funding Low visibility Reduced cap on budgets Exclusive focus on technology buys	Reduced visibility Merger integration Multiple development programs Balancing resources with corporate initiatives Improvement of process and documentation Changes in sales and service Process integration center Strategic alliances regarding advanced silicon chip
Suppliers	Competitors
Excess capacity Increased cooperation Shorter lead times	Losing market share New entrants Dumping inventory and cutting price Focus on components markets

Analyzing Strengths, Weaknesses, Opportunities, and Threats

The executive coach suggested that a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis would complete the picture of the current situation and potentially yield additional insight. The activity generated a discussion and summary chart (Table 2.8) that allowed the team to recognize Apex's extreme vulnerability to the emerging competition. At the same time, team members felt renewed hope that rapid action could allow Apex to regain and sustain a winning position.

Table 2.8. The Apex Business Group's SWOT Analysis

Strengths	Weaknesses
Engineering expertise Materials expertise Diverse product line Profitability Innovation Customer-centric policies Accessibility	Inconsistent product development processes Incomplete process documentation Weak Asian market penetration Bit of cowboy label remains (brand)
Opportunities	Threats
Expand into new markets Establish quality systems player reputation Leverage parent-company field operations Improve operations	Depressed market Competitors will come after us as new Margin erosion Merger or acquisition by major competitors Integration with parent company Internal focus vs. customer focus Employee retention

The scan of the current situation caused team members to wonder how things had slipped so dramatically during the past 12 months. How could Apex have gone from 20 percent growth and 30 percent Profit Before Tax (PBT) to negative growth and falling margins in such a short time? Hadn't they all been working 80-hour weeks to restore revenues and recover margins? Didn't they have a performance-based culture where employees were held accountable for achieving specific goals, and weren't measurement systems in place to ensure that the company was progressing toward its goals?

Developing the Dashboard

At this point the executive coach introduced the team to the concept of a "dashboard." The coach explained that many organizations struggle to determine measures that drive accountability and behavior that improves business results. Organizations tend to fall into two problem areas. Either they narrowly focus on a single measure like revenue or profit, which causes them to lose sight of the activities that actually drive those outcomes, or they measure and track every possible activity, which creates confusion about which outcome the specific activity was supposed to impact. The solution is to get leadership alignment on a small set of measurements that are most likely to aid the leaders in monitoring progress toward their goals, while causing the organization to simultaneously balance their efforts across four dimensions: improving internal processes, achieving financial results, growing their customer base, and building employee capability. The team engaged in a process and discussions that surfaced key metrics and then reached consensus on both the metrics and stretch goals for each of the metrics. The resulting dashboard helped team members communicate the critical performance metrics and monitor progress toward the goal within each metric (Table 2.9).

Table 2.9. The Apex Business Group's Organizational Dashboard

Key Metric ("What to Measure?")
Internal Business	Customer and Market
No-charge shipments Reliability	Number-one market share in all three businesses Customer satisfaction
Financial	Learning and Growth
Revenue Cash flow Gross margin	Employee turnover
Stretch Goal ("How Much?")
Internal Business	Customer and Market
20 percent reduction in warranty costs Improve first-time yield rates by 30 percent	50 percent increase in market share of Total Available Market (TAM) Strategic roadmaps with number 5 accounts
Financial	Learning and Growth
25 percent CAGR Compound annual growth rate from 2001?2004 50 percent gross margin 20 percent Earnings Before Interest and Taxes (EBIT)	Zero negative turnover

The dashboard created a comprehensive picture for the team of what numerical goals Apex would have to achieve to successfully fulfill its key customer expectations and achieve its objectives. An examination of the dashboard triggered the obvious question?"How are we going to do that?" Hoping to relieve some of stress and move the team to a solution, the executive coach suggested that the team embark on a set of activities designed to answer this question. He then introduced the concept of performance driver analysis.

Surfacing the Performance Drivers

The executive coach described a performance driver as any process, system, or activity that causes a metric to increase or decrease. In its discussion of performance drivers, the Apex team learned that many different activities or processes could impact each key metric. Infact, the team faced a dilemma?for every measurement category, at least 25 performance drivers surfaced. Previously, the team would have assigned an individual to every one of the more than 100 possible performance drivers, with instructions to examine the driver and come back with a recommendation for improving its the impact. Instead, the coach reminded the team of a key principle of the New Six Sigma?using the leadership team to focus the organization. The application of that principle in this case meant that the team would have to analyze and prioritize its inventory of performance drivers to determine the small set of drivers that were most likely to have the greatest impact on the metrics. The resulting analysis yielded a prioritized set of performance drivers for each metric category (Table 2.10).

Table 2.10. The Apex Business Group's List of Performance Drivers

Performance Drivers
"What Factors Cause the Metric to Increase or Decrease?"
Internal	Customer and Market
Product testing Lack of process stability Documentation	Product performance Product portfolio Sales force/integration effectiveness Reliability, service support, responsiveness
Financial	Learning and Growth
New product revenue Increase turn rate Value engineering Optimized procurement	Advancement opportunity Communication

The analysis and prioritization process helped "clear the fog" for this leadership team and helped it determine which actions to sponsor for driving rapid improvement. Team members began to see that a focused set of improvement projects targeted toward these key drivers could indeed put them in the fast lane on the road to improvement. They were now anxious to get started; they felt that it was about time they addressed key problems that had plagued them for the past year. But they also reminded each other that people had been assigned to most of these drivers at one point or another during the past year, and these individuals had trouble making progress. That comment prompted the coach to point out how the Six Sigma approach would increase their chances of breakthrough improvement even in those areas where they had tried and failed in the past. A key difference in the Six Sigma methodology is that, after prioritizing a focused set of improvement opportunities, the leadership team must mobilize teams with clear charters established by the leadership. To determine the nature of the team that would be assigned to each driver, as well as some of the specific deliverables that would be expected from these teams, the leadership team engaged in a second level of analysis of the performance drivers to help clarify what they expected to improve relative to each driver (Table 2.11).

Table 2.11. The Apex Business Group's Performance Driver Analysis

Performance Driver	"What Needs to Improve?"
Product/process documentation	Implement automated business systems Launch and implement MRP
New product revenue	Implement new product launch process for Micro B Launch Micro C product Reduce product material costs/labor costs Use consistent process to rationalize all three projects Optimize procurement Implement design for manufacturability
Portfolio	Maintain focus and continued development and support of all three Micro businesses Create communications and budgeting process to support all three Complete sales training; tie into automated sales force and customer data base. Locally implement S&S automated programs
Communications	Hold quarterly leadership meetings with staff Implement employee dialog process Invest in key people, especially engineering: Training Career path Implement and communicate business review process Quarterly review of leadership talent supply

The group members agreed that the analysis helped validate their selection of performance drivers, and they began to see how a focused team activity could drive rapid improvement relative to each driver. They now felt prepared to write team charters and nominate team members and team leaders.

Chartering the Teams

The Apex leadership team found the process of writing team charters more difficult than they expected. As managers, team members had been launching team projects by providing teams with very broad targets, expecting that broad assignments would allow the teams flexibility and creativity in pursuit of the goals. In reality, these broad assignments left the teams confused and frustrated, because each team member had a different interpretation of "what the boss wanted."

In this case, the New Six Sigma approach suggested that, to be successful, teams must be given clear targets, a specific set of deliverables, and reasonable but challenging timelines. Excited about the potential for breakthrough improvement, the team worked diligently toward creating its team charters. Through this charter development activity, the Apex leadership team members discovered how differently each of them initially saw each project. Left to their own devices, each member would have provided different direction and communicated different expectations to various team members, a formula for team frustration and confusion. Instead, members carefully worked through objectives, deliverables, metrics, and timelines for each team. By the time the chartering process concluded, the Apex leadership team felt confident that, not only had they identified the highest impact improvement opportunities, but they also now had the right team resources positioned to execute on those opportunities. See Figure 2.1

Figure 2.1. Sample Team Charter

Launching the Campaign

The Apex Business Group leaders felt like a team on a mission. They had successfully worked through their differences and now established a collective vision for Apex, a winning strategy, and clear agreement on their path to rapid business improvement. As the team prepared to launch the Apex Business Group Six Sigma business improvement campaign, its executive coach helped it determine that a successful Six Sigma business improvement campaign should include some key elements:

Acceleration

Leaders identified as project sponsors would receive two days of "Champions" training that would help them effectively coach their project team in the Define, Measure, Analyze, Improve, Control (DMAIC) Six Sigma framework. The team members would receive "Green Belt" training, enabling them to assist team leaders in the application of powerful statistical analysis tools through each step of the DMAIC process. Most importantly, the team leaders would invest 20 days of their time over the next four months to learn and practice the Black Belt analytical tools designed to help them conduct thorough data gathering, analysis, design, and experimentation in every step of the project. In parallel with this training, the team members would be moving through the milestones of their project plan, guided by an expert coach who would help them apply the appropriate tools and offer best practice examples as ideas to improve their work. With coaches providing application support, instructors supplying just-in-time learning, and the Champions conducting weekly project coaching, the Apex Business Group felt confident that these teams would achieve their breakthrough improvement goals.

Governance

With the Acceleration strategy in place, the leadership team members formulated a Governance strategy. As they learned from their executive coach, an explicit Governance strategy was essential to the success of the team because it ensured that the leadership team would continue as active sponsors of the campaign. As a part of the campaign, they agreed on a schedule of monthly review sessions for the sponsors of the projects and weekly coaching sessions for each Black Belt candidate with the Champions assigned to each project. This organized review structure would ensure that the teams were making appropriate progress, getting the resources and support they needed, and?most importantly?remained on track to achieve the desired business results. As a final but crucial piece of the Governance strategy, the leadership team agreed on a communication strategy for the Apex Six Sigma business improvement campaign. A process of using each level of the management team to communicate the Apex vision, mission, strategic objectives, and expected business results, as well as the initiatives and project teams that would enable them to achieve these results, provided the centerpiece of the communication plan. The Apex scorecard (Figure 2.2) served as the recommended vehicle for facilitating each level of manager?employee dialog

Figure 2.2. The Apex Business Group Scorecard

The Apex Business Group scorecard served as a one-page articulation of the Apex winning strategy and reflected everything the leadership team had agreed upon. Wide-scale distribution of the scorecard would facilitate manager and employee dialogs relating each employee's specific quarterly goals to the Apex strategy. The scorecard also provided the context for the Apex Six Sigma business improvement campaign. The campaign's straightforward objective was to apply team resources and powerful Six Sigma tools to ensure that Apex achieves its goals fast enough to deliver breakthrough products and services for its customers and breakthrough business results for its investors. With a firm understanding of the direction established in the scorecard and the results that the Apex Six Sigma business improvement campaign would achieve, employees could once again feel excited about their future. Most importantly, the Apex leadership team felt confident that it had established a course that would lead Apex to breakthrough business results as well as sustainable improvements well into the future.

Introduction to the New Six Sigma

six sigma all hype

Motorola University developed the New Six Sigma because we had to. We could see our Motorola businesses as well as our customers and suppliers struggling with the same critical issues. We knew that the classic Six Sigma methodology—focus on defects and variability reduction—had served our business managers quite effectively during much of the 1990s, and we had helped our customers and suppliers apply Six Sigma to dramatically improve their business processes. But we could also see that Six Sigma was losing its relevance to many of our business leaders. They perceived the methodology as too complex, effective only in manufacturing and engineering environments, and too slow in yielding results. We could also see, however, that many of our leaders had taken the important elements of Six Sigma—like understanding customer requirements, continuously driving process improvement, and using statistical analysis to drive fact-based decision making—and moved them into a broader, integrated approach that flawlessly executed their full business strategies. The New Six Sigma builds on the power of the Six Sigma methodology we pioneered in the 1980s and introduced to many businesses in the 1990s, yet it benefits from the lessons we learned as we helped our customers and suppliers implement the methodology.

The new Six Sigma is an overall business improvement method.

The New Six Sigma solves the paradox that leaders find themselves in today of attempting to simultaneously achieve short-term financial gains through fast business improvement projects while building future capability in both key talent and critical processes.

By integrating tools and processes such as scorecards, business process redesign, high-performance teams, and continuous monitoring of key business metrics, the New Six Sigma provides a practical approach and useful tools for leaders looking to drive balanced execution.

Table 2.1 outlines the four key leadership principles, discerned through studying organizations that successfully implemented Six Sigma. These leadership principles anchor the New Six Sigma.1

Table 2.1. Leadership Principles of the New Six Sigma

Key Leadership Principle	Description
Align	Using the performance excellence business model (based on the Malcolm Baldrige criteria), link customer requirements to business strategy and core business processes. Create strategy execution targets, stretch goals, and appropriate measures. The goal is to provide sustainable, measurable bottom-line results that drive business goal achievement.
Mobilize	Empower teams to drive improvements using projects selected by executives, project management methodology, and Six Sigma methods. Organize team efforts with clear charters, success criteria, and rigorous reviews. Provide teams with just-in-time training and empower them to act.
Accelerate	Employ an action learning methodology by combining structured education with real-time project work and coaching to quickly bridge the gap from learning to doing. The motivation to act is perishable yet essential for driving projects to timely results.
Govern	Drive the execution of strategy by managing scorecard metrics. Structured review processes involve reviewing dashboards of results as well as drilling into process and project details where needed. Barriers lift when leaders share best practices.

The New Six Sigma integrates best-practice processes with tools designed to help leaders in driving their business strategy for dramatic short-term business results while building sustained future capability.

Table 2.2 shows some of the best practices that were included in the New Six Sigma methodology.

Table 2.2. Best Practices of the New Six Sigma

Best Practice Process or Tool	Definition or Purpose
Voice of the Customer (VOC)	Six Sigma methods translate abstract desires from customers into concrete specifications and organizational requirements. Leaders use these data to transform the strategic goals and processes so that they deliver value.
Balanced Scorecard	Executive teams actively build scorecards to quickly achieve alignment on their organization's vision, mission, strategic objectives, breakthrough initiatives, and the metrics used for monitoring progress. The scorecard itself provides the vehicle for clear and concise communication of vision, mission, objectives, metrics, and initiatives to the entire organization.
Accelerated Business Improvement	Business process redesign provides the tools that enable the creation or redesign of the key business processes essential for delivering on the customer's expectations and achieving the goals articulated in the scorecard.
High-Performance Teams	High-performance teams are customer-focused, cross-functional teams with clear charters used to complete the projects most critical to the business improvement effort.
Six Sigma Black Belt Teams	Six Sigma Black Belt teams are: Employed against highly complex projects that require advanced statistical tools. Used when an advanced tool set is required to achieve: Process improvement. Process development. Product or service improvement. Product or service development.
Blitz Teams	Blitz Teams are employed when: It's clear what needs to improve. Detailed data analysis is not required. The consequences of not taking action outweigh the risks of making mistakes. Leaders are ready to support action.
Integrated Business Review	Executives use a dashboard—a summary of the status of metrics—to review the progress toward goals. Leaders drill into details when stoplights on the dashboard indicate unfavorable trends or goals. Details include process status and projects that aim to improve processes.

The next section uses the New Six Sigma methodology to provide leaders with a practical approach to achieving rapid business improvement while building sustainability into their business systems. It builds leaders' understanding of the four key insights (Align, Mobilize, Accelerate, Govern), and it guides them through the use of New Six Sigma practices and tools by providing real-world examples.

To clarify these concepts, we have combined Motorola's experiences with those of the many other companies who have practiced the New Six Sigma over the past few years. The case study that follows demonstrates how novel leadership principles and innovations make the New Six Sigma significantly better than the original.

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Six Sigma?The Present

six sigma basics

In the first years of the 21st century, leaders face a new reality. We must consistently generate positive, month-to-month financial results while continuously building a business that will sustain those results over the longer term. While balancing short term and long term has always concerned executives, today's environment demands performance along both dimensions. Fierce new competitors, demanding customers, tight talent supplies, and wildly fluctuating markets are a reality in almost every industry; meanwhile, investors show no willingness to wait for returns on their investments.

Executives attempting to chart a course through these waters feel schizophrenic and myopic. They work to answer weekly demands for an improved financial picture while trying to communicate a long-term vision and roadmap to customers, suppliers, and employees. Management approaches that have been successful in the past are no longer effective. Fortunately, in every industry there are executives who outperform their peers.

For the past few years, Motorola University has worked to understand what differentiates top-performing executive teams, both inside Motorola and across many industries. Remarkably, we've discovered important parallels between our findings and lessons from Six Sigma's past. Top-performing leadership teams demonstrate a keen sense of daily priorities. They also possess the ability to effectively execute those priorities while still maintaining a compelling vision for the future, and this enables others to act on that vision. Furthermore, top teams always operate ethically. To leverage these personal attributes, many executives have adopted common best practices that give them an edge in creating a vision, establishing priorities, enabling people to take action, and driving execution in a way that satisfies short-term demands while building capability for future growth. These best practices have been documented and incorporated into an approach to executive management and leadership that is the New Six Sigma.

The old Six Sigma was just a standard measure of goodness.

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History of Six Sigma

Black Belt Six Sigma

By the early 1970s, Motorola had established itself as the world leader in wireless communications products, and it was battling Texas Instruments and Intel for the number one slot in semiconductor sales. In 1974, five of the top eight semiconductor manufacturers were American and three were European. But competition in the semiconductor market soon grew very fierce. Just five years later, in 1979, two of the top eight chip manufacturers were Japanese. The Japanese were also beginning to erode Motorola's lead in the U.S. paging market. These difficulties were prefigured in 1973, when Motorola, finding itself unable to compete in the consumer products market, sold its consumer electronics division to a Japanese company. The threat to the company's future was clearly on the horizon; nevertheless, a majority of Motorola's senior leaders ignored the warning signs.

In 1979, under the leadership of CEO Bob Galvin, a task force began to develop a plan for Motorola's renewal and growth. This work accelerated after Art Sundry, the most senior sales vice-president of the largest communications group, shouted "Our quality stinks" in the May 1979 officers meeting. Sundry's outburst resulted from feedback he received from customers and users of Motorola's communications products. Together, Galvin's task force and Sundry's research led to the creation of a four-point plan, rolled out in 1980, with the aim of securing Motorola's global leadership:

1. Global competitiveness? Ensuring market and product superiority by benchmarking the company against global competitors; designing products for global distribution; and breaking down trade barriers that kept Motorola products out of Japan and other international markets.

2. Participative management? Drawing on traditional Total Quality Management (TQM) philosophy to adapt the principals and methodology of quality circles to the Motorola culture; sharing profit improvements with all employees.

3. Quality improvements? Establishing goals of improving quality tenfold (10X) within five years and placing quality improvement goals in the incentive packages of all executives; this initiative sowed the seeds of Six Sigma.

4. Motorola Training and Education Center? Creating the precursor to Motorola University, which addressed the fact that the dramatic changes required in quality processes and management style would create a great incompetence in the workforce?not because of workers' unintelligence, but due to the insufficient information they received on how to meet the new job requirements.

Galvin selected senior executives to drive each of these four initiatives and had them report directly to his office.

The 10X quality improvement goal drove significant change in each of the business units. However, at this time, quality improvement efforts were focused exclusively on the manufacturing function because conventional wisdom dictated that manufacturing was the source of a majority of the problems and held the greatest promise for improvement.

Based on this premise, the company established the Motorola Manufacturing Institute (MMI) in 1984 under the direction of a senior manufacturing vice-president, Carlton Braun. This two-week program for senior manufacturing managers focused on developing and sharing quality improvement goals. In providing feedback, the first groups of managers who completed the program commented that the 10X quality improvement goal could never be achieved by focusing on the manufacturing function alone. Managers were convinced that all functions needed to be involved, particularly engineering design. These remarks resulted in improved courses and the refocus of the institute away from just manufacturing and toward all aspects of management.

Consequently, the institute, renamed the Motorola Management Institute, represented all business functions in every class. This institute served as a major catalyst in breaking down the silos that existed between functions. Quality improvements along with cost and cycle-time reductions could only be achieved through the involvement of all who impacted or were impacted by the development of new Motorola products and services. As a result, customers and suppliers began to get involved in the design of next-generation products. This part of Six Sigma's history reflects Motorola's earliest realization that all parts of the business impact the achievement of strategic outcomes and all efforts must be aligned toward improving results in order to reach the goals of improved quality and customer satisfaction.

Motorola still lacked a common metric for sharing and comparing improvement initiatives, and this deficiency served as a major barrier to alignment. Then, in late 1985, quality engineer Bill Smith, frustrated by his associate's rejection of his quality measurement ideas, scheduled a meeting with Bob Galvin. After listening to Smith's point of view, Galvin instructed Jack Germain, the corporate vice-president of Quality, to build on Smith's ideas.

As a result, Smith and a team of quality managers created a three-day program entitled "Design for Manufacturability" (DFM). Facilitated by a Motorola University designer, Ann Dille, DFM defined the "Six Steps to Six Sigma" and became the first required training program for all technical personnel worldwide. Another Motorola engineer, Craig Fullerton, developed and taught "Six Sigma Design Methodology" (SSDM?today called Design for Six Sigma, or DFSS, by most other companies). The Six Sigma Design Methodology focused on ensuring winning product design. Six Sigma now aligned all quality efforts around a common measurement process, and Six Sigma goals drove every team worldwide. Six Sigma's success led Motorola's managers to set an even more aggressive goal, from 10X to 100X improvement.

Participants in the initial implementation of the DFM program felt that all functions and not just the technical employees needed to use the Six Sigma methodology. A one-day course entitled "Understanding Six Sigma" was then developed for all nontechnical employees worldwide, and Motorolans began to use Six Sigma on everything from measuring training defects to financial effectiveness. At this point, Motorola had two of the major components of continuous improvement in place. All quality improvement efforts were now aligned around the concepts of Six Sigma, and all employees were mobilized by common Six Sigma goals and reward systems.

These efforts resulted in Motorola receiving the first Malcolm Baldrige National Quality Award from the U.S Government in 1988. In describing the corporation's renewal, one of the Malcolm Baldrige auditors commented that wherever he went and whomever he talked to, the Six Sigma concept was articulated and understood. The alignment of the culture around the quality goal had been achieved.

Six Sigma began as an initiative for improving quality rather than as a methodology for continuous business improvement. Once organizations achieved the Six Sigma goal, they stopped improving?they became "good enough." This mindset caused complacency that allowed quality to actually deteriorate.

By 1990, Motorola was struggling to reach Six Sigma in everything it did, yet it seemed to be stuck at 5.4 Sigma. Bill Wiggenhorn, president of Motorola University, proposed the establishment of a Six Sigma Research Institute (SSRI) to bring leading engineers and statisticians together with the goal of finding new ways to accelerate the achievement of "Six Sigma and Beyond." The SSRI became an alliance of IBM, Texas Instruments, Kodak, and others, all of which provided resources that drove the search for new quality improvement ideas. These efforts resulted in the adoption of new and powerful software tools required to analyze the large amounts of data generated by Six Sigma projects. The foundation of this work was a focus on the root cause of the problem and a reduction of sources of variability. Another key concept?that of the "Black Belt"?resulted from the SSRI.

A team of improvement experts from the SSRI companies, led by Motorola statistician Harrison "Skip" Weed, Ph.D., defined the first content and standards for a Black Belt based on concepts that originated with Motorola's statistical experts in Asia. Black Belts were originally intended to be improvement experts that led teams to ensure a high probability of success. But Weed's team decided that to achieve Black Belt recognition, candidates must demonstrate statistical, team, and business skill along with business impact. The output of the SSRI Black Belt work was shared with both the original companies in the alliance and non-alliance companies, and General Electric became one of the first non-alliance members to internalize the Six Sigma methodology. By this stage of Six Sigma's evolution, Motorola had successfully germinated three of the four major components of the business improvement model it nurtured into the model used today?the concepts of Alignment with business goals, Mobilizing teams, and Accelerating the speed to results.

To further institutionalize and accelerate the new culture of improvement, Motorola built new business processes and adopted a new learning standard. "Action learning" became the model for senior executive development and later Black Belt training. Teams of top executives were brought together to focus on critical issues (e.g., software development quality and moving into emerging markets). Motorola University designed and facilitated these executive meetings, during which participants gained new knowledge about the focus topic. The CEO directed executives to apply the new knowledge to their businesses and share this action learning with other businesses.

This process of "learning-action-feedback" accelerated change at an unprecedented rate, moving into the business units through the development of Total Customer Satisfaction (TCS) teams. Thousands of TCS teams were formed at every level to address problems in the workplace. These teams would pull together the people and resources necessary to improve the quality of the work in manufacturing, engineering, human resources, finance, and all other functions. TCS teams shared their results globally so that new learning taking place in one part of the world could be duplicated elsewhere. The development of the Six Sigma Black Belt Steering Committee, the Corporate Quality Steering Committee, and a global process of Quality System Reviews (QSR) further drove the institutionalization of the quality culture.

Motorola had learned that maintaining and even going beyond Six Sigma required strong leadership committed to the development and implementation of process: Alignment, Mobilization, Acceleration, and Governance. These concepts facilitate the creation of new cultures or the changing of existing ones within and across all business functions. Continuous improvement requires continuous change, which in turn requires continuous learning. Motorola University succeeded as a catalyst for continuous learning, and it proved that without refreshing and updating skills, improvement is not possible. Learning is at the heart of continuously improving quality and other important business results.

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