Key Elements Of Motorola Six Sigma Program

Published Date: 02 Nov 2017

Mahesh Rajendran

Prepared for principles of Management Consultancy

- Introduction

The journal focuses on a program called Six Sigma, which was the cause for a major turnaround in Motorola’s performance and revenues. The program aimed at achieving a 100-percent-perfect performance and as a consequence Motorola reaped rich benefits. A more thorough analysis is included below.

-Key elements of the Motorola Six Sigma program.

The Six Sigma implementation provided Motorola with the following benefits.

In-process defect levels have been reduced by a factor of 200.

Reduction in the manufacturing costs by $1.4 billion.

Employee production increased on a dollar basis by 126 percent.

Stockholder’s share value saw a fourfold increase.

In the 1980’s Motorola was operating at "Three Sigma" quality levels resulting in 66,807 defects per million products. Motorola’s TV division ‘Quasar’ was outsourced to a Japanese company called ‘Matsushita’, which reduced the defects by 20 folds using the same work force, technology and design. This experience served as the motivation to replicate this quality model within Motorola to achieve better results. The company did so by employing a four stage problem-solving approach called the MAIC (Measure, Analyze, Improve and Control) to reduce the number of defects in its products. These four stages have been identified as the key elements of the Six Sigma program.

The ultimate goal of the organization was to increase revenues and net income and the immediate goal was defect reduction. The four stages of the MAIC approach helped Motorola in achieving this. The Measure Phase established reliable metrics to measure existing systems to monitor the progress towards project goals. The Analyze phase provided ways to explore the root caused for defects by using statistical analysis. In the Improve phase, teams were focusing on the best solution after identifying the root causes and also had to chart out action plans to implement this solution. Finally the Control phase was designed to regulate the new system by developing new measures in order to keep problems from recurring.

In order to implement the MAIC approach the company invested heavily in ensuring that every employee was trained in Six Sigma Tools. At the same time the investment was carefully planned to ensure that each employee received training only on the tools that were necessary to him/her. Motorola identified that cost of poor quality was considerable and hence focused on improving quality standards. This initiative spread the awareness about quality among employees and as a consequence defect rates reduced, employee morale increased and this resulted in a decrease in production costs. This in turn increased the quality of its products and decreased the manufacturing costs by $1.4 billion.

There was significant investment in training employees and increasing their performance in terms of quality control and cutting downs on defect at the source. This translated into improved employee productivity. All of these factors were responsible for the tremendous growth of the company and the resultant increase in the share price.

The primary goal within Motorola was defect reduction. In order to achieve this it was decided that employees would be trained in statistical tools of quality program, as a part of the Six Sigma implementation. Since statistics is the study of the collection, analysis, organization, presentation and interpretation of data it was an absolute necessity for employees to be familiar with statistical tools to improve on quality. Employees had to record defects in every function of business. When employees are working with a compilation of recorded defects over a period of time (in other words ‘data’) it becomes imperative for them to use statistical tools to measure such data. These tools form the crux of the program, as it is not possible to measure results without statistical tools. If the results of the initiative cannot be measured it is impossible to determine whether it has been effective or not.

Statistical methods have proven successes in providing organizations with the ability to identify variations in a process which in turn allow them to isolate the cause of the issue. Furthermore, the ‘Analyze’ phase of the MAIC approach demanded the use of statistical analysis to examine potential variables affecting the outcome and seek to identify the most significant root causes. These factors prove that the usage of statistical tools was extremely important to the success of the overall program.

- Next Generation Six Sigma

The original Six Sigma program aimed at defect reduction and served mainly the manufacturing process. It was the best continuous quality management and quality control technique in the market. The new concept of Six Sigma combined good business application of statistics with the elements of effective business strategy. It was an overall business improvement program to improve Motorola’s ability to realize its strategic objectives of quality and consumer satisfaction. While Motorola had identified six steps to achieve Six Sigma as a part of the old quality program, the new generation Six Sigma speaks about four steps viz. Align, Mobilize, Accelerate and Govern. Unlike the old Six Sigma model which was defined as a standard for quality control and defect reduction alone, the new concept involves scope for improvement of the company as a whole. Another notable difference is the emphasis on using variable data in the new concept as opposed to using attribute data in the old concept.

The new generation Six Sigma is not a completely new concept in itself rather it is a revamp of the existing Six Sigma process with the addition of a few extra layers. However, the new concept with its four steps (Align, Mobilize, Accelerate and Govern) does specify about measuring defects as the previous system had. Thus, if Motorola is not performing measurement activities, they may risk going back to producing lower quality three sigma products. The new Six Sigma is driven by the executive team and is specifically used to achieve strategic objectives. The concept of reducing defects coupled with a focus on strategic objectives should definitely help the new concept in the further growth of the organization. Although the new concept does introduce a few additional measures it does not qualify as a whole new way of doing business.

– Drawing lines to Management Consultancy

The manufacturing industry is of relevance to management consultancy as many consulting companies stress on reducing defects in order to reduce operating costs and increase profits. Porters Five Forces could be used to analyze Motorola’s processes.

Threat of new entrants: As the Six sigma program gained popularity, other companies started implementing these measures and this clearly hurt Motorola’s growth plans as we can witness in the slump that Motorola experience post 2002.

Threat of substitute products or services: The Lean methodology in certain cases could act as an alternate for Six Sigma, Lean’s main focus is on speed. It highlights reduction in the amount of time between events, activities and cycles. Shortening the cycle time, allows us to complete more cycles in a given amount of time. Lean also recognizes areas where process bottlenecks and waste can be eliminated.

Bargaining power of customers: It is interesting to note the evolution process of Six Sigma starting from One Sigma, to Six Sigma. The performance levels for various sigma levels and the defects are as mentioned below. As customers began to realize the advantages of implementing a performance level to reduce defects they became more and more demanding and that led to more stringent measure eventually leading to the implementation of Six Sigma.

Sigma Level

Defects Per Million Opportunities (DPMO)

1

690,000

2

308,537

3

66,807

4

6,210

5

233

6

3.4

Intensity of competitive rivalry: The success of the Six Sigma implantation fuelled an intense competition which led to Motorola realizing that they had established new rivals. The unexpected growth of new rivals, kind of curbed Motorola’s growth strategy.

Bargaining power of Suppliers: Since Six Sigma was the brainchild of Motorola’s management and they were the early and the only implementers of this methodology, other rival companies had no choice but to follow suit and implement the same methodology in their own operations to improve defect reduction and thereby attain more profitability.

– Conclusion

To conclude that the Six Sigma program at Motorola was an organization wide, leadership driven, process orientated, middle manager led, employee owned initiative that launched Motorola to the number one position in the market. Motorola implemented an entirely new process in order to transform its business performance. The introduction of the sophisticated Six Sigma program focused attention on the high costs associated with defects. The culture of constant improvement and zero tolerance of errors that led to the implementation of Six Sigma is an essential element of the success realized by Motorola.