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Motorola, GE, Honeywell and Profitability?

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  • #31342

    Darrel
    Participant

    Motorola, GE and Honeywell are the companies who pioneered the Six Sigma methodology.  If Six Sigma is so effective in making a company profitable, why has Motorola been performing so poorly over the years?.  Their net income has dropped over the past years and they are also performing at a much lower level than the industry they are in.  I understand Motorola’s industry is very competitive but I would think they would be doing better becasue of Six Sigma.  Does anyone know why this it?  GE and Honeywell seem to be doing well.
    Darrel
        

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    #82506

    Tinoco
    Participant

    Jack Welch is no longer CEO, Immelt took his place
    James McNerny went to 3M, Robert Nardelli went to Home Depot
    They were the executives there when Six Sigma took hold.

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    #82507

    Pipkin
    Participant

    Six Sigma is a part of a greater business philosophy at GE. Six Sigma by itself, can be an impotent tool if there is not substantial top-down leadership on business results. GE demands it’s business leaders make their numbers, regardless of the economy, and Six Sigma helps them get there. At GE, it’s a way of life. At other companies, like Motorola or Siemens, more recently, it’s a suggestion. Their type of leadership does not demand the top line results.

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    #82510

    Tuell
    Participant

    Six Sigma is not a panacea for all business ailments. You still need good leadership and values within the company.
    There was a useful post a while ago about the “Motorola Troubles”. I did a lot of searching and finally found it here: https://www.isixsigma.com/forum/showmessage.asp?messageID=9239
    Here’s a quote from xash that I through was useful information:

    Firstly, the handset products are losing out in my opinion due to poor design, and poor marketing, which are both driven by a fundamental lack of understanding of the customers Motorola was trying to serve. This is probably a classic example of why being first to market is NOT enough, customer intimacy and feedback was obviously not taken seriously enough when considering design and product targeting and launch of later generations of Motorola handsets. Who can forget the “brick” models that were touted by BMW drivers visible at traffic lights, and the up-swoosh ubiquity of the Micro-tac handsets through the early nineties? Motorola had it good and whatever it did consumers lapped up the technology hungry for more mobile-communication capabilities.

    Then what happened? A pair of companies took the world by storm forming intimate relationships with the service providers, and devising simple but effective segmentation strategies per end user segment.  The full featured phone for the conspicuous consumers, business people, pimps, and show-offs, the cost effective models for the corporate travellers who coudl easily justify the expense to finance, and the budget models for students, and the cost conscious. Who were these people…with such a rational and sensible approach that could have come from a first-year MBA marketing text-book?!  

     => Enter E/// and Nokia.

    Second, why didn’t 6 sigma stop this? Actually the question should be why should 6 sigma stop this? To be fair to Ed Brown, I believe he has honourable intentions and hit the points pretty much bang-on despite the derisory comments of some who read his contribution.

    To crystallise, just because you have your ship in order and are cruising at your most optimum speed, and all hands on deck, and your navigation is the latest GPS system it doesnt mean you are cruising on the right course, or have identified the correct destination.

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    #82511

    Withheld
    Member

    Here is a link to Hon’s stock board discussion on Yahoo. Some of the employees have a different spin.
    http://messages.yahoo.com/bbs?.mm=EV&action=l&board=7088119&tid=iraqusconflict&sid=7088119&mid=23061
     

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    #82512

    Withheld
    Member

    Sorry about that! Here is the Hon link:
    http://messages.yahoo.com/?action=q&board=HON

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    #82517

    A.B
    Participant

    Darrel ;
    Six sigma is not necessarily the key to success. A lot of other companies make profits without using 6 sigma.
    The problem with the big Cos is : 
    – They killed competition slowly : customers have a limited choice for procurement.
    – Lack of vision : They haven’t used full potential of their acquisitions and/or mergers. Less products released , slow innovation.
    – Ignoring competency for short term results : thousands if not tens of thousands of highly skilled workers laid off just to show that a newly merged company is turning profit.
    – Field employees working hard to make profits and Top Management reaping benefits with disproportionate salaries.
    ……………etc.
     
     

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    #82518

    Stuart Mottershead
    Member

    I recently saw a presentation by a senior motorola exec where he basically said that they had got their 6s strategy wrong originally when the used the ‘six steps to 6 sigma’. They are now using DMAIC and are trying to follow the same model as GE.

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    #82523

    Rao
    Participant

    Recently I had an opportunity to meet with some of the senior officials in Motorola and this was the same doubt I put forward to them! There was a time when Moto used to manufacture the pagers and they were so strong in their quality that no checks or inspections were carried on line or at service centre! If any pager gives a problem, they used to replace it with a new pager. It was absolutely a culture where the defective pager used to be thrown out! From that level now they are slowly slipping down in the market though they still hold 19% of mobile market in the world to satisfy themselves with no.2 position. But I suspect how long they can retain it and also nokia is way ahead of them in the race.
    When we were trained for BB, we were thought what shouldn’t be done to become a bad role model for Six sigma. That example was Motorola. Motorola leveraged more on their inventive methods and their past history rather than understanding the present generation customer. They were no.1 in nineties and then the generation started looking for more convinience due to the rapid improvements in the software field! This is the major weakness for Motorola as could not get on to the boat at the right time. Instead they still focus on what they are doing rather understanding the customer psychology. The custmer need vibrant models with more features but Moto is not ready to deliver this other than their infamous flip over models or not ready for a customer friendly software features. (I was told that the software for the handphone is a mix of various bits and peices and it has to be joined in a permutation and combination way! Now Moto is recruiting thousands of software engineers to strengthen that area with in asia!)
    Six sigma has got a life cycle. When you reach the crown or 6 sigma level, the next step is to start all over again in identifying the Q-C-Ds! Unfortunately this concept was not emphasized with Moto’s 6 Step process!!!
    No matter, how big they are…if they don’t understand the customer, they have to face wrath of customer!!!

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    #82526

    sl
    Member

    Your point is well taken.
    The 6sig strengths are offset by the 6sig weknesses.  The 6sig enthusiast seems to forgets issues of culture, strategy, people, leadership,customer and process linkages for organizational performance. The need for management of these linkages is essential.  There is also the need to view this linkages at each and every level of the hierarchy-vertically and horiziontally.
    Lets not make 6 sig just another fad!
    Read:  The Power of Alignment by Dr. George Labovitz, 1999 or so.  Aligning organizations has nested within it the six sig philosophy.

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    #82537

    Robert S.
    Member

    Good question! 
    I have been wondering that myself.  I have read all the replys and links offered.  I still do not see a clear answer to your question (with all due respect to the people who replied). 
    I have read many financial articles about Motorola and believe that their problems run much deeper than their Six Sigma methodology.  However, there are many quality related articles and books stating the three companies and their success as a result of Six Sigma.  One book I read was “The Six Sigma Way: How GE, Motorola, and other top companies are honing their performance.  This book was published in 2000, a time when Motorola was doing rather poorly. I guess, I am still not clear about the connection between Six Sigma and profitability either.  I also wonder if GE and Honeywell are doing well because of their Six Sigma initiative or because of other reasons.  Does anyone have any more insight?

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    #82538

    BobJim
    Participant

    In my opinion, the answer is pretty simple. Six Sigma properly focused, funded and supported from the top down will help a company that has clearly set goals, and understands the marketplace and their place in it, and listens to their customers. It will provide an extra boost to earnings and perhaps just enough of an extra jolt to push a company ahead of it’s peers.
    By contrast, even properly implemented Six Sigma will not magically transform a company that has not addressed the business fundamentals (clear goals, understanding of the marketplace, customers, etc.) or has perhaps just lost site of those fundamentals. Six Sigma is not a cure-all.
    One might ask how much further down Motorola might have fallen without Six Sigma. 

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    #82539

    Erik L
    Participant

    Robert,
    I firmly believe that the reason for the erosion of certain implementations rests on the inability to mobilize energy and managerial support for the translation of ideas into saleable product and services.  Approaching a business from only a 6 sigma perspective will improve a business in the short-term, but the overall health and survival of a business is he who gets to market fastest with the products and services that meet those espoused needs and/or those latent needs that customers never new they had.  If one only focuses on 6 sigma then you become a victim of your own success.  As you climgb the sigma levels of improved performance you pay a staggering amount to go from a 5 to 5.2 sigma performance.  So what happens?  You continue to look within and then begin a long spiral of battling the profit margin battle to the point that your business becomes little more than a commodity.  The problem there is that it becomes primarily a question of $ and whom can undercut whom.  The one-two punch is through the full integration of 6 sigma with DFSS.  The beauty of DFSS is that you can bring services and products to market that demand a premium and a healthy product portfolio (and PDP) ensures that you can outloop the competition.  When I was an officer in the Marines it was termed the opponents OODA loop.  Basically you become the driving factor and cause the opponent to react to you because you already know their next two steps as they respond to your action.  Businesses that neglect this will eventually cease to exist.
    Regards,Erik

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    #82552

    Withheld 2
    Member

    I’m a former Motorolan and I understand that they were just starting to deploy the DMAIC model when I left in the fall.  They’ve not had specific “Six Sigma” projects, at least not to my knowledge, but we used many of the tools to solve problems.   

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    #82555

    Mikel
    Member

    The problems at Motorola have nothing to do with Six Sigma and have been well documented.
    The best techniques don’t protect from arogant marketing decisions or an unresponsive CEO.
    This was covered by Business Week in late summer 2001. Chris Galvin was on the cover. Go read it.

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    #82558

    John Babina
    Participant

     
    There are some key issues to keep in mind while discussing this worthy topic. When Motorola & GE instituted Six Sigma, they were already healthy companies and were seeking to do even better . . . . and they did. They had the discretionary funds to do the job right.
     
    More powerful forces are at play in our economy than just what Six Sigma can fix. The world economy is currently suffering from two key issues, overcapacity and the aging demographic. The last great depression was caused by overcapacity. This is just one problem for the world economy.
     
    On the other hand, the world has never seen an inverted population pyramid like we are experiencing now. Private corporations are now contributing billions to pension plans because of the government rules under ERISA. (Business Week – 3 recent stories) These funds come right out of profit. The state budgets are buckling under the same strain but they were exempt from ERISA, so their un-funded liabilities are much worse. It was probably a mistake to exempt the states. The state deficits currently being reported in the press are only the tip of the iceberg. The states will seek to increase the taxes on corporations to make up for the spectacular promises they made to state employees . . . . and these corporations are already strapped for cash.
     
    In order to dig themselves out of the benefit problem, companies have increased the export of jobs to offshore locations. (Business Week – most recent story). For the first time in my 38 year working career, I have witnessed companies cutting staff below critical mass to sidestep the benefits problem. It is the first time that I have seen so many people laid off and there is still work to do. A lot of important work is just not getting done. This makes it more difficult to institute any kind of improvement program, regardless of the name. In addition, many companies are still using 2000 as the benchmark year for sales, revenue and profitability. By my reckoning 2000 was an outlier! Companies would be off better using an average of  1997 – 2000 as a reference target and get back to reality. Those boom years were not real . . . so we have come to learn.
     
    I have lived through Zero Defects, Quality Circles, TQM, Kaizen, etc. All of these programs offered value and contributed to the evolution of quality. Six Sigma is the inheritor of this evolutionary process, but these programs by themselves will not solve the bigger social and economic issues.
     
    What is worse is that prestigious domestic companies are now exporting technology jobs and R&D to offshore locations. This is most troublesome for the long-term prosperity and security of the US. But this is a different story.
     
    Look beyond Six Sigma for the big picture. Stay current on all of these topics as it affects your business and your career. Regardless of the state of the economy, keep your head down and keep pushing for continuous improvement wherever you can. That has always been my strategy and it worked for me.
     
    John Babina
    Six Sigma Black Belt
    Consultant
    Monroe, CT
    [email protected]

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    #82563

    lin
    Participant

    Six Sigma is a process that has reducing waste and improving Quality as viewed by the customer AS THEY RELATE TO MEETING BUSINESS OBJECTIVES.
    This means you pursue Six Sigma objectives that improve the bottom line. Customer retention is part of that, but you do not make changes that cause you to cease pursuing business objectives (i.e. improved profit). 
    When you improve quality the end result should be customer retention and improved market share. That means as we all know to understand what the customer wants and perceives as “Quality”.   When you work on items he finds acceptable at the expense of  items he has concerns about everybody suffers.
    Specifically Motorola, is a case study in this.  Big $ were spent on trying to create perfect factory quality, and it was decided that the customers would be happier with less expensive analog phones, and more robust LED displays.  However, quality of design with less parts was a better investment then perfect manufacturing, customers (the ones that counted) wanted digital phones that produced greater network capacity at the lowest possible cost, and all customers wanted features that LCD displays brought to the end user.
    The rest is history….mis directed 6 Sigma hurt Motorola in many areas, and helped it in many….Leadership must apply the strategy appropriately or the bottom line does not improve. 

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    #82571

    FS
    Participant

    Good point Stan!.  I also read the article in businessweek.

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    #82578

    John J. Flaig
    Participant

    Jack,It sounds to good to be true. All management
    has to do is kick ass and bingo fantastic results.
    Let me suggest an alternate hypothesis.
    Management kicks ass and everyone lies,
    cheats, and steals to make their numbers.My experience is the same as Dr. Deming’s —
    The alternate hypothesis is far more likely than
    the first. Perhaps this why we see several
    divisions within GE now having to restate
    earnings.John John J. Flaig, Ph.D.
    Applied Technology (http://www.e-AT-USA.com)

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    #82583

    Aravena
    Participant

    John,
    Your inference that lying, cheating, and stealing are the driving forces behind GE’s performance is ridiculous.  I challenge you to show me a company with more emphasis on Financial controllership and integrity.  I worked as a Finance leader in GE for 7 years and reject any such notion.  Jack’s characterization is, for the most part, correct.  GE is a performance culture above all else and that culture is a catalyst for all initiatives including Six Sigma.
    Whether we like it or not, many people who currently pursue Six Sigma as a career (consultants, MBBs,BBs, etc) owe a debt of thanks to GE.  Perhaps your narrow view is driven more by your inability to ride in GE’s Six Sigma wake?  I question your motives…  I am convinced of one thing, it’s obvious that you’ve never had to “kick ass” and drive results; at least not from behind the safety of your stack of books.
    Pablo
     
     

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    #82584

    Mikel
    Member

    Dr. John,
    Once again you don’t have a clue. Please stick to providing help on tools as you clearly have no actual knowledge of GE.
    If you want to atack something, go after the bloated infrastructure of the big 3 automotive comapnies. All are waving Six Sigma flags of some sort and all continue to be in denial.

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    #82587

    Barry Alexander
    Participant

    One might ask if Motorola was not so focused on 6 Sigma, management might have paid more attention to business and products.  Even the highest quality products that are not cost and customer competitive won’t create sucess.

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    #82588

    TA
    Member

    I like what George Eckes says in the new book “Six Sigma Team Dynamics”
    “When Six Sigma fails, it most commonly does so not because the methodology is flawed, but because the dynamics of the team implementing improvement. Good team chemistry depends on the clear delineation of duties and responsibilities of members, on expert leadership abilities, and on excellent project management skills.”

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    #82596

    xCompEng
    Member

    Hey Darrel,
    As a former Moto (and some others in your post) engineer, my 2 cents on those companies is that like any other process methodology, there is no silver bullet.  Sorry to upset some Sigma proponents, but noble aspirations only take you so far.  Moto (wireless in particular) was the hands down the worst environment I ever experienced before or since.  They were beaten up by Nokia for good reasons, such as Fundamental Lack of Understanding (FLU) between marketing and engineering, and a full compliment of old school hardware people running the software development (read: impending disaster).  Up until around 1999, there were still many folks there that thought digital was a fad, and analog was still the way to go.  Too many problems to list.  My suspicion, founded on experience, is that this represents the norm rather than the exception in tech-oriented big-corporate America.  As always, YMMV.
    -x

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    #82633

    LMMiller
    Participant

    “Experts” internal or external in the quality field are generally very good technical experts, but are not business managers. Profitability is the outcome of the “whole-system” not a micro analysis of statistal variation.
    I was doing a workshop with senior executives at Motorola some years ago and one of them came up to me and said “You know you can go bankrupt doing Six Sigma.” He then used the example of the perfect buggy whip. The point being that business performance is the result of a)being in the right market at the right time (strategy); b) developing products or services that have competitive features and can demand higher margins; c) effective cost management; d) effective sales and marketing; and) as Andy Grove once told me, Intels only competitive advantage is their rate of foreward movement, innovation and time to market; and then finally e) customer satisfaction through reliability and quality service. 
    Six Sigma never made any company profitable ALONE. It is also true that the larger the company the greater percent of their financial performance is determined by macro market conditions, rather than internally controllable performance.
    Larry Miller
     
     

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    #82634

    LMMiller
    Participant

    Robert,
    See my response posted today. I think I provide a genuine “business” answer. The answer lies in understanding the “whole-system” of the business, including the external environment of that system. Quality methods are only a small part of the whole system and will never explain the total performance of that system.
    Larry Miller
     

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    #83175

    Dack
    Participant

     John,
    I was searching around for some information about the three pioneering Six Sigma companies.  I found your post regarding Motorola and profitability.  In your post you talked about the economy as a whole being a cause of the problems.  However, the question was more specific than that, It was about Motorola and their industry.  Motorola would drop along with their industry but would perform better if Six Sigma were effective.

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    #83185

    John Babina
    Participant

    Hi
    You  have good points.
    I was trying to point out that many companies wait till they get into trouble and then think that Six Sigma is a fast cure. They do not know the amout of work and money GE & Motorola put in to institute SS and they were already healthy . . . . just trying to get even better.
    On the other hand many companies who are on hard times are discarding minimal quality activities to just stay afloat.
    We are now in a mode where the economy will stabalize but never get back to the bubble of the previous years.  The personnel benefits burden is huge. Many big corporations are now paying out billions for medical and pensions. They had a free ride with the booming market. This will dampen the hiring or assigment of any personnel to tasks that some management will now consider “frill”. As a result we will see a downward spiral in quality assurance activities and quality in this country.
    Other countries will pick up the slack as we move more jobs and products off-shore. I note that last years trade deficit was at an all time high.
    This decade will be a challenge for us in the quality community.
    John Babina
    Consultant

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    #83198

    Ronald
    Participant

    I agree that in some customer segments and in some products quality drives higher sales and better customer retention.  But care must be taken not to drive quality for quality sake.  Six Sigma will always be a business tool and must be treated as such.  I could spend billions of dollars to improve my product quality and not gain a cent of higher profit and thus drive my business out of business crying how six sigma ruined me.  This would be more likely if I ignore my customers, my market, and my process partners (all which is counter to the six sigma methodology).  To overdesign and over quality improve is has damaging as under designing and poor quality. 
    The drive should be toward value.  Value to the customer, value to the business.  Both a quality loss function as well as market opportunities should be examined.
    In terms of profitability, that is often a function of your competitors as it is a function of your customers.  If all business in the market were doing six sigma and it was well implemented, there would be a zero effect on the market shares.  The winner would be the customers.  However the loser would be anyone of the businesses unable or poorly implementing the methodology.
    Of course, the other thing to be said to the posts above is that timing is everything.  Since Six Sigma requires a cultural change it is not very effective addressing platforms that are already burnt.  It addresses burning platforms and is most effective when the fire is identified early.
    Six Sigma is a powerful tool in terms of its consistency, its rigour, and its collection of tools.  However any tool can be misused, broken, or collect dust. 

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    #83200

    Robert S.
    Member

    I took a look at some of Motorola’s, GE’s and Honeywell’s financial data and here is what I found:
    1)  We know that Motorola has dropped substatially below the market and its Industry.  I am not so sure Motorola was already healthy when they created and started using Six Sigma.  Does anyone know if they were?
    2) GE is doing well.
    3) Honeywell has not done well over the past year compared to their industry, which is communications equipment.  However, they have done well over the past five years, except for their sales growth rate, that was below their industry.
    One major difference between other quality programs and Six Sigma, is the tracking of financial data.  Six Sigma has the quality department and finance department working together for possibly, the first time. 
    What recommendations and conclusions can be drawn from this information?  Anyone?? 

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    #83204

    Robert S.
    Member

    I saw a mistake in my last post. 
    Honeywell falls into the aerospace and defense industry.  For some financial sources, it falls in the conglomerates industry.
    Motorola is in the communications equipment industry, and GE in in the conglormerates industry.
    Thanks
    Robert

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    #83211

    Tom Lowinski
    Member

    I do not think Six Sigma can help organizations as a whole.  They may help certain areas of the business.  Six Sigma is also used to correct problems caused by poor management.  Some companies use Six Sigma to help them form “going under”.   

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    #83229

    G.L.
    Participant

    Good point!  I notice alot of people on this site discussing the methods used in Six Sigma and not understanding its roots or its connection to  finance. Remember, the strong connection to the financial side is what makes Six Sigma different from the other quality programs.
    GL 

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    #83262

    Sam Quality Engineer
    Member

    It works both ways.  Management does not understand the value in terms of finance in quality, and the quality department does not understand the connection to finance.  Six Sigma uses finance and quality equally.

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    #102847

    Cone
    Participant

    i worked for motorola for over 20 years six sigma is a joke managers always lied about their numbers and it just got worse with six sigma

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