Xerox went from being an industry leader to resting on its laurels. Their focus shifted away from improvement for the benefit of their customers. This, coupled with a financial scandal, brought the organization to the point where many financial experts believed that bankruptcy was on the horizon. A major shift in how Xerox did business righted the ship and then some.

How Total Quality Management Brought Xerox Back Into Profitability

An embrace of both Total Quality Management and Lean Six Sigma is what helped bring Xerox back. Total Quality Management (TQM) is a management system that is fully aligned with the methodologies of both Lean and Six Sigma. It typically adopts eight guiding principles. They are as follows:

• Putting the customer first: In Total Quality Management, there is a primary focus on the customer experience. Through all aspects of interaction with the organization, the customer is the priority.

• Employee ownership and involvement: All employees are working towards a common goal. Workers feel empowered, involved, heard, and integral to processes.

• Process-based success: TQM focuses on creating and implementing processes that find success, are repeatable, and are sustainable.

• Integration: TQM strategies deal with making sure that all assets that are available are integrated and working towards the goals.

• Communication: During all points of change in the organization, as well as during the day-to-day operations, communication plays a massive role in keeping up the morale and motivation of the team.

• Data and facts, not assumptions: Data is for the company’s improvement, and decisions are made based on facts, not assumptions or feelings.

• Strategic planning: TQM focuses on using a strategic and systematic approach towards achieving goals.

Continuous improvement: A culture of continuous improvement drives the organization towards continually finding better and more effective ways of improving the company and how it meets the needs of its customers.

Think about these main tenets of Total Quality Management when reading the case study of Xerox below and how the organization was able to turn itself around.

Xerox Had An Issue

In 2002, Xerox was fined 10 million dollars by the Securities and Exchange Commission, under accusations that the corporation had been inflating its operating performance for a four-year period. The following year, six former Xerox executives were fined a total of 22 million dollars after being charged with securities fraud and aiding and abetting the corporation’s violations of federal securities law. The SEC alleged that the purpose of these practices was to deliberately mislead investors in order to raise the organization’s Wall Street reputation as well as inflate the worth of the company’s stock.

The impact of these allegations weighed heavily on the reputation of Xerox. Not only did the company have this scandal to contend with, there was also the fact that it was no longer as dominant in the marketplace as it once was. The improvement of the products that the company was built on had become stagnant, so other companies came along and made products that used the Xerox products as a jumping-off point. These products did what Xerox photocopiers did, but did it more reliably, faster, and less expensively. The company had been resting on its laurels, thinking that it would continue to thrive without doing anything to continue improving.

Along with not innovating for the sake of its customers, there were efforts to change the culture of the company that caused major internal issues. This led to a slew of mismanaged sales, shipping problems, frustrated employees, and the loss of trust from customers.

All of these combined factors led Xerox to fall into a 16-billion-dollar debt, and most financial experts expected the company to declare Chapter 11.

Instead, Xerox brought on two important figures that would be integral to the effort towards bringing the company back from the brink. One was Lawrence Zimmerman, and the other was Anne Mulcahy.

It would be necessary to change how Xerox worked as well as how it was viewed in the public eye after the scandal. Luckily, the change in top-level management created the perfect opportunity to do so.

Lawrence Zimmerman had been a major player during his 31 years at IBM. He became well known for having highly developed skills in the financial restructuring of organizations. Zimmerman joined Xerox in 2002 as CFO and senior vice president, coming out of retirement at the time.

Anne Mulcahy was brought on and made the CEO of Xerox, once the former chief executive officer was ousted. She was the company’s first female CEO, and the news of her placement in the organization caused the price of Xerox stock to drop 15%.

Getting Xerox back on track was not going to be easy.

The goal for both was to gain back Xerox’s strong reputation and get the company back to being profitable after the tarnish that the investigation, fine, and loss of strength in the marketplace had put on the organization.

Just how, though, were they going to do it?

Embracing Lean Six Sigma and the Main Tenets of TQM to Turn Xerox Around

Before Zimmerman and Mulcahy made any moves toward fixing the organization, it was necessary to know exactly what the problems were in the eyes of those that should be most important to a company–the customers.

Mulcahy’s first project as CEO was to hop on a plane and undertake 90 days of solicitation of constructive criticism about the company through direct communication with customers, focus groups, public forums, industry analysts, and more. She flew from meeting to meeting, learning from the customer base what they actually wanted from the company. She also made a point of listening to the employees to get an understanding of where they saw the most issues with the organization. The employees, in general, were happy to be involved in whatever solutions would be decided on as long as there was a clear direction to follow.

Her remarkably thorough efforts to determine exactly what the problems were are a good example of the Define stage of DMAIC in Six Sigma.

One of the first things that were decided upon was the elimination of waste in the company. With a customer-centric approach, if clear interest had not been shown by customers in a line of products, they were cut. Areas of the organization that were wasting resources were eliminated. One example would be nearly the entire range of products that were directed toward home offices. A deep look was put into all processes to ensure structural and operational efficiency.

The team also went after lost markets by focusing research and development on the input that was received during Mulcahy’s interactions with customers. The emphasis on innovation to meet the needs of the customer led to improved copy machines and multifunctional devices. Some of the innovations stemmed from the creative thinking of including the customers themselves in the development process. In order to ensure that the focus on customers was coming from the top down, Mulcahy assigned all senior managers to their own key customers–helping to guarantee that Xerox no longer strayed from the improvement of the customer experience by making the customer a primary part of the company culture.

Zimmerman also used his expertise to help Xerox focus on efficiency and deliver value to customers. During these transitional years, Xerox led over 1,500 Lean Six Sigma projects with the assistance of over 600 Sigma Black Belts.

In order to address the financial culture at Xerox post-investigation, a holistic approach to global-reporting processes was developed, with an insistence on high ethical standards of excellence. An ethics code of conduct was developed for employees and the finance department, in particular.

Like all true change, the positive effects of this return to core values and embrace of putting the customer first did not immediately pay off. Xerox continued to have a couple of hard years before the true benefits of changing the company culture could be seen.

The Outcome Was Phenomenal

After about three years, the benefits of this strategy began to really show for Xerox. Being receptive to feedback from customers and workers on how to improve, as well as funneling this input into implementing Six Sigma projects, made a huge difference. Shifting the culture of the company to focus on their innovations based on input received from their customers instead of assumptions also had a massive impact. In less than five years, Xerox went from losing 200 million dollars a year to grossing over 1 billion dollars. Being transparent with its dealings ethically also helped regain the confidence and trust back of customers and stakeholders.

6 Best Practices When Implementing Lean Six Sigma and Total Quality Management Techniques

1. Innovate for your customers
Xerox learned how important it was to not innovate just based on assumptions but by listening to their customers and innovating to actually solve their problems and meet their needs.

2. Improvement is essential
Even during a crisis, Xerox learned the value of working to make the company better for its customers. Finding ways to improve the customer experience is a big part of what saved Xerox.

3. Eliminate waste
In order to survive, Xerox had to make some tough decisions about eliminating programs that were resource drains and were not adding value for their customers.

4. Listen and respond to feedback
Making it a priority to get feedback from your customers, workers, and colleagues can give much-needed insight into the improvement of products that you already have out on the market as well as point towards moving into new areas that are in high-demand from your clients. This kind of open communication also builds trust between the company, the client, and the staff.

5. Include your workers in the changes within the company
Xerox had tried to make changes in their organization before. What was different within the organization this time was that the staff felt personally invested in and involved in the changes that were going to happen. This time, they felt that everyone in the organization was working towards set goals and that everyone understood what those goals were.

6. Invigorating staff through top management alignment with goals
Through having top management put as much of their own efforts towards the customer experience, employees felt much more inclined to follow suit.

What We Can Learn From the Xerox Example

One key takeaway from the example of Xerox is that an organization should not believe that its past successes are going to carry over into the future indefinitely. An organization needs to keep improving in order to meet the needs and demands of customers. A company also needs to act ethically, or else they will lose the trust and confidence of the public. It is also vital that an organization listen to its customers and employees in order to know where to target its current and future efforts. If you really take the time in your company to find out from your customers and workers where the main issues are in the organization, you stand a much better chance at finding the root causes and eliminating any waste that is draining valuable resources and not contributing toward providing value in the customer experience.

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