Total Quality, Tough Questions Motorola Learns That Even a Standard-Bearer like Itself Can Be in Trouble When It Loses Focus

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Byline: Dan Culloton Daily Herald Business Writer

For years Motorola Inc. has been teaching others in the business world how to do things right.

Recently, though, the Schaumburg electronics company that has been in the vanguard of the total quality management movement has offered lessons on what not to do wrong.

"The company lost focus," said Kenneth Thompson, a management professor at DePaul University and an examiner for The Lincoln Foundation for Business Excellence, which honors Illinois companies for quality.

"Even if you are shooting for quality, when the company loses focus, problems will occur," Thompson said.

Motorola consciously began aiming for perfection more than two decades ago after a senior executive stood up during a meeting with then-Chairman Robert Galvin, and declared, "Our quality stinks."

Rather than costing the officer his job, the blunt words spurred Galvin to launch a company-wide quality improvement campaign.

Motorola created its own university, vowed to work toward zero defects for every one million manufactured parts - a goal known as Six Sigma, began giving every employee 40 hours of training per year and formed "total customer satisfaction teams" that entered ideas for cost and time savings in a global competition.

The quality drive garnered Motorola honors - notably Congress' Malcolm Baldrige Award and a prize from the Royal Swedish Academy of Engineering Sciences - helped it crack the redoubtable Japanese market and saved $15 billion over 10 years, executives said.

Thousands of organizations, including competing high-tech companies, have sent people to Schaumburg to hear the quality gospel according to Motorola.

Workers became more productive. Between 1988 and 1995 sales per employee, one measure of productivity, grew by between 7 percent and 17 percent per year.

In 1996 and 1997, however, revenue per worker was nearly flat gaining 1 percent and 3.5 percent, respectively.

Forces beyond the company's quality and training programs may have accounted for the drop-off, experts said. "I think other things have contributed to the problems Motorola is having now," said Mary Rose Hennessy, director of Business and Industry Services for Northern Illinois University.

Asian economic chaos, slumping semiconductor demand, increasing competition and the loss of a promising and charismatic leader like George Fisher, who left Motorola for Kodak earlier this decade, all have taken a toll, said Hennessy, whose Oak Brook-based operation provides counsel on training and quality to about 350 Illinois companies.

Other experts, however, said the factors behind Motorola's recent earnings and stock slide and massive restructuring raise quality questions.

They ask why Motorola misjudged the digital wireless phone market, and why it stuck with its infamous "warring tribes" corporate culture when it was clear it frustrated and confused some customers and led to duplication of effort and products.

They also ask how a company vaunted for its quality could botch an important contract like the PrimeCo deal it lost last year because equipment didn't perform properly.

"I do think other companies will learn from Motorola's experience - the good, the bad and the ugly of that experience," said George Bateman, adjunct professor of statistics and quality management at the University of Chicago.

The ugly part is Motorola failed to transfer the quality concepts that made its products industry benchmarks to other aspects of its business, insiders and observers said. They also said Motorola became arrogant and relaxed to the point where it did not take comments and complaints of customers seriously.

Dennis Sester, senior corporate vice president and director of Motorola quality, said when the company was growing in the late 1980s and early 1990s, it didn't do a good job exporting its quality culture to new locations. …