Answer questions in on answers, no plgrsm. elaborate and answer fully

1. Contrast Leadership for Quality and Lean Six Sigma as quality initiatives for Xerox. How did their motivations differ? What differences or similarities are evident in the principles behind these initiatives and the way in which they were implemented?

2. What lessons might this experienceparticularly in responding to the new crisishave for other organizations?

3. Discuss the meaning of "Quality is a race without a finish line." What is its significance to Xerox, or to any organization?

The Evolution of Quality at Xerox41

The Xerox 914, the first plainpaper copier, was intro duced in 1959. Regarded by many people as the most successful business product ever introduced, it created a new industry. During the 1960s Xerox grew rapidly, selling all it could produce, and reached $1 billion in revenue in recordsetting time. By the mid1970s its return on assets was in the low 20 per cent range. Its competitive advantage was due to strong patents, a growing market, and little competi tion. In such an environment, management was not pressed to focus on customers.

Facing a Competitive Crisis During the 1970s, however, IBM and Kodak entered the highvolume copier businessXerox's principal market. Several Japanese companies introduced high quality lowvolume copiers, a market that Xerox had virtually ignored, and established a foundation for moving into the highvolume market. In addition, the Federal Trade Commission accused Xerox of illegally monopolizing the copier business. After negotiations, Xerox agreed to open approximately 1,700 patents to competitors. Xerox was soon losing market share to Japanese competitors, and by the early 1980s it faced a serious competitive threat from copy machine manu facturers in Japan; Xerox's market share had fallen to less than 50 percent. Some people even predicted that the company would not survive. Rework, scrap, exces sive inspection, lost business, and other problems were estimated to be costing Xerox more than 20 per cent of revenue, which in 1983 amounted to nearly $2 billion. Both the company and its primary union, the Amalgamated Clothing and Textile Workers, were concerned. In comparing itself with its competition, Xerox discovered that it had nine times as many sup pliers, twice as many employees, cycle times that were twice as long, 10 times as many rejects, and seven times as many manufacturing defects in finished prod ucts. It was clear that radical changes were required.

Leadership Through Quality In 1983, company president David T. Kearns be came convinced that Xerox needed a longrange,

comprehensive quality strategy as well as a change in its traditional management culture (see Figure 1.4). Kearns was aware of Japanese subsidiary Fuji Xerox's success in implementing quality management prac tices and was approached by several Xerox employees about instituting total quality management. He com missioned a team to outline a quality strategy for Xerox. The team's report stated that instituting it would require changes in behaviors and attitudes through out the company as well as operational changes in the company's business practices. Kearns determined that Xerox would initiate a total quality management approach, that they would take the time to "design it right the first time," and that the effort would involve all employees. Kearns and the company's top 25 man agers wrote the Xerox Quality Policy, which states: Xerox is a quality company. Quality is the basic business principle for Xerox. Quality means pro viding our external and internal customers with innovative products and services that fully satisfy their requirements. Quality improvement is the job of every Xerox employee. This policy led to a process called Leadership Through Quality, which had three objectives:

1. To instill quality as the basic business principle in Xerox, and to ensure that quality improvement becomes the job of every Xerox person.

2. To ensure that Xerox people, individually and collectively, provide our external and internal customers with innovative products and ser vices that fully satisfy their existing and latent requirements.

3. To establish, as a way of life, management and work processes that enable all Xerox people to continuously pursue quality improvement in meeting customer requirements.

In addition, Leadership Through Quality was di

rected at achieving four goals in all Xerox activities:

Customer Goal: To become an organization with whom customers are eager to do business.

employee Goal: To create environment where everyone can take pride in the organization and feel responsible for its success.

Business Goal: To increase profits and presence at a rate faster than the markets in which Xerox competes.

Process Goal: To use Leadership Through Quality principles in all Xerox does.

Leadership Through Quality radically changed

the way Xerox did business. All activities, such as product planning, distribution, and establishing unit objectives, began with a focus on customer require ments. Benchmarkingidentifying and studying the companies and organizations that best perform critical business functions and then incorporating those organ izations' ideas into the firm's operationsbecame an important component of Xerox's quality efforts. Xerox benchmarked more than 200 processes with those of noncompetitive companies. For instance, ideas for improving production scheduling came from Cummins Engine Company, ideas for improving the distribution

system came from L. L. Bean, and ideas for improving billing processes came from American Express. Measuring customer satisfaction and training

were important components of the program. Every month, 40,000 surveys were mailed to customers, seeking feedback on equipment performance, sales, service, and administrative support. Any reported dis satisfaction was dealt with immediately and was usu ally resolved in a matter of days. When the program was instituted, every Xerox employee worldwide, and at all levels of the company, received the same train ing in quality principles. This training began with top management and filtered down through each level of the firm. Five years, 4 million laborhours, and more than $125 million later, all employees had received qualityrelated training. In 1988, about 79 percent of Xerox employees were involved in quality improve ment teams.

Several other steps were taken. Xerox worked with suppliers to improve their processes, implement statistical methods and a total quality process, and to support a justintime inventory concept.

Suppliers that joined in these efforts were involved in the earliest phases of new product designs and rewarded with longterm contracts.

Employee involvement and participation was also an important effort. Xerox had always had good relationships with its unions. In 1980, the company signed a contract with its principal union, the Amal gamated Clothing and Textile Workers, encouraging union members' participation in quality improvement processes. It was the first program in the company that linked managers with employees in a mutual problemsolving approach and served as a model for other corporations. A subsequent contract included the provision that "every employee shall support the concept of continuous quality improvement while reducing quality costs through teamwork." Most important, management became the role model for the new way of doing business. Managers were required to practice quality in their daily activities and to promote Leadership Through Quality among their peers and subordinates. Reward and recognition systems were modified to focus on teamwork and quality results. Managers became coaches, involving their employees in the act of running the business on a routine basis. From the initiation of Leadership Through Qual ity until the point at which Xerox's Business Products and Systems organization won the Malcolm Baldrige National Quality Award in 1989, some of the most obvious impacts of the Leadership Through Quality program included the following: 1. Reject rates on the assembly line fell from 10,000 parts per million to 300 parts per million.

2. Ninetyfive percent of supplied parts no longer needed inspection; in 1989, 30 U.S. suppliers went the entire year defectfree.

3. The number of suppliers was cut from 5,000 to fewer than 500.

4. The cost of purchased parts was reduced by 45 percent.

5. Despite inflation, manufacturing costs dropped 20 percent.

6. Product development time decreased by 60 percent.

7. Overall product quality improved 93 percent. Xerox learned that customer satisfaction plus employee motivation and satisfaction resulted in

increased market share and improved return on as sets. In 1989, President David Kearns observed that quality is "a race without a finish line."

Crisis and Quality Renewal Throughout the 1990s, Xerox grew at a steady rate. However, at the turn of the century, the technol ogy downturn, coupled with a decreased focus on quality by top corporate management, resulted in a significant stock price drop and a new crisis (see Figure 1.5). A top management shakeup, resulting in new corporate leadership, renewed the company's focus on quality, beginning with "New Quality" in 2001 and leading to the current "Lean Six Sigma" initiative. The New Quality philosophy built on the quality legacy established in the 1983 Leadership Through Quality process. Soon afterward, as Six Sigma became more popular across the United States, this approach was refined around a structured. Six Sigmabased im provement process with more emphasis on behaviors and leadership to achieve performance excellence. The new thrust, established in 2003 and called "Lean Six Sigma" (see Chapter 9 for a detailed discussion), includes a dedicated infrastructure and resource com mitment to focus on key business issues: critical cus tomer opportunities, significant training of employees and "Black Belt" improvement specialists, a value driven project selection process, and an increased cus tomer focus with a clear linkage to business strategy and objectives. The basic principles support the core value "We Deliver Quality and Excellence in All We Do" and are stated as:

Customerfocused employees, accountable for business results, are fundamental to our success.

Our work environment enables participation, speed, and teamwork based on trust, learning, and recognition.

Everyone at Xerox has business objectives aligned to the Xerox direction. A disciplined process is used to assess progress toward delivery of results.

Customerfocused work processes, supported by disciplined use of quality tools, enable rapid changes and yield predictable business results.

Everyone takes responsibility to communicate and act on benchmarks and knowledge that enable rapid change in the best interests of customers and shareholders.

The key components of Xerox's Lean Six Sigma are as follows:

1. Performance excellence process

Supports clearer, simpler alignment of corpo rate direction to individual objectives

Emphasizes ongoing inspection/assessment of business priorities

Provides clear links to market trends, bench marking, and Lean Six Sigma

Supports a simplified "Baldrigetype" busi ness assessment model

2. DMAIC (define, measure, analyze, improve, con trol) process

Based on industryproven Six Sigma approach with speed and focus

Four steps support improvement projects, set goals

Used to proactively capture opportunities or solve problems

Full set of lean and Six Sigma tools

3. Market trends and benchmarking

Reinforces market focus and encourages external view

Disciplined approach to benchmarking

Establishes a common fourstep approach to benchmarking

Encourages all employees to be aware of changing markets

Strong linkage to performance excellence pro cess and DMAIC

4. Behaviors and leadership

Reinforces customer focus

Expands interactive skills to include more team effectiveness

Promotes faster decision making and intro duces new meeting tool The heart of Xerox's Lean Six Sigma is the perfor mance excellence process, illustrated in Figure 1.6. It consists of three phases: setting direction, deploy ing direction, and delivering and inspecting results. It starts at the top of the organizationeven the chair and CEO has an individual performance excellence plan with objectives that are aligned with organiza tion goals and measures and targets for assessment. This approach provides clear communication of direc tion and accountability for objectives. A structured

approach is used to prioritize and select projects that have high benefits relative to the effort involved in accomplishing them. Statistical methods, lean work flow methods, and other process management skills are used to drive improvement from a factual, objec tive basis, driven by the DMAIC methodology. Market trends and benchmarking help provide

an external perspective required to lead the market with innovative products, services, and solutions and add value to the customer experience. This compo nent encourages all people to share information and knowledge that enable changes in the best interest of customers and shareholders. Finally, behaviors and leadership

reinforce customerfocused behaviors,

based on the principle that "Quality is the responsibil ity of every Xerox employee." In 2003, Xerox trained more than 1,000 senior

leaders across the company and communicated this business approach, the key differences from their quality legacy, and expectations to every employee, and rapidly moved Lean Six Sigma concepts from manufacturing and supply chain into all business ar eas. After Lean Six Sigma became internalized within Xerox, the company began to leverage its expertise

through consulting services to help other companies improve. One application was at the Brooklyn Public Library. Using Lean Six Sigma, the Xerox Global Ser vices team led library administrators through a fact based analysis, seeking out core processes, making them controllable, and then automating them, result ing in a comprehensive Patron Access Management system that effectively merged people, processes, and technology to provide better service and free up time for the library staff.

Key Issues for Discussion