Reintroducing the Six Sigma methodology, as corporate management dogma, to the company that invented it as a quality-control process for the assembly line is a huge undertaking engineered by Motorola CEO Christopher Galvin, with the help of President and Chief Operating Officer Mike Zafirovski, a GE alumnus.

They are attempting to radically remake the culture at the 75-year-old Schaumburg telecommunications giant over the next 18 months, and trim $3 billion in costs in the process.

A Motorola spokeswoman insists that Mr. Galvin "is really the one driving the culture change." Still, the adoption of GE principles appears to confirm the rising influence of Mr. Zafirovski. He is widely expected to succeed Mr. Galvin, the third-generation scion of the founding family that gave the company a character every bit as distinct as the one Mr. Zafirovski hopes to import from GE.

Under Mr. Galvin, Motorola has discovered the shortcomings of many of its methods, and he's faced calls to step down from shareholders fed up with years of dismal financial results.

It will take a massive effort by the top executives, as well as Michael Fengen, the GE executive recruited to lead the Six Sigma initiative, to school Motorolans in GE's handbook, with its emphasis on flawless execution and relentless cost-cutting. Despite the similarities between the two manufacturers, their markets, heritage and cultures differ sharply.

Motorola, renowned for inventing the car radio, walkie-talkie, pager and cellular phone, has long prized innovation, while GE is famed for steady, incremental improvements in the process of making more mundane products like light bulbs and dishwashers.

Motorola executives swing for the fences, launching entire new industries such as paging and cell phones. Like most home-run hitters, they strike out a lot, as with the company's ill-fated Iridium satellite phone system.

GE, by contrast, hits for a higher batting average, churning out the consistent profit growth Wall Street craves.

Once strident, but secure

Motorola's history is defined by outsized personalities and titanic clashes among rival executives, while GE managers tend to conform to a lower-key ideal. By the same token, the Galvin family fostered a paternalistic environment that cherished long-term employees and sought to avoid layoffs. GE, meanwhile, took a by-the-numbers approach to human resources, routinely culling the bottom 10% of the workforce.

Still, it's clear that Motorola stands to benefit from some GE-style efficiency. Although the company has trimmed $4.5 billion in costs and eliminated 58,000 jobs during the past two years, it still remains costlier and less efficient than its rivals, Finland's Nokia Oyj and South Korea's Samsung Electronics Co.

But for all the hype, Six Sigma remains an inward-looking process, while Motorola's greatest problems are largely external. Despite eking out a thin profit of $169 million on net sales of $6 billion during the first quarter, Motorola is still plagued by stagnant revenue growth and the deep funk engulfing its industry. And one of its greatest problems in recent years has been the loss of its edge in product innovation, a talent Six Sigma is unlikely to elicit.

"Six Sigma, by itself, does nothing to help you see the right-angle turns in the market or raise the corporate imagination," says Peter Skarzynski, CEO of Strategos, a Chicago-based global strategy consulting firm. "It does nothing to help you see the future. It helps perfect the past."

For the next three months, the company's senior managers are also conducting a "deep dive" study of each of Motorola's six business segments: their strengths, weaknesses, competitive environment and long-term prospects.

Mr. Zafirovski, better known as Mike Z, promises there will be "no sacred cows" — although he stops short of Mr. Welch's famous dictum of exiting any business where the company isn't ranked No. 1 or 2.

Even subpar performers like Motorola's chip, broadband and wireless infrastructure businesses will be expected to hit financial targets, "with no predisposition that the (business) has to be part of us," Mr. Zafirovski said at a conference in New York earlier this month. "We're aware of the skepticism: Is Motorola willing to step up, to acquire or dispose of (businesses)?"

That skepticism extends to the culture change.

"Six Sigma? Oh, you mean phony buzzwords that have no meaning," says Fred Hickey, who publishes High Tech Strategist, a New Hampshire-based newsletter known for its contrarian and acerbic analysis. "Everybody in the world is cutting costs."

Still, Mr. Zafirovski, who joined Motorola in 2000, receives good marks from analysts and corporate insiders for turning around the company's mainstay handset business. He ascended to the president's post last year after his predecessor, Edward Breen Jr., abruptly resigned to become CEO at Tyco International Ltd.

"He's well-positioned, has the pedigree and leadership skills to do a good job in the COO position," says Chris Foster, an analyst at market research firm Technology Business Research Inc. in New Hampshire.

Like Mr. Zafirovski, 11 members of Motorola's 18-person executive team are new to their jobs; nine of these executives have spent most of their careers at other companies.

'Action-oriented' leader

While Motorola officials declined to speak for this article, Mr. Zafirovski described the leadership group as "action-oriented" to attendees at the conference, sponsored by New York investment bank Goldman Sachs & Co. "The litmus test: Does every single leader envision the future and energize the people around them?"

But the corporate re-engineering envisioned by Mr. Zafirovski and other Motorola leaders does little to address the company's biggest problem.

"The markets aren't in their control," Mr. Foster says. "They can't do anything if people aren't buying handsets or semiconductors."

Indeed, contraction in China's market for consumer electronics, prompted by the SARS outbreak, could devastate Motorola's thin margins.

Motorola officials estimate the handset market in China has shrunk 15% to 20% as consumers avoid shopping malls and other public places. Motorola, which derives about 15% of its revenues from China, could face a prolonged sales slump there, perhaps requiring a significant inventory writedown, analysts say.

Mr. Hickey of High Tech Strategist foresees another hit to Motorola's stock, and stepped-up investor agitation for Mr. Galvin to relinquish the CEO spot to Mr. Zafirovski.

"The next downturn, which will probably come with this inventory reduction, will test the shareholders' faith in him," Mr. Hickey says. "It's been tested plenty before."

copyright 2003 by Crain Communications Inc.
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