The Power of Ultimate
Six Sigma™
Keki R. Bhote
AMACOM
The Power of
Ultimate Six Sigma
™
Keki Bhote’s Proven System for Moving Beyond
Quality Excellence to Total Business Excellence
KEKI R. BHOTE
American Management Association
New York
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Atlanta
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Buenos Aires
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Chicago
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London
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Mexico City
San Francisco
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tions, professional associations, and other organizations. For details, contact Spe-
cial Sales Department, AMACOM, a division of American Management
Association, 1601 Broadway, New York, NY 10019.
Tel.: 212-903-8316 Fax: 212-903-8083
Web site: www.amacombooks.org
To my beloved wife Mehroo,
whose support for me has been exceeded only by her
caring, devotion, and love
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iii
Foreword vii
Preface ix
Acknowledgments xv
PART ONE
The Power of Ultimate Six Sigma—
Evolution and Infrastructure 1
Chapter 1
The Power of Ultimate Six Sigma: A Reach-Out Purpose—
Business to Solve the World’s Ills at a Profit 3
Chapter 2
From Infirmity of the Hyped Six Sigma to the Power of Ultimate Six Sigma 17
Chapter 3
The Scope, Structure, and Methodology of the Power of Ultimate Six Sigma 31
PART TWO
The Power of Ultimate Six Sigma—
From Shareholder Value to Stakeholder Value 43
Chapter 4
From Mere Customer Satisfaction to Customer Loyalty 45
Chapter 5
From Blinkered Micromanagement to Leadership

to a Productivity Contributor 285
PART FIVE
The Power of Ultimate Six Sigma—Results 313
Chapter 15
Results: From Mediocrity to World Class 315
iv
Contents
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Conclusion: New Hope, New Horizons for Corporations 335
Reference Notes 339
Index 345
About the Author 349
Contents
v
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This Page Intentionally Left Blank
It is a pleasure to write this foreword to Keki Bhote’s book The Power of Ultimate Six
Sigma. I have had a most productive association with Keki for more than fifteen years.
He helped me in enlarging the horizons for APQC’s pioneering work on the Malcolm
Baldrige National Quality Award for the United States. Keki also introduced his simple
but highly effective and statistically powerful Design of Experiments to the American
Productivity and Quality Center staff and to many companies around the world.
Keki was among those who helped develop Motorola’s renowned Six Sigma
process. As the Chief Corporate Consultant for Quality and Productivity Improvement
at Motorola, he was responsible for many of the leading innovations in the company.
In 1995, Keki was selected as one of the new quality gurus of America by Quality Digest
magazine.
His first book on Six Sigma, The Ultimate Six Sigma, expanded the concept of Six
Sigma from mere quality excellence to total business excellence. Its great popularity

ees, and suppliers, the Ultimate Six Sigma represented a quantum leap over the standard
treatment of Six Sigma. By highlighting the ten powerful tools of the twenty-first century,
it left far behind the obsolete problem-solving/improvement tools employed by Six
Sigma black belts. Why, then, the necessity for another perspective on the Ultimate Six
Sigma? As the title The Power of the Ultimate Six Sigma indicates, there is an urgent need
to give a high-octane boost to the top management of business enterprises.
Two cataclysmic events—one global, the other within the world of business—
have converged to expand the horizon of the Ultimate Six Sigma even further and
with greater urgency. The first represents a golden opportunity for pursuing the
Power of the Ultimate Six Sigma to unprecedented heights for business. The second
represents a Power of Ultimate Six Sigma message for business to reform itself or
else witness the precipitous slide in the stock market, the disillusionment of the
stockholder, and the gradual atrophy of the glorious engine of capitalism.
The Aftermath of September 11:
A Rousing Challenge for Business
The catastrophe of September 11 impacted the American psyche as no other single
event in its history. The response of the U.S. government to fight the cancer of ter-
rorism has been splendid in conception and brilliant in its execution.
However, the underlying, deep-rooted cause of terrorism—the utter hopeless-
ness that festers among the masses of the Third World and that provides fodder for
the terrorists—cannot be effectively tackled by governments. It can only be addressed
by business. But it will require a veritable business Marshall Plan—specifically, the
Preface
9729 Ultimate Six Sigma 11/25/02 9:51 AM Page ix
solving of the world’s social ills by business—that can be executed at a profit for busi-
ness. One of the messages of Chapter 1 is lifting the vision of the business commu-
nity from its current focus on a narrow, private customer base to the larger social
responsibility of solving the ills of one-half of mankind, with the profit motive
remaining a viable output.
Enron—Greater Impact Than September 11?

x
Preface
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Leadership—A Call to Greatness
Besides calling for a business Marshall Plan and for the captains of industry to reform
themselves, this book (in the five chapters that comprise Part 2) highlights the crucial
role of leadership to better serve all of its stakeholders—customers, employees, sup-
pliers, as well as the public itself.
Essential Disciplines for Practical Implementation
In Parts 2, 3, 4, and 5, there is an unfolding of 200 disciplines and techniques that must
be embraced for practical implementation if a company is to reach for the Ultimate
Six Sigma. The reader can still refer to the original Ultimate Six Sigma book for in-
depth background and rationale, but the emphasis here is on unleashing the Power
of Ultimate Six Sigma by pursuing each discipline to completion. It is about going
from intelligence quotient to action quotient. To sum up, business needs all three
Qs—the IQ of all its people, the EQ (emotional quotient) of its leaders, and the AQ
(action quotient) of the organization!
Implementation Timetable by Three Different Company Types
Another distinctive feature of the book is a recommended timetable within which
each of the 200 disciplines/techniques can be implemented. Recognizing that com-
panies have different characteristics (e.g., size and corporate cultures) as well as dif-
ferent levels of urgency, receptivity to the required disciplines, and expertise to run
with the disciplines, I have divided them into three company types:
Type A companies have the greatest urgency, either because of ambition or com-
petitive pressures, to embrace as many of these vital disciplines as possible and pro-
pel themselves into world class. Type A companies can be big or small. Size is not a
limiting factor.
Type B companies are typically smaller, and though they may possess the same
ambition to excel as a Type A company, they are limited by resources, manpower, and
expertise. The implementation timetable is, perforce, drawn out further.

ufacturing, and all service operations. In Part 4, a full chapter is devoted to each func-
tion so that readers can concentrate on that function that is of special interest to
them. (Traditional Six Sigma has only manufacturing as its major scope, and even
there its coverage is poor.)
4. Results. In the final analysis, results are the outputs of the disciplines. Results
are divided into a few highly relevant primary parameters and several secondary para-
meters that embellish the primary ones. Each parameter is given a quantitative rating
to track a company’s results.
The Self-Assessment/Audit
One of the great benefits of The Power of Ultimate Six Sigma is a self-administered
audit that can measure the business health of any company. The standards are high
enough for a reach-out and yet low enough so that companies with low scores won’t
give up in frustration. The audit can also be used by a company to pace its longitudi-
nal progress year-by-year. Traditional Six Sigma companies have no audits, other than
a narrow attempt at just product quality.
xii
Preface
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Case Studies of Benchmark Companies
Each area-by-area chapter is further illustrated with a case study of a benchmark com-
pany that is deemed to be “best in class” and whose success factors are worth emulating.
Conclusion
The final message that readers of this book will take away with them is one of new
hope, new horizons for corporations. The Ultimate Six Sigma journey promises to take
today’s businesses:
■
From anemic (or even negative) profits to a 2:1, 3:1, or 4:1 profit improvement.
■
From sleazy business practices to a “true north” of business ethics and integrity.
■

the world’s foremost industrial leader, he inspired all of us to rise to our full potential.
A third inspiration is Dr. C. Jackson Grayson—advisor to three U.S. Presidents,
and Chairman of the flagship American Productivity and Quality Center. His encour-
agement has been the genesis of this book.
Another towering influence was my late “guru” Dorian Shainin, the world’s fore-
most quality problem-solver. I’m grateful for the powerful support of Arthur Nielsen,
Jr., Chairman Emeritus of A.C. Nielsen; editors Neil Levine and Mike Sivilli of AMA-
COM Books; Harvey Kaylis, President, Mini Circuits; and Mike Katzorke, Vice Presi-
dent, Cessna Aircraft.
Among my colleagues at Motorola, I salute Oscar Kusisto, Vice President and a
true leader; Bill Schmidt, my touchstone and sympathetic critic; Adolph Hitzeberger
xv
Acknowledgments
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and Carlton Braun, part of our Young Turk brigade; and Bill Wiggenhorn, President
of Motorola University.
It is difficult to mention many of my four hundred clients in my consultations
around the world. But, I am delighted to acknowledge Bill Beer, President of Maytag
Appliances, who adapted my Ultimate Six Sigma to launch his “Maytag Constitu-
tion.” Willy Hendrickx, Frans Wouters, and Sid Dasgupta—Directors of Philips Elec-
tronics, who flooded forty Philips plants with my techniques; and Ted Tabor and Carl
Saunders of Caterpillar in advancing my methods in seven Caterpillar plants.
My special thanks to Ratan Tata, Chairman of Tata Industries, India’s largest com-
pany, for introducing my Ultimate Six Sigma in his plants. The most notable was the
brilliant Six Sigma results achieved by his Vice President, Y. Nath and his Director,
Ramesh Parkhi at Tata’s TELCO plant.
Also, a warm thank you to my esteemed associate, Jean Seeley, whose profession-
alism and speed produced this manuscript in record time.
Finally, I am grateful to my family—my daughters Safeena and Shenaya, and my
sons, Adi and Xerxes—for their faith and confidence in their father. But above all, to

where terrorism breeds and the hordes of the dispossessed is tackled, terrorism can-
not be snuffed out. In the final analysis, the solutions are not the result of the force of
arms; rather, they are economic. It is jobs, jobs, and jobs—and only meaningful jobs
will do.
3
The Power of Ultimate Six Sigma:
A Reach-Out Purpose—Business
to Solve the World’s Ills at a Profit
The ultimate cure for global terrorism is to solve the desperate
needs of mankind. This can only be done by business, bonded
together in a business Marshall Plan, with profit at the end of
the rainbow.
—KEKI R. BHOTE
CHAPTER
1
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Needed—A Business Marshall Plan
The uplifting task is monumental. The United States, as the only superpower in the
world, cannot do it alone. The European Union is too mousy to help. Governments
collectively cannot address these economic problems. They are too bureaucratic and
economically isolationist. The United Nations cannot engage in the task. It is too
impotent structurally and too strapped financially. The World Bank and the Interna-
tional Monetary Fund cannot take on the burden. They can only advise.
There is only one global institution—business, motivated by capitalism and
fueled by profit—that can mount a frontal attack on these scourges of mankind. Busi-
ness alone has the know-how, the skills, and the drive to rise to the challenge. But
business must enlarge its horizons, moving beyond its tunnel vision of shareholder
value to the larger tableau of stakeholder value, embracing customers, employees,
suppliers, and investors, and on to the panorama of the ultimate purpose of busi-
ness—societal value—the betterment of mankind, with profit at the end of the rainbow.

where access to medicine and medical treatment is lacking:
■
Doctors Without Borders, a worldwide organization supported by businesses
in the medical field, sends out thousands of doctors to the poorest countries
to treat patients who have no recourse to health care.
■
Leading drug companies are finally distributing medication at low cost to
countries afflicted with dread diseases such as AIDS, accepting the business
principle of a lower profit for larger volumes.
Infrastructure
While the debate rages about the world’s dependence on oil, there is a silent break-
through under way where wind power is blossoming from a cottage industry to a
regional and national grid for the generation of power. It is one of the cheapest
sources of energy, with hundreds of thousands of entrepreneurs creating their own
windmills and dotting the entire landscape.
As another example, the bottleneck of clogged roads in developing countries is
also being blasted away by private companies. Where governments have been too
poor and too corrupt to construct roads, private companies are getting the job done at
low cost to the public and at a profit to themselves.
Training for Jobs
I revisited India recently and discovered that where there were sleepy villages and
widespread unemployment only ten years ago, the number of private enterprises
offering training in software, and jobs to follow, are transforming the rural landscape.
Second only to the United States, India is already a leading country for software devel-
opment in the world.
The Organization for Educational Resources and Technological Training (ORT) is
one of the world’s largest nongovernmental education and training organizations. It
spans five continents and more than 100 countries. It trains more than 290,000 stu-
dents each year in diverse fields such as computers and software, team development,
environmental preservation, and mentoring.

In the Fergana Valley that borders Uzbekistan, Kyrgyzstan, and Tajikistan,
4
tens of
thousands of farmers have been helped by ACTED, which provides funds for plant-
ing new crops, improving animal husbandry, and rebuilding irrigation networks with
a paltry budget of $100,000. That is less than 80 cents per farmer rehabilitated!
As reported in the May 11, 2002 issue of The Economist, in Bangladesh alone, 80
percent of the poor families in one of the poorest countries of the world have bene-
fited from microloans from 600 microfinance institutions.
These examples of private enterprises supporting business development in devel-
oping countries are just a small and little-publicized start. Think of what can happen if
individuals, partnerships, cooperatives, and corporations could launch similar initia-
tives of free enterprise.
Business—Reform and Cure Thyself!
The road to a social utopia, led by business and paved with promise, is nevertheless
pockmarked with land mines manufactured by business itself. Enron, Arthur Ander-
sen, and WorldCom are not the exception to skullduggery, they are the rule. Senator
Joseph Lieberman, one of the most pro-business members of Congress, states:
5
We’ve seen too many companies bending rules, pushing through loopholes, defin-
ing ethical deviation down, and replacing honesty with hokum and hype. In the
process, they don’t just distort our values. They distort the markets, they taint the
system, and they threaten the free flow of capital to other deserving industries.
6
Evolution and Infrastructure
9729 Ultimate Six Sigma 11/25/02 9:51 AM Page 6
Of course, not all companies can be tarred by unethical corporate greed. But a
few examples illustrate why, in a recent Gallup Poll, business leaders scraped the bot-
tom of the barrel in integrity, even lower than the politicians!
Examples of Business Behaving Badly

When financial statements are not
transparent, that means:
1. More information is buried in the footnotes than in the body of the
statement.
2. Disaggregation disclosures are inadequate to predict earnings and cash
flow.
3. Estimates, assumptions, and off-balance sheet risks are sketchy.
4. Little information is disclosed on a company’s success factors and nonfi-
nancial performance measures.
A Reach-Out Purpose—Business to Solve the World’s Ills at a Profit
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