Motorola had world-class engineers, ultra-low defect rates, and the legendary Six Sigma program. Nokia kept pushing better hardware, faster processors, and sleeker designs. Yet both companies lost the mobile phone wars.
Why? “They weren’t customer-centric enough,” says Rene T. Domingo, adjunct professor at the Asian Institute of Management and a leading voice in quality and operations strategy. “Motorola tried to reduce the defect rates of its products such as cellphones, while Nokia kept coming out with better and better cellphones. Both eventually lost market leadership to the more customer-centric Apple and Samsung.”
In an exclusive interview with Financial Adviser PH, Domingo breaks down the difference between flawless execution and relevant innovation—and why only one of them leads to long-term success.
The Six Sigma Fallacy: Why Perfect Products Still Fail
Motorola pioneered Six Sigma, a data-driven approach to eliminate defects and improve quality. At one point, the company boasted defect rates as low as 3.4 per million.
But there was a catch.
“They were improving a product that the market no longer wanted,” says Domingo. “It may just be improving, perfecting, and documenting an error—a product that is unsalable, non-manufacturable, unprofitable, or uncompetitive.”
In other words, Motorola got better and better at producing the wrong thing.
Meanwhile, Nokia kept refining its devices—but failed to adapt to a bigger market shift: the rise of smartphones that weren’t just phones, but lifestyle hubs.
Apple and Samsung Didn’t Just Make Phones—They Changed the Game
Apple didn’t win by having fewer defects than Motorola. Samsung didn’t win by having better hardware specs than Nokia. They won by redefining the product around what customers valued most: ease of use, beautiful design, powerful ecosystems, and new experiences.
“Excellence in conformity quality and product quality may no longer be enough to ensure growth and maintain industry leadership,” Domingo explains. Instead, quality must be tied to the customer’s experience, not just internal manufacturing metrics.
That’s why Apple and Samsung pulled ahead: they focused on customer value, not internal perfection.
The Lesson: Innovate for the Customer, Not for the Factory
Domingo warns that businesses still make the same mistake today. They obsess over operational efficiency, compliance, and process optimization—while neglecting customer insights, experience, and evolving needs.
“Fragmented and functional approaches to quality and quality improvement will provide little strategic advantage,” he says.
The companies that win are those that ask:
- Are we solving a problem customers still have?
- Does our product create meaningful value?
- Are we aligned with where the market is going?
“Quality is about customer retention, customer loyalty, and building strong client relationships,” Domingo adds. “Not just being responsive, compliant, and defect-free.”
You Can’t Excel Your Way Out of Irrelevance
Motorola and Nokia didn’t lose because they made bad products. They lost because they failed to evolve. Their competitors weren’t just better—they were smarter about what the customer actually wanted.
And that’s the bottom line: In today’s market, being excellent isn’t enough. You also have to be relevant.
