The Wisdom of Chairman Ko

Chen's fast-feedback system worked. By the time he convinced Nishimura to join Solectron in 1988, revenues had already increased 200-fold to about $93 million, and profits had more than doubled.

"Never be satisfied. Never be bound by conventional wisdom."

With Solectron's star comfortably hitched to the accelerating outsourcing train, Nishimura had little reason to push for big changes when he sat down at his first management meeting. Yet the second-generation Japanese-American Zen Buddhist, who says his greatest influence was his immigrant grandmother, arrived with a cultural (if not a genetic) predisposition for continuous improvement -- and for continuously questioning existing practices. For example, although an engineer by training, Nishimura questioned standard financial practices. After listening to CFO Susan Wang, 48, detail her success at shortening the company's financial-feedback loop, Nishimura produced his own management standards. "We'd just decreased the financial-closing cycle from three months to three days, which I felt was a major accomplishment," recalls Wang, another IBM refugee who arrived at Solectron in 1984. Unimpressed with Wang's achievement, Nishimura asked her, "Do you think that's good enough? Why wouldn't you close the books every day?"

" 'Excuse me?' " Wang remembers saying. "Three days was a benchmark practice. At that time, few companies could claim that record. But then I realized that he was just saying, 'Never be satisfied. Never be bound by conventional wisdom.' "

That attitude had earned Nishimura a reputation as something of a maverick at IBM. For instance, he once skirted procedure to rush a new disk-drive design to market. Instead of going through normal bureaucratic channels to set up a development lab, Nishimura searched out a suitable space on his own, then rallied his team to set up the lab over a weekend. "It would have taken months if he had followed the standard procedure, but he bypassed the whole system," recalls Phil Fok, 38, an IBM veteran who is now Solectron's director of operations. "He's always been one to question the rules."

Applying the same ethic to Solectron's manufacturing operations, Nishimura challenged established standards as he searched for ways to improve Chen's customer-first model. He soon came across an ad in an electronics magazine soliciting applicants for the Malcolm Baldrige National Quality Award. Congress established the Baldrige in 1987 to help revive the nation's then-weakening manufacturing sector. Nishimura sensed that the Baldrige was more than just an award for product quality; its seven-point evaluation process closely matched Solectron's principles and could serve as a benchmark for continuous improvement. "I brought the ad to a staff meeting," says Nishimura, "but they said, 'Great, another management flavor of the month.' " Unfazed by the reaction, he persuaded the group to apply for the 1989 award. "We turned our application in after working on it for six weeks," says Nishimura. Solectron's entry failed to impress the award committee. "We didn't even get a site visit."

But Solectron did receive a report from the Baldrige evaluators that outlined what they saw as improvements the company needed to make in its human-resources, strategic-planning, and supplier-management functions. "They said that we needed to focus even more on the customer, and that we didn't do enough long-range planning with the customer in mind," says Nishimura. To a more egotistical CEO, the Baldrige response would have seemed like a rebuke, a slap in the face. But Nishimura considered it a gift. "They gave us free consulting!" he says. "It was great!"

Nishimura set about incorporating the Baldrige prescriptions, initiating a "customer executive survey" on Solectron customers' long-term technology and production needs. He used that feedback to establish a long-range-planning process -- hoshin kanri, a Japanese system of internal communication that has been credited for the success of several Japanese winners of the Deming Prize, a quality prize after which the Baldrige was patterned. Adopting the hoshin system, Solectron established one- and three-year strategic plans for individual plant managers to incorporate into their processes.

The next year, Solectron was back in the Baldrige competition, submitting an entry that documented the company's initiatives. And the next year, the Baldrige award committee's report advised more improvements in benchmarking and supplier management. So Nishimura followed the prescription again. "We weren't trying to win the award," Nishimura says of Solectron's second Baldrige application. "We were simply trying to build a quality company. And the award was the template."