Baldrige National Quality Award 1998 Recipient
Solar Turbines Incorporated
With customers in 86 countries, Solar Turbines Incorporated is the world's
largest supplier of mid-range industrial gas turbine systems. The San
Diego-based company's turbine engines and compressors are used in the
production and transmission of oil and gas, for industrial power generation,
and in the propulsion systems of high-speed ferries. Solar provides full
service support-including financing, installation, field service, and
overhauling-for all products. New-product sales and aftermarket services
totaled nearly $1.3 billion in 1997. One of the 50 largest exporters in
the United States, Solar sells more than 70 percent of its products in
A wholly owned subsidiary of Caterpillar Inc. since 1981, Solar was founded
in 1927 as the Prudden San Diego Airplane Company. Leveraging its expertise
in manufacturing complex products for high-temperature applications, the
company built its first industrial gas turbine in 1959. Today, more than
10,000 Solar gas turbine systems are installed worldwide. Eighty percent
of Solar's 6,200 employees are distributed among 15 locations in the United
States. Sixty percent are located in San Diego, and another 16 percent
are based in Texas, where the company has four facilities. About one-fourth
of the workforce is deployed among sites in 23 foreign nations.
"Strategies to Win"
Solar vies for new and repeat business in a consolidating
industry as a fully integrated global organization with the flexibility
to respond quickly and effectively to the local needs of its widely dispersed
customers. Following its six "strategies to win," the company has increased
its share of the world-wide market for new turbine equipment to a position
of strong global market leadership since 1992.
Five of Solar's strategies focus on meeting customer requirements, building
the performance capabilities necessary to quickly deliver superior products,
and engaging the full potential of its workforce. Sustained progress in
these areas has enabled the company to realize its sixth strategy, delivering
investor-grade returns in a low-margin industry.
Hallmarks of Solar's approach include a dynamic strategic planning process,
an extensive teamwork system that is aligned and coordinated throughout
the entire company, and an "authority delegation process" that enables
employees who are closest to the work to design, manage, and improve work
systems and processes.
Solar's structure of integrated teams begins with its leadership and extends
to cross-functional work teams. At every level, teams are effectively
linked to others, ensuring that decisions and actions do not occur in
isolation or without understanding of business-wide impacts.
Shared Leadership, Shared Goals
Solar's three-tier leadership system cascades from the company president
and staff to an "expanded leadership team" consisting of the top executives,
an Operations Council of 74 leaders from across the business, and more
than 400 managers and supervisors. In turn, this team is linked to a set
of 10 interlocking committees, including the Operations Council. These
committees integrate and coordinate improvement activities in all business
Through this system of cross-organizational and cross-functional linkages
that extend outside the company to customers and suppliers, Solar systematically
gathers and assimilates information on market, industry, and regulatory
developments from all parts of the globe. The entire organization is kept
up to date. Led by the Operations Council, strategic planning has become
a dynamic, nearly continuous process, helping Solar to initiate the short-
and long-term adjustments that respond to changing conditions.
Outputs of Solar's core business principles and the planning process include
Solar's "strategies to win," a set of "critical success factors" that
distills each strategy into goals, and "top tier measures" that set annual
and long-term targets for reaching business and strategic goals. Each
critical success factor has an owner, a member of the company president's
staff. All are pursued through "work agendas" carried out by teams. From
five to 15 work agendas, which usually require contributions from multiple
business units, support each of the company's seven critical success factors.
Within departments, individual work plans are aligned with work agenda
Metrics include the high-level, top-tier measures and supporting sets
of "lower tier measures" that are process-specific. To help it stay on
track, the company conducts annual internal assessments of all programs,
using the Baldrige National Quality Award criteria.
Human Resources: Agent for Change
The importance of Solar's workforce to achieving company goals is underscored
by its strategy to "engage the full potential of people to improve business
results," which explains why employee satisfaction is one of Solar's carefully
selected top tier measures. In 1997, 86 percent of Solar's domestic employees
recommended the company as a good place to work.
In the early 1990s, Solar totally revamped its approach to employee management,
transforming its human resources focus from administering salaries and
benefits to becoming a powerful agent for change. Solar abandoned the
traditional method of boosting production by adding proportional amounts
of material, capital, and labor. Instead, it set its sights on increasing
productivity through the initiative and capabilities of a self-directed
The company flattened its organizational structure, restructured into
work teams, and delegated authority to the point of customer contact or
to the work performed. In its "pro-employee" approach to work system teaming,
Solar does not differentiate between union and non-union workers. Developing
people, rather than overseeing tasks, became the primary job of managers
Devised with knowledge gained from benchmarking other organizations, Solar
believes its authority delegation process is unique. It has reduced non-value-added
steps in decision-making and helped the company to respond quickly to
changing customer needs and competitive conditions.
Training and education needs are formally addressed during strategic planning.
Solar estimates that total expenditures for training are equivalent to
about 15 percent of its payroll. Awards and bonuses reinforce the workforce's
commitment to achieving business goals. Incentive payouts have helped
Solar to meet or exceed goals for increasing its return on assets. Payouts
increased 7.6 percent of salary in 1994 to 10.4 percent of salary in 1997.
Sources of information on customer requirements and competitors' capabilities
include competitive business reports by field service representatives,
regular visits to customer facilities by Solar executives, annual satisfaction
surveys, end-of-project surveys, complaints, and reviews of won and lost
bids for business. This and other intelligence gleaned from listening
posts around the world is analyzed for emerging business opportunities.
Using a four-phase new product introduction process, the company has been
quick to seize opportunities. The process integrates the efforts of 30
or more teams and sub-teams that involve all stakeholders, including customers
and suppliers. Since 1994, the new product development cycle has been
trimmed from 39 months to 22 months, and quality has improved. The number
of warranty claims has decreased significantly since 1995, and non-recoverable
commissioning costs have been cut.
For customers, benefits resulting from gains in quality include lower
maintenance costs. Industry-sponsored studies show that maintenance costs
for Solar-made industrial turbines are 42 percent lower than the average
for all suppliers.
Ultimately, the company aims to distinguish itself as the best among suppliers
of any type of equipment, not just turbomachinery. In 1997, 43 percent
of customers responding to a survey question named Solar as their best
Solar's share of the global market for new turbine engines has risen from
less than 20 percent in 1970 to a position of global market leadership.
Since 1988, the company has tripled its annual revenues and increased
its profits by a factor of 11. Improvements in productivity have fueled
these gains in business performance. Revenues generated per employee increased
by 61 percent between 1993 and 1997.
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Last updated: 11/29/2011