The Eastman Way

W
HAT ENABLED EASTMAN CHEMICAL tomer indicated that if things did not change,
Company to become the only Eastman would lose market share to its competi-
chemical corporation to receive a tors and possibly go out of business.
Malcolm Baldrige National This news came as a shock because Eastman
Quality Award? How were had thought of itself as being customer focused
employees motivated to increase sales 84% in 10 and it had invented and patented the product in
years? What led to a 14% increase in operating question. But, in reality, Eastman’s licensee was
income in 1994, while the industrial chemicals making a higher-quality product.
division doubled its profits? How did it manage to This event made Eastman realize the difference
align 17,500 employees in 450 product markets between being customer focused and passionately
(32% of which are sold in foreign markets) to delighting customers. It also realized that the only
achieve its goals?1 way to survive was to use customers’ feedback
While some companies increase their profits by throughout its operations. So, by the early 1980s,
A Baldrige eliminating jobs or cracking the whip to get customers’ feedback had become a key part of
employees to work harder, Eastman has, over the planning and other operations.
Award winner years, paid particular attention to its employees In 1983, the company developed a quality poli-
and how to motivate them. It recognizes that cy, which set the tone and context for future quality
shares its people create quality. This recognition is embod- efforts; in 1984, the company commenced training
insights on ied in a philosophy known as the “Eastman Way.”
An Eastman publication states that, “Quality is
in the “old” tools of quality, such as those used in
statistical process control (SPC) and process flow-
how to very much a people issue. In a respect-driven envi- charting. Production employees were encouraged
ronment, all employees work together in a spirit of to chart the quality of their work and post it for all
motivate fairness, respect, trust, and teamwork. The to see. These charts, however, became known to
Eastman Way describes a culture founded on these some as “rat sheets.” The company had yet to drive
employees. and other key beliefs and principles concerning fear from the workplace. At one particular SPC
people. Having this foundation is necessary for us class, an employee asked, “You are asking all of us
to reach the level of excellence described in our using SPC to post all of our mistakes. How will
quality policy and to achieve our vision to be the these things be used?”
world’s preferred chemical company.”2
For Eastman, the concept is more than words
on a page. A great deal of focus has gone into
by
Weston F. Milliken
understanding how to recognize and reward
behavior that is appropriate to achieving corporate
goals. The flip side has also been examined: the
processes and procedures that work against indi-
Be
Best
viduals achieving corporate goals. Before looking
at the people management side of Eastman, the t h e
following examines what inspired the company to
start its quality journey.

Eastman’s history of corporate quality

According to Robert C. Joines, the former vice
president of quality, the wake-up call came in the
late 1970s when a key customer came to Eastman,
then a division of Kodak, and said, “Your product
is not as good as your competitor’s.”3 The cus-

/
Quality Progress October 1996 57
 At that moment, Joines recognized what he calls the “cultural
contradictions of SPC”—a clash between the hierarchical, dis-
Figure 1. The Philosophy
ciplinary corporate culture and the open, honest environment
demanded by an effective SPC system. The Eastman Way
The creation of the Eastman Way Eastman people are the key to success. We have recognized
The cultural contradictions of SPC led to the development of throughout our history the importance of treating each other
the Eastman Way in 1985. While the planning to create an hon- fairly and with respect. We will enhance these beliefs by build-
est, open environment was taking place, one manager asked, ing upon the following values and principles:
“We have always been honest. Why do we need to emphasize
Honesty and integrity. We are honest with ourselves and others.
trust now?” Another manager pointed out a key part of SPC was
Our integrity is exhibited through relationships with co-workers,
looking at the data, not honesty. Questions and comments such
customers, suppliers, and neighbors. Our goal is truth in all
as these indicated that there was a problem at Eastman, so
relationships.
employees were surveyed. The findings revealed that there was
poor communication throughout the organization. Specifically, Fairness. We treat each other as we expect to be treated.
Eastman learned that:
• Management must communicate what it is doing and why it Trust. We respect and rely on each other. Fair treatment, honesty
is doing it. in our relationships, and confidence in each other create trust.
• Employees are the key to accomplishing anything the com- Teamwork. We are empowered to manage our areas of respon-
pany wishes to do. sibility. We work together to achieve common goals for business
Based on these insights, management developed the Eastman success. Full participation, cooperation, and open communica-
Way philosophy (see Figure 1). This philosophy emphasizes tion lead to superior results.
honesty, integrity, and trust among employees. It has become a
strong foundation on which to build quality, customer-focused Diversity. We value different points of view. Men and women
operations. With this foundation, Eastman deploys corporate from different races, cultures, and backgrounds enrich the gen-
objectives throughout the company by focusing on communica- eration and usefulness of these different points of view. We cre-
tion, recognition, and reward. ate an environment that enables all employees to reach their full
Another key effort started in 1985 was a quality management potential in pursuit of company objectives.
process that focused on internal and external customers and
suppliers. This process, which began in manufacturing, asked Employee well-being. We have a safe, healthy, and desirable
employees and teams to anchor their work to the needs of their workplace. Stability of employment is given high priority.
customers and to apply the plan-do-check-act (PDCA) cycle to Growth in employee skills is essential. Recognition for contri-
all of their processes. butions and full utilization of employees’ capabilities promote
In 1986, the senior managers implemented their own quality job satisfaction.
management process. They wanted to be sure they understood Citizenship. We are valued by our community for our contribu-
the quality management principles, so they identified their cus- tions as individuals and as a company. We protect public health
tomers, learned those customers’ needs, and developed concrete and safety and the environment by being good stewards of our
measures to determine whether they were meeting those needs. products and our processes.
This led to the implementation of a computerized customer sat-
isfaction process in 1987 to determine how well Eastman was Winning attitude. Our can-do attitude and desire for excellence
meeting customers’ needs. The findings were independently drive continual improvement, making us winners in everything
verified by an outside firm. Senior managers’ hands-on practice we do.
of the quality management process is considered key to the suc-
cessful companywide implementation of the process, because Source: “To Be the Best,” Eastman Chemical Company publication
senior managers were walking the talk. ECC-67, January 1994.
Later that year, the quality focus expanded from individuals
to the concept of interlocking teams. Each team was composed
of several colleagues and their supervisor. Several of these
supervisors constituted another team with their supervisor and • Don’t care
so on up the organization. In all, 1,000 teams were formed, each • Don’t have authority
working within their own functions. (In 1995, 99% of Eastman • Don’t have appropriate skills
employees actively participated in teams, some of which are The issues of authority and skills brought questions concern-
cross-functional.) ing each unit’s focus and purpose, such as: Why is the unit
Each team identified its customers, the customers’ require- there? What is it doing? How does it support the corporation’s
ments, and what measures needed to be used to ensure that goals? Once these questions were answered and processes were
those requirements were being satisfied. Setting goals, however, mapped out, management strove to give employees the needed
is not a static process, so the PDCA cycle was rigorously skills and authority.
applied to ensure continuous improvement of processes. With regard to the issue of not caring, employees were sur-
In 1987, Eastman also focused on employee empowerment. veyed to find out what prevented them from caring about their
Eastman learned that a company cannot successfully empower work. The results revealed that one roadblock to caring was the
employees who: employee appraisal system, a process later revised in 1990.

58 /
Quality Progress October 1996
Applying for the Baldrige Award agreed-on goals and objectives is critical to accomplishing any
corporate strategy. Providing just-in-time training and delegat-
In 1988, Eastman applied for the Baldrige Award but did not
ing both responsibility and authority to the employees accom-
win. Eastman learned a great deal from the site visit and the
plish the first two objectives. The third, motivating the work
examiners’ commentary, however. These insights, combined
force, is a more complicated task.
with having 400 managers attend a seminar given by W.
Edwards Deming, helped the company become even more Removing the roadblocks that impede motivation is one
employee focused. component in this task. Another is giving employees incentives
In the following year, quality systems were registered to ISO to keep them focused on management’s goals and objectives. In
9000 (75% of Eastman’s current systems are ISO 9000 regis- other words, management has to answer employees’ perennial
tered). Eastman also implemented its process, evaluation, con- question, “What’s in it for me?”
trol, and improvement system. Through this and other methods,
management continued to drive the technical methods into the
Removing roadblocks
organization. Just-in-time training, which emphasizes applying Eastman recognized the need to remove several roadblocks,
new skills immediately after they are taught, was also begun to including:
ensure the greatest retention of new skills. • Fear of losing one’s job. Eastman realized that employees
In 1990, Eastman assessed all of its divisions using the might be afraid that they will improve themselves out of a
Baldrige Award criteria. One key improvement made based on job. So, from the very beginning, the company promised
the findings was changes in the employee appraisal system.
Before the changes, employees were force-ranked on a bell
curve; most didn’t like it. As Deming points out, such a system
automatically identifies half of the people as below average.4
A party by itself does not reinforce
And as Joines observed, the system is illogical: “You take high-
quality people who have been earning a 3.8 grade point average learning —it is the equivalent of
and then tell them they are below average. That just doesn’t
make sense.”5
After a six-month review led by Joines, the old process was
“meet, eat, burp, and go back to
abandoned. The team recognized that one improves nothing by
only appraising. The only way to improve is by working on the work.”
system. Working with people to improve the system is much
more important than scoring people. The company has now
shifted its energy from simply grading employees to developing never to lay off anyone because of quality improvement. It
them. has kept that promise; employment levels have remained
In 1991, Eastman developed its strategic intent: to be the basically constant over the last 10 years. As processes
world’s preferred chemical supplier. One part of accomplishing improve, it does become easier for fewer people to accom-
this objective was measuring performance in many sectors, plish more, but companies must realize that, as productivity
including customer satisfaction, employee morale, supplier increases, so too will sales and savings. Over the last 10
cooperation, and local community support. Further, the compa- years, Eastman’s sales have greatly increased while its costs
ny was reorganized. Rather than viewing the organization in the
decreased.
typical hierarchical structure, the organization is viewed as a
• The performance appraisal system. In scrapping the perfor-
wheel—the chief executive officer is the hub, with spokes radi-
mance appraisal system in 1990, management removed a
ating to the various strategic business units.
In 1992, Eastman implemented a supplier recognition pro- great disincentive. As Joines put it, those who complained
gram. Using this mechanism, it recognized and rewarded sup- about the elimination of the performance system were those
pliers with which it had chosen to partner. Eastman also made rated at the top by the system. But what about the others?
an effort to help its suppliers in their own quality efforts because According to Joines, who was originally a proponent of the
Eastman realized that they were all in the same boat. old system, 80% of the employees think of themselves as
The year of 1993 was marked by winning the Baldrige being in the top third of their work groups, so it doesn’t make
Award. In the same year, the company communicated its sense to say to them, “We’ve determined that you’re not in
“responsible care pledge.” This document pledged the compa- the top third. Go and do better!” “What’s wrong,” asked
ny’s dedication to the environment, health, and safety. Contrary Joines, “with telling employees they are all in the top third,
to the public’s perception of the chemical industry at large, thereby making them feel better about themselves? When
Eastman has no significant Superfund liabilities. you do, they will go out and win battles for you.”6
Despite its accomplishment of winning the Baldrige Award, • The employee suggestion system. The original employee sug-
Eastman continues its efforts. It recognizes that the largest room gestion system rewarded individuals with money for their
in the world is the room for improvement. It continues to ideas. Over time, the company found that this process inter-
aggressively expand its international operations as well as its fered with suggestions for improvements made by teams.
domestic businesses. Individuals wanted to get credit for their ideas and credit in
their checking accounts. Seeing that the old system interfered
Motivating employees with teamwork, the company abandoned it. Now suggestions
As Eastman’s management recognized in 1986, giving are encouraged from teams, and the company reports a high-
employees the skills, authority, and motivation to accomplish er quality of ideas.

/
Quality Progress October 1996 59
 actions. “Behavior is not a function of procedure,” emphasized
The Origins of Eastman Chemical Company Justice. “Behavior is a function of consequences.” The question
for companies then becomes, “How can the company create the
right consequences of behavior to further its corporate goals?”
Eastman Chemical Company was, until Jan. 1, 1994, a
Eastman answers this question by:
wholly owned subsidiary of Eastman Kodak Company. • Offering positive reinforcement to the best behaviors
Kodak, established in 1884, is known for its pioneering • Making almost everyone feel like a champion
photography technology and products. In 1920, Kodak • Rigorously measuring the results of business processes
built a plant in Kingsport, TN, to manufacture methanol for • Encouraging employees to learn from their experiences
These practices are organized and operationalized in a seven-
photographic chemicals. This plant served as the head-
step process to unify the company around common goals. This
quarters for Kodak’s Tennessee Eastman division and is process is called “leadership for accelerated continuous
now the headquarters of the Eastman Chemical Company, improvement.”
which currently manufactures performance and industrial
Leadership for accelerated continuous improvement
chemicals.
The following seven steps for accelerated continuous
improvement are part of the discipline that Eastman uses to
achieve corporate excellence:
Providing incentives 1. Focus and pinpoint. In this step, all employees agree to a
Earnie Deavenport, Eastman’s chairman, singles out Russell common objective and see how their own job performance fits
Justice, a technical associate in quality management, for his with that objective. “Focus” is about getting everyone on the
contributions in helping the company understand how to moti- same page with regard to goals. “Pinpoint” is about specifying
vate employees. “Russell is one of those people who never in measurable terms what is expected of employees. This helps
seems to run out of ideas when it comes to getting people to set them up for success.
give their very best efforts to whatever they are involved in,” It is critical that the focus undertaken by the company be
said Deavenport.”7 both strategic and important. Management should use influence
Justice is a believer in the human side of quality: “What other diagrams (i.e., interrelationship digraphs—one of the seven
side is there?” he quips.8 The first part of management’s job, management and planning tools) to help determine the impor-
according to Justice, is to focus and pinpoint the organization tance of proposed focuses. Management should also ensure that
toward a unifying theme. Next, the theme needs to be commu- the measurement systems are simple, understandable, and rele-
nicated throughout the organization. Teams are then needed to vant.
develop and implement management’s action plans to accom- For example, while mapping its international sales process,
plish corporate goals and objectives and to improve internal Eastman found that it was extremely complex. The resulting
processes. pinpoint was a process called “make international business easy
How management responds to this work is as important as (MIBE)”—a process to simplify and improve international
the process, according to Justice, who has a behavioral science sales. MIBE evolved into a process called “making Eastman the
background. Justice’s background has taught him that, if left preferred supplier (MEPS)” to support Eastman’s strategic
alone, everything gets worse—this is the law of entropy. For intent to be the world’s preferred chemical company. MEPS has
example, consider these three scenarios for a company wanting resulted in huge projected increases in international sales.
to empower its employees: 2. Communicate. Here the objective is to be sure that
• Scenario 1: Management tells the employees they are employees know what is important to the company and why. “If
empowered, gives them a task, and simply goes away. The you want people to join you on this journey, if you want them to
result will be a gradual decline in enthusiasm for the task. be enthusiastic and take responsibility for what needs to be
• Scenario 2: Management tells the employees they are done, there has to be lots of communication,” said Deavenport.
empowered, gives them a task, later discovers problems, and Communication is done companywide by publicizing key result
then punishes the employees for the bad results. The result areas, the vision, and the mission statement.
will be a sharp decline in enthusiasm and performance. After the communication is complete, it is hoped that all par-
• Scenario 3: Management tells the employees they are ticipants can answer the following questions:
empowered, gives them a task, monitors the results, and • What is being improved?
applauds them for their efforts. The result will be a lasting • Why is it important to the customer, to the company, and to
approach to quality that encourages enthusiasm, commit- me?
ment, and performance. “Applause is like the accelerator to • What has the management team committed to do to help?
speed organizational improvement,” said Justice. • What, specifically, is the company asking me to do?
Scenario 3 is consistent with a cycle of human behavior—a It is important that management first communicate what it is
feedback loop that everyone experiences: First, you are present- committed to do before asking employees to do their part. One
ed with a situation. Next, that situation creates or influences good test to see whether the communication has gone well is to
your behavioral response (i.e., your actions). Finally, there are ask employees to restate what they are going to do.
consequences of your actions from which you learn. In other For example, in implementing the MIBE program, one man-
words, what you learned alters how you will respond to a simi- ager was assigned to go to each Eastman business unit to
lar situation in the future. explain the importance of this particular goal. The business unit
In this cycle, people learn from the consequences of their managers were instructed to specify management’s commit-

60 /
Quality Progress October 1996
ment to the process before asking employees to restate what of champions” and “If you don’t measure performance, you
was expected of them. In addition, the business unit managers can’t improve it.”
were also coached on the best way to do this. Feedback is a way of making performance visible to those
3. Translate and link. Next, teams translate the companywide who are working on a process. Eastman’s rules for feedback
objectives into their own language and environment. For exam- include:
ple, while management’s plan might use such terms as dollars • Feedback should be visual (posted), frequent, simple, and
and percents, teams will later translate these terms into cycle specific.
time and reliability. Then, teams are linked to the companywide • The baseline performance should be shown for comparison.
focus as they carry out those tasks. • The past, current period, and goals should be posted.
Justice compares this step to conducting an orchestra: The • The best-ever score should be posted.
conductor understands the part each performer plays in the • A chart should be immediately understandable.
whole and works to align the efforts of all of the performers to • A good scorecard allows comments and annotations.
accomplish the composer’s objectives. Therefore, each per- “Without feedback, there is no learning,” said Justice, refer-
former is linked to the composition through the work of the ring to the importance of positive reinforcement. “Tracking per-
conductor. formance enables self-learning; teams teach themselves the
For example, in the MEPS program, there were 111 teams importance of measurement and problem solving by immedi-
working together to accomplish the goal of simplification. The ately seeing the results of their improvement actions posted on
linkage of teams was symbolized by taking photographs of each the wall. What better incentive for performance than having a
team and linking them graphically on a prominent wall-sized historical record of process improvements visible on the wall to
poster at headquarters. This served to recognize and thank team everyone?”
members for their efforts. It also graphically reinforced the 7. Reinforce behaviors and celebrate results. Celebrating
importance of the effort to headquarters personnel. A videotape positive results can have tremendous value, and many compa-
of each team’s symbolic link on the wall was sent to all remote nies hold celebrations. Eastman, however, goes one step
locations to emphasize the worldwide importance of the MEPS beyond: It reinforces the learning that leads to positive results.
process. Justice notes that a simple celebration does not do the trick—it
4. Create a management action plan. In this step, manage- is the equivalent of “meet, eat, burp, and go back to work.” In
ment creates a plan with specific actions to reach a goal, includ- other words, a party by itself does not reinforce learning.
ing metrics to measure success. Each team member is asked to According to Justice, the magic question to ask a team at a
know what tasks need to be done, why those tasks are impor- celebration is, “How did you achieve this?” Answering this
tant, and what the team’s role is in getting them done. In plan- question encourages team members to ponder and learn from
ning, managers look at policy, required system changes, the results, reinforcing the behaviors that have led to success.
removal of barriers to success, training requirements, required (Remember that behavior is the function of consequences.)
resources, and any other problems that need to be solved to At celebrations, Eastman team members are encouraged to
accomplish the plan’s goal. revisit their actions by answering:
The intent of this step is to be progressive in making plans. 1. What did the team do? Why did it work?
Managers use problem-solving tools to find likely problems 2. Why is this important for the customer, the company, and
before they occur. They hope to make mistakes on paper rather the team?
than during implementation. The discipline of the planning 3. How did the team accomplish its achievement?
process causes managers to focus their attention on important The last question is key because in answering it, learning
issues. They look at the forces supporting the proposed goals takes place. Through understanding how the team accomplished
and remove the roadblocks challenging them. its achievement, a positive reinforcement cycle that depends on
5. Improve processes. At this stage, employees work together the team itself is created. No manager comes in to offer his or
to solve problems. A team looks at a symptom, identifies the her wisdom on the project; team members themselves are cele-
problem, develops a solution, and implements the solution. If brating and learning at the same time, which is the essence of
successful, the team develops strategies to sustain the new level empowerment.
of improvement. One more caveat on celebrations is that much effort should
Specifically, teams follow a six-step process to create and be made to expand the winner’s circle. Companies should never
maintain improvements: design a system in which there is a limit to the number of peo-
• Identify the problem. ple who can win. Just as in the old Eastman performance
• Use tools to solve the problems. appraisal system, that only makes the people who don’t win feel
• Plan the solution implementation. bad—and that does not help anyone (except perhaps the win-
• Execute and measure results. ners, who are given the opportunity to look down on someone).
• Document what was done as a team. During celebrations, teams should be given a memory or a
• Strategize how to maintain the level of improvement. symbol of what they accomplished. For example, one team’s
Eastman teams have been very effective in using this process. project saved Eastman $1 million. To bring the scale of the sav-
One team completed 20 problem-solving projects in only two ings home to celebrants, the company arranged to have $1 mil-
years. lion in $20 bills delivered to the celebration. The team members
6. Measure progress and provide feedback. Eastman is could see, touch, and smell the effect that they had on the com-
adamant about the importance of unambiguous, visual feedback pany. Think of the stories that occasion spawned!
to employees and appropriate measures of performance. This is It is interesting to note that Eastman does not rely on mone-
evident in two of Eastman’s mottoes: “Feedback is the breakfast tary rewards to motivate and reinforce behavior. Instead of

/
Quality Progress October 1996 61
 money, Eastman has come to rely on the intrinsic value that
employees seek in their jobs and in what they accomplish.
Letting employees know that they make a difference to the
company produces pride and excitement, which is not usually
found in most businesses today.

The principles will work for others, too

The Eastman experience reveals the importance of reinforc-
ing positive behaviors. Without being manipulative, Eastman
has studied the importance of reinforcing good behavior and
has designed its management systems to support that behavior.
Not only is good behavior reinforced, but practical support,
such as training in problem solving and providing adequate
resources, is also given.
While such a process could degenerate into an empty, cynical
gesture, Eastman’s corporate culture of trust and respect has
prevented this. Employees are empowered and applauded for
their efforts. In the words of one Eastman executive, “Showing
appreciation will always get you an encore.”9 And the company
has seen many encores. Executives cite process improvements
of 15% to 50% from applying these principles.10
As Eastman points out, its formula cannot be blindly fol-
lowed by others. As with any tool or process, it must be adapted
to the specific corporate culture. Nevertheless, the human prin-
ciples Eastman practices apply everywhere. And as Justice said,
“The pathway to excellence leads through the state of disci-
pline.”11 Eastman has disciplined its management process
admirably to accomplish its corporate goals.
References
1. Hoover’s Handbook Database (Austin, TX: The Reference Press,
Inc., 1995).
2. “To Be the Best,” Eastman Chemical Company publication ECC-
67, January 1994.
3. Quotations from Robert C. Joines were taken from his Jan. 30,
1995, lecture at California Institute of Technology in Pasadena, CA.
4. W. Edwards Deming, Out of the Crisis (Cambridge, MA:
Massachusetts Institute of Technology, Center for Advanced
Engineering Study, 1986).
5. Joines, Jan. 30, 1995, lecture.
6. Joines, Jan. 30, 1995, lecture.
7. Earnie Deavenport and Russell Justice, “A Tunnel Is More Than a
Hole: Enterprise-Wide Leadership at Eastman Chemical,” GOAL/QPC
TQM Conference, Nov. 14-16, 1994, Boston, MA.
8. Ibid.
9. Ibid.
10. Ibid.
11. Deavenport and Justice, “A Tunnel Is More Than a Hole:
Enterprise-Wide Leadership at Eastman Chemical.”

Weston F. Milliken is the principal of CUE Consulting in Los

Angeles, CA. He received a master’s degree in business administration
from the University of California at Los Angeles. Milliken is a member
of ASQC.

What did you think about this article?

Quality Progress needs your Excellent Circle #337
feedback. On the postage-paid
reader service card inserted toward Good Circle #338
the back of this magazine, please
circle the number that corresponds Fair Circle #339
with your opinion of the preceding Poor Circle #340
article.

62 /
Quality Progress October 1996