The ever-increasing demand for more and larger software systems requires that new and more effective ways of developing software be developed to increase the levels of quality and productivity. Experience with the 5ESS1" switching system development at Bell Laboratories showed that simultaneous gains in productivity and quality were made by improving the methodology and the environment surrounding the development. This paper describes the key aspects of the management approach and the development methodology that directly contributed to those improvements in the software quality and project productivity. In addition, efforts for further improvements, including the implementation of productivity and quality circles, data and metric analysis, etc., are discussed. Although these experiences resulted from the development of a very large project, the basic ideas and techniques can still be applied to most software projects involving more than a small group of programmers.