Motorola used to be the marvel of six sigma success. Now that once admired company is in a world of hurt.
The Schaumburg, Ill., equipment maker has been reeling from the
meltdown of its mobile devices division, which has lost $1.6 billion
since January 2007. Since former chief executive Ed Zander resigned
under pressure in December, the company has lost or replaced the heads of finance, technology, human resources, strategy, marketing, and its largest unit, mobile devices, as well as a host of other senior officials.
So what do you do if you’re a technology company whose products are suffering from technological inferiority? Appoint a CEO who doesn’t use technology!
Motorola’s current CEO, Greg Brown, is so technologically out of touch
he refuses to use a computer for communications, and has all his email
correspondences printed by his secretary and replied to by dictation.
And if you’re running a technology company that has inferior products, what do you do? Cut R&D!
Motorola Labs, which developed at least two-thirds of Motorola’s patents, has been cut from 1,000 to 600 researchers. Further reductions are expected this summer, according to people familiar with the matter, including 200 researchers to be laid off. Only 200 would remain in the group, the people said.
I guess it’s time to probe the background of wunderkind Greg Brown to find some rationale for this strategy.
Prior to his role as President and COO, Mr. Brown headed four different
businesses at Motorola. He also led the $3.9 billion acquisition of
Symbol Technologies, the second largest transaction in Motorola’s
history and an important strategic move to strengthen Motorola’s
enterprise offering. Additionally, Mr. Brown returned the automotive
business to profitability, while also leading the divestiture of that
business which was sold to Continental for $1.0 billion.
Oh, I get it. You work hard to return a major operating unit to profitability, then get rid of it. Some nice cash to make the short-term investment community happy, but then one day you wake up and wonder why the core company isn’t making a profit. So it’s time to save more cash my whacking R&D. Then one day you wake up and wonder why the product pipeline is antiquated, if it is still flowing to begin with.
Contrast that with Apple and Steve Jobs. They made some early mistakes (but in hindsight…?), the company was declared nearly dead by investors, but they hung on. Apple continue to invest every free dime in R&D and held onto confidence in its design acumen. After a very tough decade out popped the iPod… and the iMac… and the MacBook… and the iPhone. Now the company is once again an apple in the eyes of investors, rolling in cash and opportunity.
I wonder which "strategy" is taught in most business schools…
Mark Graban says
Well, at least he’s not wasting time sitting in front of MS Outlook all day. I find it hard to believe he’s not using some Motorola smart phone device.