Can Motorola Fix Its 'Warring Tribes'?
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Andy*, a 30-year-old engineer, will never forget the experience of joining Motorola (NYSE: MOT) after college eight years ago.
Recruiters had spirited him to Schaumburg, Illinois, for a long weekend at company headquarters where he met executives and got a big taste of the company's culture. He remembers traipsing through the company's campus museum and dining with talented engineers. He was nothing short of giddy at the thought of a global technology innovator such as Motorola wooing him to come aboard.
After all, this was the venerable company that built the first car radio back in 1930, introduced the first FM portable two-way radio in 1943 and brought the world DynaTac, the first commercial portable cell phone in 1983.
Today the 80-year-old company is scrambling and scurrying to keep hold onto third place in the mobile handset market, after years of sitting comfortably in the number two spot.
Even a new CEO and a slew of new leaders hasn't seem to alter its downward spiral. Just a day before its first quarter earnings call Motorola announced it was laying off 4,600 employees from its roster. (Motorola lists about 66,000 employees worldwide.)
"Yet, even up until last year it was still a good place to be," said Andy, who works in a successful division and hasn't faced a layoff scenario in several years. "The thing is, no one understands why we're in the position we are today."
That "position" is bleak given what Motorola has done -- or more succinctly what it hasn't done -- since its phenomenal success with the Razr phone in 2004.
Motorola spokespeople declined to comment to this story.
CEO Greg Brown, who took over for ousted CEO Ed Zander last January, was upbeat and confident during the company's first quarter financial earnings conference call in April, telling analysts that Motorola's leadership changes, its recent plan to spin off the mobile division, and ending a brewing battle with fiery shareholder Carl Icahn were big steps in getting Motorola back on the road to profitability.
However, Andy, and Bill, an ex-Motorola product manager, worry whether these moves will be enough to stem Motorola's slide without addressing internal issue that they call the "warring tribes" approach. This feature, as well the layoffs, have to stop and stop soon, said the two men, who don't know each other and requested anonymity for career reasons.
Success will only come, they say, if executive management changes the organizational culture that pits in-house product teams against each other.
"If two divisions have similar customers Motorola's strategy pits them against each other to compete for those customers," Bill explained, adding that internal sales and market fights could get ugly at times.
Without a huge management structure change there's likely little hope of regaining market dominance or getting back to innovation, he said.
"Motorola's culture is what I call 'Midwestern aggressive.' It's polite but it will stab you in the back. It has no compunction about fostering such in-house competition among product groups," Bill continued.
Such a work environment is tough, he said, as motivation can easily wane. Employees are leery of making internal management enemies, Andy explained, as they could find themselves interviewing with that 'warring' product team in a layoff situation.
"With layoffs people are told ahead of time that their job will end on a certain date. They then can look for a job elsewhere in the company but it's pretty much up to them to get that job," he explained.
As Bill recalled, surviving in such an environment is doable "if you didn't take it personally." But he suspects Motorola is experiencing a talent drain given the work environment.
That, in itself, could prove to be the final death knell given that talent and skills are key aspects to creating mobile handsets. After all the good engineers, mobile application developers and designers typically want to work for innovative companies.
Motorola's challenge at this point, said Bill, is to find the right "ingredients" for getting its success "recipe" in place.
One ingredient is understanding the mobile device market and what it demands, as it isn't like any other market Motorola's experienced, he explained.
"Sometimes it would take three to four years before competitors would catch up with something Motorola did," he said. "Today, in the case of mobile devices, competitors are in place in months or even ahead of Motorola."
A prime example is Motorola's fling with Apple a few years back in developing the Rokr, a music phone. The phone fizzled and Apple went on to develop the popular iPhone.
Motorola also has to realize there's no more differentiators to be found in the market, said Bill. It also has to stop trying to offer something for everyone, he added.
"This is a hyper competitive market and mobile devices doesnt fit into the Motorola game plan of yesterday which was to develop something and milk it as long as it could," he said. "Customers are much more powerful today and the key is anticipating their needs."
Quoting business guru Michael Porter, Bill said he believes Motorola's quest to regain leadership comes down to Porter's basic strategy: have one differentiator, low-cost production and very good market service.
A prime example, says the ex-Motorola employee, is smartphone leader Research in Motion's strategy.
"Just look at the BlackBerry and the niche it serves, and how RIM is continually reaching out to customers," he said. "When you have warring tribes internally it's impossible to find the differentiator that you need to go forward."
For Andy, the hope is that change comes fast enough.
"This is not the lowest point, but it's pretty close," said the engineer. "We wonder why are we staying as there seems to be no hope for future at all at times."
*The source's real name was changed to Andy so he wouldn't face retaliation for speaking to the press.