|The Seamless Road to Profitability
As a new CEO, Zander had a wealth of options about Motorola’s future. But it also meant he received an abundance of unsolicited suggestions about where to lead the company. “I got hundreds and hundreds of e-mails a month giving me advice. Former Motorolans, analysts, financial analysts, just everybody giving me long e-mails about sell this, buy this, do this.”
Zander has focused on streamlining the company and centralizing decision-making so that Motorola’s varied businesses would work in concert. He has not drastically reduced the company’s size, as some business observers suggested he should. In 2004, Motorola did spin off its semiconductor arm, Freescale, a move already under way when Zander took over. But while multiple industry analysts suggested Motorola also should unload its wireless infrastructure business, Zander has held tight to that branch.
Rather than paring Motorola down to a core business, Zander has looked for ways its existing businesses could become part of a larger technological convergence. The result is the concept Zander calls “seamless mobility,” which he says will be the center of Motorola’s future business. Essentially, the company aims to enhance the mobility of information, be it voice communications, data, or entertainment. Motorola wants the music that people listen to at home, for instance, to be transportable to mobile handsets or cars. Home-based Internet access, in this vision, would move with the consumer throughout the day, from handset to car to the office.
“I think we’re on the edge of something as explosive as anything we’ve seen the last 10 years, this whole idea of mobility,” says Zander. “The world and everything we do is going mobile. Instead of following the Internet around with a laptop, the Internet follows you around. And just as electricity is always on wherever you go, the Internet goes everywhere you go, is always on, and is mobile. It’s in your car, in your home, in your office.” A mobile handset, adds Zander, can be “the remote control of your life.”
While this sounds extremely ambitious given the current wide array of communications, media, and technology businesses and products, Zander insists Motorola will be initiating these changes, instead of catching up with the market, as it has at times in recent years. “We’ve got to be at the edge of this disruptive technology,” says Zander. “Sometimes you have to get out in front of the stuff. It doesn’t just happen. The PC didn’t just happen and the Internet didn’t just happen. It was great companies who realized that disruptive technologies make these things happen.”
To initiate some of these changes, Motorola has developed a variety of partnerships in the last year, including deals with Apple, for use of its iTunes Music Store, and MasterCard, to develop mobile payments. It is working with Microsoft to ensure PC compatibility. In October, Motorola announced a large contract to provide fiber-optic home video services for Verizon.
Indeed, Zander believes that embracing the diversity of Motorola’s businesses, rather than shrinking from it, is precisely what may give the company the opportunity to make seamless mobility a reality. And if that does not satisfy all the analysts and stock pickers looking for a short-term hit, Zander is willing to live with the whims of an unpredictable stock market.
In January, for instance, Motorola announced strong fourth-quarter results, with earnings up 56 percent compared with the fourth quarter of 2003, revenue up 27 percent, and annual revenue up 35 percent over 2003. But the stock, which currently sits around $17, still fell a dollar upon this news, partly because of concerns that such a broad-based company might not sustain such growth on multiple fronts every quarter.
Zander has his sights set further down the road. “Wall Street used to be a place where you looked at companies for long-term value creation and you put your money in and you basically bid over the long run,” he says. “Now it’s like going to the racetrack. Who’s going to win today’s race?” The problem, he believes, is that “the instantaneous need for results really hampers CEOs from making the right calls over the long term. It’s very, very challenging. You’ve got to decide: You’re either going to give in to that and do a bunch of knee-jerk stuff, or you’ve got to just believe in what you believe in, and make the right long-term calls here.”
Zander sees his job as balancing speed and patience, as he tries to move Motorola from strength to strength. The company that made the car radio famous will still be in the automobile electronics business, after all, but by selling the next generation of inventions and integrating them with the rest of the company’s offerings.
“We’ve got a lot of old legacy, good, great profit-generating businesses, but the real challenge in technology is how you reinvent yourself when you’re successful, and a lot of big companies don’t get it,” Zander says. The high-tech sector, he believes, “regenerates itself” more rapidly than any other industry.
“We tend to whack ourselves every 10 to 12 years, and if you’re not careful, you’ll come and go… What happens is, bright people come out of RPI, venture capital is available, and with new ideas, new disruptive technologies, innovation happens, and before you know it, if you’re not careful, you’re a legacy.”
In the end, reinventing Motorola may be Zander’s most lasting legacy.
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