How Motorola Got Its Groove Back
It’s a muggy Friday morning in mid-July and a group of Motorola Inc. (MOT) designers are gathered on the 26th floor in the company’s downtown Chicago design center. They’re looking over prototypes for a new mobile phone when CEO Edward J. Zander pokes his head in the door: “Can I come in?” Dressed casually, in jeans and a polo shirt, he quickly gets down to business. The models on the table are for the Q, a phone with a full QWERTY keyboard designed to compete with the wildly popular BlackBerry, from Research in Motion Ltd. (RIMM) (RIM).
No detail is too small for Zander’s attention. He and the employees put one Motorola prototype alongside a competitor’s. “Ours is longer,” Zander worries out loud. “Yeah, but it’s half as thick,” retorts designer Sean Daw. Zander picks up another model and starts poking keys. “I don’t know,” he says. “The Good feels better to me,” referring to a device that uses software from Good Technology Inc. The Q prototypes look alike but have infinitesimal differences: keys raised a few millimeters more, buttons that require a tad more forceful punch. Finally, Zander finds one he thinks has the right feel. “Now this one feels pretty good,” he says.
Zander seems to have found just the right touch at Motorola, too. At a time when rivals Nokia Corp. (NOK) and Samsung Electronics are reporting lackluster results, the once-troubled Motorola is on a tear. On July 19 the company reported that second-quarter sales had zoomed 17%, to $8.8 billion, while earnings hit $933 million, compared with a $203 million loss the previous year. The biggest driver? The cellular-phone business that shipped a record 34 million units. That gave it 18% share — its highest in seven years and a big step closer to Nokia, which holds 33% of the market. “We’re a stronger No. 2,” Zander told analysts on the earnings call. “We’ve now set our sights on No. 1.”
At the heart of Motorola’s pursuit is a radically revamped strategy for new products: Design leads, and engineering follows. Ever since its founding in 1928 as Galvin Manufacturing Co., the company had been dominated by engineers. That led to loads of innovation, including the invention of the modern cell phone. But in the late 1990s, the approach began to misfire, with a string of unpopular phones and missed deadlines. Now Zander has helped shift the balance of power so that Motorola’s designers hold sway. “It used to be the engineers threw us a chunk of circuit boards and said: ‘Put some plastic around that,”‘ says Daw. “Now we base everything on some experience we want to project and then have the engineering team help us get there.”
Motorola has been trying to improve its design for years. Christopher B. Galvin, Zander’s predecessor and the founder’s grandson, hired a series of talented creatives, including James Wicks, a well-respected Sony Corp. (SNE) executive who is now head of design for Motorola’s phone group. Yet the genteel Galvin rarely got involved in day-to-day decisions. Zander, though, plays a hands-on role in encouraging workers to come up with the latest in cool. He spends about half his time at the downtown design center, rather than the Schaumburg (Ill.) headquarters, and he constantly pushes, prods, and makes himself a general pain in the neck. In addition, Zander promoted former Nike Inc. executive Geoffrey Frost to the vacant position of chief marketing officer and charged him with making sure that designers’ best ideas get aired among the top brass.
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