By Lisa A. M. Bauman
This report pinpoints several interconnected problems within Motorola that reveal one serious problem occurring in the company. Since Google acquired Motorola in August 2011 Motorola no longer has a vision unique to its own identity; its basis for existence seems to be driven solely by Google's needs. Motorola's once inspiring innovation-focused vision has been replaced with Google's customer-based development model and goal to overtake the smartphone market.
Google does offer potential strengths by providing investment capitol and pre-market access to its pet project Android. Still, confidence is waivered because Google has had a history of deviating from its own vision "to organize the world's information" and Motorola could be another example of this. There is fear that Motorola is another pet project that will be easily dissolved once its use is gone.
Considerable financial and cultural losses are being sustained because of Motorola's lack of vision. Google directed aggressive lawsuits in the so-called "smartphone patent war" racking up to 5 million dollars per each of the 41 infringement suits filed. Layoffs directed by Google to restructure Motorola into a strictly smartphone-focused industry resulted in over $275 million in losses. The 2012 fourth quarter alone Motorola's GAAP operating loss was $527 million.
Four potential solutions were studied. Three failed. Solution one offered a rehiring process to gain back company culture and loyalty, but the solution did not address the problem completely. Solution two suggested combining Google and Motorola into a meshed brand, but it was costly, threatened Android vendors, and put both companies into branding risk. Solution three offered incentives to encourage employee innovation, but it failed because modern breakthroughs in behavioral science proved the model unsuccessful. This left one more option.
Solution four offers a re-visioning process labeled Looking Inward for Motorola that focuses on innovation while keeping Google's goals in mind. It is cost effective, lower risk, and addresses the problem more fully than any other solution. Implementation involves monthly meetings, exchange of ideas, recognition for successes, sharing of positive feedback, and most importantly: sharing the reasons and benefit of Motorola's new inspired vision. Implementation is feasible because (1) Motorola has the finances available to fund the project (2) financial benefits will begin to show in less than a year and (3) there is little risk for environmental, community, or legal losses. In conclusion, this report recommends solution four to address Motorola's need for vision.
Essay: Motorola's Need for Vision
Motorola's Proud History
Before Google's buyout in August 2011 Motorola’s mission and vision statement was: “Our history is rich. Our future is dynamic. We are Motorola and the spirit of invention is what drives us ("Motorola Mobility Targets World Record," par. 5).” Motorola takes significant inspiration from its history and it is evident that this history is rich with invention. Motorola began manufacturing radios in 1937 and moved into car radios, transistors, televisions, pagers, and today mobile phones ("About Motorola: History" par. 1-7).
There is good reason that Motorola is proud of its history too. Motorola, once known as Galvin Manufacturing Company, invented the handie-talkie and walkie-talkie which became widely used during World War II. It produced the first portable cellular phone for consumer use in 1983 and in 1996 Motorola offered the smallest and lightest mobile phone on the market. Motorola RAZR was the top-selling cell phone of all time for 12-straight quarters until 2011. Finally, it released the very successful Droid that we know today in November 2009 with Google's Android system (Goldman, What Google is buying par. 1-8).
The major stakeholders in this new, under-construction face of Motorola is far-reaching. Google and its investors, Motorola and its investors, employees of both companies, and the engineers who worked so hard to create Android all share high emotional and economic stakes. Competitors such as Apple and Microsoft are also concerned. Investors of both companies have been let down by the drops in revenue. Also, considerable lay-offs have created losses for both employees and investors. Android engineers want to see Android succeed and competitors want it to fail. Now that you understand the situation, let's visit some of the problems that Motorola faces as it moves forward.
Unlike Motorola's main focus on technology, Google's focus is search and its income comes from advertisement. Its mission and vision is to "organize the world’s information and make it universally accessible and useful ("Google: About Google" par. 1)." Since 1995 when founders Larry Page and Sergey Brin were grad students at Stanford, their goal has been to organize information on the web. In 2001, when Google Groups launched, Google began to create products that were not specifically related to search or advertising. This was a big change for the company and it caused criticism to circulate.
As far back as 2006 Google was showing signs of fuzzy vision. BusinessWeek correspondent Ben Elgin noted that Google appears to have "a case of product attention-deficit-disorder" in an interview with Marissa Mayer, now Google VP (Elgin par. 5, McGee 3). Mayer explained that the diversity of products was evidence of the core philosophy that Google should "put products out there and, without a lot of promotion, a good product will grow." She said that "The way you find really successful new innovation is to release five things and hope that one or two of them really take off." She explains that Google has an inspiring "consensus-driven approach" that yields "some of the best outcomes we've had" by encouraging teamwork, vision building, and individual creativity (qtd. in Elgin par. 5, 20). Indeed, this method of innovation seems to be working for Google as last year alone revenue increased 51 percent to $11.33 billion from $7.51 billion ("Google Earnings, Revenue Miss" par. 10). But is this dynamic branching of invention in line with the original vision of the company? It's been four years since the interview and now Mayer seems to agree that focus is needed. She admitted that “we do have too many products and we need to condense them (qtd. in McGee 3).”
Problem One: Is Google Loosing Focus?
The Motorola buyout seems to be the ultimate test of Google's deviation from its vision. The purchase of Motorola has caused significant immediate losses for Google. Motorola revenues now account for 18 percent of Google’s 2012 third quarter report. Still, Motorola reports a GAAP operating loss of $527 million ($505 million of which came from mobile). Motorola had 20 percent decrease in net income and as a result Google stock decreased by 10 percent (Crook par. 1-6). Of course a portion of this loss comes from short-term restructuring costs but the question begs to be asked: Why would Google, a search engine business funded by advertising revenue, want to purchase a mobile phone company?
Problem Two: Is Motorola Merely A Stepping-stone for Google?
It seems that the key to Google's interest in acquiring Motorola is Android, a free, open-source mobile platform project led by Google that modernizes Google's goal to organize the world’s information. Google sees the next step of information usefulness and universal accessibility needs to be lead through mobile devices. Google's philosophy is that "the world is increasingly mobile: people want access to information wherever they are, whenever they need it … we’re hoping to fuel greater innovation for mobile users everywhere with Android … ("What We Believe" par. 5)." This is why Google convinced Motorola to switch to Android in 2009 and later purchased the company and its more than 17,000 patents, plus an extra 7,500 that are awaiting approval (Goldman, Google Seals $13 Billion par. 5).
The real concern is: Is Motorola yet another test project that will later be discarded? If this is true, it is understandable how the company could be losing ambition and steam. Google seems to be placing all of its planning and power to place Motorola as a strategic pawn rather than a profitable, desirable, and separate business entity with duties to its stakeholders.
Problem Three: The Cost of Gaining Market Control
Additionally when Google purchased Motorola with the intent to secure its place in the smartphone market, Motorola incurred damaging restructuring and legal costs.
Under Google's direction Motorola began the costly race to secure patents in the smartphone market. A study in 2011 that focused on applicable smartphone patents since the 1960's found 298 litigated patents that applied to the smartphone "patent war" of today. Of this study, Motorola was asserting the most patents - 41 total (Lloyd, Spielthenne, and Mokdsi 9, 14). Another 2011 study estimates that patent infringement suits where more than $25 million is at risk cost about 5 million dollars each (Sachdev par. 12). Patent litigation is clearly contributing to Motorola's losses.
Additionally, large-scale, costly layoffs were required as Google removed elements of Motorola that distracted from this new smartphone focus. In August 2012 Google announced that it would lay off 4,000 employees, one-third of which would be in the United States, and that severance-related charges of up to $275 million were expected in the third quarter. Google also downsized 40 percent of Motorola Mobility's vice presidents ("Google's Motorola Mobility Layoffs" par. 9, 12, 13). This brings to light some of the exceptional costs that Motorola's new, strictly smartphone focus is requiring.
The Problem: Google Kills Motorola's Vision
It appears that the three problems stated above are connected. Surprisingly, Motorola's mission and vision statements are nowhere to be found on the web since the Google buyout. Motorola does keep the long and beautifully graphical record of the company's history available for its stakeholders to see, but the company's focus has completely changed. Instead of promising innovation, the company's profile mimics Google's customer-focused culture boasting that "We’re designing technology that connects seamlessly so consumers have the best content at their fingertips, every second of every day. TV, talk, text, email and web surfing ("Giving People What They Want" par. 1)." The problem is that Motorola no longer has a vision unique to its own identity; its basis for existence seems to be driven solely by Google's needs. In order for Motorola to gain back its vision, changes need to be made.
To fully explore the possibilities of causes for this daunting problem, I created a fishbone diagram (Fig. 1). I found that several scenarios had not been explored: (1) employees lost due to the restructuring could have had significant correlation to the strained culture and vision in the company and (2) the Google buyout could have the ability contribute to the solution rather than the problem since Motorola had been showing signs of stressors even before the buyout occurred.
Layoffs and Cultural Losses
Signs of anger and outrage were almost immediate when Motorola began job cuts to allow for restructuring. In August 2012 after announcing plans to layoff 4,000 employees and close one-third of its 94 offices, China employees responded in protest. Hundreds refused to sign their walking papers and in Beijing more than 150 people organized a demonstration outside a company office (Ong par. 1-10).
According to a 2008 report published in Organization Science "the cumulative decision-making experience an employee builds over time through relationships with customers, vendors and fellow employees, [plays an] important role in dictating a firm's capacity to create competitive advantage." Furthermore, layoffs can "seriously erode employee commitment and loyalty, with negative consequences for firm competitiveness and performance (Guthrie and Datta 111)." Motorola may be experiencing these very same loyalty conflicts today.
A Positive Look at Google's Acquisition
Google's acquisition offers benefits that can contribute to Motorola's future success. Google sees Motorola as a test market for Android; using it to "understand how consumers interact with mobile devices (Cheng par. 17)." Google's long-term perspective for Motorola and financial capitol affords Motorola the time and resources it needs without the demand from shareholders for "instantaneous profits and a turnaround in revenue growth (Cheng par. 17)." This is an important element needed for Motorola to compete.
Also, because as a test market for Google, many believe that Motorola will gain access to Android code before major competitors. Although Google denies this claim, many experts such as Michael Gartenberg, an analyst for Gartner, believe differently (qtd. in Cheng par. 13). If this insight to Android does occur as many believe, it will give Motorola an edge to compete in the smartphone market.
Despite all of the negative things that are occurring as Motorola makes this transition, Google seems to understand that in order for Motorola to succeed it must focus on innovation. "We're deciding as a company to stand for innovation," Dennis Woodside, an ex-Google employee who now runs Motorola told CNET in an interview (qtd. in Cheng par. 5). Still, we see no sign of internal promotion of the ideology. This pervasive problem is what our focus will be on for the rest of the paper.
Unlike most corporate problems, this issue seems pretty clear: Motorola needs vision. The question is: How does Motorola cultivate this vision given the current circumstances? Below is a list of potential solutions.
Solution Option One: Repairing Lost Culture
Because of layoffs, Motorola has lost valuable employees that contributed to the culture of the company. Motorola will instate a rehiring preference for employees who were laid off due to the buyout in an attempt to repair lost relations and disloyal feelings.
Solution Option Two: Rebranding Motorola as a Partner with Google
Like Motorola, Google has a lot of history to be proud of. In this solution Motorola and Google will combine their brand through a logo change, mission statement, employee trainings, and advertising campaign for Motorola. By combining the brands employees and engineers will identify with the honesty of the gesture and find inspiration in the combined goals of Google and Motorola.
Solution Option Three: Incentivizing Innovation
Instead of focusing on culturing the company, Motorola will create a culture through practice. Employees will be encouraged to share innovative ideas and experiments in the workplace. Incentives will include both financial and personal rewards.
Solution Option Four: Looking Inward
Right now Motorola's vision seems to be an advertising campaign that mimics Google's customer-driven culture. In this solution Motorola will change this focus to internal inspiration which comes from Motorola's historical inspiration to innovate. This is a goal that both employees and engineers can identify with. This new company culturing will occur mostly through training and tying the ideals with the company's new, Google-driven ideology.
Now that we have a list of possible solutions let us evaluate them and choose the best solution available.
Examining Option One: Repairing Lost Culture
Instating a rehiring preference for past employees can be very helpful to boost spirits, but it is an incomplete solution to a larger problem. It fails to direct the current employees and engineers to find vision and should not be used.
Examining Option Two: Rebranding Motorola as a Partner with Google
After an acquisition the purchasing company, in this situation Google, has three basic strategies for branding: joint branding, flexible branding, and one brand. Joint branding, where "both brands enjoy an equal or similar market standing, market reach and brand equity" has been the current strategy in place. The one brand strategy used for companies that are very similar in products or services and the flexible branding strategy based on geographical separation, do not apply directly in this situation (Wilson 2, 3). Our focus in this solution set is a new variation of joint branding where Motorola will be a new, Google brand, but retain its own name.
Option three seems to be the most holistic and honest approach to the problem, but it is also the riskiest and most costly. Marketing specialist Rebecca Wilson says that "one of the main reasons for the failure of … acquisition is the resulting conflict between the combined entities sales, marketing, and cultural communications strategies (1).” When Kmart acquired Sears in 2004 with plans to cross-sell product lines, many believed that the inferior Kmart brand would be replaced by Sears. Also, partners and vendors were disenfranchised. For example in 2005 "Nike, fearful that its products would suddenly appear in Kmart as a Blue Light Special, terminated its deal to continue selling Nike products in Sears stores" (de Mesa 13-15). For Google this situation is already causing Android vendors apprehension. Because Motorola has an interest conflict with Google vendors and an unstable brand name in the smartphone market, the option two strategy should not be used.
Examining Option Three: Incentivizing Innovation
Incentives have been used before in business and they can be helpful, but recent breakthroughs in behavioral science show that this type of solution falls short. Daniel H. Pink, author of Drive: The Surprising Truth About What Motivates Us, explains that managing with rewards and punishments can only de-motivate action. This type of motivator sends a signal that employees have no real stake in outcomes because no real choice is available to them. Fifty years of behavioral science points to the clear signs that only when an employee is given autonomy, discovery, and mastery can he claim his stake (Pink 13-145, Fig. 2). This is why option three should not be used.
Why Looking Inward is Most Favorable
Solution four offers inspiration through a relatively affordable, less risky approach that follows current behavioral science. By focusing on training within, Motorola avoids expensive marketing costs. Also, by keeping the Motorola and Google brands separate, it avoids vender conflicts with Android and other Google projects.
The goal to looking inward is to cultivate passion within the company. There are four things that a company needs to achieve this according to Carmine Gallo, communication skills coach for the world's top brands: brevity, specificity, consistency, and emotional connection (par. 1-10). Gallo says that "In order to create an emotional connection … your vision must be about your listener. In other words, if your vision is all about yourself, it can be specific, concise, and consistent, but fail to touch your [listener] on an emotional level (par. 9)." Google's new vision for Motorola offers specificity and consistency, but it lacks the connection to Motorola's proud history and drive for innovation in technological advancement.
Now we understand why Motorola should not merely focus on lost employees, incentives, or even Google's brand. It should capitalize on Motorola's proud history and drive for innovation. By communicating and encouraging employee involvement, employees will self-generate their own culture and move Motorola forward as a leader in the smartphone industry while satisfying Google's acquisition goals. These are the reasons why I believe that option four is the best and most affordable solution to Motorola's problem.
· This solution will have no major impact on the biological environment. Impacts include the use of facilities and operations that require electricity, travel, and office materials.
· There will be no major impact in the local community. Several jobs will be created for training purposes - boosting employment rates.
· Company values and vision will be upheld with better customer service and a culture of innovation.
· This solution will have a positive impact on stakeholders. Both companies and the investors will have needs served by better productivity and a revenue increase. Employees will feel more valued and secure in their jobs. Android vendors will have confidence boosted. Motorola's brand will portray a more positive image to investors and the general public.
Cost-Benefit and Feasibility Analysis
This plan proves to be very feasible after weighting economic, organizational, technological, and legal factors. Please refer to Figures 3,4, and 5 to view the Cost-Benefit Analysis and Feasibility Diagrams which verify the five points below. Please note that financial estimations in these charts are not accurate. They are created with limited information.
1. Motorola can afford the initial cost of the program. Current assets that are available for implementation are $6,612,000 and the initial costs are $586,000. Additionally, Motorola will see a profitable outcome before a year has passed.
2. Motorola has the expertise to administrate a training program. One to three "vision managers" will be either trained for these positions or replaced; saving about $240,000.
3. Facilities, supplies, and technologies are currently in place. The program will cause a slight increase in costs (estimated $190,000 annually), but not significant enough to create a problem.
4. Administration will not be difficult for Motorola to perform as all employee information is contained within to company. The allocated funds for this expense are $190,000.
5. Legal factors are a small risk. Motorola will use current legal checks and balances to insure all laws are followed. There is little risk of lawsuits to implement this plan.
Motorola will direct employees through a culture and vision training program inspired by Mary Lorenz, a specialist in corporate recruiting best practices. The program will offer these three steps:
1. Monthly team meetings will be held by the three vision managers who travel to national branches and staff managers. A vision manager will attend at least four of the 12 meetings a year. The inspirational program must:
· Communicate how the vision will benefit employees’ lives and the world.
· Explain how employee goals align with those of the organization.
· Inspire by communicating with enthusiasm and passion.
· Share why Motorola believes the destination is compelling and inspiring.
2. Communication and media will be used; mainly inter-office sources and motivational speaking within meetings. Additionally the website will be updated to specifically communicate Motorola's new inspired vision.
· The program will solicit employee input by asking employees what the vision means to them and how they see themselves contributing to it.
· Positive customer feedback will be shared to give employees reasons to feel good about what the company does.
3. Recognition will be important. Employees will celebrate achievement of milestones by recognizing progress and success along the way.
Employees will submit a monthly anonymous multiple-choice form that measures personal feelings for Motorola as a company and employer. It will have a changing set of questions interpreting the company's vision and mission. Answers to an open-ended question about how the vision applies to them will be used for team building purposes. A score will be given according to the scale of satisfaction and correctness of understanding the vision. Data will be presented quarterly by a vision manager. This test will measure attitudes about Motorola.
Innovation is the second goal. To measure this each office will need to set individual goals for innovation. Setting specific goals that blanket the entire process will inhibit innovation and distract from the goal of this project. Additionally, the company will keep employees educated about successes that are companywide. Successes in innovation will be shared at the monthly meeting.
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** For BA301 honors, Problem Solving, Portland State University, Fall Term, 2012-2013