Who Shot Motorola?
On Wednesday, September 17, 2003, Motorola’s board had a routine meeting at the company’s headquarters, in Schaumburg, Illinois, and discussed its unhappiness with Galvin. During his tenure, Motorola had made some disastrous mistakes. He oversaw the launch of the Iridium satellite-phone system, which cost Motorola $2.6 billion before it went bankrupt. He clung to the money-losing semiconductor division despite the board’s insistence that he sell it. Perhaps worse, he allowed the company to miss the transition in the late 1990s from analog cell phones to digital ones, enabling Nokia to blow past Motorola in handset market share. At the time, Motorola’s being bested by Nokia was the equivalent of the New York Yankees losing the World Series to a Finnish baseball squad.
Galvin had flaws as a young C.E.O. Executives who worked with him say he stood by senior managers even after repeated screwups. “He had a hard time pulling the trigger,” says Glenn Gienko, who was Galvin’s head of human resources. “His heart got in the way.”
Outsiders who came to Motorola say they found a stifling bureaucracy. Top executives at big Motorola customers like Nextel and AT&T Wireless thought the company was often arrogant and difficult to deal with. And as good as Motorola was at engineering, it stunk at software. It still does.
It’s also true that Motorola had always been a company that shifted focus and had huge hits and misses. In the 1930s, it commercialized the car radio but no longer makes them. It was the world’s fourth-biggest TV maker in the 1960s but sold the business in 1974. It has created three of the biggest-selling cell phones in history: MicroTAC, StarTAC, and Razr. But between those peaks were mostly arid valleys of so-so sales. Chart Motorola’s stock during the past 30 years against the Dow Jones industrial average, and Motorola’s line looks like a jagged EKG readout by comparison. So the company’s ups and downs under Galvin were not exactly a new phenomenon.
The horrific fall at Motorola that led to Galvin’s ouster was driven, in part, by outside forces. First came the telecom crash in 2000, followed by 9/11 in 2001, when Motorola lost $3.9 billion. Every telecom-related company got killed, whether newcomers like Qwest or longtime players like Corning, which makes fiberoptics. Galvin laid off 60,000 people as he tried to restructure the company. Yet by the fall of 2003, there was no upturn in sight. The stock was climbing but still wasn’t back to the levels of a decade earlier. Global competitors—Nokia, Samsung, Sony Ericsson—were gaining strength and market share. The press had taken to beating up Galvin, calling him a dud. Compared with nimble Silicon Valley companies, Motorola was seen as aging and slow-footed. The board recognized all of that and felt pressure to do something. The two newest members—Indra Nooyi, now PepsiCo’s C.E.O., and Douglas Warner, the former chairman of J.P. Morgan Chase—in particular, agitated for change.
After the board’s meeting, lead director John Pepper and most senior director Ken West surprised Galvin in his office. As Galvin has told several associates, the two men informed him that the board had “decided to make a change.” Galvin’s immediate reply: “Don’t do this.” He insisted that a turnaround was about to happen and that his successor would get the credit. They didn’t believe him, and the board had not yet seen financial numbers that might have convinced them Galvin was right. (Pepper, now chairman of Disney’s board, declined to comment; West died in 2006.)
The following Friday, Motorola euphemistically announced that Galvin had decided to retire. Galvin made a bitter statement—unusual in such situations—saying he did not agree with the board’s decision.
After Galvin’s departure, Motorola’s board seemed enamored with the idea of hiring an outsider who might shake up the company the way Lou Gerstner did at I.B.M., pumping new life into the firm in the 1990s. Zander’s name popped up from recruiters. The unvarnished, wisecracking Zander had risen to the No. 2 position at brash Silicon Valley computermaker Sun Microsystems before leaving in 2002 when it became clear that he wasn’t going to run the company. Zander’s contemporaries recall him as a creative marketer and showman, and a good manager as long as his duties stayed narrow. Otherwise, he had a hard time focusing, often veering from topic to topic, former associates say—a tendency that hurt him as his duties expanded at Sun (and, later, as C.E.O. of Motorola).
Zander was biding his time at Silver Lake Partners, a private equity firm, when Motorola called. Pepper and Zander had dinner. Pepper had been bothered by criticism that Motorola had no overall strategy or image; its businesses ranged from cell phones to cable modems to military radios. So Pepper asked Zander what he thought Motorola should stand for. Zander looked down at the bat-wing logo on Pepper’s Motorola phone and said the M should stand for mobility. “You ought to own mobility,” he told Pepper and pointed out that upside down, the logo would be a W, for wireless. Pepper, a former C.E.O. of Procter & Gamble, where clear branding was essential, loved it. He had argued with Galvin about Motorola’s need for a simpler strategy for Wall Street analysts. Galvin countered that Motorola had a long history of moving in and out of various industries and that the company’s multiple product lines actually helped it find combinations that created new businesses. But Zander told Pepper what he wanted to hear: M for mobility. Simple.
Less than a month after Galvin was fired, Motorola reported flat earnings for the third quarter of 2003 and a 5 percent increase in sales; it was the start of an upward curve. Two months later, the board announced that it had hired Zander as C.E.O.
The board brought on Zander to turn Motorola around, but by the time he took office, in January 2004, a significant turnaround had already begun. Zander’s separation agreement from Motorola prohibits him from talking to the media about the company, but from conversations I had with him in the fall of 2007, when he was still C.E.O., and with people who know him, it’s clear what his take would be.

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