Motorola: The Loss of a Once-Great Company

Motorola is pitching its split into two companies, announced this morning, as a chance to re-focus and grow. It smells more like the death of a great American company.

It certainly feels that way to the Galvins -- the family that built and ran the company for most of its existence. Paul Galvin founded Motorola; his son Bob Galvin made it huge; and the grandson, Chris Galvin, was CEO from 1995 through 2003 -- when the board forced him to resign. Motorola had a spurt of growth just after Chris Galvin left -- which Galvin and a lot of others believe came from products Galvin had teed up -- and performed pretty well through 2006 under CEO Ed Zander. Since then, Moto's cell phone business has sputtered and lost market share while its stock price has gone off a cliff.

Chris Galvin recently told me that his family has sold 99% of their Moto holdings -- a devastating vote of no-confidence. "Motorola as an innovator is dead and cannot be retrieved," he said. Yes, of course, that could sound like sour grapes -- except that he might be right. An investor, Carl Icahn, has succeeded in putting short-term shareholder gain above everything, forcing Motorola into pieces that surely can't have the cultural strength or market impact of the whole.

Fourteen years ago, when Jim Collins and Jerry Porras wrote their groundbreaking book Built to Last, they included Motorola among just 18 global companies that had enduring top-shelf success. Moto was especially cited as a company that had a built-in mechanism for renewal. It periodically dipped into a difficult time, but found new businesses and exited old ones and got going again. It could do that because it had patient management -- the family that built the company. Once that was gone, crass shareholder returns took the lead.

Splitting into pieces doesn't seem like the same recipe that got Motorola onto the Built To Last list.

Motorola's individual businesses might do fine. Perhaps they'll surprise everyone and bounce back. But at the moment, the split seems like a giant step back from greatness -- and maybe a step toward that place where you'll find other once-iconic names like Polaroid, Westinghouse and Sears.

(A disclosure and bit of trivia: The quote on the front of most paperback copies of Built To Last, attributed to USA Today, is me.)

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