Motorola Analogue/digital Failure
Essay Preview: Motorola Analogue/digital Failure
Report this essay
Business recap of the companys approach and market and competitive position
Initially Motorola was the market leader. This position was entrenched by a long history of successes going back to its development of the first walkie talkie used by the US Military. They produced the first pager. They were one of the first companies to adapt the Total Quality Management system when predominately Japanese companies were cornering the efficiency of manufacturing. In 1990 Motorola had total revenue of $10 billion with what is staggering growth for a large corporation of that size of 27%. The net income at its peak was $1.8 billion and also growing exponentially at 58%. Its market share was also an impressive 60%. On the surface the company was an astounding success story, an American dream.
When Motorola launched itself into the cell phone market, it had a huge competitive advantage. It had the art, the science and the technology of business to really thrive. Equally it had the distribution networks, the financial backing and the sales people that other companies lacked. The current way of thinking was that analog technology was best. This was not really thought out too much. It was assumed, based on the fetishes of the mainly engineering dominated company. In fact analog had only one main strength, which was about to disintegrate; it had better area coverage than Digital. But in all other respects, Digital technology was far superior; you could have 10 times more subscribers for the same band length. This enabled the network companies to spread their fixed costs and expand its user base with little impediments. Not surprisingly, the network providers were crying out for Digital.
Yet still the management of Motorola did not heed the call to action. They did not listen to their customers who wanted Digital. They did not listen to the network providers. They did not listen to their own sales people out in the field. At the same time they were deaf to the noises made by their competitors, such as Nokia and Ericsson. These organizations purchased the patents from Motorola to use Digital technology and made handsome profits from it.
2Strategic flaws in the companys approach
The main idea that is conveyed to me is the lack of listening skills throughout the organization. They are all too tied up with mindlessly developing technology for its own sake, within a self-perpetuating cycle of corporate insanity. No one questions the values of the company or whether its culture is useful or effective. They are too obsessive, too insular and in a way too lazy to look at alternatives. This is even more the case with the hands off style of management. Rather than commissioning reports on digital technology, listening to the demands of the customers or the network providers, the top brass are content to be lulled into a false sense of security by the technologists who have long since taken leave of their senses.
This scenario reminds me of a book called the madness of crowds where the author examines situations where culture and values of groups of individuals impel them to make decisions that as a separate entity would clearly be classed as insane. What Friedrich Nietzsche said “Madness is rare in individuals, but in groups, organizations, and nations it is the norm.”, is completely apt in the case of Motorola. Finally when they realized their error, they did not respond in a calm or balanced way. They caved into to fear-based exercises,