INTERVIEW-CEO Galvin changing Motorola's culture
10:07 AM ET 06/29/98
***maybe something with the Q in the future?
Caxton
By Susan Nadeau
SCHAUMBURG, Ill., June 29 (Reuters) - In forging
partnerships with industry rivals and embarking on new joint
ventures, Motorola Inc. Chief Executive Christopher
Galvin said the company is embarking on a new strategy that
constitutes nothing less than a change in its corporate
culture.
"To some degree, the strength with which we hold
convictions can look like we're uncooperative, but we were
standing our ground," Galvin said in an interview. "That gets
built into the culture."
Motorola, an early leader in cellular phones, pagers and
semiconductors, came to be seen as an aloof, free-standing
pillar in the high technology world. But humbled by declining
profits and recognizing the industry is buzzing with change,
the bellwether technology company is changing its ways.
"The culture we had wasn't arbitrary," Galvin said of the
old ways. "We didn't wake up in the morning and say let's be
uncooperative...The culture grew out of the fact that that's
what it took to build businesses."
The old ways were born of a world that criticized the
company, for example, for its then-visionary investment in what
many considered a costly and frivolous technology, the cellular
phone. The company had to have a backbone, he said.
But Galvin said he has made changing that culture a
priority so far in his 18-month tenure as chief executive. He
is the grandson of the founder of Motorola, and the third
Galvin generation to lead the company, and has seen the need
for change evolve as the market did.
Now with acceptance of wireless communications firmly in
place, numerous niches are developing, making partnerships
practical and necessary, Galvin said.
Just last week Motorola said it planned to join forces with
its European rivals, Nokia Ab Oy and Telefon AB L.M.
Ericsson , to develop a standard operating system with
hand-held computer maker Psion Plc of Britain.
Motorola last month abandoned plans to develop its own
"Internet in the sky" satellite system and folded it into a
rival system being built by Teledesic LLC, backed by Microsoft
Corp. Chairman Bill Gates and wireless communications
entrepreneur Craig McCaw. Motorola gets a 26 percent stake and
is the principal contractor.
Galvin lauded this deal as a prime example of partnering
and change in the company. McCaw brings to the deal his proven
capabilities as a telecommunications operator and a financier,
while Motorola will provide the satellite technology. Motorola
has already successfully put into orbit the 66-satellite
Iridium mobile communications network, with commercial launch
due in September.
"Chris Galvin has brought a refreshing world view to
Motorola that places a new emphasis on collaboration and
partnership," McCaw said when the Teledesic deal was announced.
The list of partnerships goes on -- a key semiconductor
alliance with Lucent Technologies Inc. ; other projects
with Siemens AG , minority stakes in NetSpeak Corp.
and Neoware Systems Inc. ; even a new pact in
the emerging biotechnology industry.
"They've always tended to have their own culture," said
Robert Wilkes, analyst with Brown Brothers Harriman. "I do
think they're reaching out."
In fact, the buzz word at the sprawling Schaumburg,
Illinois Motorola headquarters is "renewal." The changes come
as Motorola is expected to report its first quarterly loss in
13 years, sideswiped by what Galvin called the Asian currency
and consumer confidence crisis. The company's plan to cut costs
and reorganize had to be accelerated, he said.
Earlier this month, Motorola announced a plan to
consolidate and cut annual costs by $750 million, lay off
15,000 workers and take a nearly $2 billion second quarter
charge related to the plan. Even excluding the charge, the
company said it could post an operating loss, and analysts on
average expect a loss of $0.04 a share for the quarter. In
1997, Motorola's sales edged higher to $29.8 billion from $28.0
billion in 1996.
Motorola's stock price has declined from a high last summer
of about $90 to Friday's close of $52.375.
A year ago Motorola restructured its semiconductor group,
and a plan for its communications business will be detailed
next month, Galvin said.
He declined to give the specifics, but confirmed that one
part of the communications business will focus on products for
consumers and the other on equipment for operators.
The plan will combine the now separate paging, two-way
radio, cellular phone and infrastructure businesses, giving way
to more internal and external cooperation.
Galvin noted this is a concerted move away from the now
"dysfunctional" warring tribes culture within Motorola, which
in the old world promoted innovation through competition.
Galvin said he is holding his management team more
accountable for developing customer relationships.
"The attitude is more prone to cooperate than what people
may have described who had a bad experience with us as arrogant
five or so years ago," Galvin said, noting however that
customers have "long memories".
"I think our team knows we want to change, and we want to
change fast," he added.
((Chicago newsroom, 312 408 8787, fax 312 922 6657,
chicago.equities.newsroom@reuters.com))
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