On the 18th floor of the Merchandise Mart, in a soaring two-story space underneath a vast industrial-looking stairway, a small crowd of business types, pols, and journalists gathers. They’re here on this warm April day to check out the geek-chic new offices of Motorola Mobility, the mobile phone maker that spun off from then-struggling telecommunications company Motorola (now Motorola Solutions) in January 2011 and got snapped up by tech giant Google seven months later.
A big, silver-haired man wearing a dark suit, a Silicon Valley–style open-neck shirt, and a high-wattage smile steps up to the podium. Rick Osterloh has been the president and COO of Motorola Mobility for all of 10 days, the fourth man to run the place since its split from the mother ship. In a few minutes, this amiable Stanford grad will launch visitors on a tour of the slick 14-acre space. They’ll see images and artifacts from Motorola’s storied history—the first car radios, the first handheld mobile phones, the first device to carry voice and video from the moon to the earth—interspersed with lots of glass and metal and Google-bright colors. They’ll visit a game room complete with retro pinball machines, seven big labs with see-through walls, and 10 kitchens with tech themes. (In the NASA kitchen, snack bags nestle inside an Apollo space helmet.)
But first Osterloh gives a short speech. He feels good about the future of Motorola Mobility and of Chicago, he says. The company’s growth rate, he claims, would be the envy of any startup: “Motorola Mobility shipped 6.5 million devices in the first quarter of the year, up 61 percent over the [same quarter] last year.”
What Osterloh doesn’t mention is that those devices represent a paltry 2 percent of the global market for smartphones. Or that Motorola Mobility lost $198 million in the first quarter of 2014. Or that its losses just since Google took over have totaled more than $1 billion, even as the company has cut some 17,000 workers.
Osterloh then cedes the podium to a dapper Mayor Rahm Emanuel, who had helped convince Google brass to move the business downtown from suburban Libertyville. “Motorola Mobility will act as a major economic engine,” Emanuel declares, “bringing 2,000 jobs to the city.”
No one, least of all the mayor, acknowledges the elephant in the room. Three months earlier—less than two years after Google completed the deal to buy Motorola Mobility in the first place—Google’s CEO, Larry Page, agreed to sell the company to Chinese computer maker Lenovo for $2.9 billion. (Currently undergoing regulatory scrutiny, the deal is expected to be finalized sometime this fall.) Already, obsolescence haunts these halls. The Google colors were out of date before the place even opened.
As for those 2,000 Chicago jobs? Lenovo CEO Yang Yuanqing can do with them what he likes. The future of Osterloh and his Google-anointed team, in particular, looks far from certain.
Getting outflanked by tech upstarts, hacked in two by a fearsome corporate raider, and finally taken over in part by a Chinese company that exists largely because of the world Motorola made for it: Such a fate would have been unthinkable 20 years ago. Motorola was then one of America’s greatest companies, having racked up a stunning record of innovation that continually spawned new businesses, which in turn created enormous wealth. Motorola had the vision to invest in China long before most multinational companies. It even developed Six Sigma, a rigorous process for improving quality that would be embraced by management gurus and change the way companies nearly everywhere operate.
However, as the history of many giant corporations (Lehman Brothers, General Motors) shows, great success can lead to great trouble. Interviews with key players in and around Motorola and its spinoffs indicate that the problems began when management jettisoned a powerful corporate culture that had been inculcated over decades. When healthy internal competition degenerated into damaging infighting. “I loved most of my time there,” says Mike DiNanno, a former controller of several Motorola divisions, who worked at the company from 1984 to 2003. “But I hated the last few years.”
Motorola began as Galvin Manufacturing Corporation in 1928, just before the Great Depression, founded by a 33-year-old native of Harvard, Illinois, named Paul Galvin. Its small offices stood on Chicago’s West Harrison Street, a dozen blocks from the Loop. Two years later came the company’s first big breakthrough: commercializing the first mass-market car radio by figuring out how to eliminate static interference from under the hood. But success didn’t come easily, says Paul’s grandson Chris Galvin, who ran Motorola from 1997 to 2004. Paul was a serial entrepreneur, and two previous ventures of his had flopped. “The company’s success,” Chris explains, “was born of failures.”
As Paul and his brother Joe built the company, they created an environment that drove people to invent and fail and learn and invent again. Motorola became known for its culture of risk taking, its investment in training and development, and its almost fanatical insistence on respectful dealings among employees.
(Thanks to www.chicagomag.com)
Good luck,
Petr
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