Last January, a couple of weeks into his new job as CEO of Motorola Inc. (MOT), Ed Zander paid a visit to his biggest customer, Nextel Communications (NXTL). Motorola had long been the sole supplier of phones and network gear for the Reston (Va.)-based telecom. But by delivering phones after promised deadlines and at prices Nextel considered too high, Motorola had made the relationship as rocky as Virginia's Stone Mountain.
So, Zander sat and talked with Nextel CEO Tim Donahue for two hours. "We had real serious issues," Donahue says. Zander listened and then assured Donahue that he would usher in a new responsiveness at Motorola. "I was taken aback," Zander says. "I got angry. I won't tolerate anything but great customer delight."
He assigned Motorola Chief Information Officer Sam Desai to patch up the relationship. Desai now meets with Nextel monthly, and Motorola delivered five new phones during the second quarter to its key customer. "It's not just rhetoric, it's being demonstrated in actions," Donahue says of the renewed commitment Zander is bringing to Motorola. "We have seen an absolute sea change in the attitude and service."
Zander spoke with BusinessWeek Chicago Deputy Bureau Chief Roger O. Crockett, after Motorola reported its second straight quarter of strong financials on July 20. Here are edited excerpts from those comments, plus others from an interview the high-energy Zander gave in his 12th floor Schaumburg (Ill.) office last quarter:
On Motorola's execution:
Execution to me is a cultural part of the business. This is the touchy-feely, qualitative part. Do the employees, does your management team, does everybody here understand the importance, the priority, what it is when we say execution? It's meeting your customer expectations, delivering on your numbers, quality, and being held responsible and accountable.
I know it all sounds so obvious. When people say what's on your mind? It's execution. What's execution? It's doing what you say you're going to go do when you say you're going to go do it. It's customer delight. It's making your numbers on the quarter, delivering on your expectations, and its holding people accountable.
Pretty simple stuff, but they've got to hear it over and over from me, and then my staff has to got to deliver that same message. That's how I get up in the morning. I'm thinking about: How are our products being received in the marketplace?
The other part is the quantitative stuff. We changed the incentive plan for all of the employees. Now 25% of every employee's incentive is based on some very defined quantitative metrics that measure customer satisfaction, cost of poor quality, customer liability. I hate to tie it down to that level, but we are. We pay sometimes for what we want. I added much more weighting on total corporate performance than individual business performance. If you're my staff, I want to promote teamwork, working across sectors, across businesses.
On the late delivery of a much-anticipated camera phone for Verizon (VZ):
We wanted to make sure that everything was right. We shipped 14 days late. But, c'mon, we were scheduled to ship 27 phones in the first half. We got 23 of 27. I'm happy with that progress. I'll be really happy when we ship 27 out of 27. We want to get every one done on time.
But we have $8.7 billion of [companywide] revenue that we shipped [in the second quarter]. On the whole, they did a really good job. When a baseball team executes, they win games, and we had a really good quarter. The glass is half full, not half empty. A year ago it wouldn't be 23 out 27, it would be a lot less.
On his message to customers and approach to customer service:
The customers are pretty nice to me, and then after about a half an hour, they start teeing off. You sit there and write down stuff. Then I give them my agenda about my commitment to improving it. I don't promise anything. I listen. It has been a painful few months in front of all our customers. They've been not only disappointed, they've been neglected.
Our sales force does a great job. It's not about an individual sales person. It's really senior management not engaging with customers at high levels, not delivering on the quality and customer satisfaction. I write e-mails. I call them. It's a basis to make them understand that I know what the issues are.
The best thing to do if you want to change a company is to use the customer as your change agent. If I lost a deal, you don't want to be near me. If I've got a customer that has announced another company's product that I think is better, you don't want to be near me. That's what it's all about.
On teamwork and commitment to corporate performance over business unit performance:
I'm getting the [senior leaders] to meet more as a team. One of the things that I saw here that I wanted to change: If someone was one of my direct reports running the government business, he spent 100% of his time wherever that business was and showed up once in a blue moon.
And the corporate office ran this company in a "spoke" model. I don't buy that. We're communications. We're one company. We're tech. We have a lot of common issues. I told them that you may be running HR or the auto business, but you have to spend 30% of your time helping me run the company. You're part of the Motorola, Ed Zander, running-the-company board. Decisions aren't going to come out of this company one-off. I'm not going to cut budgets, head count, R&D, buy a company, without us sitting in a room discussing these big issues.
Now, I believe in participatory, not consensus, management. I don't sit around for four months trying to get everybody bought in. I hear opinions, and if we all agree, great. I we don't, I'll make a decision.
On changing Motorola's laborious meeting culture:
I'm trying to wean them away from the hundred PowerPoint slides. My meetings consist of a white board, sometimes an easel, handouts, but mostly discussion. I want them to use this [points to head]. Presentations used to be 100 words in 3-dimensional color per slide, and a hundred slides. C'mon.
So, for instance, in modeling the company I went to the white board, and I said, "You all had had Business 101. There's revenue, gross margin, R&D, sales and marketing, profit. Let's start at the bottom: What profit do we want to return to our shareholders?" We put a number there. Now you test it.
You look at your competition. So I just looked at Nokia (NOK), Samsung, Cisco (CSCO), Intel (INTC). I know them by heart. You take 'em and throw them next to [ours]. Then we had each of the businesses get up and show their competitor. The broadband business did Scientific Atlanta (SFA), the handset business did Nokia. You know what? It wasn't 400 slides. And all of sudden, we began to converge on a model of where we are today.
On creating a sense of urgency:
What I'm trying to do is get the commitment levels up. It's not just about products. It's the tone of: If the phone rings on this floor [slams his hand on the table], I want it answered in two rings. We have responsiveness problems. I want everybody to start waking up and saying who do I serve? I want them to be very externally focused and be able to measure and hold people accountable. The first part is changing the cadence of the company. The sense of urgency, speed, execution, decision-making.
Look [sighs], the leadership of this company has to set the example because it's going to be hard to move this ship. It's a big ship. My expectation, therefore, is it's going to take some time. But if I can empower, and measure, and hold the senior team accountable, and put in the right cadence to go do it, I can change some things around here...which we are.