Technology August 4, 2008, 7:52PM EST

Motorola: The New CEO's Real Challenge

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New Motorola co-CEO Sanjay Jha

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Innovation Insight

Jha has plenty of motivation to tackle the challenge. His base salary is no less than $1.2 million. He will receive 3.7 million restricted Motorola shares, worth approximately $35 million at the Aug. 4 stock price. He also receives loads of stock options. Think Jha might rethink the spin-off? Think again. In the event of a spin-off, Jha would receive stock and option awards giving him a 3% stake in the company. In other words, if the new company achieves a $1 billion market cap, Jha gets $30 million in equity. If it reaps $2 billion, he pulls in $60 million. And if the spin-off does not happen before Oct. 31, 2010, Motorola will still give Jha $30 million in cash.

Can he make a lasting difference where others couldn't? His reputation at Qualcomm is stellar. Under his leadership as COO, the company's chip division grew into the largest mobile chip business in the world, with $5.7 billion in sales last year. It's grown much faster, in fact, than the chip businesses of top competitors such as Texas Instruments (TXN). While Qualcomm's chip sales rose 74%, from $3.2 billion in 2004, most top rivals' revenues only grew 20% to 30%, according to consultancy iSuppli. "He's a very talented guy," says Qualcomm's Len Lauer, who will replace Jha as COO at the chipmaker. "He has strong carrier relationships and he knows the competition."

Jha's experience in innovation could prove to be the most helpful at Motorola. Qualcomm is known for staying one step ahead of rivals in incorporating extra capability into its products. One Qualcomm chip often replaces two or more of a competitor's components, analysts say. Jha is one of the people most responsible for this corporate foresight. He was the point person for developing the company's road maps, and plotting forays into new wireless technologies. "He understands the wireless industry market and how to implement [upcoming developments] in hardware," says John Lau, an analyst with Jefferies Group (JEF).

Recruiting Plans

One thing is certain: Jha can't turn around Motorola on his own. Among his first priorities will be to attract the best and brightest from around the industry to lead execution in areas where he doesn't have deep experience. Motorola has lost several top executives, especially some talented marketing and product sales executives to the likes of Apple (AAPL) and BlackBerry maker Research In Motion (RIMM). "He's going to have to get some top-notch people," one former executive told BusinessWeek. "The guys there now are the same guys that have not produced product for several years."

Jha is well-connected in the industry and told analysts on a conference call that he would do extensive recruiting for major talent. One draw some industry observers suggest for down the road is to move the phone unit from its current location in the northwest suburbs of Chicago to the West Coast, where there is a tech culture with hundreds of companies and workers that move at a more brisk pace. Jha lives in the San Diego area and Motorola has operations there, as well as in the San Jose area, that could serve as a starting point to move development and resources. "The most important thing they need is a sense of urgency," says the former executive. "He may go to Chicago and six months later decide that [raising the level of urgency would come] by moving at least part of the management team to the West Coast."

Wherever the phone unit is located, Motorola executives seem to understand that the company has to change its ways to drive better results. "Sanjay has very rigorous operational discipline and he knows the processes here that have been inconsistent," says co-CEO Brown. Resurrecting Motorola's mobile-phone unit will be a daunting task, but Jha's convinced that he's up to it. "This is unique opportunity," he says. "And I really feel that I can make a difference."

Crockett is deputy manager of BusinessWeek's Chicago bureau . Kharif is a senior writer for BusinessWeek.com in Portland, Ore.