Motorola's Technology Strategy and Innovation Management - Case Study Example

Case Study-Motorola INTRODUCTION This is a case study in Technology Strategy & Innovation Management using Motorola as the I shall attempt to show how technology has affected Motorola and how they have responded. We shall look at how further technological advancements may affect them. The focus will be on the following: The external factors that are affecting Motorola, how technological change in particular is influencing the external operating environment of the company, how the company organises its R&D and technological development, the contribution that technological innovation is making to the strategy of the company and the main threats and opportunities posed to the company by technological change over the next decade. THE EXTERNAL FACTORS THAT ARE AFFECTING MOTOROLA There are several external factors that are affecting Motorola. I will use the PESTEL framework to analyze them. The focus, therefore, will be Political, Economic, Socio-cultural, Technological, Environment and Legal.. Let us now take a look at them in details. Political: In spite of technological advancements we have not yet reached a stage where we exist in the virtual dimension. Businesses are done through remote collaboration tools and solutions but those who collaborate operate from and within certain jurisdictions. Those jurisdictions have laws and they affect how any company operating within them can operate. Multinationals like Motorola must adapt to the political climates of their host nations. Economic: Motorola is currently the second largest telecommunications company globally. Socio-cultural: Motorola shows social responsibility and maintains good relationships with their host communities. An example of their social responsibility is the supplier diversity programme which endeavours to give certain disadvantaged groups an opportunity. Technological advancements: New solutions, new platforms and the pace of these innovations. From MRP we now have ERP and are quickly heading towards the Virtual Enterprise. Software breakthroughs have brought an expanded horizon. There are many business solutions and platforms that are constantly affecting the way we do business. Motorola is also taking advantage of these solutions and platforms. Environmental: Motorola has long term environmental policies that include designing all their products to be environment friendly, recycling or reusing all waste materials and conserving natural resources. Legal: Motorola has a well established legal department. This is demonstrated by the fact that they have an audit committee line which main aim is to allow access to the Audit and Legal Committee of the Motorola's Board of Directors. THE INTERNAL FACTORS THAT ARE AFFECTING MOTOROLA Now I want to discuss the internal factors that are affecting Motorola. I will concentrate on the threat of entry, threat of substitutes, the power of buyers, the power of suppliers and competitive rivalry. The threat of entry: Nokia, previously a minor in telecommunications overthrew Motorola the former undisputed king of telecommunications. Another smaller company could repeat what Nokia did. The challenge is predicting correctly the next technological trend. A new or smaller company can literarily become the world leader if it makes the right forecast and positions itself well to capitalize on it. There are other threats posed by certain platforms: As described by Hardwick and Bolton (1997), "Virtual enterprise companies share costs, skills, and core competencies that collectively enable them to access global markets with world-class solutions their members could not deliver individually." (Eom & Lee, 1999) This has afforded Motorola a better way of increasing efficiency while reducing costs. However, it has also opened up the door for less funded competition to increase their productivity. Threat of substitutes: The internet is growing and with this growth also comes a lot of opportunities and threats. The cost of doing business online is relatively low. This means that a less financed but more net-savvy company can take a leading position online with all the attendant benefits. For a clear example, a little known less-financed company's site, sitesell.com ranks about 150th as at the 27th of April 2006 while Nokia's and Motorola's websites nokia.com and motorola.com are ranked 636th and 861st respectively. You can verify this by downloading alexa toolbar from alexa.com and visiting all the above-mentioned sites. Technologies appear that totally alter the way things are done. Nanotechnology has such promise. But what is it 'Nanotechnology' is the engineering of functional systems at the molecular scale. This covers current work and concepts that are more advanced. In its original sense, nanotechnology refers to the projected ability to construct items from the bottom up, using techniques and tools being developed today to make complete, highly advanced products. (Treder Mike, March 17, 2006) And about the role it will likely play in the foreseeable future, "It is a larger commentary on how knowledge today is both a global currency and a global social responsibility." (Dufour & Hassan, 2005) The scope it will likely cover is equally amazing. "Just as the Internet brought dramatic changes to society and the workplace, nanotechnology may bring with it a host of new challenges for policymakers to tackle." (Bourquard, 2005) "Nanotechnology might even move the Internet to light speed." (Bourquard, 2005) This will certainly have a profound effect on telecommunications considering what has been achieved so far: The semi-conductor industry is using nanotechnology to create more powerful chips. Super strong tennis rackets, longer acting tennis balls, self correcting golf balls, windshield cleaners that repel rain, snow and bugs, and skin lotion customized for various weather conditions are some of the nanotech products currently on the market. (Bourquard, 2005) But there is a concern about how Motorola intends to take advantage of this technology. "Leaders such as Motorola and IBM have embraced nanomaterials, but by spending less on R&D, the U.S. manufacturing sector could be stumbling in the race for more innovative products." (Teresko John) The power of buyer: Customers no longer look for phones that can just make and receive calls. They want something much more. In our fast-paced and changing world, what these customers expect tomorrow will be radically different from what they raved about today. Any company that intends to remain relevant must adjust consistently to ensure they don't just meet those expectations when they become evident. They must anticipate them and develop products accordingly. The power of supplier: Mergers add new dimensions to any business. When the competition merges with another value-adding service provider, it creates a new equation that might not have been a factor in analyzing this competitor. It could actually give a corporation a quantum push that will totally redefine industry landscape and standards. This is a factor all top companies try to keep in focus. They do this by keeping a close tab on the competition to ensure that such mergers do not take them unawares. Without this close monitoring, any company is bound to lose its competitive edge. Competitive rivalry: The telecommunications industry (which is actually our main focus in this case study) is a highly competitive one. And with the global leader being the highly innovative Nokia, you can imagine the kind of influence they must be having on Motorola who, by the way, was the former undisputed number one in the telecommunications industry. Motorola received a rude shock by Nokia's overthrow. Nokia was previously an insignificant quantity in the telecommunications industry. If you add the other top contenders like Samsung, LG, Sony Ericson and Siemens, you will understand just how competitive this industry is. This has a profound effect on Motorola who are not just trying to regain their dominance but must remain on the cutting edge if they must remain relevant. They must innovate or vacate their current position. They must ensure they thrive by studying the best practices of these other companies while working hard to find a comparative advantage by repositioning themselves in this fiercely contested marketplace. BUSINESS STRATEGY There cannot be growth without any plan. Good plans are built on high quality strategies. And there are a number of factors that have really made it important for a change in strategy. One of such is the fact that long gone are the days when telecommunications was a western-world exclusivity. In fact, most buyers there now are merely replacing their sets. There is a huge and growing market in developing countries. Most of these countries are yet new to wireless communications and have yet to build brand preferences and loyalty. There is a rush to gain market dominance in these new markets. Closely related to, but slightly different from, customer expectations are global trends. Global trends can be technological, economical, social, religious and much more. We shall once again use Nokia to buttress this argument. Motorola failed to see that digital and wireless was the way to go. Nokia came with digital solutions and quickly overthrew them from their previously undisputed and little-contested number one position. They must remain alert or else they could suffer a major loss in their position. Motorola has implemented a number of processes that are worthy of commendation and should be stepped up if they truly intend to take back their previous number one position. This includes e-procurement:Motorola implemented a successful e-procurement initiative making a lot of savings in the process. (Barlas Demir, 2003 February 21). The other process is database management. They have "completed the second phase of a four-phase rollout of information life-cycle management (ILM) software that cut its production database size by as much as 50% in some business divisions". (Mearian Lucas, 2004 August 17) . I shall mention one more step I think they have taken in the right direction. It is in administration. Enet has greatly reduced mundane tasks freeing up workers' time for more value-adding activities. (Motorola: Human Resource Solution) TECHNOLOGY STRATEGY AND IMPLEMENTION There are many technological advancements that are having a profound effect on how businesses are conducted. The quality of strategy implemented by the Research and Development department goes a long way in determining the results achieved by any company.The following excerpt aptly summarizes the company's R&D strategy. At the heart of Motorola's pursuit is a radically revamped strategy for new products: Design leads, and engineering follows. Ever since its founding in 1928 as Galvin Manufacturing Co., the company had been dominated by engineers. That led to loads of innovation, including the invention of the modern cell phone. But in the late 1990s, the approach began to misfire, with a string of unpopular phones and missed deadlines. Now Zander (The CEO) has helped shift the balance of power so that Motorola's designers hold sway. "It used to be the engineers threw us a chunk of circuit boards and said: 'Put some plastic around that,"' says Daw. "Now we base everything on some experience we want to project and then have the engineering team help us get there." (Crockett, Edwards and Ante, 2005, August 8) However, I think that while this strategy should be maintained, care should be taken to constantly monitor it to make sure it takes into account other factors like the Internet/intranet which is probably one invention that has had the most dramatic effect on the way we live our lives. As the internet expands, opportunities and possibilities increase almost exponentially. Every company looks for ways of leveraging on the internet's advantages. Corporate entities now easily reach and manage their customers through the internet while handling internal matters through their corporate intranet. Web-based services have greatly reduced corporate inefficiency by making it very easy for companies to operate with a lean but mean (highly efficient) workforce. Mundane tasks are easily outsourced without the usual hassles connected with doing so offline. Highly skilled professionals can be easily contracted through an online market place like Elance. Business operations are no longer restricted to the usual "commute to office" model. Technology has not only made off-shoring and global remote collaboration possible, it has made them the de facto standard for corporations that intend to increase their efficiency while simultaneously making huge cost savings. There is now almost no difference between the workplace and other places. With remote collaboration, work still goes on in spite of the location. With telecommuting, e-procurement, outsourcing and off-shoring, the external environment has also become part of the work place. Mobility, which is provision of a seamless platform, is the immediate future of communications. This is evident in this statement by mobile communications leader, Nokia. The mobile communications, information technology and media industries are converging into one broader industry, which we call the mobility industry. This is a result of advances in technologies that enable a variety of products and services from different industries to become connected with each other. We expect this convergence to lead to the creation of new mobile devices, new services and new ways in which mobile devices are used. (Business Environment, 2004 February). It is important that Motorola remains on the cutting edge and not be cut off from the mobility industry and these other innovations. This is the time for them to ensure they position themselves to take advantage of trends related to the communications business. CONCLUSION The possibilities are enormous but there seems to be no immediate end in sight. When we think the summit has been reached, a new dimension is added. While this is true, it is also true that a lot of the inventions are time and money wasters. The ability of any company to effectively and quickly determine what is useful and what is not will affect its success with these solutions and services, and by extension, its success as a company. The bar of what is acceptable is constantly moving upwards. Wireless services, for example, are taking over from the traditional telephone system. A cell phone is no longer just a device that makes and receives calls. It now does much more - seamless commucation/entertainment solution. Therefore, for any company to remain relevant in the industry, it must constantly raise its standards to conform to industry standards. If corporations must change from previous standards to new ones there must be constant adjustment of strategies. References Barlas Demir (2003, February 21). Motorola's Services Procurement http://www.line56.com/articles/default.asparticleID=4439&TopicID=1 Bourquard, J. A. (2005, December). Tiny Technology Moves into the Big Time: No Longer Just a Concept, Nanoscience Could Drive the Next Industrial Revolution. State Legislatures, 31, 30+. Retrieved April 27, 2006, from Questia database: http://www.questia.com/PM.qsta=o&d=5012034924 Business Environment (2004, February) http://www.nokia.co.uk/nokia/0,,49767,00.html, Crockett Roger, Edwards Cliff and Ante Spencer (2005, August 8). How Motorola Got Its Groove Back. http://www.businessweek.com/magazine/content/05_32/b3946103_mz063.htm Dufour, P., & Hassan, M. H. (2005, Fall). Nanotechnology for Development. Issues in Science and Technology, 22, 15+. Retrieved April 27, 2006, from Questia database: http://www.questia.com/PM.qsta=o&d=5011972415 Eom, S. B., & Lee, C. K. (1999). Virtual Teams: An Information Age Opportunity for Mobilizing Hidden Manpower. SAM Advanced Management Journal, 64(2), 12+. Retrieved April 27, 2006, from Questia database: http://www.questia.com/PM.qsta=o&d=5001269042 Mearian Lucas2004, August 17) Computerworld http://www.computerworld.com/databasetopics/data/story/0,10801,95318,00.html Motorola: Human Resource Solution http://www.accenture.com/Global/Services/By_Industry/Electronics_and_High_Tech/high_motorola.htm Teresko John (2005, Aug. 1). http://www.industryweek.com/ReadArticle.aspxArticleID=10514 Treder Mike (2006, March 17). What is Nanotechnology (http://crnano.typepad.com/crnblog/2004/05/what_is_nanotec.html) Read More