Welcome back to my BLOG!  I had to take a few weeks away to finalize the book with my publisher (Wharton Press/Prentice Hall) and am now looking forward to its release in May or June!  Of course a lot has happened since I last blogged, and I’m looking forward to jumping in with comments on how current businesses can dramatically improve results by applying The Phoenix Principle.  Let your friends and colleagues know the blog is back —– and encourage everyone to comment!

After all the positive things I said about Motorola (see chart here) over the last 3 years, it is befitting that my return posting be about this company that is newly belueaguered.  Last Friday Motorola executives gave investors, and employees, the impression they intended to break up the company (see article here) – and jettison the cell phone business which Motorola invented!  On the face of it, this action appears to indicate Motorola’s executives are ready to through in the towel on reviving Motorola as one of America’s leading technology companies.

When Ed Zander joined Motorola he embarked on a remarkable start.  He stopped Defend & Extend practices implemented by the Galvins, focused on finding competitor weaknesses, Disrupted long-held Lock-ins and opened several White Space projects.  And there was rapid improvement in ALL Motorola divisions.  What went wrong?

The Siren’s song of quick returns from Defend & Extend Management lured even the maverick CEO Ed Zander onto the rocks of disaster.  Instead of keeping the focus entirely on the future, Mr. Zander allowed himself, and his company, to start planning from the past.  As quickly as July, 2006 – a mere 2 years after starting Motorola’s remarkable transformation – when asked how he intended to keep up company growth he responded with "More Razrs" (see article here).  He was willing to rely on extending past success, rather than discovering new solutions that would maintain growth.  And this small turn, this willingness to think he could milk a company cow, undid Motorola.  It turned out that as he spoke these words, sales of Razr handset phones were peaking and the handset business was entering a precipitous profit slide. 

Of course, competitors learned from Motorola, and copied the company.  Similar products came to market, and Motorola found itself slashing prices to maintain sales.  The company continued to attack competitors, Lock-ins and open White Space in the rest of its businesses (see article here).  And those businesses are continuing to do quite well, as revenues and share are rising along with profitability.  By focusing on the future, and how to be stronger in set-top boxes, wireless networks and infrastructure products through new products and new ways to compete, those businesses have applied The Phoenix Principle to great success.  But these successes weren’t enough to overcome the disaster wrought by the Defend & Extend decision in cellular handsets. 

The lure of D&E Management is strong.  Executives would like to believe they can live on past successes.  They would like to avoid scenario planning, competitor paranoia, the tension of Disrupting Lock-ins and managing White Space.  But in today’s global internet economy, they can’t.  Competitors can acquire resources too fast, and overcome competitive hurdles too easily.  There really is no rest for the weary, and to any executive willing to listen to the Siren’s song of cut costs (Motorola started laying off thousands in 2007 – after Disruptions had created success and leadership began thinking about how to D&E that success) they need to pay close attention to what happened to Ed Zander and his team at Motorola.  D&E may sound good, but it doesn’t produce revenue and profit growth that will make a company successful.