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Motorola's Bet on the Razr's Edge

 
9/12/2005
Motorola had grown a reputation for stodgy cell phone designs. So how did Moto change from mundane to marvelous with the hit Razr phone? Start with low expectations. From Strategy & Innovation.

In the early 2000s, Motorola—the company that two decades earlier had pioneered the mobile-phone industry—seemed to have lost its way. The communications industry titan still had a respectable share of the worldwide mobile-phone market, to be sure, but Finland-based Nokia held the lead, and emerging Korean competitors Samsung and LG had the lock on cool.

While most players focused on adding more and more features to their mobile phones to avoid the specter of commoditization, in 2004, Motorola bucked the industry trend by introducing the ultrathin Razr V3 cell phone. Just 3.35 ounces and a half-inch thick, the Razr was simpler, smaller, and sleeker than any existing phone.

The $450 phone has been a surprising breakout hit for the company, selling more than a million units in its first six months and leaving rivals scrambling to come up with something equally appealing and competitive. Just as significant, the Razr helped give Motorola a much-needed image boost, making the company appear more forward thinking and trendy than it had been perceived to be.

The Razr represents "a departure [for]…the stodgy, engineering-driven, Midwestern company that was Motorola," Yankee Group analyst John Jackson said in an Associated Press story.

To successfully introduce what it now refers to as an "iconic" product, Motorola maintained a single-minded focus on simplicity, avoiding the temptation to layer in additional features that would have made the phone bigger, heavier, and less distinctive. The company also had to dodge some of the classic traps—such as consensus-based decision-making processes that can result in compromised products—that make it so difficult for big businesses to follow new strategies.

The story of how a small team and some visionary high-level intervention steered the project around these challenges and came up with a winning product provides important lessons for innovators hoping to transform other industries.

Getting the idea
In many ways, the idea for the Razr was nothing new. At its heart, it's really not much more than a very small mobile phone. But no one had ever been able to develop a phone anywhere near as small or as slick as the Razr.

Most industry insiders assumed it was technologically impossible to make a mobile phone that small, especially if it included advanced features such as a camera. Plus, at the time, the phones that were capturing all the buzz were the so-called smartphones, such as palmOne's popular Treo 600 and 650 models, that offer a multitude of additional functions such as the ability to send and receive e-mail messages and manage a calendar.

Manufacturers (including Motorola) were also racing to create devices with high-end features that would allow users to listen to music (à la Apple's iPod) and watch streaming video clips.

What could Motorola do to distinguish itself in this ever more crowded field? A team within the IT department put together a prototype of a phone that was less than one-half-inch thick. By focusing squarely on size and simplicity, the prototype caught the attention of Chief Marketing Officer Geoffrey Frost.

Roger Jellicoe, a director of operations who managed the Razr development project, remembers that Frost "was frustrated with how stodgy our products had become. He wanted a couple of initiatives up and running that would break that image." Frost's attitude toward the Razr was aggressive: "I don't care what you have to do, let's get this done," Jellicoe remembers Frost telling the team.

Jellicoe also believed the concept had tremendous promise. "I badly wanted to do this phone," he says. "I saw the potential and realized it could change the industry."

The team that developed the product concurred. The further into the project the team got, the more convinced they became that they were on to something great. "From the beginning," Jellicoe recalls, "once you picked up the Razr and used it, you never wanted another phone."

Keeping it simple
Perhaps the biggest challenge facing the Razr team was Motorola's internal innovation process. Usually, when Motorola planned to develop a new phone, representatives from each of the company's major geographic regions were asked to weigh in on the concept. The regions would request the sorts of features and functions they wanted included in the design. Each region would then forecast how many units of the model they thought they could sell. The aggregated regional plans would help Motorola then decide whether to invest in a phone's introduction.

It was a complicated dance. If a development team ignored features that a specific region deemed critical, that region would project low sales for the phone. The lowered forecast would make it tougher to get approval to move the project forward. Design teams knew they had to appease each region or their projects would die on the vine.

Obviously, this system has pluses and minuses. On the one hand, it ensures that products reflect some critical in-market feedback provided by the regions. But, it can force designers to develop compromised products that end up being acceptable to everyone yet delightful to no one. More distressing still, the process can systematically stamp out highly differentiated, counterintuitive innovations such as the Razr.

Luckily, Motorola management correctly recognized that it had to act differently if it wanted to innovate differently. Senior management, in essence, liberated the Razr from the company's development process, giving the team the freedom to create a product that they thought would be successful.

"We kept on playing the icon card," Jellicoe says. "This product was represented as this iconic, image-leading, low-sales-volume program. I think the Razr got by all the internal processes because it was characterized from the outset as an exception."

"Right at the beginning, we made a determination that we didn't care how many we sell," he adds. "It was decided we were going to do it for the learning and the brand building. That enabled it to bypass a lot of the internal hurdles."

Jellicoe is quick to note that he doesn't believe that Motorola's traditional process is faulty. "I had to be very careful to make it very clear that I believed in the process, that I thought it was a great thing and an important thing that is good for the business," he says. "But this was the kind of project that the process was never intended to apply to."

Jellicoe recalls the importance of having senior management's buy-in during the program's early days. He describes how Rob Shaddock, the group's general manager, provided "air cover" for the program, making sure the company didn't count on getting a huge boost from an uncertain venture.

"He would say, 'I don't want anybody to count on something that is this technologically advanced hitting next year. We have to make our companywide plan without it, and if this team delivers on this product, then it is all upside,'" Jellicoe says.

Perhaps the biggest challenge facing the Razr team was Motorola's internal innovation process.

Not only did this freedom make it possible to move forward without getting buy-in from each region, but the team also didn't have to go through cumbersome rounds of customer research that might have slowed development or provided conflicting information that could have compromised the product. Motorola validated the demand for the product in simpler ways.

"Everybody here is a consumer," Jellicoe says. "All our families are consumers. Sometimes you hit on a design where people say, "Wow, I have to have it!" There is a reaction you get that, when it happens, you know it's going to be a successful program."

Finally, the team did not have to work closely with the mobile-phone operators such as Vodafone and Cingular that would ultimately sell the phones. The stealth approach allowed the team to get a leg up in the marketplace.

"One of the big successes of Razr was that it took the world by surprise," Jellicoe says. "There are very few Motorola products that do that."

Solving the problems
Of course, coming up with a good idea and having the organizational leeway to move forward is never sufficient. Developing the right technology is critical, and Motorola also had to solve some tricky equipment-related issues before it could introduce the Razr.

Jellicoe says the team started its work by looking at concepts that engineers had discarded. "I found that the engineers had already cast aside some clever and promising directions based on very informal discussions with various expert groups," Jellicoe says. He put together a sketch that incorporated elements from different ideas. "None of those ideas was the complete solution, and so the tradeoffs or risks were judged unacceptable when each was considered separately," he says. "When the novel ideas were put together, however, the risks seemed manageable. This illustrates both the hazards of group thinking and the fact that innovation can sometimes move forward only when ideas are evaluated in combination rather than in isolation."

One particularly perplexing problem related to moving from sketch to reality involved the placement of the antenna that sends and receives the radio signal. To keep the phone as small as possible, the antenna had to be designed into the phone's casing. That was a problem the industry had not yet solved. Jellicoe says he sent five engineers off for a week, each charged with coming up with two different designs that would solve the problem.

A quick analysis of the proposed solutions suggested to the team that three of the resulting designs had the highest potential. The team then used some of Motorola's internal resources over an intense two-week period to develop rough prototypes with which to test the three options. At the end of the test period, the team had settled on a single design. Not only did it fit into the product's specifications, it has performed extremely well in the field.

"That antenna is showing better performance in the field than any other antenna we have in GSM," says Jellicoe. (Editors' note: GSM stands for global systems for mobile, the technology standard used in most of Europe and Asia and by Cingular and T-Mobile in the United States.) "Obviously, all of [Motorola's] GSM programs from this point on are adopting this same style of antenna. This is clearly a big win."

As Jellicoe reflects on the antenna's design, he notes that the person who came up with the winning blueprint actually was one of the younger members of the team. "He had very little antenna experience," Jellicoe says. "So he didn't have the baggage that other people had."

One of the big successes of Razr was that it took the world by surprise.
— Roger Jellicoe, Motorola

The team faced other design challenges as well, such as finding a way to mount a camera onto the tiny product and developing a keypad that was etched directly onto the phone. Although solving these problems was difficult, the team didn't have to develop completely new technologies to do so.

"We had a thin-phone concept that, for the most part, didn't require any new breakthrough technology, just a repackaging of existing technology," Jellicoe says. "That meant we could execute in a year, which meant it wasn't a man-in-the-moon concept that could take three or four years to develop."

What's next?
When Motorola introduced the Razr in August 2004, the industry took notice. Consumers quickly snatched it up. Jellicoe says the Razr exceeded the company's total lifetime projections for the product in its first three months.

Even those most intimately familiar with the product have been surprised by the benefits Razr has brought to the company.

"Prior to Razr, if we didn't show a product [to a carrier], there was no interest," Jellicoe says. "Now we say we have this secret program we are working on, and nobody wants to be left out. . . . It has kicked down some doors for us and gets us noticed. It really is a tremendous brand builder. As for credibility in the marketplace, it has been a very big win."

Not only has the phone had a strong external impact, it has had a serious internal impact as well.

"People's eyes have been opened to what can be accomplished internally," Jellicoe says. "And the bar has been raised for other programs. Razr's success suggests that a new product can have a wider impact than just within its category."

Frost says he draws four primary lessons from the Razr's success: "First, it was a bet being made, not a base being covered. We didn't even include it in the sector's business plan. Second, no compromise was the standard operating procedure. We didn't juggle tradeoffs, we just insisted on excellence," he says.

"Third, we didn't try to predict the market for the product based on history, we bet that if it was good enough, it would make its own market. Finally, we put the best, brightest, craziest, and most passionate people we had on it."

Motorola knew that it would stand alone in this category only for a short time. Indeed, competitors quickly announced plans to introduce competing phones. But Motorola's ambitious, clandestine approach gave it almost six months of exclusivity in the marketplace, a lifetime in the fiercely competitive mobile phone environment.

To keep its brand momentum, and the valuable buzz that accompanies it, the company is continuing to invest in the creation of "iconic" products in the hope that each new introduction will have the same marketplace impact that the Razr did. Jellicoe acknowledges that following up on the Razr's success will be difficult.

"There was a suggestion that we need two icons a year. I cautioned about that," Jellicoe says. "If you do something totally revolutionary twice a year, doing something revolutionary ceases to be remarkable. And I would question the marketplace's ability to absorb a revolution twice a year. If you take that approach, you have to expect that many of these things would fail."

Motorola's managers and shareholders would be unlikely to argue with "just" one massive success a year.

Reproduced with permission from "Making the Most of a Slim Chance," Strategy and Innovation, Vol. 3, No. 4, July/August 2005.

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Scott D. Anthony is a partner at Innosight. He can be reached at editorial@strategyandinnovation.com.