Friday, September 26, 2003

Motorola Late to Market
Motorola's announcement today that it is late to market with camera phones and will miss having a presence in this hot new market prior to Christmas may well have been one of the reasons, it is now looking for a new CEO.

The strategic implications of being late to market are actually much more important than many people realize.

Most focus on the cost of lost sales. Perhaps they mention something about the brand value deterioriating.

But I would argue that the real damage from being late to market is that you have fewer opportunities to learn from customer experience. While you are not learning, your competitors are.

And the more you learn from customers, the more input you have for your next generation of product. THe more you can correct errors, fix usability issues, discover opportunities for increasing value, etc.

Those with experience in the new product area and those that have studied success have learned that competiting in the market with the most demanding customers and having international experience in product design improves both the likelihood of product success and the subsequent marketshare achieved.

It seems no coincidence as a result, that firms like Samsung and LG from Korea, Nokia from Europe, and Sony from Japan have out innovated Motorola. Their presence in markets with higher cell phone usage has clearly benefitted them.

Over the years, I have been very taken with the idea of "cycles of learning" or time-based management. In software, there is very little argument any more about the importance of iterative prototyping, or the notion that you should build software quickly, get feedback from users and then expand the project. But firms like the Thomas Group out of Dallas have argued in favor of cycles of learning in manufacturing - small lots and make sure you measure performance so that you can improve it. It's controversial, but the idea is less about small lots and more about what it takes to learn about optimizing.

I have a friend, Sue Rudd, who used to work at Motorola. She made the point to me many years ago that the problem with Six Sigma quality programs is that if you are measuring quality and manufacturing performance, "stopping the production line" will often count against you. An interruption worsens your metrics. She commented that well managed companies try to measure the rate of increase in quality. That takes different incentive programs and often requires investment in new equipment, training and leadership.

Several years ago, I worked with a Japanese firm that had been very successful in Japan providing tools for speeding up the design of embedded systems (i.e. in products like cell phones, PDA, consumer electronics). Their research suggested that over the past 3-5 years, the complexity of embedded systems and the time available for developing them caused the design process to have to be 12X more efficient. It's hard achieving that kind of performance improvement without leadership committed to achieving that kind of success.

Having led projects that improved product development cycles by an order of magnitude, it takes secure manager permitted to make mistakes, and it takes time to improve processes. It rarely happens over night.

Alistair Davidson

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