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Fixing Symbol's woes

Symbol Technologies CEO William Nuti tells how he turned the beleaguered barcode company into an RFID player.

Symbol Technologies CEO William Nuti is good at pulling out the weeds in corporate restructuring.

And this he did when he moved up the ladder last year from his chief operating officer position to head the once-flagging barcode applications company that had been dogged by several accounting scandals.

A former top executive at networking giant Cisco Systems, Nuti was successful in weeding out the bad performance issues and harvesting the good. In less than a year, the company's revenue rose to $1.3 billion, up 13 percent from the year before. Operating costs were also slashed, by $15.5 million.

Nuti also refreshed the company's entire product line, steering Symbol toward new areas, such as RFID, or radio frequency identification.

In a recent interview with CNETAsia, Nuti spoke about several areas, including intellectual-property rights, and privacy issues concerning RFID.

Q: You recently filed a second patent-infringement lawsuit against Intermec, relating to some of Symbol's patents. Can you give us an update? And how are your customers affected?
Nuti: No customer will be affected whatsoever. A lot of attention has been paid to it--more than we anticipated. It's simply a matter of us protecting our intellectual property in the market that we have worked so hard for.

We have 875 patents that we've developed over the last 30 years and where we've spent an incredible amount of money. The two areas where we are launching suits against Intermec are wireless and 2D barcodes. We think we have an excellent case in those areas.

How do you view the fact that some businesses have abused intellectual property for their economic benefit against the greater good of society?
Nuti: As the CEO of a company that has invested so much in intellectual property, it's disturbing for me to see another business in the market act with the lack of integrity or ethics that I would expect the global business landscape to live up to.

Do you agree that software patents are accorded too easily?
Nuti: I think that just like hardware, software patents are equally important in the market. The buzz around Microsoft spending a lot of money developing their software and their patent infrastructure has to be respected from a global perspective.

But on the flipside, I also believe that you have to offer reasonable and nondiscriminatory license terms for companies to use that software or hardware.

It is Symbol's goal to lead in the RFID industry. What is the company's position so far? Right now, I would characterize Symbol as the leader in RFID technology for the supply chain industry, as well as travel and transportation. Clearly, there is a large RFID market that we don't participate in--the active tag market. We (therefore) can't characterize Symbol as the leader in RFID in the general sense.

Technology is always a double-edged sword. RFID, while useful to businesses in streamlining logistics, is considered a bane for privacy. Any thoughts?
Nuti: I actually think that a lot of education needs to be done on a worldwide basis with regard to RFID, because an RFID tag is nothing more than a talking barcode. It's a serial number identifier that's transmitted, and nothing more than that.

So, there isn't any risk of a privacy breach when all you're receiving is a unique identifier, like a license plate number. And when I receive that data, I need to match it to a database to give me more information about what that means. And RFID tags don't have any power--they have to be powered by a device in a specific range.

The key issue is one of education. When people understand how the technology works, they will no longer have a concern about privacy.

Are privacy advocates against RFID technology really blowing things out of proportion?
Nuti: Absolutely, there's no doubt about it. And it's because they don't understand the technology. Once they understand the technology, I think they will quickly back off the concerns they have. It's up to us to educate them. I spend a good amount of time educating world leaders in Washington, D.C., and around the world on RFID--the technology and why there shouldn't be any concern with privacy.

Do you get threats from privacy advocates?
Nuti: No, I haven't directly received any letters or threats. In the 1970s, people were concerned about the same privacy issue with barcodes. And of course, once people understood the technology, their concerns went away. The same will happen with RFID.

After taking the helm at Symbol Technologies, what magic did you weave to turn the company around?
Nuti: I didn't weave any magic. I had a good management team, and they've done a great job with our product line. We focused on five things. The first was company culture. The second was operational processes. The third was vision, followed by strategy. Once we understood that, we developed our organizational structure to deliver on that.

The output was a good financial performance. We worked 24-7 for a few years on rebuilding our product line, our go-to-market strategy, services, capabilities and marketing strategy.

Did your experience at Cisco help in any way?
Nuti: Absolutely. At Cisco, I had a reputation for being "Mr. Fix It." I was shipped around the world to either build or restructure parts of the company. For many years, I had been doing fairly large-scale restructuring at Cisco. This certainly helps you, skills-wise.

But nothing really prepares you for a turnaround of this magnitude. This was--no hyperbole intended--maybe one of the largest or more significant turnarounds in corporate history in the last decade.

According to media reports, you engineered a plan to sweep out the "toxic culture" at Symbol. What was toxic before you came onboard?
Nuti: There was a toxic subculture in the company that was largely due to unethical management, but it involved very few people. The other aspect of the culture that we needed to deal with was how we essentially had "muscle memory" on how not to make money.

We did not make any profits from 1998 to 2002. Those were some of the biggest boom years in information technology history to not make money during that time frame. It was surprising, to say the least.

For six years, people were doing things and thought what they were doing was translating into profitable growth. It was only when we restated the financials that people found out. What they (the previous management) did was leading to a non-profitable company.

We had major behavioral and habitual changes that needed to take place inside the company (in order) to build "muscle memory" on how to grow profit from the bottom up. That required a substantial change in management effort. We restructured every business and function of the company. Out of 5,600 people in the company, we brought in 3,600 new people in two-and-a-half years.

We built our business systems up from a company that managed itself on Microsoft Excel to one that is connected globally with a set of applications that's used consistently on a global basis. And we spent a lot of money and time on leadership and people development to attack this notion of muscle memory.

Lastly, we set in place a very aggressive communications plan. We were very mind-numbing when it comes to ensuring the consistency of our messaging internally, in the company, and externally--so people would understand where we were going and how we were going to get there.

In terms of new product introductions, what were some of your big bets in recent years?
Nuti: We completely refreshed our entire product line. Two years ago, there were really only three businesses in the company: advanced data capture, mobile computing and wireless LAN.

We made two very large bets. The first was the acquisition of Matrics, which allowed us to move into the RFID space. The second was opening the mobility software division, which is focused on end-to-end value added solutions for the enterprise mobility architecture of capture, move and manage. Essentially at its core, it's a mobile and wireless LAN deployment and management system that would enable our customers to drive down total cost of ownership, as well as gain control of the mobile edge.

You were once touted as the heir apparent to Cisco boss John Chambers before you took over Symbol. What were your opportunity costs back then?
Nuti: I was very flattered to be considered as a possible successor to John. But by the same token, I think it's always difficult to follow a John Chambers. I wasn't interested in taking a $24 billion company to what was next.

I wanted to set out on my own and take a smaller company to the size of Cisco and challenge myself along those lines to achieve greatness on my own.

This interview was pitched as a rare opportunity to meet a high-profile technology CEO. How accessible are you to your employees and customers?
Nuti: I don't consider myself the CEO of Symbol. I consider myself an associate in the company. I don't think I carry myself as the CEO. I'm a pretty regular person.

I would love to spend more time with customers, and I will, now that we've become more external in our focus given the turnaround. I probably spend 30 percent of my time with customers today, but I'd like that to be 50 percent. And I spend probably 80 percent of my time with my associates. I'm rarely behind closed doors in my office at all. I'm a very hands-on leader, not a micro-manager, although some may disagree.

You have been described as a hands-on operator, with marketing savvy and unflagging energy. Now, where does that energy come from?
Nuti: (laughs) It comes from a passion for my work and my passion for the vision of the company. I genuinely believe in our company, vision and people. If you dig deep, it also comes from a great driver of very successful people: the fear of failure.

Your regular interactive meetings with top executives allow you to instill a learning culture at Symbol--how successful is that?
Nuti: It's working well. Symbol is very much a start-up. It is almost newly founded because of such substantial changes in the company. There has to be consistent interactive communication on a global basis, so that (1) people understand where you are going and how you intend to get there, and (2) you listen carefully to what the challenges are in achieving those goals.

Making customer satisfaction part of employee compensation--how did your staff react to that?
Nuti: Customer satisfaction and yearly performance are part of the bonus structure for everyone in the company. It's 25 percent of my yearly bonus, and that's not small.

When all is said and done, we put the money where our mouth is, and not many companies do that. It's only when you make it part of your employees' compensation that you will get the focus and attention you need on customer satisfaction.

In the past year, our customer satisfaction has gone up. In 2003, our customer satisfaction rating was 3.51 out of 5, and in 2004, it was 3.81 which is a fairly healthy jump year-on-year. Every year we dive deeply into the customer satisfaction survey results and come up with plans to address the top three to five functions that will improve customer satisfaction. We chart that throughout the year, measure our progress against that, and rerun the survey to see if we've improved.