Firing Workers Won't Fix Motorola or Pfizer

Getting rid of workers, you see, lets a company forecast the kind of immediate cost savings and surging profit margins that keep shareholders from marching on the executive suite. Pfizer threw shareholders an even bigger bone by authorizing $10 billion in share buybacks in 2007 and promising further increases in the company's dividend payout.

None of this has anything to do with fixing the problem facing both companies: a failure to innovate. Neither company has been able to figure out how to come up with a steady stream of new products -- despite spending big on research and development -- to replace aging big sellers facing crushing competition.

You could even argue that firing 5% and 10% of your work force, as Motorola and Pfizer did, throws a company into turmoil just at the time when it needs everybody to pull together.

Unfortunately, Motorola and Pfizer are pursuing an all-too-common strategy these days. Companies are long on financial engineering, cost-cutting, share buybacks and acquisitions, but short on innovation and capital spending today to generate profits tomorrow. That will change, but until it does, investors will find themselves looking at a landscape like the current one, a landscape that's very, very short on great growth stocks.

Early Ripe, Early Rot

So what's wrong at Motorola? Pretty much the same old thing that Zander was brought in to fix. The company can create great individual products, such as the Razr phone, that sell like hotcakes when they first hit the market. But the company can't create a steady stream of new items to keep its product line fresh and competitors chasing a moving target.