(FORTUNE Magazine) – Ed Zander, the loquacious new CEO of Motorola, has devoted his first three months on the job to listening. He's getting an earful. There is, for example, the tongue-lashing he suffered after a brief Hi-I'm-the-new-guy luncheon speech to customers at a wireless conference on the French Riviera in late February. Naguib Sawiris, chairman of Egypt's Orascom Telecom, tardily ambled into a high-ceilinged room at the Carlton hotel in Cannes, overlooking a glittering Mediterranean Sea, and raised his hand. "We have been promised year after year that this company will deliver," began Sawiris, whose wireless licenses span the Middle East, Africa, and India. "And we want to believe [it], perhaps out of some sense of nostalgia. But there's no clarity on the future of this company," he complained--whether the subject is Motorola's commitment to remaining in the wireless infrastructure equipment business or its inability to turn out cellphones on time. "So I want to know, are you the best news?"

For the sake of 75-year-old Motorola, the answer had better be yes. In the span of a decade Motorola has gone from tech titan to industry doormat. A wireless pioneer, it missed the shift from analog to digital cellphones, giving up its No. 1 market share to Nokia. It was once equal to Intel in microprocessors, but its semiconductor business has dropped out of the upper echelon in that industry. At around $17 a share, its stock trades where it did in 1997 when Chris Galvin, a grandson of the founder, stepped into the CEO's shoes. (He abruptly retired in September.) Signaling a need to break with the past, the company's board passed over popular internal candidate Mike Zafirovski, a General Electric veteran who had been Motorola's president for a year. In choosing outsider Zander, a former president of Sun Micro-systems, Motorola got an executive with operational smarts and marketing savvy--he dreamed up the company-unifying message that Sun "put the dot into dot-com"--but no experience in wireless or consumer marketing. "We just need to get faster, more decisive, and closer to the customer," explains John Pepper, former CEO of Procter & Gamble and the Motorola board member who led the search for a new CEO. In Zander, he says, "we're talking about a person who is extraordinarily energetic and focused on getting things done."

As Zander gets his bearings as CEO, it is clear that his mission is nothing less than saving an iconic company that has lost its way. His first task ought to be simple: figuring out what Motorola is. But even that's not straightforward.

Take the company's famed science labs. In January, two weeks after joining Motorola, Zander asked chief technology officer Padmasree Warrior to assemble for him a one-day technology review by the company's major researchers. Warrior seated Zander in the middle of a horseshoe-shaped configuration of tables in an auditorium at the sprawling corporate headquarters in suburban Chicago. The scientists proceeded to show him everything in the works in the corporate labs--which account for Motorola's $4 billion in annual R&D spending--from far-out networking concepts to next-generation communications devices. "'I didn't know we have all this,'" Zander said, as Warrior tells it. "By the end of the day, he said, 'I have a migraine.'"

An electrical engineering major in college, Zander says he truly was fascinated by the display. "After about, like, five hours of this stuff, I thought I was in a science fair. I was blown away." But the brute force of the presentation in "typical Motorola style"--20 minutes per project, 200 slides each at 1,000 words per slide, he recounts--was overwhelming. In addition to topics clearly related to communications, Motorola's researchers are working on projects as far afield as a device to test for cystic fibrosis and breakthrough technology in cathode-ray-tube televisions. Zander's experience that day speaks volumes--about the company's technological prowess as well as about its hidebound culture.

"One thing I've learned Motorola does really well is that it loves complex problems," he says. "The more things are gnarly, the better folks understand how to do it. I said, 'Look, folks, we've got an arsenal here, a war chest of technology. But we've got to pick our big bets. We've got to narrow this list down.'"

For years Motorola was defined by big bets that paid off, landing it on every FORTUNE 500 list in the ranking's 50-year history. Motorola rode up the list on the legacy of its leadership in car radios, pathbreaking walkie-talkies for the U.S. Army in World War II, semiconductors wedged into everything from automobiles to washing machines, and finally cellular telephones, a business Motorola dominated until the mid-1990s. In 1994, Motorola peaked on the FORTUNE 500 at No. 23. But it has since slipped to No. 61 on this year's list. If it had merely held its own for the past decade in two of the era's greatest growth markets, wireless phones and microprocessors, its star would have risen. Subtract the revenues from Motorola's chip business, which it plans to spin off shortly as the independent Freescale Semiconductor, and the company would drop another 20-plus slots on the list.

Motorola's slide is explained by one flop after another from the mid-1990s on. First it failed to anticipate the worldwide shift to digital cellphones, allowing Nokia to overtake it as the world's No. 1 cellphone maker. Once a leader in wireless infrastructure equipment--the behind-the-scenes gear that makes cellphone systems work--Motorola's market share slid to 10% last year, making it the No. 4 player. In 2000 it bought General Instrument, the market leader in set-top boxes for cable television, for $17 billion. The cable unit's revenues have declined 49% since then as cable companies slowed purchases and Motorola fell behind its competitors in delivering new products. Arguably, Motorola's biggest blunder was the ten-plus years and $2.6 billion it lost in now bankrupt Iridium, the satellite network famous for its brick-sized phones and dollars-per-minute international calls. The company developed a reputation for owning killer technology that got stuck in its labs. Says Tom Lynch, a General Instrument veteran who now runs Motorola's cellphone business: "There are endless examples of instances where this company has blazed a trail and someone else has reaped the benefits."

If the digital screw-up and the Iridium debacle were embarrassing, more recent flops have established Motorola as the big company that can't shoot straight. "On cellphones they've missed just about every window that's opened," says analyst Berge Ayvazian of the Yankee Group, a market research firm. When color-screen phones became hot in 2002, Motorola couldn't produce them in large volumes, and Samsung came from seemingly nowhere to become the No. 2 cellphone player by revenue. Production glitches last December kept Motorola from delivering camera phones, the holiday season's big seller. Motorola's broadband unit (the former General Instrument), despite being the market leader in set-top boxes, has been slow to release a combination set-top box/digital video recorder, allowing archrival Scientific-Atlanta to sell hundreds of thousands of units essentially unchallenged by Motorola. Its semiconductor unit had a lock on chips for PDAs as recently as three years ago; Intel has snatched that lead. In wireless infrastructure, Motorola has fallen behind in offering products using the latest technologies; that allowed Ericsson, a company with its own financial problems, to stake out a clear No. 1 position in that market.

All those missteps have created big doubts about the company for customers and competitors alike--ones that palliatives from Zander can't quell. Carl-Henric Svanberg, Ericsson's CEO, believes they have what it takes but says, "I haven't really felt that they have yet committed to say, 'This is an area we'll be in.'"

Before hiring Zander, Motorola did decide to exit one business: its $5-billion-a-year chip division, whose boom-bust cycles didn't fit well with the rest of the company. That will leave Motorola with five businesses: cellphones, which had $11 billion in revenue in 2003; infrastructure equipment, with $4 billion; two-way-radio systems--at $4 billion and growing, one of Motorola's success stories; electronic equipment for automobiles, with $2 billion in sales; and the $2 billion cable TV division. But revenue declined at three of the five last year. Only the automotive and two-way-radio units saw an improvement; the latter has had a big boost from increased spending by local and national governments on homeland-security initiatives.

Overall, revenues peaked in 2000 at $38 billion, when Motorola earned $1.3 billion. The next two years were harsh. Revenues declined 29% from 2000 to 2002, and the company posted losses that totaled a staggering $6.4 billion. Chris Galvin returned Motorola to profitability through brutal cost cutting--employment dropped from 147,000 at the end of 2000 to 88,000 currently. In 2003 the company eked out profits of $893 million, on sales of $27 billion, down slightly from the year before.

There are bright spots at Motorola. In 2003 it acquired a startup called Winphoria, whose switching technology Motorola hopes will make it a player in next-generation infrastructure. It has come up with exciting cellphone designs, including a soon-to-be-introduced dual-hinge model, the MPx, that flips open one way as a PDA and another way as a large-screen phone. In software for so-called smart-phones--essentially combo phone/PDAs--Motorola has shrewdly pulled out of Symbian, a consortium led by archrival Nokia, opting instead for a software tie-up with Microsoft.

Notwithstanding these signs of progress, critics have come to a simple conclusion: Motorola does too many things--and not enough of them well. Zander grasps that repairing the company's image is his first order of business. "Is Motorola just a collection of disparate standalone businesses?" he asks. He'll judge his success by when critics stop asking that question.

And so Ed Zander is literally searching for a mission statement. He's doing it pretty much nonstop, including over dinner on a brisk February evening in downtown Chicago. A slight man with a long face, an easy smile, and a hairline that receded long ago, Zander speaks plainly, with the occasional flash of Brooklynese from his childhood. He's a natural jokester--one analyst imagines Zander putting whoopee cushions on the chairs at Motorola management meetings to lighten things up--but he's also adept at shifting gears and getting down to business. "The world wants me to come up with this grand vision," he says, "but what I'm hearing from customers right now is 'Execute. Give me the products. Make the company more efficient.' And that's a lot." So while Motorola does indeed need a master plan, simply keeping its promises is an equally urgent concern.

Zander's also enlisting help. He's been visiting investors and Wall Street analysts to get their thoughts. He asked Richard Nottenburg, a former electrical-engineering professor and CEO of a company on whose board Zander sat, to conduct investigations into Motorola technology. Nottenburg likes what he sees, particularly in Motorola's broadband division, which critics have urged Zander to sell.

Six months ago Zander would never have expected to be schlepping around the world visiting phone companies, let alone enduring a Chicago winter. ("I've been cold for two months now," he grouses.) After 15 years at Sun, which he joined following stints at Data General and Apollo Computer, Zander was enjoying something like early retirement at Silver Lake Partners, a private-equity firm focused on tech buyouts, and living the good life. He spent time at his homes in Silicon Valley and Palm Desert, Calif., and sat on boards. Then came the call in October from Motorola, an opportunity to run a big company that Scott McNealy's dominance at Sun hadn't allowed. "I said to my wife, 'Gosh, you know, Motorola, that's a huge enterprise, that's big. That's an American icon,'" he says. "And my wife could see it in my eyes. She could see that this time around it was something that maybe I had to go look at."

It is often said of Zander, who is 57, that he's a "regular guy." Around Motorola the comment is made in implied contrast with the standoffish Galvin. When Motorola executives praise Zander for glad-handing customers--on a recent four-day swing through Europe, he visited with 23--the unspoken message is that Galvin didn't do so often or well enough. There's no question that Zander has the common touch. He spent a wintry Saturday (a football Saturday, the sports-crazed CEO will have you know) driving around the Chicago suburbs with his wife, Mona, and his executive assistant from Sun, Linda Walker, helping Walker find a new home. She is the only hire Zander has made from his "former life," as he likes to call it.

To get a sense of the company, he's doing what any new CEO would do: visiting key employees, hearing out customers, trying to understand his new company's inner workings. Motorola presents a newcomer with special challenges. It's laden with 75 years' worth of stuffiness, as well as acronyms so obscure it takes a glossary to figure out what the heck Motorolans are talking about. The successful business that sells two-way-radio systems primarily to police forces, for example, is its Commercial Government and Industrial Solutions Sector, or "C-Giss" in Motorola argot. "Obviously not named by a marketing guy," quips Greg Brown, who heads the business. The company has a unit called the Energy Systems Group. It makes batteries. When Zander convenes a meeting of top managers (the SLT, or Senior Leadership Team) in Motorola's boardroom, where the walls are lined with rare maps of the world, he faces an oil portrait of company co-founder Paul Galvin, Chris's granddad. Says Zander: "I try to discipline myself to get through the day without using an acronym."

At this point Zander is fuzzy on many of the acronyms. He still trips over UMTS--short for universal mobile telecommunications system, a next-generation technology in which Motorola has fallen behind in Europe. But he is coming along on the mission statement. "I'm going to need a little time to figure it out," he says. "I mean, we're a communications company. But we still need to get what we want to identify with in this new millennium."

Ed Zander is leaving Cannes, flying to another customer meeting, and he's shaking his head over the Egyptian telecom executive who challenged Motorola's resolve. "The fact that people ask us if we're committed to infrastructure," Zander says--"I don't have any hair to pull out, but if I did ..."

Zander has, however, begun to articulate a vision of the company in terms of its four big end markets: the individual, the home, the auto, and the big organization, including governments. He's picked up on a theme the company had been pursuing before his arrival, seamless mobility, which represents the unrealized opportunity for users to transfer their calls and data easily from office to car to home and back again. It's the kind of commitment he says Motorola needs to make. "If we declare that's the big five-year bet, then everybody in the company's got to get galvanized around it," he says, clearly intending no pun on the founding family's name. Simply getting a once great company to pull in one direction sounds like a modest goal. For Motorola under Ed Zander, it'd be a great start.

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