Qualcomm Leadership: What Makes It Tick

Being at the top post of a large business organization is a very tough job. Leading people is more than managing business because these people are the workforce that fuels the organization towards success. This is why Tom Peters and Nancy Austin, authors of the best-seller, A Passion for Excellence (1985), described leadership as:

Leadership means vision, cheerleading, enthusiasm, love, trust, verve, passion, obsession, consistency, the use of symbols, paying attention as illustrated by the content of one’s calendar, out-and-out drama (and the management thereof), creating heroes at all levels, coaching, effectively wandering around, and numerous other things. Leadership must be present at all levels of the organization. It depends on a million little things done with obsession, consistency, and care, but all of those million little things add up to nothing if the trust, vision, and basic belief are not there.

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Thus, this definition goes to show that gone are the times when leadership means that the leader completely dominates his or her subordinates. Experts already emphasize role of empowerment, through decentralization, and dramatically reducing formalization and eliminating standardization. Business organizations now are moving from formal control systems, such a bureaucratic, to those involving shared information, collaborative strategies, such as clan control and developing adaptive cultures are essential (Daft, 2004).

Daft (2004) summarized the managerial implications of the structural/environmental adaptation in business organizations: “Today’s organizations must poise themselves to innovate and change, not only to prosper but merely to survive in a world of increased competition (2004, p. 400). ” Fundamentally, the business executive’s role in organizational change is to: 1) recognize the need for change, and 2) make it happen (Daft, 2005). On the other hand, Qualcomm is one of the most successful IT companies to date.

Aptly listed in Fortune 500, the company develops, manufactures, licenses, delivers and operates digital wireless communication products and services based on Code Division Multiple Access (CDMA) technology. The company pioneered the commercialization of CDMA technology, and provides system software for wireless voice, data communications and Global Positioning System (GPS) products to wireless device and infrastructure manufacturers. The company operates primarily in the Americas, Europe, and Asia Pacific. It is headquartered in San Diego, California.

In fact, as a proof of the viability of Qualcomm’s business, the company recorded revenues of $5,670 million during the fiscal year ended December 2005, an increase of 16. 2% over the previous fiscal year. The company saw a net income of $1,970 million in fiscal 2005, an increase of 9. 4% over fiscal 2004 (Qualcomm Website). Led by Irwin Mark Jacobs, Qualcomm has proved that it had a strong research and development team which has a proven track record for innovation in wireless communications technologies. The company’s research and development expenditures have been steadily increasing.

The company’s R&D expenditures in fiscal 2005, 2004 and 2003 were approximately $1. 01 billion, $720 million and $523 million, respectively. As a percentage of revenues, R&D investments were 18% of revenues for 2005 compared to 15% in fiscal 2004. This constant investment in R&D initiatives has enabled the company to hold various patents. In fiscal 2005, six new R&D centers were opened in California, India, Taiwan and UK. The centers support the company’s global CDMA development activities and ongoing efforts to advance CDMA technologies.

Effective R&D expenditure has enabled Qualcomm to set new industry standards and keep pace with customer requirements (Datamonitor, 25 November 2006). Despite the strong competition in the wireless communication arena, Qualcomm had managed to rise above rest. With this, we will closely study the leadership strategies in Qualcomm that helped it successfully achieve the status to which they enjoy at present. Leader Profile: Irwin Mark Jacobs Growing up in New Bedford, Massachusetts, Irwin Jacobs had a gift for science and math.

However, he was directed toward hotel management after he graduated from high school because it was expected that he would follow his father into the restaurant business. After less than two years studying hotel management, he returned to his interest in math and science by switching his major to electrical engineering. After graduating from Cornell University, he moved on to the Massachusetts Institute of Technology (MIT) where he earned his M. S. and Ph. D. degrees in Electrical Engineering in only three years. Jacobs then accepted a position at MIT teaching electrical engineering (Napier et al. 2003)

In 1966, he packed up his young family and moved across the continent to take a teaching position with the University of California at San Diego. Not long after arriving in San Diego, Jacobs, along with two UCLA associates, Andrew Viterbi and Len Kleinrock, formed a consulting company called Linkabit, which received a contract from DARPA to help European universities, government agencies, and phone companies connect to the ARPANET. Linkabit continued to grow and Jacobs left the University of California to manage the company full time.

In 1980 he sold Linkabit to another company but stayed on for another five years; however, in 1985 Jacobs left Linkabit to create another technology startup company, Qualcomm Incorporated, to develop new commercial wireless technologies. Together with, Franklin Antonio, Adelia Coffman, Andrew Cohen, Klein Gilhousen, Andrew Viterbi and Harvey White – Irwin wanted to build “QUALity COMMunications”, so they outlined a plan that, 20 years later, has evolved into one of the telecommunications industry’s greatest start-up success stories: Qualcomm Incorporated (History, Qualcomm Website).

Traditional commercial wireless technologies relied on a radio signal transmitted on an unchanging frequency. One example of such a signal is an FM radio signal which can easily be found at the same MHz on the radio dial. For some time the military had been using a form of wireless communication called “spread spectrum” in which the wireless signal was deliberately varied from frequency to frequency according to a complex mathematical code known only to the sender and the receiver. This made it difficult for an enemy to jam or intercept the signal.

Scientists at Qualcomm made technological advances that enabled commercialization of a spread spectrum technology called Code Division Multiple Access or CDMA for cellular phones and networks. These advances allowed more signals to share the same bandwidth than were allowed by the other digital wireless technologies used at the time (Napier et al. , 2003). By 1989, Jacobs was relentlessly pitching Qualcomm’s CDMA wireless technologies for digital cellular networks, but the reigning telecom companies such as AT;T and Motorola Inc. had already adopted an earlier digital cellular technology called Time Division Multiple Access or TDMA.

With an exploding cell phone market, the stakes were high. Somehow, Qualcomm managed to maximize its edge as it gained numerous patent portfolios, including approximately 5,100 United States patents and patent applications for CDMA and related technologies. More than 130 telecommunications equipment manufacturers worldwide have licensed Qualcomm’s essential CDMA patents. For more than 20 years, Qualcomm’s visionary technology leadership has improved the way people communicate, work and live, one idea at a time (History, Qualcomm Website). Leadership at Qualcomm: In Focus Qualcomm had prided its strong commitment to its customer.

In its business model, it indicated that their company embraces the “philosophy of using imagination and innovation to drive technological advances that benefit end users. According to Mark Irwin Jacobs, Qualcomm’s chairman, “We started Qualcomm with the idea that we would try to be innovative – look for an idea that could make a significant difference. ” This is why, for more than 20 years, Qualcomm has invested significantly in research and development, which has resulted in thousands of innovative ideas, methods and products that have changed the wireless world (Qualcomm White Paper, September 2006).

As CEO of Qualcomm Inc. , Jacobs had sought to create a stimulating environment, which he believes is essential for innovation. “We can’t achieve it quite as well, but we do try to keep some kind of an intellectual ferment around the company,” he says. Even as Qualcomm’s workforce has grown into the thousands, he still tries to preserve a relatively flat management structure, and to foster open communications through extensive e-mail use. “The company’s size means that I can no longer walk the corridors and see people, but I do it, in effect, by reading the e-mail,” he says.

Qualcomm regularly appears on lists of the best U. S. companies to work for, and part of the appeal has been its liberal stock-option grants. Their value has soared along with the company’s stock in the past years and, as one employee noted: “There are a lot of new millionaires in San Diego now” (Arensman, March 2000). In the article by Arensman (March 2000), Jacobs described his management style simply as: “We try to find very good people and then give them lots of freedom”. Martha Dennis, president and CEO of San Diego software company Wave Ware Communications, says that approach has remained consistent for the 30 years she’s known Jacobs. His basic belief is, or at least it used to be, that good people manage themselves,” she says. Dennis added that while Jacobs always preferred working in the trenches with the engineering staff, he had better business skills than the average technology entrepreneur.

Moreover, Tamar Elkeles, vice president of learning and development at Qualcomm, has emphasized their company’s responsibility for employee communications as well as learning. She suggested that, “There’s a convergence of training and information roles and if you’re solely focused on training, you’re missing the boat. Another important role for training and development, Elkeles supported talent management and the acquisition of talent. Leaders can do that through significant collaboration with the staffing organization or a merger between training and staffing. In the next five years, it should be clear that a development role needs to be closely linked with a talent acquisition role. Elkeles advised that for a new practitioners on the fast track: “The number 1 thing is to learn the business of your employer.

Do some serious benchmarking against other organizations to understand what’s going on and what the trends are. Learn all you can from colleagues, peers, and other professionals. Then look for a leverage point in your organization. If the company has customer service issues, start with customer service. For example, Qualcomm’s CEO Irwin Jacobs is very supportive of the symphony, so “we worked with a conductor to do a leadership experience. It was an effective way to get the CEO’s involvement”.

Thus, companies need to be broader and to do more than just help employees learn specific skills. In a learning organization like Qualcomm, they needed to help people learn about the company, the culture, the industry, the market, and so on (Galagan, 2003). One thing that could be pointed out on Jacobs’ style in leadership are his attitudes towards his business. In leadership, trait perspectives assume that traits play a central role in differentiating between leaders and nonleaders (leaders must have the “right stuff”) or in predicting leader or organizational outcomes.

The great person–trait approach reflects this leader and nonleader difference and is the earliest approach in studying leadership, having been introduced more than a century ago. Leaders tend to be energetic and to operate on an even keel. They crave power not as an end in itself but as a means to achieving a vision or desired goals. Leaders also are very ambitious and have a high need for achievement. At the same time, they have to be emotionally mature enough to recognize their own strengths and weaknesses, and they are oriented toward self-improvement.

Furthermore, to be trusted they must have integrity; without trust, they cannot hope to maintain the loyalty of their followers. Leaders also must not be easily discouraged. They need to stick to a chosen course of action and to push toward goal accomplishment. At the same time, they must be cognitively sharp enough to deal well with the large amount of information they receive. However, they do not need to be brilliant; they just need to show above-average intelligence. In addition, leaders must have a good understanding of their social setting (Schermerhorn et al. , 2004).

Finally, they must possess lots of specific knowledge concerning their industry, firm, and job. Luckily, Qualcomm’s Mark Irwin Jacobs possessed numerous positive leadership traits that might have spelled Qualcomm’s success throughout the years. The leadership theory that could be matched with what Jacobs’ exemplified is the path–goal theory of leadership. This theory attempted to define the relationships between a leader’s behavior and the subordinates’ performance and work activities. Leader behavior is acceptable to subordinates to the degree that they see it as a source of satisfaction now or as a step toward future satisfaction.

Leader behavior influences the motivation of subordinates when it makes the satisfaction of their needs contingent on successful performance; and it provides the guidance, support, and rewards needed for effective performance (but that are not already present in the environment). The path–goal theory of leadership and the expectancy theory of motivation, which was described in the previous chapter, are closely related in that leader behaviors can either increase or decrease employee expectancies (Falk and Wendler, October 1982).

In path–goal theory, leader behavior falls into one of the four basic types—role classification, supportive, participative, and autocratic. Role classification leadership lets subordinates know what is expected of them, gives guidance as to what should be done and how, schedules and coordinates work among the subordinates, and maintains definite standards of performance. Supportive leadership has a friendly, approachable leader who attempts to make the work environment more pleasant for subordinates. Participative leadership involves consulting with subordinates and asking for their suggestions in the decision-making process.

Autocratic leadership comes from a leader who gives orders that are not to be questioned by subordinates. As we have discussed above, Jacobs involved himself fully in the research and development arm of his company. Thus, it mirrors the participative type of leadership. Under this theory, each of these leadership behaviors results in different levels of performance and subordinate satisfaction, depending on the structure of the work tasks. Role clarification leads to high satisfaction and performance for subordinates engaged in unstructured tasks.

Supportive leadership brings the most satisfaction to those who work on highly structured tasks. Participative leader behavior enhances performance and satisfaction for subordinates engaged in ambiguous tasks. Autocratic leadership behavior has a negative effect on both satisfaction and performance in both structured and unstructured task situations. This is the reason why Qualcomm had concentrated more in training their workforce because they strive to satisfy the skills of their people to empower them and make them improve with the company.

Qualcomm’s Future in the Wireless Communications Industry Presently, competition in the wireless telecommunications industry in the US and throughout the world continues to increase at a rapid pace. Qualcomm faces the threat of market consolidation, as the global wireless industry has witnessed a spate of consolidation activity in the past. Companies holding Qualcomm’s product license technology have established market positions, trade names, trademarks, patents, copyrights, intellectual property rights and substantial technological capabilities.

Consequently, as a result of increasing competition in the wireless space, Qualcomm may face sustained pressure from these players resulting in greater price erosion. Increasing competition could erode the company’s market share and pull down its revenues. Moreover, increasing competitors, improving product functionality and overlapping products may make Qualcomm subject to claims of infringement or misappropriation of the intellectual property rights. For instance, in November 2005, Qualcomm and its wholly-owned subsidiary SnapTrack Inc. , filed a patent suit against Nokia Corporation and Nokia Inc. for infringement of 11 of Qualcomm’s patents and one patent owned by SnapTrack.

In July 2005, Qualcomm filed a suit against Broadcom Corporation for infringement of seven Qualcomm patents that are essential to manufacture or use equipments that comply with the GSM, GPRS and EDGE cellular standards and Wi-Fi. Qualcomm could lose proprietary rights or incur substantial unexpected operating costs as a result of any such litigation suits. Furthermore, failure to protect its trademark rights could impair the company’s brand identity and future earnings.

Qualcomm enjoys cross-licenses with various companies to gain access to intellectual property in the CDMA space. These companies could force Qualcomm to litigate either by contesting its patents or claiming royalties. Despite the various threats in the wireless communication industry, Qualcomm has recently found a niche in the 3G market. The 3g market is growing, as more operators are upgrading their networks to expand capacity and meet rising demand for high-speed and low-cost data capabilities. Demand for CDMA2000 and WCDMA products and services in the global markets are expected to grow.

As reported by the Global Mobile Suppliers Association, as of October 2005, 87 WCDMA networks have been launched. Expected volume increase and growing competition among the WCDMA manufacturers and WCDMA IC suppliers is likely to reduce the prices of WCDMA phones which in turn would drive the growth of WCDMA phone sales worldwide. An increase in royalty revenues in fiscal 2006 and beyond is anticipated with the expiration of royalty-sharing obligations under two agreements, one in fiscal 2005 and the other in fiscal 2006.

There is an expected growth in low-end phones, advanced 3G phones and devices and high-end, multimedia phones. Conclusion Qualcomm’s success could be attributed to its strong leadership in their organization. Its continuing viability is reflected in its upward groth. The company recorded revenues of $5,673 million during the fiscal year ended 2005, an increase of about 16. 3% over 2004. Strength upturn in the CDMA market led to increased demand for the company’s products and license purchases.

Enhanced multimedia functionality, increased growth of 1xEX D, local portability initiatives and improved competitive positioning of CDMA operators, also led to an increased demand for Qualcomm’s products. These rising revenues would provide the company with a strong financial base. As CEO Irwin Jacobs made clear, “We started Qualcomm with the idea that we would try to be innovative – look for an idea that could make a significant difference. ” The intent of the leader to spell their organization to improve spelled the success for their organization.

Clearly, Qualcomm had maintained their financial strength and other resources needed to continue supporting customers worldwide with a broad range of new technology, chipsets, software and services. They remained focused on enhancing the wireless user experience – both consumer and enterprise to further accelerate the growth of products and services using CDMA technology. This is because the leader concentrated in their R&D and enhanced the skill of their workforce to constantly be at par in the highly competitive wireless communications industry.