I’m fairly certain that having “Lucent” on your curriculum vitae and “VP” beside it as your title will just about qualify you for a position as a Barista at Seattle’s Best Coffee[1]. Try for a bigger gig, and perhaps you’re reaching.

In the boom times the notion of meritocracy in American business was often talked about but, due to a shortage of real talent, was also highly superficial. This explains how a number of pudknockers (to quote Panch Barnes [2]) managed to dig themselves out of big, ugly, unsuccessful companies and land cherry jobs with big salaries, private jets, huge bonuses and, of course, stock options packages that at the peak of the market would allow them to purchase medium-sized African republics.

During that time, companies (apparently including Lucent’s Board of Directors) consistently failed to take into account both the track records of the companies from which their prospects were fleeing or the individual success of the executives themselves. Big names like Lucent, AT&T, Nortel, Microsoft were enough to seal the deal when you were looking for a CEO because one was only trying to impress investors and, frankly, investors can’t tell the difference.

When interviewing big names like Fiorina and Russo, apparently nobody bothered to look at Lucent’s track record since its launch and the history of the company that spawned it. HP and Kodak got dazed by the glare, and mistook it for halos encircling the heads of their CEO candidates and look where it has gotten them. HP has gotten a multi-year-long merger which will never work during which time the brightest success that the world’s oldest technology company can laud is making digital cameras mainstream. [3] Kodak got 8 months of floundering attempts to segue their now squandered lead in photography into some reasonable market position in digital cameras. Apparently both have digital photography on the brain.

If you want to look to either of these two for innovative thinking, you’d best look elsewhere. It’s not all their fault, though — their lack of creativity is institutionalized. When Lucent was a shiny ray of hope within AT&T, you didn’t get to be a VP by being an innovative thinker or by taking risks. Leadership within AT&T meant mastery of the groupthink: the unflappable ability to read the winds of whimsy and spew it back to the powers that be. This explains the long relationship between AT&T and McKinsey Consulting [4].

As Trish Russo and Carly Fiorina are discovering, life is a lot more difficult outside of The Borg. Patricia Russo has wisely cut bait and fled back to the constitutional monarchy that is Lucent, while Carly Fiorina (evidently more courageous — or perhaps just deluded) has committed herself to riding the blazing meteor all the way down to earth in a megaproject that would make BC Ferries [5] proud.

Pity, though. In the wake of their experiments outside of The Borg (and other Borg-like objects), execs like these two have left a lot of otherwise intelligent people out of work, out of options (stock options, I mean), and short on opportunities. In the process they have killed some pretty cool companies, thus proving that the challenge of careers which have some ultimate consequence is not something they’re ready for.

After failing to recognize opportunity after opportunity, the battle cries of these supposed technology leaders have amounted to what Percy Bysshe Shelley would call “an ocean of dreams without a sound[6].”

-Ian.

[1] – http://www.seabest.com/site/about/careers/ [2] – http://www.danielc.com/quote.html [3] – http://www.hp.com/hpinfo/newsroom/press/08jan02a.htm [4] – http://www.telecomvisions.com/visions/ [5] – http://www.nsnews.com/issues00/w032000/03150001.html [6] – http://home.westserv.net.au/~alen1/TheSensitivePlant.htm

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http://www.theglobeandmail.com/servlet/RTGAMArticleHTMLTemplate/D,D/20020107/wmath07?hub=homeBN&tf=tgam%252Frealtime%252Ffullstory.html&cf=tgam/realtime/config-neutral&vg=BigAdVariableGenerator&slug=wmath07&date 020107&archive=RTGAM&site=Front&ad_page_name=breakingnews

(nice friggin’ URL, guys!)

Ingram: A track record isn’t always a good thing By MATHEW INGRAM

Globe and Mail Update

Monday, January 07 ? Online Edition, Posted at 3:25 PM EST

Here’s a nice welcome: The board of directors of a struggling tech company names you as the new chief executive officer, and the stock falls. Admittedly, shares of networking equipment maker Lucent Technologies only fell by a small amount Monday, after an initial boost of enthusiasm, but it still wasn’t much of a greeting for new CEO Patricia Russo.

The tepid response could be because Ms. Russo is a Lucent veteran ? which means she was around during the former superstar’s fall from glory, a loss of value that would be almost unprecedented if Nortel Networks hadn’t experienced a similar fall from grace. For some investors, her connection to that era means her abilities are already in question.

The lack of an enthusiastic response could also be due to the fact that Lucent has been looking for a new CEO for more than a year, and the expectation was that ? like Nortel ? the company was interested in finding a senior telecom executive from outside the company who could turn things around, rather than someone with a history inside the firm.

“What they’ve got with Pat is another lifer,” one analyst told Reuters. “I view this as a lost opportunity to bring in some new management. For the long-term health of this company they need an infusion of outside views, outside experiences, and frankly Pat does not bring that.” Several senior tech executives were reportedly offered the job and turned it down, which probably doesn’t make Ms. Russo feel any better.

The company, naturally, chose to focus on the fact that as a Lucent employee and executive for more than 20 years ? before she went to Kodak to become president and chief operating officer about eight months ago ? Ms. Russo had an in-depth knowledge of the company, and therefore could “step in as CEO without missing a beat,” to quote a news release.

The problem for some Lucent-watchers, however, is that Ms. Russo was a key members of several different departments at Lucent while the entire company was not just missing a beat, but missing entire technology developments ? and thereby effectively handing control of the telecom and networking equipment game to competitors Nortel and Cisco Systems.

Ms. Russo replaces Henry Schacht, who was CEO of Lucent following its spinoff from AT&T and then returned to the position following the departure of CEO Richard McGinn in October, 2000, and now becomes chairman. Ms. Russo left Lucent two months before Mr. McGinn, who was fired as a result of the company’s lacklustre performance, which included paying about $44-billion (U.S.) to acquire startups with little or no revenue.

Like Hewlett-Packard CEO Carly Fiorina, also a former Lucent executive, Ms. Russo was intimately involved in the spinoff of the company from AT&T in 1995, which at the time was one of the largest initial public offerings in U.S. history and was oversubscribed. After a couple of positive years, however, Lucent made a number of critical errors ? including a decision to delay the introduction of a new series of switches.

Nortel did the opposite, pouring its development and marketing resources into rolling out its version of the new switch, and within a year Nortel had taken so much market share away from Lucent that it had supplanted its formerly much larger competitor as the No. 1 player in the telecom equipment industry. Nortel’s market value also eclipsed Lucent’s, something that would have been unthinkable just a few years earlier.

But Lucent did more than just miss a product cycle: To compound its error, the company took some desperate steps to try and catch up ? including engaging in an orgy of vendor financing, the questionable practice of loaning large customers the money to buy your products. It didn’t work, and Lucent wound up with hundreds of millions in questionable loans on its books just as the entire sector was heading into a sharp downturn.

Since Mr. McGinn left, Lucent has narrowly averted a cash crunch by spinning off a couple of its units ? the Avaya corporate networking business, and the Agere fibre-optic operation ? and has laid off or announced plans to lay off close to half its previous employee base of 106,000. Despite these moves, which led to a loss of $16.2-billion for 2001, the company said it will not meet estimates for the first quarter.

Some of the company’s supporters argue that Lucent needs a quick turnaround, and that having someone who knows the business ? even if they were associated with some of the company’s failures ? will help speed up the process. But it may take time for investors to be convinced that taking someone from Lucent’s past will help it have a brighter future.

-Ian.

—– http://www.pbs.org/cringely/pulpit/pulpit20020103.html

The 70 Percent Solution Bob’s Predictions for 2002 By Robert X. Cringely

Each year at this time, I make predictions about what will happen in high tech business during the next 12 months. It’s not really that hard to do if, like me, you read a lot, go to lunch a lot, and have smart friends. My predictions are 70 percent correct, year after year. What I got wrong the last time out was I wrote that the recession would be over by now, that Microsoft would be a bad stock to own, and that Cisco would be a good one.

My other predictions, which included Microsoft settling with the DoJ without requiring a break-up, were all correct. You can find that column under the “Old Hat” button on this page or among the “I Like It” links.

This year, I am going to do things a bit differently just because this year feels different. There is a new feeling coming from the laboratories and boardrooms, a feeling that has nothing to do with terrorism and patriotism or even high tech, and has everything to do with waking up from a long sleep and realizing that the blanket has slipped off the bed and it is cold.

As we slouch through this recession, it is clear to me that corporate arrogance is a problem that has afflicted us for sometime, but there are signs of it weakening. Last year, when I predicted Cisco would do so well, it was only weeks after I had sat through the company’s European, Middle East and African division sales meeting. At that moment, Cisco executives were setting high goals and expecting to reach them. Only it didn’t work out that way. This made me realize even the most successful companies don’t have any greater insight, just better luck. Back in October 2000, Cisco had basically no idea where it was really going, just expecting that a corporate body in motion would tend to stay in motion, that success would breed success.

Good companies learn lessons and not such good companies don’t. It took years of staggering losses and the hiring of an outsider for IBM to turn around in the early 1990s. Big Blue has fared better than most of its competitors in recent years, and it is entirely as a result of that humbling. But losses and new blood aren’t always enough. AT&T brought in Michael Armstrong for exactly the same reason, and all he did was make a $100 billion mistake. Same for Carly Fiorina at Hewlett-Packard, though her loss was smaller. Great corporate names, both, and they are threatened because of arrogance.

Now to this year’s predictions:

1. The dominant theme will be the continuing battle between evil and evil as Microsoft expands its .NET strategy and the rest of the industry responds. Look for further stratification as the banks come to realize that Redmond’s goal is to take a piece of every online transaction, which is to say Microsoft intends to steal the banks’ business. This is a fundamental reworking of business that WILL happen over the next three to five years.

2. The main technical tool for this reworking will be XML, and it will probably be easy to label 2002 as the Year of XML. This new data standard will be sprinkled on every type of software imaginable, whether it makes sense to do so or not.

3. Look for emergence of an XML industry, which is to say a rash of new startups built around XML services. Microsoft’s dedication to the standard in its relatively pure form makes this emergence inevitable. The big XML hit for 2002 will come from a company called KnowNow.

4. KnowNow is a new company backed by Kleiner Perkins, the big venture firm, and represents the resurgence of venture capital in 2002. Having spent 2001 NOT investing money, the VCs this year have to either resume investing their funds or get out of the business. Look for the former, again thanks to XML, as the VC industry finds another type of business to spawn than pawn off on us.

5. The resurgence of VCs can only come with a resurgence of the market for Initial Public Offerings, which should happen by late spring.

6. Other hot IPO areas besides XML will include security (thanks to bin Laden and Microsoft’s continued incompetence in this area) and an emerging niche called rich media.

7. XML is real, security is real, but rich media is not real — at least not in 2002. Just as the online music industry grew up around MP3, rich media is built on MPEG-4, which is far more than just another video codec. MPEG-4 is a framework for building new types of entertainment that are more Internet-friendly. Beyond carrying traditional video, MPEG-4 enables the creation of entertainment products made of up many levels of artificial scenes, sets, even animated characters. It is the entertainment of the future, but alas that future won’t start in 2002. The problem is that embracing rich media means rejecting old media and the tools aren’t yet good enough to make that jump.

8. Rich media doesn’t absolutely require broadband, but it sure helps. And 2002 will be a pivotal year for broadband, which took a lot of lumps in 2001 with the fall of companies like Northpoint, Rhythms, Covad, and Excite@Home. What is key here is the deal for Cox Cable to buy AT&T’s cable TV unit. If that goes through (and I think it will), Cox will try to make its big investment pay off by competing for local and long distance phone service over its cable system. Other cable companies will follow suit and the only way for the local phone companies to fight back is with expanded DSL.

9. And Microsoft will make itself a part of every deal, everywhere, no matter what happens with its anti-trust case. Quite simply, Microsoft will take an equity position in every tech deal that’s over $1 billion, leveraging to the hilt its close to $40 billion cash hoard. Don’t bet against Microsoft in 2002. That is because, in addition to having deep pockets, Microsoft owns the start page, the defaults, the windowing environment, and the content standards. It turns out they also own the traffic, the audience management, and if you’re watching closely what they’re doing with Windows Media, they’re going to force you to pay licenses to show your own content on-line. Today, on the desktop, tomorrow, on UltimateTV.

10. Finally, I think last year’s prediction for Cisco Systems will come true this year. I wrote “The answer to every problem with the Internet will continue to be ‘pay more money to Cisco.’ At current prices the stock is a bargain.”

No, I don’t own any Cisco stock.