Management Turnover as Change Agent

Tuesday, September 2, 2008

Defying Rumors - Alcatel-Lucent Fills CEO and Chairman From Outside

Alcatel-Lucent ALTU (NYSE) surprised many by going outside the world's largest fixed-line telecommunications gear manufacturer to replace outgoing CEO (Patricia Russo) and chairman (Serge Tchuruk).  Last week rumors were rampant that the firm might make former COO, Mike Quigley, who at one time had been considered for the top position, as the new CEO (see earlier blog).  Instead the company made two very exciting picks.  The board picked former British Telecom CEO (2002 to June 2008) and Dutch national Ben Verwaayen.  For non-executive chairman the board chose former European Aeronautic, Defence and Space Company (EADS) co-CEO Philippe Camus.  Camus held the EADS job from 2002 - 2005.  He is also a co-managing partner of Lagardere since 1988, and since 2006 has been a partner at Evercore Partners, Inc.  According to a story by Rudy Ruitenberg for Bloomberg
(Verwaayen) boosted sales of business services to 7.9 billion pounds from 4.5 billion in six years as revenue from retail and wholesale services plunged.  Under Verwaayen, BT's sales outside the U.K. grew to 17 percent of the total from 8 percent in fiscal 2002.

... Verwaayen has the advantage that he has been the CEO of a network operator, so he knows what Alcatel-Lucnet's customers want," said Exane BNP's Peterc.
Camus when he was with EADS managed to bring a number of different cultures together to make the high tech operation succeed.  He may be just the right person to do the same for the Alcatel-Lucent merger that has been faced with some of the same problems that EADS faced in relation to different corporate and personal cultures in one organization.  According to Peggy Hollinger who wrote a piece for the Financial Times,
Mr. Camus may well be placed to help reconcile the cultural differences.  As EADS
 co-chief executive he had to navigate often difficult relations between the French and German shareholders, which exploded into acrimony after his departure.
The new duo are already working on ways to fix the troubled telecom manufacturer.  According to Jennifer L. Schenker of Business Week  in a blog today,
During our discussion, Verwaayen mentioned a five-point plan he has already worked up to fix Alcatel-Lucent.  Among the key ideas: greater embrace of so-called "open innovation," an emerging management concept also practiced by companies such as Philips, that aim to do away with the most "not-invented-here" syndrome in corporate R&D.  Instead, companies partner--sometimes even with their rivals--on development of key technologies, and look to startups that may have fresher ideas than the stuff coming out of in-house research labs.

... Healing the company's wounds will take time, but Verwaayen has a long track record of winning over employees and creating a sense of common purpose.
While the task ahed for these two top executives is fraught with problems, the choice to pick them was terrific.  Stay tuned for an interesting ride.

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