Leadership in Global Business Janet Davidson Chief Strategy Officer April 2006 NCMA World Congress...
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Transcript of Leadership in Global Business Janet Davidson Chief Strategy Officer April 2006 NCMA World Congress...
Leadership in Global Business Leadership in Global Business
Janet DavidsonJanet DavidsonChief Strategy OfficerChief Strategy Officer
April 2006April 2006
NCMA World Congress 2006
Lucent Technologies – Proprietary
Use pursuant to company instruction2
Pre-1984
AT&T – a regulated U.S. monopoly
Lucent – the R&D/manufacturing team for a monopoly parent
1984-1995
Post-divestiture – "freedom" to compete
– In existing and new industries
– Outside the U.S.
1996 Lucent IPO
1984-1996: The Lucent Heritage
Understand who you are!
AT&T
AT&T
Lucent Technologies – Proprietary
Use pursuant to company instruction3
1996-2000: Lucent AscendantMarket Conditions – Telecommunications
– Internet Boom
– Deregulation
– Service Provider market grew from fewer than 1,000 carriers in 1996 to more than 15,000 service providers by 2000
– Service Provider Capital Spending grew from $213 billion in 1996 to $310 billion in 2000
Lucent was one of several companies riding the growth curve …
– Grew revenue from $20 billion to $38 billion*
– Increased headcount from 131,000 at IPO to 157,000 at peak*
– Expanded customer base from hundreds to thousands*
– Introduced more than 260 new products
– Acquired 38 companiesDeregulation, unlimited access to capital, and Internet boom led to the most
intense growth period in the history of the telecommunications industry
* Includes Avaya, Agere, OFS , Power Systems
Lucent Technologies – Proprietary
Use pursuant to company instruction4
1996-2000: Lucent Ascendant
Pre-Divestiture 1984 1996+
A Few Other Suppliers
Hundreds of Suppliers
A Thousand Customers
Network Systems
And Seven RBOCs
Network Systems
Lucent Technologies – Proprietary
Use pursuant to company instruction5
2001-2006: The Lucent Transformation
Telecom market collapse forced dramatic restructuring involving fundamental, ongoing changes in: – Supply Chain (Manufacturing)
– Research & Development
– Customer Base and Relationships
– Competition and Partnerships
– Corporate Culture
Restructuring restored stability and positioned the company for growth in global markets
Lucent Technologies – Proprietary
Use pursuant to company instruction6
Supply Chain 1996-2000
During the telecom boom, Lucent had:
11 independent business units
>20,000 people employed in 29 factories– Five major manufacturing facilities in United States
>500 warehouses
$1.9 billion annual corporate manufacturing budget
$5 billion in annual inventory
Lucent Technologies – Proprietary
Use pursuant to company instruction7
Supply Chain Discipline Began in 2001
Formal Supply Chain Organization created in 2001 Reduced number of strategic suppliers from more than 1,000 to 90 by 2005
Developed sourcing strategies for about 70 different commodities, ranging from metals to memory chips
– Reduced commodity costs by as much as 50 percent
Moved $1.2 billion in fixed cost to variable cost by leveraging EMS providers
Globalization of supply chain and delivery mechanisms
– Two EMS manufacturers with global operations and facilities
– Four regional systems integration centers for test and delivery of customized regional solutions
Lucent Technologies – Proprietary
Use pursuant to company instruction8
Key Supply Chain Adjustments
2000 2002 2005$5.1 billion $1.4 billion $731 million3.7 turns 5.6 turns 7.2 turns
Managed Warehouses
500+ 1010 (50+ logistics
providers)
Supply Base
40% spend with 1000+ suppliers
(3,000+ total suppliers)
80% spend with 60 key
suppliers
85% spend with 90 key
suppliers
Customer Satisfaction Index
7.24 7.47 8.2
Inventory
Lucent Technologies – Proprietary
Use pursuant to company instruction9
Lessons Learned - Supply Chain
Initial disruption causes pain– Changes reverberate through product design,
development, manufacturing and distribution
– Flexibility in product management, R&D are critical
– Be clear about where you add value
– Metrics matter
Benefits are well worth the price
Lucent Technologies – Proprietary
Use pursuant to company instruction10
Lucent Main R&D Centers 1996-1999
Whippany
Lisle/Naperville
HolmdelMurray Hill
World-renowned Bell Labs Was a U.S.-Centric Organization Serving Primarily U.S.-based Customers
Lucent Technologies – Proprietary
Use pursuant to company instruction11
Lucent Main R&D Centers 2006
ShanghaiBeijing
Nanjing
Qingdao
Bangalore
Whippany
Lisle/Naperville Swindon
Holmdel
NurembergWestford
Campinas
Bydgoszcz
AlcobendesMurray Hill
Today, Lucent has 15 Global R&D Centers Aligned with Customer Concentrations
Lucent Technologies – Proprietary
Use pursuant to company instruction12
Lessons Learned - R&D
"World renowned R&D" means little if your R&D is not visible to your customers around the world– Local problems require local solutions
There are brilliant people everywhere – Hire them!– It makes no sense to limit your R&D team to one region
– It makes no sense to draw your ideas from one culture
Competing globally requires a competitive cost structure in all aspects of your operation
Diversity in R&D makes solid business sense
Lucent Technologies – Proprietary
Use pursuant to company instruction13
Customers
1984 1995 20061990 2001
Local and Long-distance Service Providers
Wireless Service Providers
CLECs
Cable, xVNOs, xVNEs
Global Service Providers
CLECs
Lucent Technologies – Proprietary
Use pursuant to company instruction14
Customers 1996-2005
In 1998, 40% of the world telecom spend occurred in the United States
In 1996, 77% of Lucent’s business was done in the U.S.
In 2005, 63% of Lucent’s business was done in the U.S.
Lucent Technologies – Proprietary
Use pursuant to company instruction15
Lessons Learned - Customers
Products and services that work in your home market may or may not be relevant in other markets
Every customer is unique … treat them that way– Use your unique skills/assets to help them solve their
business needs
Stay the course– Establishing a market presence/reputation takes time
– If you leave a market, it may be a lifetime decision
Lucent Technologies – Proprietary
Use pursuant to company instruction16
Competition
1984 1995 20061990 2001
Similar Companies with Regional Focus
Similar Companies with Global Scale
Fast High-Tech Startups
Low-Price Global Competitors
Global IT Companies
Lucent Technologies – Proprietary
Use pursuant to company instruction17
Lessons Learned - Competition
A regulated monopoly knows how to compete INTERNALLY
Every country is different
– Regulatory policy
– Political environment
– Industrial policy, …
Every competitor is different… know what makes you unique
Lucent Technologies – Proprietary
Use pursuant to company instruction18
People
Each shockwave requires culture change to survive
CompetitionCustomers &
Markets
R&D Globalization Supply Chain
Deregulation
Lucent Technologies – Proprietary
Use pursuant to company instruction19
Lessons Learned - People Change is a constant not an option
– Work on the "critical few"
– Stay the course
Communication is critical
"Culture" determines how quickly your people can anticipate and respond to changes in customer base, competition, technology and global politics
HR can be your most critical ally in creating a flexible, motivated work force– Never underestimate the need to communicate your strategy, your progress
and your values to your people
Compliance is important – Employees need to be trained
Hire and train 3-to-5 years ahead of your business