New Alcatel-Lucent CEO Shares His Thoughts

Posted by: Jennifer L. Schenker on September 02

The highly-anticipated announcement of new top management for troubled telecom gear maker Alcatel-Lucent has finally happened—and the choices are an impressive duo.

The company’s new chief executive will be 56-year-old Ben Verwaayen, who recently retired as CEO of British telecom giant BT Group after leading a solid turnaround there that transformed the telco from a laggard to a leader in broadband, Internet Protocol (IP), and IT services. Verwaayen, a Dutch native, previously led the Netherlands’ former national phone monopoly, then known as Royal PTT and now called KPN, and also served several years as the vice-chairman of Lucent before its merger with Alcatel.

I’ve known Ben since 1989, when I interviewed him 10 months into his job at Royal PTT. In an early morning telephone call on Sept. 2—in what I believe was his first press interview after accepting the top Alcatel-Lucent job—Verwaayen told me why he decided just a few days ago to take on a position that he initially rebuffed.

One reason is that Verwaayen loves a challenge and he is convinced that he can turn Alcatel-Lucent around. "Sometimes you lose sight of assets you have in front of you," he says. "I have looked hard at the assets and I think I can do it."

It won't be an easy task. Alcatel-Lucent has been slammed by a wicked mix of global economic uncertainty, fierce competition from emerging Asian telecom equipment makers, and weakness in some parts of its product line. Worse, merging the French and American halves of the company has proven far more difficult than anticipated, resulting in management bickering and cultural conflicts. The result has been six consecutive quarters of losses and a staggering plunge in the company's market capitalization.

Solving those problems won't fall to Verwaayen alone. Indeed, he says what really convinced him to take the job was the board's choice for Alcatel-Lucent's new chairman, Philippe Camus, a 60-year-old French national who formerly served as co-CEO of Airbus parent European Aeronautic Defense and Space Co. (EADS). Camus, who currently lives in the U.S., is co-managing partner of international media group Lagardere and a partner at Evercore Partners, a New York based investment and advisory firm.

"The most important thing for me was the choice of Philippe Camus," Verwaayen told me. "He understands the French environment but he also really knows global business." Verwaayen said he and Camus had a series of "interesting conversations" over the last few weeks. "We talked about governance roles and responsibilities. He is certainly a real professional." Verwaayen, who left BT only in June, said he made the decision last Friday at his French vacation home.

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 aims to do away with the "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.

Another critical change: Verwaayen aims to banish the us-versus-them mentality inside Alcatel-Lucent, insisting instead that the company think and act as one. He says he never again wants to hear that a certain technology or key account came from the Lucent side or the Alcatel side.

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. As I wrote in an earlier blog at the time Ben left BT, he wasn't initially welcomed when he took the top job at Royal PTT. The Dutch company's 29,000 employees had recently been stripped of their civil-service status and were being asked to follow the lead of an outsider who made it clear that he was going to shake things up. But many came to admire him, and he helped position KPN for the more competitive world it faced after privatization.

Verwaayen's focus on team-building--and his innate sense of egalitarianism--also smoothed his tenure at BT, which was in deep trouble when he arrived in 2002. Tellingly, soon after he started at BT, he democratized the company dining room and eliminated a special CEO-only elevator at the corporate headquarters.

If the past is a guide, Verwaayen is likely to take similar steps in Paris to shake up Alcatel-Lucent. There will undoubtedly be critics and doubters, and some may leave. But Verwaayen isn't worried--and in a highly symbolic gesture, he has agreed to a contract with no severance pay. "If they want to get rid of me they can do it in a heartbeat," he says. "I am here to do a job, not to make a career."