Transformational Strategy: Leading Innovation in a Fast-ChangingGlobal Organization John Bobb

SPRING 2010VOLUME 14,

ISSUE 1HSATMHOWE SCHOOL ALLIANCE FOR TECHNOLOGY MANAGEMENT

Current Issues in Technology Management

In the face of a radically changed globalbusiness environment, Alcatel-Lucent’s sub-sidiary in Belgium has taken the lessonslearned and moved forward, introducing anew approach that emphasizes capitalizingon the innovative ideas of individuals in thecompany. The idea was to give individualcontributors the tools to foster their entrepre-neurial spirit and break down the silos andmanagerial boundaries that so often stifleinnovation. Alcatel-Lucent provided theirindividuals with guidance and the right con-nections to successfully exploit their ideas, atthe same time creating business opportuni-ties that would benefit the company.

It has long been recognized that innovationis key to the success of Alcatel-Lucent.Alcatel-Lucent’s Bell Labs has been in theforefront of innovation for decades, withmany leading minds in technology innova-tion. However, it takes more than a creativelaboratory to make innovation successful. Ittakes the diversity of thought and action fromindividuals in the company as a whole, tomove ideas and concepts to commercial real-ity, through business planning, engineering,manufacturing, marketing and distribution ina global market place. Alcatel-LucentBelgium recognized that major changes

would have to occur in the company in orderto create an environment that encouragedinvolvement from all levels, provided the abil-ity to work effectively across functionalboundaries, and fostered the re-emergenceof the entrepreneurial spirit it once had.

Many ideas that were not being capitalizedon were “under the radar” of companydecision-makers, as there were few if anychannels through which an individual couldrelay a new concept or business idea up tothe management team. Silos within theorganization often prevented communication

and collaboration between groups, hinder-ing a team effort in formulating new ideas.Alcatel-Lucent was a powerhouse for tech-nology innovation, but with large competi-tors like Cisco Systems and Ericsson theyhad to find new ways to create and developideas to stay ahead. Somehow the innova-

tion process had to be owned by everyemployee, going beyond the research labs,pulling all individuals in the company in thesame direction from innovation to implemen-tation. It was important to create a sense ofurgency, to bring people out of their comfortzones and be motivated to collaborate.

A key element of Alcatel-Lucent’s changeprocess was to create an environment thatwould encourage risk-taking. They wantedto find hidden talents within the companyand redeploy them into new areas of thecompany, encouraging entrepreneurship

along the way. Alcatel-Lucent wanted to con-stantly move the borders, creating new net-works of people and relationships.

The change process began with the creationof an Innovation Board, consisting of theCEO and the leaders of all the businessunits in Alcatel-Lucent Belgium. It was recog-

This article describes an initiative by Alcatel-Lucent, a company with a long and admired history of innovation, to accelerate its pace ofinnovation during a period of rapid and disruptive industry change. I have a particular interest in Alcatel-Lucent as I became part of one ofits forerunner organizations, Lucent Technologies, when my company, Ascend Communications, was acquired by Lucent in 1999. In theirquest for growth, Lucent acquired Ascend, along with 37 other companies, within a four year time span during the mid to late 1990’s. Itwas a fantastic time to be in technology, as growth seemed boundless. However, the acquisition and integration of companies is risky anddifficult during even the best of times. Undertaken at this scale at the brink of the telecom bubble collapse, the challenges to successful inte-gration of 38 companies and their innovative ideas were nearly insurmountable.

...it takes more than a creative laboratory to make innovation

successful. It takes the diversity of thought and action from

individuals in the company as a whole,

to move ideas and concepts to commercial reality...

nized that a powerful guiding coalition ofleaders was necessary in order to achievethe level of buy-in required of employees.Alcatel-Lucent knew that to be successful, theleaders had to be involved throughout thechange process, and they had to championthe change with enthusiasm.

Next to be launched was the Alcatel-LucentInnovation Task Force. Its mission was tocreate new opportunities for the companyby connecting the talent and ideas of peo-ple throughout the company. This teamhelped to communicate the new companyvision. The Innovation Task Force promotedthe program through company meetings,brochures and the Intranet. They created awebsite where ideas could be posted andopinions expressed about the ideas. Thewebsite was open to everyone, creating anenvironment that transcended traditionalorganizational boundaries, allowing every-one to speak freely about their innovativeideas. By widening the circle of involve-ment, connecting people and ideas, creat-ing communities for action and embracingdemocratic principles, Alcatel-Lucent wasembarking upon a new paradigm to helpthem be more successful in today’s complexbusiness environment.

Alcatel-Lucent’s first attempt at fostering inno-vation through this system tried to promotethe collective effort of individuals in express-ing their ideas. The Innovation Boardencouraged ideas by conducting a contestin which the prize was a car. Through thewebsite 150 ideas were presented in fivemonths. All ideas were reviewed and onewas selected as the winner. At first this ini-tiative was deemed a success, but ultimatelythe leadership team discovered that using aprize in this manner was a bad practice.There was one winner and 149 unhappylosers, the program was not sustainable,and none of the top 11 ideas made it tomarket.

The process clearly had to be re-evaluated.The Innovation Board had to get people’s

involvement without dangling a prize infront of them, and they had to establish bet-ter criteria for project selection. The ideashad to become more than just ideas. Theideas had to be of significant value, and ithad to be demonstrated that they had thepotential to be developed into meaningful,

profitable ventures for the company. Ideashad to align with the core market of thecompany, or align with a market segmentthat the company envisioned pursuing. Theidea needed to be achievable as a businessventure within a reasonable timeframe.Since an idea that becomes a successfulventure has to have the inputs of many dif-ferent talented people along the way tocommercial reality, ideas had to be accom-

panied by full business plans that the com-pany could implement.

What came out of this re-evaluation was theEntrepreneurial Boot Camp, a program thatconsolidated the resources needed to support the pursuit of innovative ideas andto create business opportunity plans fromthose ideas. Through proposal development, selection of plans, funding and securing of venture capital, people now had theopportunity to express their ideas on a levelplaying field and, potentially, see thembecome a new business within the companyor with external partners.

The Entrepreneurial Boot Camp addressedthe shortcomings of the first attempt. Clearlydefined criteria were established for ideasto be considered. Teams were encouragedto be formed through what was termed a“dating event:” a five minute presentationby each person with a new idea and agathering in the lunch room to talk and collaborate, leading to the formation ofdiverse teams to carry the ideas to the next

level. Coaches from the executive manage-ment level were provided to the teams tomentor them and help form connections tothe right internal and external resources andencourage collaboration. Alcatel-Lucent alsoincorporated business school professors intothe Innovation Boot Camp process, to teachbusiness plan development principles and toshare personal wisdom from their own pastexperiences.

The Entrepreneurial Boot Camp was not forthe faint of heart; there had to be passionfor the idea and a commitment to see theidea through the review and developmentprocess. Participants had to commit to athree-weekend experience. During the firstweekend they were trained in developing asuccessful business plan, new venture cre-ation, and opportunity development. In thesecond weekend the training covered entre-preneurial marketing and new productgrowth. The final weekend moved intolegal, finance and intellectual propertyrights. The goal was to give participants

the tools required to create a business casefor their idea, through 80% coaching and20% theory.

As ideas moved through development in theEntrepreneurial Boot Camp, the participantteams had to present their new businessplans to a jury. The team’s speaker had just15 minutes to present the case to the CEO,CTO, and CFO of Alcatel-Lucent Belgium,five venture capitalists, and approximately150 employees. Being fully prepared andpassionate about their ideas was critical. Inthis stage, the teams presenting the newbusiness opportunity received high exposureto top management, and were able to con-nect with them and share information. This is important in order to develop trustbetween employees of the company and the management team, and to break downthe walls that inhibit innovation and entre-preneurship.

Once a business opportunity is selected, itmust go through an incubation period dur-

... to be successful, the leaders had to be involved throughout

the change process, and they had to

champion the change with enthusiasm.

Silos within the organization have been successfully breached, and

this has created new networks of employees that can do more.

ing which a fast prototype is developed sothat something can be shown to potential cus-tomers and where the opportunity is furthervalidated within the targeted market segment.As a result, the plan may be modified to increase the probability of its suc-cess.

Not every idea brought into theEntrepreneurial Boot Camp is accepted -- infact only one out of five is. There thus had tobe a post-boot camp feedback process, tohelp the teams understand that it is the jour-ney -- the learning experience -- that is mostimportant. Being prepared for the high prob-ability of not making it to market is tough,and Alcatel-Lucent does not want to see theirpeople discouraged from the results. Hence,feedback is provided to each team as to whytheir business plan did not make it. They areencouraged to improve the plan on theirown. This process helps to insure that theywill try again, and that others will follow.

The program is still young, but the results sofar are encouraging. In the first two yearssince inception, two projects have beendeveloped into new market opportunities andseveral others were transferred directly toexisting product groups. Expansion of theprogram is considered critical to the successof Alcatel-Lucent, and they have decided toexpand the Entrepreneurial Boot Camp con-cept from Belgium into other locations. TheEntrepreneurial Boot Camp is now also run inParis, France, where they have teamed upwith local business schools to help create thesame type of environment that has been sosuccessful in Antwerp, Belgium. In Septemberof 2009, the first Boot Camp was conductedin North America. The next countries slatedfor Boot Camps are China and India.

As Alcatel-Lucent expands the program into

other countries, they are taking into accountlocal and cultural differences and reflectingthose differences in the program, customizingthe program for each country to insureacceptance of the program and to capitalizeon the wealth of knowledge that others fromdifferent cultures have to offer. They alsohave to determine market differences, asevery country has unique market opportuni-ties that Alcatel-Lucent can capitalize on ormust be sensitive to. It is also important toknow what the scale of the program shouldbe and the cost of the program for each ofthe new areas they move into in order toinsure successful implementation.

In addition to spreading the program internal-ly, Alcatel-Lucent has promoted the best prac-tices of the program to some other companiesin order to explore the possible setup of jointBoot Camps in the framework of collaborativeinnovation. Currently Johnson & Johnson, thePicanol Group, Merck Serono, Swift and oth-ers have adopted similar practices.

There are many theories about organization-al change and how it should be done, andthere are many pitfalls along the way thatcan destroy even the most sincere attempts tochange an organization. Alcatel-Lucent inBelgium, in an effort to change the cultureand business strategy of the global Alcatel-Lucent, has created an incredible innovationprogram. Management has fully bought intothe program and is intimately involved inevery step of the process, showing full com-mitment to the employees of the company.They have been able to bring to light innova-tive ideas of everyday folks in the company,they have created synergies through collabo-rative meetings, and ideas are becomingbusiness plans that can be evaluated for theirpotential to grow the company. Silos withinthe organization have been successfully

breached, and this has created new networksof employees that can do more. They havesuccessfully crossed difficult global bound-aries in their quest for innovative ideas andhave been able to apply globally anapproach that is sensitive to the cultural andmarket aspects of each region.

If the passion of Dr. Guido Petit, Director ofthe Alcatel-Lucent Technical Academy inBelgium is any indication of how peoplewithin the company feel, Alcatel-Lucent’s strat-egy will be successful. Their initiative willoffer a new model of organizational changefor other companies. Dr. Petit said you mustbe an evangelist when creating change with-in a company. You can get a feeling for Dr.Petit’s passion by watching the videotape ofhis presentation, Innovation Leadership in aFast-Changing Global Organization, given atthe Eighteenth Annual Conference of theHowe School Alliance for TechnologyManagement, Leading in a ChangingEnvironment, athttp://howe.stevens.edu/video/petit-hsatm-2009/

* * * * *This overview description of one of Alcatel-Lucent’s innovation initiatives is based uponan interview with Dr. Guido Petit, Director ofthe Alcatel-Lucent Technical Academy, August6th 2009. The author is grateful to Dr. Petitfor permission to publish this description ofthe process and to use it to formulate his ownviews of the program. ■

About the Author:John Bobb (jbobb@syncns.com) is Vice President of Operations for Synchronized Networking Solutions, a Native American-owned company dedicated to providing integrated telecommunications and information network products and services. He has been in various roles in network engineering and operations for over 18 years, with responsibility for network operation centers and on-site engineering services. Prior to joiningSynchronized Networking Solutions, John was with Lucent Technologies, which acquired his previous organiza-tion, Ascend Communications, in 1999. John has a special interest in fostering entrepreneurial ideas and inno-vation through collaboration with personnel and through partnerships with other companies.