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![Page 1: Japan Conference on Financial Institutions for Innovation and Development Ritsumeikan University July 30-31, 2015 William Lazonick The AIRnet University.](https://reader035.fdocuments.us/reader035/viewer/2022080915/56649e3a5503460f94b2bce8/html5/thumbnails/1.jpg)
Japan Conference on Financial Institutions for Innovation and DevelopmentRitsumeikan University
July 30-31, 2015
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
The Innovative Enterprise; a Case Study in the Transformation of AT&Tfrom an Old Economy into a New Economy Business Model*
Driving Factors for ChangeEvolving Strategy and Organization
Transformation Results
Edward MarchThayer School of Engineering, Dartmouth College
Master of Engineering Management Program
*Based on Paper: “The Rise and Demise of Lucent Technologies”, William Lazonick and Edward March, Journal of Strategic Management Education 7(4), 2011
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![Page 2: Japan Conference on Financial Institutions for Innovation and Development Ritsumeikan University July 30-31, 2015 William Lazonick The AIRnet University.](https://reader035.fdocuments.us/reader035/viewer/2022080915/56649e3a5503460f94b2bce8/html5/thumbnails/2.jpg)
Basic Differences between Telecommunications and Computer Industries before Technology Convergence
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
Convergence: Digital Technology Replaces Analog Signaling; Voice, Data, Video can be Transmitted across the same Network, Limited Pre-ConditioningTelecommunication and Computer Industries have a Common Technology Base
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Telecommunications Industry Regulatory Changes Driven by Technical Advances
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
Deregulated Telecommunications Industry Forces Change in Lucent Technologies Culture
(1) Greater competition, faster new product development (2) More risk taking in market introductions (3) Investment made according to a technology roadmap (4) Advanced manufacturing capability developed
in parallel with new designs
Onset ofConvergence
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Lucent Technologies Organization StructureNovember 1997
Chairman
Henry Schacht
Chief ExecutiveOfficer
President
Rich McGinn
Executive V.P.Corporate Staff
Operations
Patricia Russo
Executive V.P.Chief Financial
Officer
Don Peterson
Executive V.P.Chief Operating
OfficerPresident Bell Labs
Dan Stanzione
Executive V.P.Chief Operating
Officer
Ben Verwaayen
Office of the Chief Executive Officer
Group PresidentMicroelectronics
&Intellectual Property
Curtis Crawford
Group PresidentBusiness Comm.
Systems &Data Networking
Systems
William O’Shea
Group PresidentGlobal Service
Providers Business
Carleton Fiorina
Product Groups Customer Groups
Group PresidentOptical Networking
Gerald Butters
Group PresidentWireless Networking
Jim Brewington
Group PresidentSwitching & Access
Systems
Robert Holder
Group PresidentNetwork Products
William Spivey
Acting GroupPresident
CommunicationsSoftware
J. Carl Hsu
PresidentInternational Region
Global ServiceProviders Business
Joseph Colson
Executive V.P.ResearchBell Labs
Arun Netravali
PresidentNew Ventures
Group
Thomas Uhlman
Business Units
Executive V.P.Corporate Staff
Operations
Patricia Russo
Executive V.P.Chief Financial
Officer
Don Peterson
Executive V.P.Chief Operating
OfficerPresident Bell Labs
Dan Stanzione
Executive V.P.Chief Operating
Officer
Ben Verwaayen
Office of the Chief Executive Officer
Group PresidentMicroelectronics
&Intellectual Property
Curtis Crawford
Group PresidentBusiness Comm.
Systems &Data Networking
Systems
William O’Shea
Group PresidentGlobal Service
Providers Business
Carleton Fiorina
Product Groups Customer Groups
Group PresidentOptical Networking
Gerald Butters
Group PresidentWireless Networking
Jim Brewington
Group PresidentSwitching & Access
Systems
Robert Holder
Group PresidentNetwork Products
William Spivey
Acting GroupPresident
CommunicationsSoftware
J. Carl Hsu
PresidentInternational Region
Global ServiceProviders Business
Joseph Colson
Executive V.P.ResearchBell Labs
Arun Netravali
PresidentNew Ventures
Group
Thomas Uhlman
Business Units
11 “Hot Businesses” Rich McGinn, CEO
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
Business Units
Business Unit Structure• Decentralized, Entrepreneurial• Separated by Technology• Each a Profit/Loss Center• Overlapping Products, Confusing to the Customer
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Emerging Communications Technologies Influence Lucent Strategy,Exhaust R&D Resources
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
Global Competitors were Pushing Communications Technology in New Directions
Incumbent Technology
Voice Networks,Circuit Switching
Centralized NetworkControl
Electronic Transport
Wireline Services
Internet “Twisted Pair”
Alternative Technology
Data Networks,Packet Switching
Distributed Network Control
Optical Transport
Wireless Services
Internet “Coaxial Cable”
Lucent Strategy
Adapt
Adapt
Innovate
Innovate
Innovate
Successful Strategy Failed Strategy
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Lucent Technologies Transformation Results
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
Growth Decline StagnationInternet: 2nd Phone LineDigital Switch Demand
Electrical to Optical ConversionWireless Network Installation
Network Overcapacity
EmployeeDownsizing
Lost Opportunities,Lack of ResourcesEnterprise Systems
Data NetworksGlobal Wireless
Growth
Decline
Stagnation
Business Units Spun-OffEnterprise Networks 9/2000
Microelectronics 4/2001
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Consequences of Insufficient Investment in Technology Development
Consequences of Insufficient Investment in Technology
William LazonickThe AIRnet
University of Massachusetts
Edward MarchThayer School of Engineering
Dartmouth College
THE RISE AND FALL OF LUCENT TECHNOLOGIES
When compete on technology, if R&D investment is not sustained, or if technology cannot be acquired, product portfolio becomes
obsolete and company eventually fails
Options for Lucent Technologies during “Stagnation Period”
• Supplier of legacy telecommunication equipment• Niche supplier of specialty equipment• Merge with another company, pooling resources and products together to retain full-line supplier status
Alternative Chosenfor Reestablishing
Growth*Effective November 2006
*Less than two years after the merger, Bell Labs was no longer engaged in basic research.
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