New Delhi: Soon after he took the chief executive’s office in early September at Alcatel Lucent, a telecom gear maker lagging its peers in profits and revenues, Ben Verwaayen made his intent clear of how the corner office meant business: as a demonstration of how he intends trimming costs, he grounded three of the company’s business jets, asking executives to fly commercial airlines.
Future vision: Ben Verwaayen of Alcatel-Lucent says that five years from now, the battle will be over the business model to adopt when video is introduced as the main driver of growth in the network. Madhu Kapparath / Mint
Together with Alcatel Lucent’s new chairman Philippe Camus, Verwaayen is widely thought of by analysts as the person to nurse the telecom vendor back to health. Verwaayen, 56, is not new to troubled situations. He took the Alcatel Lucent job – from Patricia Russo – after turning around BT Group plc (formerly British Telecom) in six years.
In a Sunday afternoon interview, Verwaayen tells Mint how his two months in the Alcatel Lucent executive suite has been, hints at what investors and the telecom world can look out for, and, briefly, his plans for India. Edited excerpts:
How have the first two months been?
It’s been fun. First of all it’s (telecom) a market that I know very well. It was good to say hello to a lot of friends and customers. It’s good to see a lot of energy in the company. You could not hope for a better time to start; you know, with the economic crisis. But at the same time it focuses the mind on the choices that we need to make as the company. And it’s good to see a willingness to engage in discussion
What did you set out to do when you took over and what ground have you covered?
Well if I summarize all of that then just two days ago we issued a new business model that specifies we get close to your customers. Much more focus to add value and getting away from a lot of internal focus on stuff and getting much more transparent on how we make decisions. Making sure that you are faster and if you make a decision then you stick to it and go on and execute. And you do it in a way that your line up is customer first. Everything you do customer first.
Second thing we need to do, of course, is repair the profitability of the company. There is no doubt about it.
The third element—we are good on cash, which is good nowadays so we don’t have to worry about that but we of course have to make sure that, we keep ourselves in that space by being very positive about our cash flow management.
So if you have those three elements in your organization then it’s all about people. We made some choices about people. I think a good mix. Some on the outside and some on the inside, some young kids from out of jobs and now its time to go.
What are the key areas you will be driving in your return to profitability?
I would say you have to be more relevant. We are serving a world that needs to take care of building skills, building people. We need to be connected to the web, to say hello, to send a message, to collaborate or whatever. Is the added value still connected to access or is there (something else) that will create a layer that will take away the value. If you are a young kid and want to move from one screen to another screen to another. And, we all assume that it will be absolutely respecting of privacy and other stuff.
So here is the question – what can we do to help our industry be powerful enough or to be relevant to our customers? That’s it.
What’s the answer? How would that translate into a business model?
So now you talk of the business model – from us to the service providers. I am talking about a business model from the service providers to customers first. Because if you do not know what a business service provider is, then how can you serve them better.
I think that if we have an understanding of that then the next phase is that we need to help them focus on what they have to make the difference.
Therefore, you have seen us regroup as a company into carrier products, services and – very important – service applications. Those three elements in a horizontal way brought together will create a platform.
We come in from an era (in telecom) which is box for box, may the best one win. Sometimes even to the level that it is commoditized so you can do an e-auction. To be in the e- auction business is to be in something completely different. In the e-auction business it is standardized, it is commoditized and it’s a different thing – you go for the lowest cost denominator.
But isn’t a large part of the business that you try to address in that commoditized space?
There is a substantial part – maybe not large but a substantial part in that space. There are other parts in what I would call undefined territory; there is value but we haven’t really figured out how to get the value understood. And then there is the middle space which is just doing things better and faster.
What is it that Alcatel Lucent would have that your bigger and more prosperous competitors like Ericsson and Nokia Siemens do not have to be able to deliver the value you talk about?
With due respect, they are a lot more focused in certain part of the technology landscape. I think they have been able to better execute on certain elements of their value chain than we have been able to – looking at the numbers.
But I think that to be honest – that is only part of the debate. Your real debate is how we create value together with your customers in a different way.
I think making boxes faster – making boxes better is a way to go forward. It’s one way where you may be in a trap that is difficult to get out.
I think the creation of value as it is understood by your customers is a bit broader. Its not just the boxes and not just with technologies. It is the application and the way that you bring it to the market.
Explain this with an example. If I were a telecom CEO, how would you sell to me?
Good question. You have to wait until mid-December for (details of that). It certainly won’t be 15 slides of a 400-slide presentation. It will be more like 20 seconds or an elevator pitch.
Five years from now, where do you see Alcatel Lucent?
Lets ask first where do I see the industry. I think there are two buzzwords. First one is collaboration. This is an industry that allows people to work cross borders; communicate across borders like we have never seen before. We do not have to physically have to move anything across a border to be part of a bigger machine. To enable that is the point.
Second, I think that we will see an industry that will really go out and converge.
I think five years from now, this will be a world in which the creation of services is not just for the (equipment) supplier to decide; I think the customer will have a big say in the creations of services.
For instance, the battle will be what is the business model to adopt when you introduce video as the main driver of growth in the network. We will be there to support that world. So, it is not just bandwidth up for all the time even if you don’t need it for 23 hours a day, but bandwidth when you need it; it is bandwidth wrapped into the service. It will be bandwidth that will serve the same screen on your mobile handset as it does on your PC.
You think Alcatel Lucent will have a compelling service offering to enable to offer that.
We have to. It is at the heart of the development.
Tell us a bit of the local market here in terms of the way you see Asia Pacific or India in particular.
India is a fantastic opportunity. It is an opportunity as a market, it’s an opportunity as a talent base, it’s a merger between high numbers and great depths of talent. So I am very positive about the capability of India as a country and in our industry. And I am very positive about what as a company we can do in India.
In your previous job at BT, you really pushed the envelope outsourcing as much as a billion dollars worth of business here annually. Would some of those things be on your agenda here in your new job?
It would be very hard to imagine that they all of a sudden I have changed my mindset.
But (Alcatel Lucent’s) a culture that has not done very much?