What If…

By Mark Evans | Published: March 3, 2008

Daichendt
In the wake of disappointing financial results and yet another 2,000 jobs to be eliminated, the spotlight – and pressure – is clearly on Nortel CEO Mike Zafirovski and his hand-picked senior management team.

For all the talk about revitalizing Nortel and Six Sigma (aka cost reductions), you have to ask what Zafirovski really done over the past two and half a years. Nortel has made exactly one acquisition (Tasman Networks), dumped one major asset (the money-losing UMTS business to Alcatel), chopped about 5,000 jobs, while moving others to lower cost countries such as Turkey, Mexico and China.

But at the end of the day, Nortel is pretty much the same as it was three years ago – a company trying to be all things to all people without a dynamic growth engine. (Note: it would be unfair not to give Mike Z. credit for navigating Nortel though the accounting scandal he inherited, and giving the company some financial stability).

It got me thinking about what could have been if the Cisco Kids – Gary Daichendt (above left) and Gary Kunis – had been given the freedom by Nortel’s board to performance radical surgery on the company.

Their strategy would have seen Nortel focus on fewer businesses, which would have given it a sharper strategic focus and significantly lower R&D costs. At the same time, it’s likely the Garys would have sold a number of businesses, closed superfluous facilities and streamlined the books.

Unfortunately, their plans never came to fruition as Daichendt abruptly resigned as president and COO three months after he was hired after butting heads with CEO Bill Owens and failing to convince Nortel’s board of the new, radical strategic direction that was required. Soon after, Kunis, the CTO, followed him out the door.

Hindsight is always 20/20 but it would have been interesting to see what the two Garys would have done to Nortel.

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  • Not An Accountant

    I also keep thinking about that in my sleepless nights. Timing is crucial in a number of aspects of our life. From that aspect, Nortel has lost a gigantic opportunity to renew its focus and strategy. Nortel could be in a very different situation today.

  • flabbergasted

    Hard to say what if, but I assure this. It would've been hard for the Garys to drive the company into more muck that it already is.

  • GoBigOrGoHome

    Didnt Gary Daichendts new plans come directly from God?

  • Observer

    The Garys were plants by John Chambers to package up the company and sell to Cisco. Once the board and Bill Owens found that out that was the end of them. The market really hasn't changed much since 2005. Has Nortel missed out on some growth ? Yes. Has the market diverged so much that Nortel doesn't have the right portfolio now to still compete ? No. Nortel will have to place its bets eventually but it may not come until the economy has fully bottomed and then picked up again. I don't think the situation the Garys would have faced would have benefitted Canada all that much. They would be part of Cisco and and there would be little left in Ottawa or anywhere else in Canada. I say better to go down fighting in the marketplace than selling out to your competitors.

  • many

    Actually the garys did not relaize that god is a verb, not a noun :)

    I don't think it would have mattered that much. Beh. Cisco vs. GE , they were cut from the same cloth as zafirovski.

  • ex-nt

    The Gary's definitely had the right plan and it could have worked. Everything was analyzed, plans drawn up, ready to go. I believe the disagreement was over UMTS which gary wanted to shut. He was proven right years later. This was a major lost opportunity. Another factor is how the Gary's made their decisions – they had a very analytical fair approach that did not alienate the engineers or business people.

  • Break It Up

    Mark… great insight. Gary would have certainly moved much more heavily into enterprise which would have made a read difference. At least he would make some strategic decisions instead of getting stuck navel gazing like Zman.

  • Not An Accountant

    Observer: Do actually have facts to substantiate that or you're just speculating?

  • ex-nt

    Observer is smoking something.

  • Observer

    Not smoking anything. The Garys were finished before they even got started. I'd love to hear their “drawn up plans.” ex-nt. The Garys would not have managed Nortel thru the accounting and financial crisis they were in. I've said it before and I'll say it again. The Garys wouldn't have been alter Nortel's course all that much as most of the damage was done before their time by lack of execution on creating new products. Now that we are headed into a significant slowdown Nortel will get another reprieve for their R&D to play catchup.

  • Nortel watcher

    Observer:
    If the Garys were to package up Nortel to sell to Cisco, then it was moot for Owens and the board to fire them given Nortel's pps today. If your hunch is true, then at least back then the Garys would have gotten Nortel shareholders a better share acquisition price than they could get today or in the foreseeable future.

  • Observer

    You guys don't seem to realize how deep in bed Nortel is with the Canadian government. Worst case scenario is a government bailout of Nortel via further loan guarantees. Remember Nortel is one of the primary equipment suppliers for the 2010 Vancouver olympics.

    By the way, anyone paying attention to 3COMs troubles with the US government regarding Huawei taking a stake in the company ? I doubt the Canadian government would idly sit by if any foreign entity tried to take Nortel over.

    Shareholders can do what they want but I don't think they are always the primary reason decisions are taken despite all the talk you may hear from corporate speak. There is always more going on behind the scenes than shareholders know or care about.

    Its clear to me Nortel isn't about to sell out. At worst they will retreat into Canada and become an arm of BCE again.

  • Ex-Nortel

    The comments about Gary's 'plans coming from God' comes from back door statements from former CFO Peter C. Gary wanted the BOD to remove Peter C because he felt that Nortel's accounting practices were unacceptable (36 different P&Ls, no corporate wide ERP or accounting systems, etc) and that there would be future restatements that would affect Nortel's credibility. Gary D. was right. Nortel has restated 4 times since he has left. Peter C is now gone and Nortel has a new CFO.

    The 'God' comments were Peter C.'s way of getting back at Gary D. Harry Pearce apologized to Gary D.

  • ex-nt

    Observer,
    First you claim the Garys were plants for CISCO, then you claim they would have made no difference? Then Nortel is in bed with Government of Canada?? Do you have any stories about black helicopters, aliens, and Mike Z???

  • ex-nt

    Observer,
    First you claim the Garys were plants for CISCO, then you claim they would have made no difference? Then Nortel is in bed with Government of Canada?? Do you have any stories about black helicopters, aliens, and Mike Z???

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