It’s Not Just Mike Z.’s Fault

By Mark Evans | Published: August 11, 2009

As much as Nortel CEO Mike Zafirovski did an excellent job over the past 3+ years in killing Canada’s flagship high-tech company, it would be remiss to not shine the spotlight on the board, and the role it failed to play in providing much-needed supervision of the senior management, as well as serve the interests of shareholders.

I’ll put together some thoughts soon but in the meantime, the Toronto Star’s David Olive does a nice job of scrutinizing the “Nortel Nine”. In hindsight, it might have been a good idea if more than one of them – Richard McCormick – actually had telecom experience.

More: The Globe & Mail’s story on Mike Z.’s departure is another example of how he’s getting off easy by providing him with tons of real estate about how Nortel was a risky proposition from the start, and how a variety of issues (the accounting scandal, competition, the credit crunch, etc.) conspired against the best efforts of senior managers.

That’s lame because it ignores how Mike Z. had plenty of opportunities to get Nortel heading into a new, decisive direction but failed to pull the trigger. It’s sad to see the media give Mike Z. so much room for excuses, rather than do a critical analysis.


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  • oldfaithfull

    ya same here, Clarify… when we had Bill Conner as president of the eBusiness unit. We killed a very good software company… no one in Nortel could even spell software sales at the time, what a mess. Amdocs picked it up for a song.

  • S_O_S_This_is_HMS_Nortel

    The demise of Nortel can be summed it up in 3 words

    Incompetency, Greed and Ego

  • zeroman

    it's his wife or kid. Mike does not have the guts to get on this board.

    has he left for the US (ooops Mexico) yet.

  • ChaiTea

    Scalp:

    Agree with you. However you should also add Clarance Chandran to the list. More like John Roth/Clarance Chandran and their mindless acquisitions.

    BTW…r u based in Ottawa?

  • zeroman

    only country who should care is Canada – chances of that happening are as good as not having a winter.

  • NortelEmp

    120K employees? I'm not following. The municipal government? Hello?

  • zeroman

    to sum it up since the others share a small percentage of the blame.

    Roth started the right angle turn steering the Nortel car on two wheels. So pwerful was the screeching and squealing of tires that he got thrown out the window. Then Dunn took over but could not control it, so it went off the road almost hitting an 18 wheeler. Dunn got thrown out the window in the violent lurching, so Owens took over the wheel. But he thought the beaten up rusty little hatchback was an Abrams tank. He tried to take it through rough terrain but the poor car just could not keep up. Then Z took over but he fell asleep at the wheel so he hit a concrete wall head on of debt, old products and no profit. He got saved with the airbag so he left.

    The BoD all the time was in the back seat munching on chips and drinking as much free coke as they could. The car is now in a chopshop junkyard retrieving spare parts.

  • biddut

    I think Mike Z tried and failed, because he is NOT ONLY STUPID BUT ALSO A LIAR. He flatly denied about Chap 11 and then it did happen. He mentioned that Nortel would come out of Ch 11 and truly it was never the plan. He is a LIAR, PERIOD. He is also incapable of big change, such as selling wireless and/or raising cash from stock, at least, or from Canadian GOVT. His only solution was to cut employees. He tried but he was dumber than a bag of hammer.

  • MikeZ_ElPresidente

    I find it interesting you blame employees for all the failures….you should go work for Hackney

  • MikeZ_ElPresidente

    I would rate ALU a big chance in going for CVAS

  • darius711

    look at the board: bunch of underachieving good ole canadian boys and gals there. they couldnt spell telecom, technology or GAAP earnings, between the lot of them.

  • The_Deuce

    Nortel is #1 in IVR as well. It has been #1 in messaging but I am not sure if that is still the case. CVAS is #1 because it had an early start. The product is way too complex though, I am not sure if the architecture is sound enough to survive some major rework.
    In my opinion, Nortel R&D has been stagnating. In the last 10 years, there have been two innovative products release:
    1) MCS
    2) ICP

    MCS is a great product but the Nortel politics never let it get off the ground. Really a shame because we had such a lead on our competitors. That product was developed many years ago and its still ahead of many competitive products in the market place.
    ICP is a great product but the timing was bad. Came out right before the bankruptcy announcement. Not sure if it will ever get a fair chance unfortunately given the timing and the confusion on ACE.

  • 4merEmployee22

    You may find out the informations on the ERNST & YOUNG REPORTS .
    A process of “Application for Hardship Payments” set up by the Bankruptcy
    Court in Ontario,Canada.
    It is intended only for ” former employee…” etc.. etc..
    One must prove his NORTEL GLOBAL IDENTIFICATION NUMBER.. ( like your
    Employee Number )
    I could hardly wait to get a hold of $750,000 CDN dollars payments…
    That's ONLY IF, I AM QUALIFIED and BECOME A SUCCESSFUL APPLICANT!!!

    You see my friends….. there is this English word…. “DENIED!!!” ha ha ha!
    or …”WISHFUL THINKING”

    I am beginning to think now.. that I WAS BEING punished by GOD for working
    30 years for this company!!!!!!!!!!!!!!!!!!!!!!!

    AND IF EVER I GET THIS $$$,$$$… ALL THE PEOPLE BLOGGING ON THIS SITE WILL BE INVITED FOR A “FREE BEER” !!! (name the brand of your taste)
    Canadian Beer, or American Beer or any name brand beer on the planet!'
    And for the VENUE….. How about, let's say… NIAGRA FALLS!!! and if the
    weather is great… we can all have a free ride on the 'MAID OF THE MIST' boat
    tour ride that will take us near the FALLS! he he he he!

    Dream On!!! Dudes!!! Take Care ya'll and MAY THE “FORCE” BE WITH YOU!

  • zeroman

    dumofski = macedonian for dumb

  • darius711

    in mike's defense, he facilitated the sale of wireless and enterprise. glad to be parting ways with “colleagues” such as scalp peeler.

  • GoProto

    That's what I think. Sounds like hey are written by a relative, and/or perhaps someone fairly young.

    Where is he going? To Los Cabos to throw some of his 10 mil around town?

  • felixmk

    So, under your scenario, Mike is either stupid or unethical. If he agrees with the board that it is execution, he is stupid. If he disagrees but stays on regardless, he is unethical because he is not discharging his responsibility as CEO. Neither characterization is flattering but my point was that he was stupid.

  • How_long

    In the middle ages in the UK peple were sometimes “hung by the neck until dead” for minor offences such as stealing a sheep. This doesn't happen any more. The pendulum has swung as far as it can the other way so that someone who wrecks a 100 year old corporation on which thousands of people depend for their livelihood, their pensions, their health, goes away scott free.

  • GoProto

    “naturopath did precisely what he claimed he would do and what he was asked to do”
    ——————————
    re

    If that's so, what was behind all of his claims to be able turn things around? That phrase does not at all exemplify someone who is going to just right a capsized ship and proceed to calm waters captaining a boat as a figure-head for the board. Turnaround signifies taking action. When you “turnaround” you are changing direction, not just keeping the status quo. BTW as stated- he said he would be able to turn things around, and failed miserably so he did not do precisely what he claimed he would do.

  • Casual_Observer

    Agreed the board didn't do much but at the end of the day it was Mike Z that was tasked with overhauling the company from the moment he was hired in November 2005. He did NOTHING from the time he came on to the time bankruptcy was declared. He blames the credit crisis but what about all of 2006 and 2007 and into the summer of 2008 ? The truth of the matter is his incompetence and lack of understanding did not allow him to make the changes necessary to rescue Nortel. He truly deserves the title of worst CEO of the decade. There were likely many other hires that the board could have made and Nortel would be alive and well. Instead they, specifically Pearce, spearheaded the hiring of Z to rescue Nortel. Given that nothing was done until by Z until it was too late, it makes you wonder if he just sat by as the company went down. There were no strategic changes or major acquisitions or asset sales until it was too late. There was literally no leadership from the CEO's office when it came to understand where Nortel was at in 2005 when he took over. He simply ran the company as is with no changes.

  • NortelTragedy

    Mike Zafirovski Resume

    Keywords: incompetent, incapable, inept, ignorant, incoherent, liar, untrustworthy, GE, offshore, cost reduction, Lean Six Sigma, unable, cannot, did not, fail, dishonest, pirate, thief, Judas, traitor, $$$$, Hackney, assault, young woman, anger management, quit, loser

    Feel free to add to what I've missed.

  • rfc1149

    I think he is mostly out of touch with reality.

    I see the GE way as a cult and MikeZ is a true believer. It gives the 'one true way' of managing. I believe he believes he did the right thing.

    One could certainly characterize this as 'stupid'. At very least the desire to join a cult and be given 'the' Truth is an 'interesting' psychological condition.

  • plosatel

    Here it is … in Mike's own, rambling, disjointed and barely coherent words … the three things that he would have done differently to avoid Chapter 11 / CCAA. The question was poised by an employee in the Treasury department during the Q&A session of the global GIS on January 14, 2009.

    http://www.youtube.com/watch?v=MRRRmKO26zU

  • GoProto

    Smirking, puzzled, double-talker, double-crosser….

  • NortelTragedy

    I forgot smug and aloof.

  • zeroman

    So let me get this straight. over 40 years in the US, over 25 years in claimed President and CEO positions (a lie since only top post he held was COO at Motorola), this guy speaks like he is an F-O-B just getting here to shore.

  • zeroman

    one word failure sums it up.

  • zeroman

    bang on. this guy would be sent to an inquisition, witch hunt or a painful interrogation period in the old days. if the Canadian parliament questioning made him sweat like a pig, he'd be taking a crapper.

    the present age rewards CEOs for doing nothing. mostly american behavior. no longer is the emphasis on building companies to last, being a real leader for employees, trust, loyalty … these mean nothing. now it is grab as much cash as you can then move on.

    it is amazing to see japanese ceos shocked at the amount of pillage these top people in the US made during the bailout, mortgage crisis.

  • Casual_Observer

    good post…Clearly it shows he didn't have to clue as to even what to do in the first place much less what he would have done differently. Most good CEO's being selling parts of a company to raise cash in a good economy because they know that parts won't draw as much cash in a bad economy. Anyone that couldn't see economic disaster coming in 2006 or 2007 didn't have a clue as to how debt/credit and the economy work. Instead of managing for 3-5 years out, he was managing for the next day at best and to the tip of his nose at worst.

  • GoProto

    Right. and what about delusional? egocentric? Napoleon complex?

  • GoProto

    He did everything ass-backwards when it comes to strategies for growing a company long-term.

  • rfc1149

    Quibbling perhaps but 'turnaround' is a consequence not an action. A doctor's actions are 'do a bunch of medical stuff' resulting in (hopefully) the consequence that the patient gets better.

    The MikeZ there was an absurd disconnect. His actions (L6S, outsourcing,…) could not possibly have had the desired and claimed consequence ('turnaround').

    While MikeZ seems incapable of seeing this, the board should have.

  • GoProto

    Agreed. Dumb and Dumber.

  • Compass

    I admire the French for taking action to hold Nortel accountable.

    I thought much of the strike, protests and demonstrations showed imagination, a sense of humour in grim circumstances and determination. I’m glad they recieved some small justice.

    However, threatening to blow up a building is terrorism, and terrorism is not an acceptable path to achieve your goal.

  • Compass

    Herr Scalppeeler,

    stillNT wasn't engaging in name calling.

    Just stating a fact that is obvious to everyone on the blog, but you.

  • whatnext4nt

    rich :>, fake, copy cat, incompetent, indecisive, inarticulate, mumble, follower, sociopath, egotistical, unimaginative, average intelligence, indiscrete, double standard, old boy network, uninspiring, embarrassment, non-technical, uncompassionate, poor execution, bad copy of Jack Welch, no telecom experience, no strategy, no apology, no severance, misleading statements prior to Ch 11, bad timing …

  • whatnext4nt

    Used to be roughly 50/50% US/Canadian. Very ineffective anyway.

  • whatnext4nt

    rich :>, fake, copy cat, incompetent, indecisive, inarticulate, mumble, follower, sociopath, egotistical, unimaginative, average intelligence, indiscrete, double standard, old boy network, uninspiring, embarrassment, non-technical, uncompassionate, poor execution, bad copy of Jack Welch, no telecom experience, no strategy, no apology, no severance, misleading statements prior to Ch 11, bad timing …

  • whatnext4nt

    Used to be roughly 50/50% US/Canadian. Very ineffective anyway.

  • http://www.bingobabe.co.uk Bingo Babe

    Cool post thanks.

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