Mike Z.’s Legacy = Fail

About time. I was surprised he stayed this long. Most companies that are run into bankruptcy or administration, the CEO is out in about 6 weeks or so.
Wonder how they'll restructure the leadership team now, in the interim of the big fire sale of all divisions?
Enterprise being sold, CDMA gone... does anyone know what the schedule is for flogging off the rest? Someone told me once that under UK law, they can only stay under Admin for a year. If that's correct, time is fast running out. And the UK is really the heart of Nortel EMEA.

Mike's GE influenced methods prove that they are not the Hoy Grail for all businesses ailments,sorry Jack but the methods you taught did not cover topics like how to actually "turn a business around" and now many who were affiliated with Nortel either through employment,customers,shareholders etc... have unwillingly become victims of your methods.

More directly it is Nortel's BoD that are ultimately responsible for Nortel's demise,as they should have given Mike a very limted time frame to see if his GE style impact would end up making the long sought after difference knowing that this style never addressed key areas such as strategy,product development and growth.

I totally agree with your point about the danger of copying Jack, and the sad truth is that it was even worse. MMZ did a very poor job of copying Jack and implementing his strategy and methods!

The fact that the BoD were sold snake oil and bought into the GE cult thing is bad enough, but as you say, they didn't even realize that it wasn't working where it was being applied according to the gospel of Jack, and the BoD did not notice, and almost no one else noticed, that MZ was not really executing properly on the important and potentially beneficial aspects of the Jack Method. For example, as MZ admitted near the end, he did not restructure NT to actually and thoroughly streamline, de-matrix, and de-layer the organization. Instead of busting bureaucracy as Jack did at GE, he increased it under his tenure for the first three years. Instead of empowering the rank and file, they were disempowered.

To copy GE/Jack in every respect was intellectual laziness and foolish. Not even implementing a decent copy of GE/Jack was even worse. And worst of all, as you say, the BoD bought into this stupid “plan” and sat back when it wasn’t implemented properly in some major aspects and wasn’t working when “properly” implemented according to Jack.

THE TRUTH ABOUT WHAT MZ AND BOD DID AND DIDN’T DO TO NT MUST COME OUT!:

1. STUPID, STUPID, STUPID “PLAN” TO COPY EVERYTHING JACK DID AT GE OR RECOMMENDED.
2. POOR OR NO EXECUTION OF SOME OF THE KEY POTENTIALLY BENEFICIAL ASPECTS OF THE JACK METHOD
3. BOD ASLEEP AT THE WHEEL WHEN “PLAN” WAS NOT WORKING OUT
4. CFO AND BOD ASLEEP AT THE WHEEL WHEN THE BALANCE SHEET WAS GETTING VERY WEAK.
5. STUPID PLAN TO ANNOUNCE HORRIBLE NEWS AND SUPPOSED SALE OF MEN SEPT 17 RIGHT WHEN THE FINANCIAL CRISIS WAS PEAKING.
6. NO REAL ATTEMPT TO DEVELOP A VIABLE CREATIVE RESTRUCTURING PLAN TO EMERGE FROM CCAA/CH 11.
7. UNETHICAL BONUSES WHILE PEOPLE WERE BEING LET GO WITHOUT SEVERANCE AND PENSIONS DEGRADED.
8. LOTS OF EXCUSES, NO APOLOGIES, MINIMAL ADMISSION OF ANY LESSONS LEARNED.

I said Mike Z is mentally sick.
I suspected bi-polar disorder or schizophrenia expressed in double talk.
Few days later he was fired.
What about you Doc?
Why didn't you support my assessment?
Let me tell you. I don't write just for nothing. I know what I write about.
When I said he was sick, it was just on target.
===
I said
so does Mike Z have a Plan for Nortel?
What if he is mentally sick and plays RPGames with public?
Has anyone checked his mental abilities lately?
He is still CEO of $10 bill revenue company with 30 000 employees and $3 bill in cash /rounded numbers/
In my opinion his mental abilities are very limited.
I've been watching him since the Day one and I collected dozens examples of his double talk and split personalities.
http://www.allaboutnortel.com/2009/08/06/where-...

yes4-


I am no doctor, but i took what you said seriously. I believe I agreed that he seemed psychotic, which schizophrenia basically is, a psychosis. Clearly, he was/is diassociated from reality and delusional. Bi-polar people constantly need to feed their ego in their manic stage, and have an inflated perspective as to the power they yield over others and then crash and burn in the depressive cycle. Like I said, no doctor, but unfortunately I lived with a bi-polar partner for a number of years. Mood changes, impulsive purchases and rash choices, refuse the input of others in decision making. Yes, all of the above.

Thank you GoProto
Very informative input on bipolar
I was replaying to The psychiatrist.
I am still waiting for his assessment of Mike Z mental health displayed in double talk in last 5 years.
Fact is, I made my public post about Mike Z mental abilities and the scary thing that he was in charge of $2.5 bill in cash @Nortel.
Looks like someone in universe of parallel thinking agreed with me. Mike Z is gone!
After 4 years of destroying Nortel he is gone but still he says he is proud of what he achieved for Nortel's stakeholders.
I have to watch that movie
One Flew Over the Cuckoo's Nest (1975)

It's an awesome movie, Jack Nicholson is superb, along with "Nurse Rachett". I actually thought you were just being sarcastic about his mental health, but if there is psychosis or bi-polar disease, there is nothing funny about that..As there is so much double-talk and lying going on in the upper echelons of many major companies, it's difficult to discriminate between an ambitious liar motivated by greed, a complusive liar who lies across all levels, business, personal, whatever, and a truly sick individual. Where does the line get drawn? Is a Madoff sick or just greedy? Is assaulting a young woman in a parking lot a momentary snap, or a sign of some greater and perhaps serious predatory nature??

I didn't think about that much but because you mentioned that I guess Nortel let go CSCO twins and hired two sickos_ twins from GE.

The GE way strikes me as a cult. And MikeZ is a voluntary joiner.

I am reminded of Tom Cruise in his infamous interview (http://gawker.com/5002269/the-cruise-indoctrina...) where he said things like 'As a scientologist ... I know when I see a car accident... the only one who can really help'.

'As a GEster, I know when I see a company, we are the only ones who can really help'.

Oh, that makes sense. Their way is the "Chosen Way", the only way. So, even if they are heading to the edge of the cliff, they stick with their path because they just know they are always right.
Alarming tactics when you are at the helm of a public company.

Everyone should be reminded that Jack Welch made GE rich by turning it into a bank. Oh, and GE also sells light bulbs. Then Jack wrote books talking about how he made GE rich by building better light bulbs. Everyone believed it to be gospel.

Like Malcolm Gladwell noted, the halo effect is often more powerful than the item itself. Such is the case with GE and its cult of management.

Definitely agree with your points.

But to be fair Jack Welch would not have touched Nortel with a 10 foot pole. One of the credos was to start with successful businesses (and aggressively sell off any unsuccessful ones). Nortel clearly was deeply troubled when the Zster took over.

That said, Home Depot was unequivocally a very good business when GE alumnus Nardelli took over and he GE-ed it took mediocrity.

We know why Z failed: he made a fundamental mistake day one at Nortel. He thought the problem was execution, not strategy. No matter what anyone told him, he believed that if Nortel executed better, all would be well. He ignored the fact that Nortel was below critical market share in a number of businesses, that its product pipeline was empty, that it was not strong in key markets like Asia and China. He kept the product lines as-is, he kept the organization as-is, and changed processes like 6-sigma, people management, etc. He also changed some of the top execs early on (Spradley, Debon..). The remainder of the top execs could see the disaster unfolding and knew their advice was unheard so they left: Jiannou, Slattery, Doug Wolff, Steve Pusey, the list goes on. They knew that Z was on the wrong track and jumped ship before it sank.

Now we have Z running around blaming the economy, previous CEO's, the balance sheet, the industry, everyone but himself. Shame on him - he should adopt one of his little execution catchphrases and OWN IT.

felixmk,

This the best assestment Z man I have seen so far. Instead of Nortel being a leading innovator, he and cronies tried to execute better. Problem was as bad as their lack of stategy was, they where also terrible at the execution. Never saw so many LS6 BB trip over each, each BB project conflicting with the others. After 10s of milliom of dollars spent on these new projects, I still do my job the same as I have for 15 years.

The LS6 Kool-Aid smelled too strongly of almonds.

OWN IT!! Ah, the good times. I'm glad I never got caught up in all the mess of L6S, Own It! and all the other political games people played to appease Hackney and Z. I never believed in any of them and cringed when asked to participate in any of their initiatives of the month.

N never
O overtly
R remorseful
T to
E everyone
L loser !

It's too bad we will probably never know the real truth of what went on due to the businesses being sold off one by one. If the re-structuring ever really happened and i.e. the MP deal went through and kept NT intact more or less we may have had a chance to uncover the skeletons these insiders have hoped they buried.
Now I think we will never know.

Like much of Nortel, he was good for chartware, plans, bottoms-up strategy and infighting, and buzzwords ("velocity") with FAILURE TO EXECUTE.

But what happened to the GE mantra of finishing the fight al the way to the end. I guess that part of Jack Welch did not get entrenched into these wannabe GE honchos.

Its like everyone in top management at Nortel who thinks they are CEO in the making because they spent 25-30 years at a large company. The next generation obviously smarter and quicker need 'experience' to get to where they are.

"25-30 years at a large company" sounds like lifetime
Perhaps stagnant, or complying to one company's culture for what works there.

Being at the right place at the right time can also be like a bad salesman in a golden territory, where they can not prove a good sailor doesn't blame bad weather until it is too late =)

Perhaps the GEnius Ninja's just weren't enough for Nortel.
Even if skills held merit beyond luck with a proven track record, what worked in manufacturing lightbulbs may be a far cry from what works in telecom

Were they restricted or rash in paying a premium for this hard to fill role?

What choices might others have made. Sounds like slandered yet ethical Gary had it right in retrospect.

I am apalled that this guy can even go teach MBA classes. His interview just demonstrates ego filling hedonistic 'I did no wrong' 'I did a great job' behavior.

Apparently in al his interviews he did what Nortel does best. Show a lengthy slide package with a lot of smoke and mirrors. Apparently a quarter of his slide package was on placing blame on past Nortel CEOs and the state of Nortel he took on.

Ok fine maybe Mr. GE Guru but how about showing what you did for 3 years on what you could have done with the company but did not know how to do because we can all sum it in one word I N C O M P E T E N C E. In George Bush Sr. words read our lips.

Motorola Ed Zander and the BoD passed Z up because he did not have it. They must have chuckled when Nortel took him aboard and now they must be having a huge laugh at a beach party on the Chicago river.

Where is he going to find a creditable university that thinks he is even remotely qualified to teach any portion of a MBA course? Dumbass U? The guy doesn't even have a MBA himself. His highest actual education is a bachelors in math. Everything else is honorary.

A B.A. in math at the illustrious Edinboro U! Nice hire BoDs!

Mike Z did nearly a 30 minute interview with Howard Green at BNN. It is broken into 3 parts and available at:

Part 1 - http://watch.bnn.ca/monday/#clip202132
Part 2 - http://watch.bnn.ca/monday/#clip202133
Part 3 - http://watch.bnn.ca/monday/#clip202134

No questions about appointing Hackney?

Nortel burned this guy out, he expresses what happened openly, and represents / defends Nortel's decisions admitting no mistakes, boasting 15% revenues increase, 18% cost reductions, downplayed 10 million compensation claiming this is false and 10 times higher given stock options tanked, he also gets no severance...

Nortel lacked profit since 1999, only company with negative cash flow since 1998, bad credit rating, and

"Iabsolutely" classic Zafirovski. Thanks for the links.

Just noticed the shift from "forceful" to "cautious" optimism .... towards the end of the first clip.

"Cautiously Optimistic" -

That's a commonly used Obama buzz-phrase. Started noticing that in January 09. He and all his administration use it. I guess it means they are covering their a$$es in case things spiral down-hill. Like, "we think it's going to be good news, but in case it's not, we told you we were cautious about it"
At least it makes more sense than "Forceful Optimism"- never did get that one at all. Sounds like a synonym for Delusion.

No patent held on the english language.
cisco's Chambers say as the same thing about 6 of the last 8 quarters.

"strategic paralysis" are brilliant terms as to the the cause of effect.

Nortel missed hitting the ball and kept striking out endlessly... why?
Was it increased competition with greater focus and efficiency. Nortel's fears and inability to act in time, confined to legacy business methodologies with an overly cautious conservatism, expense intensive think tanks dominating business development, a top management inexperienced in telecom wars, too many top levels bloated streamlining, enticing revenues that neglected earnings, laughable forecasting and poor execution in hindsight, etc.. ...endless and plagued by Murphy's Law, how can this be?

Even though hindsight is easy, there were too many obvious blunders a brave growing company should not have endeavored, let alone so ill rewarded themselves this greatly at every turn throughout. Exorbitant pay practices they always refused to negotiate only added insult to injury the failed to learn from or also neglected.

"Strategic paralysis expresses the concept perfectly, precisely, briefly, and in a nutshell at best. Strategic diffusing would only further the nightmare with callous disregard.

Bozos is a less civil yet equally fitting term when it came to cooking books for bonuses preceding this. Something they maintained throughout to "keep good people" as they "risked careers" and brought Notell to a disgraced close amid endless contradictions and questionable moral /ethical conduct.

It is unfathomable they could transform Nortel from a culture of innovative to one driven by bonuses, and what got them into this mess to begin with, right into the close. They still traded options yet again and even issued bonuses after insolvency. Note that bonuses are the most common motive to white collar crime and fraud.

Now they have nothing left to leach from, much like our macroeconomics depending on the masses who saw record low saving and record high debt when banks and governments were recording record profits and surplus. And it is not as if out own governments are not plagued with asgates and airbus gates corruption at the highest levels. What is it with these far from destitue pigs at the trough anyways.

Nortel's following actions in the private sector were so profoundly astounding that they hardly diffuse previous criminal acts with so many still there and fraud charges looming on both sides of the border if that's what they were trying to pull with revisions, contradictions, and bonuses.

This should prove as failed a ploy as dismissing charges on jurisdictional grounds like both Nortel and Dunn tried, as Manley's Law firm surprisingly defends him... all evidently legally. Dunn was reluctantly fired under a term that took them hours to invent "for cause". Those he held close relationships with timely resigned in plea bargain denying obvious red flags and rolled over on him. It has been a disaster ever since yet nothing has changed, for the better anyways.

What changed with so many insider CFOs, so many departing, and so many new fall guys risking careers with so many still there. Right to insolvency in a hand basket.

Strategic paralysis every which way they turned, further frozen by bonuses and their accompanying strategies. Rewarding financial innovations, triple profits, exchange rate profits, mark-to-market profits, maximizing value, etc... horsefeathers... bankrupt and liquidating is more like it after the largest fraud in Canada. A polite Enron in my view. What don't we know? =)

The real reason for failure was everyone was scared.

Everyone was scared to get laid off and lose their jobs. Everyone just followed in a straight light and never bucked the system. Right or wrong no one wanted to lose their job.

Over the past 4 years I have seen the craziest and most senseless processes implemented and no one question them or even pushed back. Anyone that tried to push back was let go.

Plain and simple if you did not follow Mike Z's stupidity you were let go and shown the door.

The upper mgmt does not know how to run a company and the middle and lower mgmt were scared shitless of losing their jobs.

While I agree with all the comments below, I have some nagging questions.
Who were the idiots that hired Mike Z.
What made him the right man for the job, when the company was already on the ropes?
Was it a great track record, reputation, inaudible reponses during the interview process?

The BOD made big $$$ but FAILED woefully in their duties to oversee Exec Mgt.
Do they not have a lot to answer for?
Did they not approve "the plan"?
IMHO they are just as much to blame for this mess..

.

"An autopsy, also known as a post-mortem examination [...] is a medical procedure that consists of a thorough examination of a corpse to determine the cause and manner of death and to evaluate any disease or injury that may be present. It is usually performed by a specialized medical doctor called a pathologist.

Autopsies are either performed for legal or medical purposes. For example a forensic autopsy is carried out when the cause of death may be a criminal matter, while a clinical or academic autopsy is performed to find the medical cause of death and is used in cases of unknown or uncertain death, or for research purposes." (Wiki on "Autopsy")

From the link in the article that talks about Ed Zander being named Moto's CEO.

"I was very disappointed when I first heard," Zafirovski said. "But at the same time, I looked at the wealth of Ed's experience, and I was impressed with the five-member search committee. I know how hard they worked to find someone."

Zafirovski, who had worked at General Electric, has been with Motorola for three years. During that time, the company has returned to profitability. But analysts point out that Motorola has recently missed delivery deadlines on some of its products.

"I think the board may have held Mike accountable for some of this," said Paul Sagawa, an equities analyst with Sanford Bernstein. "Ed is a well-known person and well regarded throughout the industry. He's been on the short list of CEO candidates for almost every hi-tech company for the last two or three years."

The most telling statement in the entire article:
But analysts point out that Motorola has recently missed delivery deadlines on some of its products. "I think the board may have held Mike accountable for some of this," said Paul Sagawa.

That says it all....

Zero Man is on my short list - list of companies to short if and when he surfaces to take a major role in a traded company!

Mike Zafirovski said when he became CEO in 2005 that he felt there was a 30- to 40-per-cent chance Nortel would not survive.

Call me a naive Believer but I never went to any job interviews (courtesy of Nortel) thinking I could likely get things right 60%-70% of the time.

Nortel is a victim of 10 years of neglect and incompetent leadership across all layers of leadership and management including the BoD. To sum it up, no strategy, no vision, no accountability, no ethics and nepotism (boys club)

Simply put, Nortel failed because it was led for years by executives & managers who wouldn't or couldn't change there ways and the same people who created the problem where given the responsibility to turn it around.

I agree with you. With this, Althoigh MZ is gone, the remaining management team is not better either. Still a lot of BS and old boys network. So there is really nothing Nortel that make me want to stay. however that doesn't mean MZ can be excused from his incompetence. For his past 4 years in Nortel i can't find anything he initiated in this company is successful Six sigma Own it Busphere CRM business transformation they all crap. I just don't understand what turn around he is talking about

Motorola was RIGHT, after all!

What buildings are still in use in RTP? I'm guessing about 150,000 square feet of space in needed to house 1,850 people.

Gateway, NC0, and NC3. We are supposed to be moving out of NC0 at some point. Last I heard the labs in NC0(not sure how many) have been given approval for a move.

Plus the endless warehouses around RTP with rotting inventory...

Thanks Mark, I've been waiting for you to make a final decree...Zafirovski has become the poster boy for the demise of Nortel...at least he's better looking than John Roth, but in the end he was just another testosterone jockey in an old boys club of self-serving underachievers. I feel sorry for the talented people that gave the best part of their careers to a company whose pilots flew it straight into the ground - of course, ensuring they parachuted out and saved themselves before impact.
2 seconds ago ·

Mark,

I have to disagree with you comment that "Mike Z.’s strategic vision was flawed". From what I saw, he never had one.

His biggest failing was his lack of understanding of the business. With that he filled the house with operations people who tried to apply operations style fixes in a development environment.

All Lean Six Sigma and the other processes that were introduced accomplished only managed to stifle the ability to be productive, essentially grinding the entire business to a standstill.

I completely agree with you. It was a tough situation, but he never understood the business. The board of directors insisted Nortel had a cultural problem (which it does have) so Mike Z focused on that. He surrounded himself with yes man and for the first year or so ran the business like a gestapo. He was completely out of his league. He did not deserve to get this job, nor does he deserve to ever be CEO of another company again after this mess. My only hope is that one day I pull up to McDonalds and I hear that uninspiring Macedonian accent through the speaker asking me if I want to biggie size that...

I couldn't agree more! Mike Z's tragic flaw was his complete ignorance of the business he was running coupled with a distain for learning it. He surrounded himself with cronies and yes-men then beat his L6S drum, figuring it was just a matter of time before all was well and in the meantime he had this fun jet to play with and oodles of money to spend...

But while L6S may be a fantastic way to make a manufacturing operation more efficient, it is useless in the face of even moderate complexity - and complexity is the life's blood of most of Nortel's products (e.g. anything that grew out of the DMS family).

So in order to support L6S data gathering they loaded tons of no-value-add record keeping to the processes followed by the rank & file who do the actual work of inventing new must-have functionality and making it work in the field. On top of that, unrealistic - frankly naive - turnaround goals were declared for field issues that stifled attempts to find root cause solutions to complex problems.

When the most important thing to a company is bean-counting, then all you get are bean-counts and you lose sight of what's really important: impressing potential customers into first-time purchases and making existing customer happy so they buy even more stuff from you.

Nortel was a telecom equipment maker that needed to stay focused on what our telecom customers needed from us over the long haul. Bill Owens (or Roth, if you want to go back further) took Nortel's eye off that ball and Mike Z never put it back there. He wanted to have a diverse customer base so that he didn't have to kow-tow to the likes of Vz. Too bad - if he had focused more on what Vz and the like needed from us, we'd still be a viable enterprise...

Clap-clap-clap for XPM_guy. Absolutely dead on analysis!

I don't think people outside of the company can really appreciate how dead on accurate this comment is. Every piece of product development slowed to a crawl under Mike Z at a time when Nortel needed to be brilliantly innovative. The engineering talent was there, but it wasn't given a chance under Mike Z's management style.

My only part of the original blog I don't wholeheartedly agree with is this thought that Nortel was a mess when he took over and people called it "mission impossible". That was not my recollection of the time; yes, there were accounting scandals, but at the time Nortel was market leader in many areas, was worth tens of billions of dollars, and was full of talented individuals. A quality CEO could have made Nortel great again. When Mike Z took the helm nobody even imagined that the company would disappear in 3 years.

I clearly remember the annoyance, then almost desperation of design/verification peons on my project a few months into Mike's reign. The development practically stopped.

We all had to be trained for and use USDRP, a process born out of L6S. USDRP primes were assigned, they created courses. All peons had to go through them, there were metrics on attendance/completion. Our USDRP prime was a very capable verification peon that wanted to move to design. The peon was promised the move if she took on this role for a year. Even this shitty job she did well - what a waste of a good brain!!

The time lost in training was nothing compared to what we had to spend on extra documentation and useless metrics. USDRP absolutely killed our project. We ended up working more on process than on product.

To this day I am convinced that Agile came to Nortel through a grassroots movement against USDRP. Peons aren't stupid and managed to get USDRP exemptions for most if not all starting projects. Soon, the exemption became the rule. A quiet shift from USDRP so Mike's "strategy" wasn't confronted but quietly disregarded. Everybody pretended nothing was happening but in fact peons were rejecting the failed "vision" and getting things moving again.

Having lived through USDRP, it would be easy to imagine that it was put in place in a deliberate attempt to stunt productivity. Where are all the conspiracy theorists when you really need them?

However, I think that Hanlan's razor applies in this case:

"Never attribute to malice that which can be adequately explained by stupidity."

As a follower of Jack Welch, MZ should have been cutting red tape not adding it.

Agreed. Nortel certainly had some portfolio renewal challenges when Mike Z arrived, but despite the financial issues that had occurred, Nortel had a strong base to build from.

No insight + no vision + no plan + no relationships + no leadership = no business.

Failure is the only outcome that could have resulted from Mike Z's tenure. The ONLY thing he could have done to same Nortel would have been to leave a lot sooner than he did.

'same' should read 'save'. Sorry for the typo.

How true. I think all the news reports are far too charitable towards z and his cronies. Many of the previous ceo's / execs were bad but none like him. He was a bully and a coward all at the same time.

Z always talked about his investments in the future. Not one of them amounted to anything. WIMAX, apps, LTE (inspite of all this bs going on right now with RIM, Nortel never turned it into a viable business), and many others.

He had absolutely no strategy whatsoever. Even the acquisition mentioned (Tasman) was done before he got there and he just approved it. Likewise the sale of UMTS. That one was also done before he got there.

He just didn't understand the business and that was even after time at Motorola. He may as well have been making toilet paper over there for all he understood the business and customers.

So sad.

If you peel back the onion, Tasman is based on a Nortel product called OpenIP which came with Bay Networks; and OpenIP was shutdown 2001/2002 and all employees terminated with severance, only to have some return with Tasman.

So Nortel bought this product TWICE!!

i used to work in OpenIp...the leaders of that division went onto to license the product from Nortel and create two startups in Ottawa called EION and iPine...which I think are all under one company now called EION...it is doing well and could potentially IPO in a year or two

Anybody has any idea if Mikey got any kind of 'golden parachute' besides filling the pockets of ELTs with 'retention packages' ?

This article says no. I hope it's accurate:

http://www.thestar.com/business/article/679154

It's Mickey (like Mickey Mouse, with apology to Disney). Evans is correct, Zafirovski = total failure