Lack of Vision Nortel's Downfall

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Lack of Vision Nortel's Downfall

If you want to get somewhere then you have to see how to get there. And if you can't see where you're going you'll stumble and fall.

And that's exactly what happened with Nortel. This lack of vision: both foresight and on the immediate environment led it to crash.

Yes this sounds like armchair quarterbacking, of hindsight, and all those other clich├ęs, especially coming from a journalist. But vision is what the CEOs and board directors get paid the serious money and are empowered to decide the fates of its employees for. To be a leader you must see clearly. If you can't see you have no business being one.

And seeing what they think is happening and calling it as it is are what journalists like me get paid to do. In my case being a taxpayer and voter in the country where Nortel is headquartered, where this company's screwups are becoming public policy and likely an election issue and having lived in communities where Nortel employs or employed my neighbors and acquaintances, gives me some skin in the game.

For all the brilliance of now-gone Nortel CEO Mike Zafirovski and the board that selected him, and presumably the senior management execs how come:

* They couldn't foresee how the competitive landscape was going to shape up even before they took the helm?

Surely these smart people have seen their opponents' maneuvers and guessed where they are going to land even before Mike Z. took his first paycheck. If Nortel was going to be much smaller or DOA then would have been time to do it, while the 'Ponzi Economy' was still upright, when others were blindly buying into the scam, to maximize sales price and minimize the fallout.

* They didn't tackle the legacy cost issue upfront from the start. This was what got me from reading Nortel's press release on Mike Z's departure. To cite

Mr. Zafirovski commented: "I am extremely proud to have been associated with this company. The Board members and I came to Nortel because we really believed in the value of Nortel's people and technology. Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount."

'Hello, Finance calling. If your costs are too high how can you compete?'

In deciding where you want to go and how to get there you must look at what is in your way. Hmm--legacy costs and capital structure--what were the Nortel honchos thinking? Did see they see them as matters to be dealt with down the road instead? Unfortunately for Nortel and more importantly for its employees both present and former the journey ended before it got there.

* They did not understand the political landscape. When you're a big company in a small jurisdiction (and Canada is small in population and mindset) you are by default a public policy matter. And when you ball up your fate is of interest to not a few people. And if you're large enough and you stumble chances are that you will be on the agenda of public policy makers.

There is no excuse for this in Nortel's case. The firm is HQed and has operations in urban areas that have long been politically powerful.

'Hello Nortel, you have a campus in Ottawa, yes that's Canada's capital. And who is the Member of Parliament who represents the area near where your campus is located? Yes that's John Baird, a young, aggressive Cabinet minister who is one of the top dogs in the Harper Conservative Government, who used his influence to kill a poorly-planned megamillion light rail project in the city when he wasn't using his opponents for toothpicks.

'And oh yes, didn't you have a Defence Minister, Brigadier General (ret.) Gordon O'Connor, repping where your office is?'

Nortel FUBARed the political game so badly, with moves like bonuses to retain top execs when playing with employees' pensions that even lapdog backbench Government MPs like Daryl Kramp from the Belleville, Ontario area where Nortel still has a plant and a number of retirees, got off their hind legs barked, and yes nipped at Mike Z.

(To the Nortel CEO's credit he did volunteer to go in and testify, against legal advice, but did he really know what kind of pit was he walking into?)

But when even thinking of about getting government help you need to get your act together first. Kind of like getting your finances in order before approaching the bank for a loan; you have to demonstrate that you are worthy enough for them to expend political (and taxpayer) capital so that they see ROIs.

Is it any wonder why according to the Globe and Mail the government declared the company "toxic"?

In fairness, all levels of government share some blame for Nortel's debacle. They too lacked the vision--of a country built on tech not just on dead dinos and logs and big foreign branch plants--and could not see the signs of Nortel stumbling, as experienced as they are in bailing out other firms, to avoid such a cap-in-hand scenario.

Ontario Municipal Affairs Minister and former Ottawa mayor Jim Watson made this point in a story carried by Canwest News Service. Watson, who had criticized city hall for failing to stand up for the largest private-sector employer in the city, now says all levels of government -- the city, the province and the federal government -- did not do as much as they could have done to save Nortel.

Watson, whose district is home to Nortel, said the federal government had not been as engaged in saving the technology company as it was with the auto industry. He also said distracted city politicians failed to agitate and lobby on behalf of Nortel, as other cities both in southern Ontario and the U.S. had done for their auto industries.

"Nortel is the single largest employer in the city... and I was disappointed that there wasn't more of a coordinated effort, really, from all three levels of government -- not just the city -- to deal with it," Watson said.

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