Unanswered prayers at Nortel
The story behind Daichendt's departure; No. 2 executive invoked divine intervention in bid to quickly take over the helm
JAMES BAGNALL
CanWest News Service
After all the angst, heartache, and sheer drama of the previous two years, Nortel Networks' board of directors was ready for something approaching normal in early June. Instead, God made an appearance - and company chairperson Red Wilson's agenda was sidetracked once again in circumstances that can only be described as surreal.
The directors' meeting should have been straightforward. The stewards of Canada's largest technology company had gathered in advance of their June 29 shareholders' meeting to analyze presentations by company management on the state of Nortel's business.
Of particular interest was the rundown to be provided by Gary Daichendt, hired only three months earlier as Nortel's chief operating officer. Daichendt came with impressive credentials. He had been the top operations executive at California-based Cisco Systems, the globe's pre-eminent power in computer networking. There was every expectation Daichendt would one day take over as chief executive from Bill Owens, who was nearing retirement age.
That Daichendt was a deeply religious Christian was considered a plus. In the wake of its lengthy accounting scandal, Nortel is portraying itself as an ethical organization.
But the directors wanted Daichendt to prove himself. Daichendt and another former Cisco executive, Gary Kunis, had been making the rounds at Nortel - trying their best to quickly understand the telecommunications equipment business and come up with strategies for reviving the Nortel name. Because the two Garys declined to tip their hand about their conclusions, senior Nortel managers had begun to suspect big changes were in the works.
The managers' fears were probably unfounded. A series of fairly personal exchanges between Daichendt and the 12-member board not only delayed the discussion about company strategies, it turned that part of the session into an afterthought.
The sequence went something like this: With Owens occupied elsewhere, Daichendt told directors he and his wife had prayed that morning for guidance. God's message, he informed the board, was that he should quickly be made CEO, implying Owens would have to go. Daichendt added chief financial officer Peter Currie would also have to leave Nortel.
Daichendt's words provoked some astonishment. One director queried the source of Daichendt's difficulty with Currie who, like Daichendt, had been recently hired.
Currie was a former vice-chairperson of the Royal Bank of Canada but had also worked at Nortel from 1979 to 1992. He is, by all accounts, a credible executive. Daichendt's reply did not appear to impress the directors.
At some point in the general discussion, a director would have responded to Daichendt's bold declaration he was ready to be CEO. At the very least, it seems likely the directors told Daichendt they were not ready to decide the issue of succession. Indeed, Daichendt's aggressive play for the top job may have caused the directors to reconsider his status as heir-apparent.
Whatever the board's full response, Daichendt declared he would quit. But the story doesn't end there. According to one account, Daichendt left the meeting to inform Owens about what had transpired. Owens noted Daichendt had already prepared his board presentation on company strategy - so why not stick around and deliver it? Remarkably, Daichendt agreed and returned to face the directors once again. Later, Daichendt and Kunis took their leave for good.
Their sudden departure left the Nortel board with a devilishly difficult job - that of crafting a news release to explain what had happened and why. Eventually, the company settled on a quote it attributed to Owens: "It has become apparent to Gary and me, that we have divergent management styles and our business views differ," read the statement issued June 10.
The meaning of the last three words remains unclear. Perhaps the two disagreed on tactics, rather than longer-term strategies. Had Owens differed profoundly with Daichendt on Nortel's ultimate direction, it's difficult to believe he would have agreed to Daichendt's presentation in the first place.
So where does this leave Nortel? The view from the inside is the exit of Daichendt and Kunis hurt, but is far from debilitating - especially in light of the impressive recent performance of Currie. That's not to say the board won't hire another newcomer as chief operating officer. Nortel's directors have learned there's a lot of value in keeping the contest for CEO competitive.
In the end, it's unlikely the invoking of divine intervention by Daichendt created the conditions for his exit. Rather, it was the impatient ambition that lay behind it.
Ottawa Citizen
Link:http://www.canada.com/montreal/montrealgazette/news/business/story.html?id=5e37d5a1-15ef-4a68-b02b-a2e793e3fea1 |
