Q&A with new president Alan Lutz
June 6, 1998
NEWBRIDGE'S NEW TOP GUN
ALAN LUTZ GIVES HIMSELF 100 DAYS TO
CHART NEW COURSE
By SUSAN TAYLOR -- Ottawa Sun
The name badge attached to president Alan Lutz's pocket is a
telling sign of the fresh start at Newbridge Networks Corp.
The telecommunications equipment maker just closed the books
on what's conservatively called a challenging year with the
stunning announcement of corporate newcomer Lutz to lead the
turnaround.
Signs the former Compaq executive is still staking out the
territory are obvious. The man who will help steer Newbridge
strategy doesn't yet have business cards and loses his way in a
newly-opened tower.
What's less predictable is how the former Compaq executive
will mesh with Newbridge's corporate culture. That's largely
driven by founder Terry Matthews who is renowned for keeping
tight reins on his business.
Lutz, whose no-nonsense style is punctuated by speed, said it
will take a balancing act.
"I will try hard to move quickly, but I will try not to be
revolutionary," he said on his third day at Newbridge. "What I
actually find is the organization clamoring for a unifying vision."
Bay St. has questioned how easily Lutz can make those changes
within the confines of Newbridge and whether he can act
independently.
"I have to give him (Matthews) very, very high marks for
stepping out of the day-to-day and not trying to influence and not
trying to emasculate the new person coming in," Lutz said.
Lutz has wasted no time setting milestones that will be used to
judge his performance.
In 100 days, he will finish a plan that lays out Newbridge's
strategy for the markets and customers it will target and how to
do it. He's already set a $2 billion benchmark for the firm's
business in the year ahead.
Lutz describes his return to Ottawa as deja vu after living here
17 years ago when he worked at Nortel . A party at Matthews'
house was just a golf shot away from Lutz's old home on Tiffany
Cres. and former colleagues have sent welcoming messages "The
Cat."
In what he calls a long mating dance, interviews with Matthews
and Newbridge directors stretched out over six months.
"Newbridge was trying to make sure that they knew what the
hell they were getting too," Lutz said. While his final decision
took time, Lutz has already put his schedule on a fast track. The
new president cancelled a two-week vacation between jobs to
attend board meetings and an upcoming trade show.
"There's a sense of urgency to the whole thing," Lutz said. "If I
want people to have sense of urgency I have to demonstrate I
have one myself."
NEW BOSS LOOKING FOR NEWBRIDGE 'SIZZLE'
The following is an edited transcript of an exclusive interview
with Newbridge president and chief operating officer Alan Lutz,
Sun business editor Stuart McCarthy and Sun technology writer
Susan Taylor:
Q: Tell us about your mandate here and what you're charged
with doing and how you're going to approach those challenges.
A: It is really simple. Newbridge is a company that's evolved
because of great technology. If you know Terry Matthews he's a
wonderful raconteur. I call him John the Baptist in a way. Really -
he's the heart and soul of the way it grew up. But Newbridge is
now a, well, we'd like to be a $2 billion company this year. My
mandate is, along with Terry, to grow this place to something of
great significance. We talk in terms of becoming a Fortune 500
sized company, of establishing a pre-eminent position in our base
technology --- ATM -- against Cisco, against Ascend, against
Lucent technologies, against Nortel. If you take a look at
Newbridge, a company this size has to pick its fights very
carefully ... in a company this size you can't out muscle Northern
on spending. So the competitive edge for a company the size of
Newbridge is to execute with great precision and very quickly.
Q: Is that something that you're going to focus on - that speed?
A: This is the third day and we're already into it ... the PC
business is characterized by a couple of product turns a year, by
lower margins -- so you have to be leaner and you have to be
fast on your feet -- that whole business model will eventually
pervade, frankly, everything that goes on in the hi-tech world.
And that's why speed is important. It only takes a good plan, but
it takes excellent execution.
Q: How long do you expect it will take you to define that plan?
A: I'm going to give you an answer that's either going to amaze
you or absolutely confirm to you that I'm crazy. I would give it
100 days. We have already organized the brain trust part at
Newbridge around the mission statements, the objectives, the
cascaded -- the waterfall plans -- for everybody.
Q: How do you gauge the buy in?
A: You ask them, frankly. They haven't even gotten to the buy-in
stage at that point ... you can't wave your hands about electrons
... You have to explain it in terms that we would like to be a
pre-eminent supplier, we'd like to be a multi-national corporation
of substance ... We need to create an environment where we can
attract the best and brightest of the technical talent.
Q: Aren't those things that already exist now in the corporation?
Is this a departure?
A: I would say that it needs to be honed and consolidated so
that everybody feels a part of it. The vision of the corporation
resides, has resided, in Terry's head and there's only 24 hours in
the day. When you talk about being chairman of a corporation
like Newbridge, Terry's time is sucked up with public activities
and customer activities.
Q: Cisco, Nortel, and Lucent have been very successful at that.
A: Sure. Nortel for sure because it's been around longer. It
wasn't very long ago they did their 100 year celebration. Cisco,
the California attitude is a little bit different than the Canadian
attitude actually. I mean there's more hype in lots of areas than
there is substance, but they thrive on hype. Newbridge is
oriented towards substance and we have to learn more hype in
order to be able to compete with that engine.
Q: So you will be expanding your marketing force?
A: Yes we will. Absolutely. Newbridge has done very well as a
multi-national company. A lot of our markets are outside of
Canada. We're excited about the opportunities in China. We're
excited about the possibilities of expanding our presence in the
U.S. The board wants a strong increase in business. You have to
make it work there. We're excited about Latin America.
Q: Until the Sprint announcement this week, there was a general
perception that Cisco wasn't an ATM player and the next thing
you know Cisco's a big supplier of ATM equipment.
A: That's actually part of the hype engine that I talk about and
that's the way of the world. It's one thing to lament that
somebody would create a lot of hype and maybe more sizzle
than steak. But if that's the way of the world, then we're going to
be there too. That's why the emphasis on marketing. And that's
why frankly we've already kicked off a complete review of what
we think our major competitors are. We might even have an
internal team, with everything they know about Newbridge play
the game of being Cisco and how would you beat Newbridge
and put that on the table.
Q: Are you talking about setting up a formal, competitive
intelligence group?
A: I don't know whether it's going to be formal or informal yet.
But I'll have the results of the first set of reviews of Cisco and
Ascend next week and we'll make our decisions based on what
we find. It's a reasonably common occurrence in hi-tech. I've
seen some of this movie before. I'm sure there's going to be new
scenes we haven't seen before.
Q: Does it sound like you're going to get the autonomy to do
this?
A: Terry and I have been talking about this for maybe six months
and before I came here I had the opportunity to talk to
three-quarters of my direct reports. I spent a great deal of time
being interviewed by of all the independent, the outside directors
of the board. No headhunter interceded. You have to understand
that Terry flew down to Houston. Called me one day and said
"I'll be in Houston the next." And showed up in Houston and we
chatted. I think the second meeting was out in Whistler ... then it
was a set of meetings here in Ottawa and lots of telephone
conversations along the way. This has been a long mating dance I
guess.
Q: What convinced you to accept the offer?
A: Frankly because Newbridge happens to be at a spot in the
marketplace right now where the tide's coming in and all the
boats are going to go up. There's no question about that. The
product portfolio, the area that Newbridge is in, is being driven
strongly by a burgeoning demand engine from the computer
industry. And there's an opportunity. Newbridge will get bigger
all by itself because of that. But there's really an opportunity to
take it to a significant position, it's bold to say greatness, but it's
certainly to increase its prominence if we manage it well.
Q: To do that here what do you see as your main challenges?
A: The first thing was to get the place organized around a
unifying vision. We actually have very good product strategies.
There's nothing broken there that I can say. We've got 1,800
very, very bright engineers and what they have done has been
excellent. I think we have to complement that with world-class
marketing. A lot of people don't know much about Newbridge.
We have to strongly improve our marketing organization and
that's an area of great near-term focus.
Q: How do you gain back that investor confidence when you
see a share drop even through you've matched what was
predicted in the latest quarter?
A: On day three, I can't tell you why the stock went down $4.85
or so yesterday. But we do have major shareholders calling in to
find out what's Al like. We do have investors and investment
houses that I don't already know calling in to say I want to talk to
him. The proof in the pudding will be ask me in six months where
the stock price is. The bad part about a position like this is only
history tells if I do a good job.
Q: Has there been any sense of trepidation over being an
outsider coming in now to fix the problems at Newbridge?
A: I don't know how to explain it easily. I'm coming into an
environment that I feel like I understand reasonably well.
Newbridge is not a distressed company. We might criticize
ourselves, frankly, for a UB acquisition but the base part of a
hi-tech company really is the flow of product and the portfolio.
And if that's busted, you may not be able to catch the train any
longer. That moves so quickly that if you have something
fundamentally wrong there then there's a really serious possibility
that you can't make it. And that's not Newbridge.
Q: As someone who is coming in from the outside do you think
there will be a period of growing pain or adjustment?
A: Only history tells for sure. I will try hard to move quickly, but
I will try not to be revolutionary. It's a delicate balance. What I
actually find is the organization clamoring for a unifying vision.
Please rapidly tell me what I need to do to contribute more
effectively. I haven't sensed, and that's part of the reason for the
enthusiasm right now, is I haven't sensed any type of reluctance.
We were late when we started this meeting because Terry and I
were having a discussion about what a chairman does and what a
president does. I have to give him very, very high marks for
stepping out of the day-to-day and not trying to influence and not
trying to emasculate the new person coming in. Maybe I don't
know what I don't know.
Q: Can you talk about where you want to see Newbridge push
itself in terms of markets and technology? What are going to be
the thrusts to take it to the size of organization that you envision?
A: Newbridge really staked out this area called ATM. We have
to defend our pre-eminent position in ATM to the death. That's
something we simply cannot back off of. The UB acquisition
presented serious challenges. We made a bad business decision
and we're now passing through that phase. I think there's a
disappointment that exists because the stock went down $5
(Wednesday) and things like that. This too shall pass. If we're
successful, nobody will remember the stock at $25 (US) if it's at
$40.
THE LUTZ FILE
* Alan Lutz
* President and chief operating officer, Newbridge Networks
Corp.
* Age: 52
* 1996 - 1998: Senior vice-president of communications
products group for Compaq Computer Corp.
* 1994 - 1996: President of the computer systems group,
Unisys
* 1987 - 1994: President of switching networks, Nortel;
president of public networks, group vice-president of integrated
networks systems
* 1986 - 1987: Vice-president, ITT Europe
Regards
Glenn |
