Q&A with David Hudson, VP of portfolio management in Nortel’s CTO org
On Thursday I talked to David Hudson. A twenty-year veteran of Nortel, David is the leader of portfolio management in the CTO organization, reporting directly into John Roese. We focused on Nortel’s Incubation Program as well as the Open Innovation Lab, both of which he leads. Both are programs designed to drive the rapid development of innovative new products and solutions.
David Hudson, VP of Portfolio Management in Nortel’s Chief Technology Office
Last month when my teammates and I visited Nortel’s Ottawa campus, we saw the early fruits of these programs in person. While we also saw demos on 40G/100G, unified communications, and telepresence that came from Nortel’s traditional R&D side, the demos that caught my attention the most were from these innovation programs. Most were software and web 2.0 based, and built on the principles of SOA and the mash-ups of our technologies with other applications. And most interesting of all, when we asked at each demo how long the team had been working on each project, the answer was always in months and weeks instead of years.
In my conversation with David, I asked him about how the incubation program works, what makes for a good incubation program versus using a normal R&D path, and the culture changes that these programs are creating within R&D. Below is our conversation.
What is Nortel’s incubation program? We carved off a portion of the total R&D and said that it is strictly for investment in new products in new spaces that fit outside the scope of our current business. It is structured pretty much the way a VC would operate. Our exit criteria and options are a little different than what a VC would use of course, but from a decision-making standpoint we are looking at investments based on their business appeal. There are no blank checks. There are no huge lump sums. There is an early seed funding to get to an idea to a prototype, a second phase of funding to get a prototype to your first customer, then a third phase of funding that would help you go big and then transition into the business.
The other thing that we are doing is building a social networking type of capability internally to let people across the company bring forward ideas and also tap into the innovation pipeline of others within the company to contribute to further shaping the idea and possibly getting involved in implementing the idea.
What’s the difference between a technology/solution that’s developed as part of Nortel’s incubation program and one that goes through traditional R&D funding? It’s always difficult to create hard and fast rules, but generally we are looking for things that would address new market spaces. The basic criteria is “will this idea expand Nortel’s total addressable market?” If the idea simply allows us to do a better job in a space we already occupy, our bias is that the existing business units take it in. Because eventually if the idea is good, when it scales it’s going to have to fold into their plan of record and their go-to-market plan, and we don’t want to create internal competition for the same market.
Also, the time scale is a little bit different. With incubation we are looking from two to five years out, whereas that horizon for investment in the business units needs to be closer in.
