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Nortel Chief Technology Officer John Roese recently talked to Gord Pitts of the Globe & Mail about his role as CTO and the transformation of Nortel’s R&D. You can see part of that interview in the below video.
The interview was also turned into a written Q&A, which you can see here. There is very little overlap between the video and the article, so both are worth your time.
Bo, Can you honestly tell us what R&D projects Roese had real influce on? Which improvment on the Enterprise Solutions Division did he trigger?, which unified product platform (that sells) is he pushing? did he even fix the OAM product issues Nortel have? what cost reduction did he drive as a result of his “vision” or “leadership”?. And as a leader, did he develop any internal leaders or is he driving them out?. As an investor, I am struggeling to see any mature outcome from Mr. Roese and I think he have the most noise as a CTO but least effectivness internally. Please do not tell me 40G, or even the 4G efforts as it started before he came!
The only think I hear from credible internal sources is the fact he drove outsourcing product verification to IBM and to be honest, this will hit Nortel after Roeses is gone from Nortel. Is this is all what he has done in 3 years?
Never been disappointed with a public tech figure like this person.
@commentor - I’m not in the R&D org at Nortel, so I can’t talk from direct experience on some of your questions. But John heads up all of Nortel R&D (~$1.7B/year I believe), and a big part of his focus has been to redistribute Nortel’s R&D efforts - which in the past were much too centric on legacy portfolios. From my perspective, I can see the focus he has on transforming Nortel form an old-world infrastructure vendor to a company that is increasingly focused on software and applications. Are these new solutions all resulting in huge revenues already? No — but you don’t create a $1B product line overnight.
He and Mike Z have also already highlighted several times in the past that R&D as a percentage of revenues has been reduced to around 15%, which is the goal for ongoing R&D operations.
For more detail, go to this Buzzboard post from July and follow the links in it (especially the first one) - which point to several items that detail the R&D transformation: http://blogs.nortel.com/buzzboard/2008/07/15/john-roese-details-nortels-rd-focus/
John is a very vocal spokesperson for Nortel, but I believe there is a lot of substance behind his words.
Bo, has anyone ever articulated why R&D at 15% of revenue is the right number? Is that based on an industry norm or is that based on what it takes for Nortel to fuel business growth? My assumption is that it’s the former, and IMHO that’s part of the problem with Nortel. I’d much rather see a detailed strategic plan for success that we can all get behind with an associated price tag than a GE Inc set of targets based on industry norms. If R&D needs to be 18%…20%…or even 25% of revenue for a couple of years to restock the pipeline, that’s better than meeting a 15% target while the company continues it’s market decline.
Step one: Figure out what it takes to stop the decline and grow the business.
Step two: Validate the plan and adjust the budget accordingly.
I don’t believe Nortel has completed step one yet so investing effort on step two at this point is like arranging deck chairs on the Titanic.
The old Nortel is dead even though the corpse is still generating quarterly results. Time to think and act like a start-up while you still can. Just my passionate opinion.
Bo, thanks for the response. You are a true profossional and you blog is a bright side for NOrtel’s marketing for sure.
One thing that is very clear (even in the links you re-directed me to). You CTO is spending far too much time expanding his empire and too much time in internal politics. My question still stands: show the market just one product line that Mr. Roese’s efforts helped and accelarated. All these R&D effeciences does not seem to expedite anything. Please list these products and be open with the market. The fact is, Nortel R&D under Roese does not seem to change much (at least externally) and I am sure interally it is really bad with the lowest ESAT in Nortel’s history.
Folks - was a busy day with DiamondWare and web.alive news, so just getting to these comments. R&D at 15% - I can’t say I know exactly where that number came from, but I doubt it’s a standard industry benchmark. My understanding is that Nortel dedicates a high % of revenues to R&D compared to even the rest of the telecom industry — even after the reduction to 15%. I wouldn’t mind anyone else with some insight chiming in on that one though.
Speaking of acting like a start-up - the news today of web.alive/DiamondWare is just that. Take a look at that news.
Regarding the products that Roese has accelerated — he’s the CTO…all R&D and product development is under him. I don’t know how you can separate out anything as his or not his…it’s all his (even 40gig, which did take 5 years, but was brought to market the last two years under Roese). Also, Mike Z has highlighted several times that 55% of revenues are now coming from identified growth markets (http://tinyurl.com/6z6aht). That surely wasn’t the case a few years ago, and can only happen by delivering new products and innovation.
Hope that helps guys.
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