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Lucent Technologies

Lucent Technologies emerged from the split of Bell Laboratories from AT&T on 1 February 1996. By this date AT&T Bell Laboratories had left an indelible mark in the history of modern technical invention. It has, through its continuous commitment to R&D, changed the fabric of modern society. Its legacy is a history full of successes. It was the birthplace of the transistor, the communications satellite, the laser, the solar cell, cellular telephony and stereo recording. Lucent Technologies recognizes that the engine of innovation lies in Bell Laboratories’ formula for invention. However, Lucent Technologies is not looking simply for successful invention; it wants more – successful innovation. The difference is important for Lucent Technologies. Lucent Technologies wants to move beyond the concept of inventions, which is closely synonymous with idea generation, to innovation, which is about taking the ideas and converting them into a market reality. This move, on the surface, can be thought to be a move away from the tradition of pure research, which led Bell Laboratories’ claim to seven Nobel prize winners as evidence of its history of success.

Success through communities for innovation

Ever since the 1960s, Bell Laboratories has explicitly acknowledged and accepted the basic tenet that a fundamental responsibility of research is to be a window to the outside world. The belief is clearly that basic research is vital. Bell Laboratories’ mission is to lead Lucent Technologies in creating and obtaining technology that it needs, and in getting that to the marketplace. The vision is to make Lucent Technologies the first choice in both existing and new businesses.

Restructuring

With the split from AT&T to AT&T Labs and Lucent Technologies, the total investment in research actually went up. The major change came in the refocusing of Bell Laboratories’ efforts. Following its mission, Lucent Technology has made a policy of committing 1 per cent of the previous year's revenues to basic research, with a total R&D spend at around 11 per cent. With buoyant revenues, exhibiting growth rates of around 15 per cent per annum, this translates into major growth in both research and development. The investments are indicative of other initiatives to support the new drive. Bell Laboratories has been reorganized and restructured. Engineers and scientists working on projects directly related to product development are aligned with Lucent Technologies’ businesses, and therefore its customer teams, who sell the commercial fruits of these developments. Supporting these projects are a second level of projects which provide centralized competency centres, such as in design automation. Underpinning both of these are basic sciences such as engineering, computing, mathematics and communications sciences.

In addition to this are a select number of new ventures which do not necessarily line up with existing Lucent Technologies businesses. Inferno, a newly announced network operating system, is a good example of an area which did not fit, and hence a new business was created to go with this product. Other areas like fingerprint recognition, Internet telephony and billing software also fall in this category.

The company also adopted a much more systematic approach to planning. Business units use technology and product road maps, which help to bring researchers and engineers closer to sales and the needs of the marketplace. This form of structure heightens the level and type of participation, and is particularly useful in making researchers part of the product team and, therefore, key inputs in producing and maintaining the product plan.

These new initiatives are carefully dovetailed to the original strengths of Bell Laboratories. The company still remains committed to technical excellence, and recruitment is made to ensure that best technical expertise and talent is captured. In fact part of the mission, still remains ‘to hire the best, develop the best and retain the best’.

Leadership has played an active role in the company's attempt to combine technical excellence with market responsiveness. Soft actions are intermeshed with hard targets. Lucent Technologies drives itself forward by setting benchmarks to attain. One such metric is the percentage of revenue that must be derived from new products in the previous three years. This stipulation not only provides Bell Laboratories with a clear business aim, but also serves to assure Lucent Technologies’ customers that the company will continue to lead the way in technology.

At the strategic level the company is attempting to become much more geographically diverse. For example, it is increasing its presence in China and Japan. Hitherto work was primarily instinctive and intuitive but, with the globalization of operations, a much more systematic approach of working, learning and dissemination is needed. In response to this the company has started to institute a certification process which ensures that there is worldwide excellence. Principles of TQM have found widespread use to assess and continuously improve every aspect of R&D. Bell Laboratories has fifteen sites around the world, and there is a tendency to localize particular types of expertise in specific areas. The typical process is that if someone starts off some good work in a particular field, this attracts others to the same geographical area, and the whole thing grows by feeding itself. What management does is cultivate this natural tendency and dramatize ‘innovation as a team sport’. In this way natural communities of excellence spring up. The challenge is to align and channel employee energies to business goals.

The third part of the Bell Laboratories’ strategy is based on creating the right environment for people to work in. Bell Laboratories, because of its historical legacy, has its own special kudos. The initiative to create the right environment is encapsulated by an approach called ‘Brand and Spirit’. Robert L. Martin, director of Lucent Technologies’ technology strategy, talks about the ‘Brand and Spirit’ approach:

A key part of research is creating the right environment for the people to work in. In itself the process is not so tidy. You want world leaders. For instance the Inferno project has its own directors and runs as a stand-alone venture. That gives the people involved control of their own destiny.

The Inferno model is increasingly being followed worldwide. Researchers are not only given the resources to develop their ideas, but also the responsibility to innovate and realize the potential of those ideas.