Alcatel-Lucent: New CEO, Same Three Problems
Alcatel-Lucent is bringing in a new CEO, but The VAR Guy remains highly skeptical of the networking giant for three key reasons.
First, the executive changes: Ben Verwaayen, former CEO of BT Group, will replace Alcatel-Lucent CEO Patricia Russo; and former EADS co-CEO Philippe Camus will replace Chairman Serge Tchuruk. The Wall Street Journal broke portions of the story, then GigaOm offered some follow-up.
Now, the problems.
1. Mergers of Equals Don’t Work: When two super-large companies get together, there’s no clear leadership. Instead of blending, corporate cultures clash with one another. Alas, you need a big buyer (example: Cisco Systems) and a small seller (example: Hundreds of small networking companies acquired by Cisco) in order for there to be a strong corporate culture that moves forward quickly.
2. Distance Hurts: Sorry, but long distance relationships don’t work. Sure, companies can leverage telepresence and video conferencing to improve long-distance communications. But merging two struggling companies — one based in the US, one based in Europe — only creates bigger problems.
3. Competition Moves Forward: While Alcatel-Lucent was busy getting hitched, big rivals (i.e., Cisco Systems) and nible startups (Digium comes to mind) continued to race forward at record speed.
Can Verwaayen and Camus energize Alcatel-Lucent? Perhaps. It’s certainly possible. And it’s always good to have one clear leader — Verwaayen — rather than two executives from opposite sides of the globe trying to glue together vastly different businesses.
But when they were separate, Alcatel and Lucent each were struggling. Putting them together doesn’t necessarily make for a stronger whole.