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News Updates - 12
March 2001 Nortel - Optimism or Hubris? - Business Week A Maestro of the plant floor - eCompany Irrational Inquiries - Red Herring Nortel: Optimism or Hubris? Brampton, Ontario, Canada: Sometimes, lessons come hard. For months, Nortel Networks Corp. CEO John A. Roth told Wall Street that the telecom-equipment maker would sizzle in 2001, with more than 30% revenue growth. He made the bold prediction not once but three times since September. Then reality came crashing in. On Feb. 15, Roth announced that Nortel's revenues would be flat in the first quarter, at $6.3 billion--$2 billion shy of the company's previous estimate. The company's stock plummeted more than 35%, to less than 20 on the news. Still, Roth predicted that Nortel's revenue growth will accelerate the rest of this year, so 2001 revenues should be 15% more than 2000's $30.3 billion. THE
PLAN Now, Chandran, 52, must rely on his survival instincts to help lead Nortel through what promises to be one of the toughest years in the history of the 105-year-old Canadian company. Nortel Chief Executive John A. Roth appointed Chandran his No. 2 last June, a move that many took to mean that the native of Bangalore, India, would soon be named to Nortel's top job. Insiders now say Chandran is likely to take the reins before the end of the year. When Chandran moves into the top slot may very well depend on how quickly he and Roth can put Nortel back on track. The company's stock plunged 35%, to less than 20 in mid-February, after the company revealed it wouldn't meet its 30% revenue-growth target for the year. Many analysts doubt Nortel will even be able to meet the revised goal of 15%. While Roth serves as the company's visionary, it's Chandran's job to guide the daily operations of Nortel's four main businesses and deliver the growth his boss is promising. Chandran isn't worried. "I don't panic," he says. Chandran has years of experience to fall back on. He started as a salesman for Bell Canada, then Nortel's parent, back in 1973. He diligently worked his way up over the past 28 years, living throughout the world in a range of management jobs. "He has great business acumen," says Roth. Chandran's responsibilities now include sales, marketing, research and development, human resources, and acquisitions. ULTIMATUM Chandran may be a little preoccupied with time. He has a collection of more than a dozen watches, and several have more than one face so that he can quickly see the time in different regions of the world. He's a man who believes that every minute counts. On a recent trip to Eagle River in northern Canada, he spent the weekend fishing without making a single catch. Then, in the last 60 minutes, he caught four Atlantic salmon. "The thing you learn is to never give up," he says. That's the kind of grit Chandran will need to get Nortel through these rocky times. A MAESTRO OF THE PLANT FLOOR - Hero of U.S. Manufacturing March 2001, eCompany magazine, By Gene Bylinsky (excerpts) America remains the world's top industrial power with the help of innovators like these. Their contributions include exquisitely. Anand Sharma, 55, a personable manufacturing consultant who runs TBM Consulting Group in Durham, N.C., has a reputation for finding out what a factory is doing wrong by simply walking through it with the plant manager. Sharma usually asks the manager about the factory's "rhythm." More often than not, the manager expresses puzzlement. But Sharma, like a seasoned orchestra conductor, may already have noted off-tempo components on the plant floor - a machine with a hardly perceptible squeak here, workers laboring at an uneven pace there, too much inventory piled up. Sharma trusts his senses to point to evidence of bad processes. In addition to looking for obvious signs--is the plant well lit and clean?--he checks to see if operators at one part of the line are working at a very fast pace while others elsewhere are working slowly or stopping. He observes whether the progress of a part being made can be tracked from beginning to end by line of sight. Says Sharma: "Where other people see complexity, I look at how simple things can be." In the decade since it was founded, TBM (short for time-based management) has worked with more than 500 manufacturers around the world, generally helping them lift productivity 15% to 20% a year. Sharma's clients include big companies such as Freightliner, Kaiser Aluminum, Mercedes-Benz, and Polaroid, as well as such lesser-known names as Batesville Casket Co. in Indiana, Cold Spring Granite in Minnesota, and Huffy Sports in Sussex, Wis. Sharma's rare skills took time to hone. While growing up in a part of India that was ceded to Pakistan after the country's partition, he felt driven by what he calls "a compulsion to make things work right." The son of a professor of Sanskrit who died while he was still a boy, Sharma and his two older brothers were brought up by their mother, who had started a sewing school for women. Sharma loved to build radios and bicycles, and knew he wanted to become a mechanical engineer. He picked Roorkree University in the foothills of the Himalayas because at the time it was India's only institution of higher education that offered hands-on training with production machines. The university ran a shop that made and sold electric motors. An imaginative, straight-A student, Sharma did a comprehensive study of how to set up and run a manufacturing company that caught the attention of the general manager of the Hindustan Machine Tool Co. Offered a job there upon graduation, Sharma showed up for work in a three-piece suit. The general manager sent him back to his hotel to put on work clothes. When he returned, he was taken to the tool room, handed a piece of steel, and told to file it. After Sharma finished, the general manager informed the aspiring executive that he had made seven mistakes--not holding the file right, straining his body, and so on. The boss asked Sharma how he expected to teach people to do their jobs. Thus began an odyssey that turned Sharma into an expert machinist and tool operator. The general manager dispatched him for six months to a training center run by experts from Switzerland, where Sharma toiled on the morning shift from 4 A.M. to 2 P.M. He recalls working on an especially complex part for two weeks, only to be told by a Swiss taskmaster to redo it because its dimensions were off by two-millionths of an inch. Back at Hindustan Machine, Sharma underwent two more years of training in various departments and then was assigned to head a tool room. He was soon challenged by a machine operator twice his age, who questioned whether Sharma could make a better part than he. Sharma did, and the questions stopped. Soon Sharma became bored with all the grooming to become a plant manager. But today he says, "I was unbelievably fortunate to have gone through that kind of training." More training came in the U.S. when the young engineer was dispatched to Franklin, Pa., to gain experience at a Chicago Pneumatics plant. The blunt-talking Sharma questioned the plant's old-fashioned product design and sloppy manufacturing methods, and was given a chance to make improvements. Eventually he left and took a succession of manufacturing jobs at U.S. Steel, Zurn Industries, and a division of American Standard, where he rose to director of manufacturing and later to vice president of strategic planning, R&D, and operations. Along the way, Sharma got an MBA at Boston University. He kept up with manufacturing trends and attended quality-control seminars offered by the founders of the quality movement, W. Edwards Deming and Joseph Juran. By the early 1970s Sharma was designing better and faster production lines at American Standard's various divisions. "I was always trying to reach for the next level," he says. He still had a lot to learn. The revelation of how much better manufacturing can be came in 1979 when Sharma met Toyota manufacturing guru Shigeo Shingo and was invited to see some plants in Japan. What stunned Sharma was the ability of Toyota's workers and others to replace dies on presses in minutes instead of the hours, or even days, that it took in American plants. The Japanese did this, moreover, with a very simple technology that employed compressed air to lift the thousand-pound dies as if they were feathers. When his division of American Standard was put up for sale, Sharma moved to a manufacturing-consulting firm in Connecticut as an executive vice president. In 18 months he turned the money-losing firm into a profitable one. Unable to get along with the owner, Sharma and three colleagues started TBM Consulting in 1991, operating out of Sharma's home. Most manufacturing companies, experts say, still haven't fully mastered modern "pull" production technology, or making products to customer demand, as contrasted with the conventional "push" production, in which stocks of unsold goods can accumulate. "We still have a lot of bloated and screwed-up processes out there, left over from the neglect of the '60s and the misapplication of the operations-research approach," says noted manufacturing consultant Patricia E. Moody, co-author with Sharma of a forthcoming book, The Perfect Engine. Sharma argues that manufacturing is the key to success of e-business, as some failing dot-com companies have discovered to their chagrin. He adds that "there are also a lot of bad plants in Japan," where, contrary to received wisdom, the Toyota system is not widely used. A typical accolade for what TBM achieves comes from Pat Lancaster, CEO of Lantech Technology, a Louisville maker of shrink-wrap machines. When TBM began working with Lantech in 1992, the company was losing money. Four years later, sales per employee had increased 80%, and the company enjoyed a healthy 10.5% return on sales. Though the CEO won't disclose the privately held company's financial assets since then, he allows that "the results in terms of profit and sales growth have been awesome." He adds, "We wouldn't be the company we are today without TBM. There isn't a place here that you could go to and not see the impact of multiple kaizen. The biggest role that Anand played was to tell us the next step." Irrational
Inquires - Finding data with SEARCH ENGINES is frustrating and
cumbersome. What’s next? Not so long ago, high blood pressure and using a search engine were not synonymous. But that was when things were simple - when most data was stored on individual PCs and searching it was relatively painless. The Internet radically altered the search equation (and the stress level). And the once provincial boundaries of the PC now extend beyond spinning hard drives to million of Web sites and an enormous trove of data. Trouble is trying to find the proverbial needle in the haystack with search technology that isn’t up to the task. Anyone who has used search engines knows they’re stupid. They always seem to return a fold of irrelevant results. Moreover, they make it difficult for the user to narrow down the search without throwing out potentially important results.Unfortunately, not much has improved over the last II years. One recent improvement, however, is the advent of the modal-based search, which “learns” from prior searches and can thus better pinpoint the type of result a user wants. This goes beyond existing types by trying to understand the search visitor’s needs. It was developed at the Xerox Palo Alto Research Center over two years ago. Among the companies using modal-based searches is Outride, which says its technology will find what you want twice as fast as a nonmodal search engine. The only drawback is that users need to fill out user and content profiles-and then the two have to get acquainted. One of Outride’s competitors is Purple-Yogi. But unlike Outride, Purple Yogi offers free downloadable software that works in conjunction with a browser. What’s clever about its software is that it continually updates a user’s profile based on the sites and data the user seeks out on the Web. Founded in 1998 in Palo Alto, CA, by CEO Rakesh Mathur, Purple Yogi now has 130 employees. Purple Yogi develops search software that can classify Internet and intranet links based on machine learning, artificial intelligence, information theory, and pattern recognition. Software displays a window next to the user’s browser and shows links based on user preferences and browsing habits, as well as those that are related to the Web page being viewed. In December, signed a deal with the Wall Street Journal Online to offer WSJ Online subscribers a free, downloadable, cobranded version of its software. Target partners include corporate portals, original equipment manufacturers, and systems integrators. Other customers include the Financial Times. It competes with Autonomy. THE
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