From Sleeper To Keeper

It was just a couple years ago that Nortel Networks Corp. was the butt of jokes. The Brampton (Ont.)-company had long been a distant second to Lucent Technologies in providing gear to telephone companies in North America. Wall Street saw it as sleepy, bureaucratic, and downright dull. And CEO John A. Roth had all the pizzazz of a mortician.

Look who's burying the competition these days. While Lucent and other rivals stumble, Nortel is emerging as the Old Economy telecom gear maker that is leading the charge into the Internet Age. The key is that Nortel dominates the market for optical equipment, now the technology of choice for transmitting data at high speeds. "Nortel is the company to beat," concedes Gururaj "Desh" Deshpande, chairman of rival Sycamore Networks Inc.

Nortel's new success stems from sweeping cultural changes at the company. At its heart, Roth is using the Net to emphasize speed as never before. He has, for example, created small work groups that use customized Web portals to share ideas and documents. That makes it a snap for software developers in Canada or India to collaborate. The average time to develop a new product is down to 24 weeks, from the 240 weeks it used to take. Special orders are on a fast track, too. Customers can deliver details of products they need directly to Nortel engineers through a company extranet, cutting production time from three months to a day. "We've shifted from telco time to Web speed," Roth says.

And while others were easing into their lawn chairs this summer, Roth launched an electronic marketplace, called e2open, that informs its 72 suppliers the minute the company receives an order. That way, suppliers can quickly start making or shipping the components Nortel will need. Just since the July launch, the system has allowed Nortel to ship everything from switches to optical gear in half the time it used to take. Nortel a laughingstock? Look who's laughing now.