Bad business trumps great tech

Tennis%20August%2016%2C%202009%20057Mugshot400X400.jpg By Tony Patterson

(Published originally in Ottawa Business Journal, Feb. 06, 2012.)
Nortel was a business failure. The sad evidence now piled in the Toronto courtroom will prove that. But here’s something worth remembering. Nortel was not a technology failure. The sale of its patent portfolio for a record setting $4.5 billion must end all argument on this point.
Nortel’s business problem was twofold.
It failed to capitalize on advances in its own shop. For instance the tech team had a smart phone ready in 1998. Ten years ahead of the iPhone, let alone Android, Nortel’s Orbitor handset was on display at an international trade show. But John Roth (pictured), then the CEO, said the company had no experience with consumer products. He didn’t think mobile units could be produced cheaply enough. He canned the project. The lead designer of the user interface later left for Apple where he led the team that designed UI for the iPhone.Roth%20145X169Flip.jpg
The muddling of accounts, which is at the heart of the Toronto trial, was endemic. Finagling was part of Nortel culture, at least as far back as Microsystems International Limited (MIL). Originally established by Nortel in 1969 to manufacture semiconductors, with millions of dollars in federal grants, MIL was shut down after five years to realize the tax benefits of $50 million in losses. Ottawa paid coming and going. It was very clever. But in retrospect the culmination of such cleverness was the financial loopiness that pushed Nortel into the crater of 2010.
This Nortel, the business of Nortel, was run from Brampton. That’s where John Roth retired from and Frank Dunn operated, with a little help from the long-serving chair in Montreal, Red Wilson. But Brampton and Montreal were not where Nortel got its gusto.
Anyone involved with Bell-Northern Research (BNR) knew in the seventies what it would be like to work at Apple in the eighties, Microsoft in the nineties or Google today. BNR, which became Nortel’s tech division, was a community of high achievers, where creativity and intelligence combined to produce telecom innovations such as computer-controlled switching. Nortel introduced the world to digital communication and phone users to handy extras like voice mail and call forwarding, as well as much reduced costs. This was no little thing. It was paradigm-shifting in one of the world’s essential industries.
This Nortel, the tech of Nortel, was run in Ottawa, where it was a pillar of what became known as Silicon Valley North, which was growing up all around it. Nortel didn’t build Silicon Valley North. That was being done, ironically, by survivors of the imploded MIL. But Nortel drew strength from the community of tech entrepreneurs such as Doyle, O’Brien, Cowpland, Bryden, Foss and Matthews. And it supported their growth.
Now that Nortel itself has imploded, a new generation is let loose in the valley. The shape of things to come is not altogether clear. But the alignment is not unlike what’s been seen before. There’s this huge company, RIM. It’s not Nortel but it’s not insignificant. It could use a new product line based on next generation technology. It’s looking to Ottawa’s QNX to supply it. It’s also bulking up R&D in the capital to soak up some of the creativity on offer.
If it achieves anything to rival BNR’s intro of Digital World in 1976 that “launched the telecommunications industry into a new era,” it could anchor a tech revival in the valley that will leave silicon in the sand and eclipse memory of that nasty Nortel business.

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