Reinventing Nortel
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Reinventing Nortel

2000 will go down in high-tech history as the year the Dark Ages ended and the Light Age began. It’s the year that fiber optics—voice and data transported as photons of light over hair-thin strands of glass—gained widespread recognition as the fastest, m

Paul Holmes

 

2000 will go down in high-tech history as the year the Dark Ages ended and the Light Age began.  It’s the year that fiber optics—voice and data transported as photons of light over hair-thin strands of glass—gained widespread recognition as the fastest, most reliable technology for the high-performance Internet.  And it’s the year that Nortel Networks was recognized as the worldwide leader of fiber optic networking.  Fleishman-Hillard was retained in 2Q99 to help launch an aggressive communications campaign to reposition Nortel Networks leadership in optical networking.  This focused strategy boosted Nortel Networks competitive positioning resulting in 80 acquisition and major strategy announcements in 2000, with a 300% increase in media coverage.  As a result, sales of Nortel Networks fiber optic networking equipment skyrocketed and so too did customer and investor awareness and appreciation for the role optical networking plays in building the next generation, high-performance Internet.

CHALLENGE

The drive to build a faster, more reliable Internet had long been viewed as a two-horse race between Lucent Technologies and Cisco Systems.  Despite its technology reinvention, Nortel Networks had been relegated to a distant third-place behind its larger competitors.  More importantly, Nortel Networks was failing to translate its transformation into stronger appeal with investors, potential customers, analysts and the business media.  While their products and customer service were superior, Nortel Networks overall reputation deficit was affecting sales, stock price and “share of voice” in the industry.  The gap between the perception of Nortel Networks (a slow moving, manufacturer of “legacy” telephone equipment) and the reality (an undervalued, fast moving, Internet-focused company) was severe.  

The business press relegated fiber optics to a technology best covered by the trade media, whose readers were pocket-protector-wearing engineers, not business savvy CEOs and investors—all critical to Nortel Networks future success.  This did not bode well for Nortel Networks, a telecommunications equipment maker that staked its future on fiber optics as the technology of choice for the next-generation Internet.  Nortel Networks believed in it, the trade media believed in it, and network engineers believed in it.  But the national business media were in the dark.  Nortel Networks set out to make them see the light.  

RESEARCH

To assess Nortel Networks marketplace perception and communications effectiveness, Fleishman-Hillard conducted a multi-tiered research program to:

Identify the attributes behind Internet leadership – to shape the company’s key messages

Measure Nortel Networks effectiveness in delivering messages in the media – on a global basis

Measure the impact the communications program is having with key end-audiences, including “CXO” executives

The initial benchmarking study confirmed that “share of voice” (coverage tracked against competitors using a measurement tool that combines circulation, article placement and message delivery) in the industry was split between Cisco and Lucent.  Nortel Networks was mentioned as a small player, if at all.  Moreover, Cisco was far ahead of Nortel Networks in perceptual leadership as an Internet technology company.   Among the findings:

In 1998, Nortel Networks was mentioned in only 33 stories in the Wall Street Journal; Cisco and Lucent were mentioned 144 and 141 times, respectively.  

Cisco held a nearly 20-point lead over Nortel Networks in the percentage of customers, media who named the company in response to the question, “which company is a leader in providing next generation Internet solutions?”   On an unaided basis: Cisco was named by 73% of respondents: Nortel Networks, 55%

OBJECTIVE

Position Nortel Networks as a leader in building the high performance Internet – to support sales and free untapped market cap.

STRATEGIC APPROACH AND CAMPAIGN EXECUTION

Strategy:  Focus the Message.  Align the company communications around a set of brief corporate messages that conveyed Nortel Networks position as the driver of a faster, better Internet necessary for the success of e-business -- the heart of the Internet revolution.  

Execution: All analyst meetings, product announcements, executive speeches, customer communications and media pitches echoed Nortel Networks unity with the Internet.

Strategy: Bring the Technology to Life.   To capture the powerful role optical technology plays in building the high-performance Internet, Nortel Networks had to move beyond “tech talk,” in favor of using easy-to-understand, colorful comparisons.

Execution: A Q4 1999 launch of a new high-capacity fiber-optic technology described a system that could transport the contents of the entire four-million volume Library of Congress from Washington, D.C., to Los Angeles in just 14 seconds -- an illustration that was reported heavily in the business coverage.

Strategy: Hit the Road.  Give Nortel Networks a human face by positioning its key executives as the architects “building the high performance Internet.”  

Execution:  CEO John Roth and other senior executives booked on media deskside briefings, appearances at industry conferences and contacts with financial analysts.  In fact, more senior management meetings were held with industry and financial analysts than during any other year in the company’s 100-year history.

Strategy: Choose Your Own Yardstick.  Leverage the few industry metrics where Nortel Networks surpasses its key competitors (Cisco and Lucent) rather than allow others to dictate what constitutes “leadership.”

Execution: Market share study of optical equipment sales ranking Nortel Networks ahead of Lucent for the first time drove a wave of aggressive pitching, graphics, analyst referrals and executive interviews.

Strategy: Tug on Superman’s Cape.  Despite analysts views of Nortel Networks as a “telephone equipment maker” trailing No. 2 Lucent, focus PR fire on No. 1 Cisco -- a brand more closely aligned with the Internet.

Execution: Media blitz surrounding the announcement of a Nortel Networks routing technology, Open IP Environment, was positioned as a direct threat to Cisco.

Strategy: Money Makes the World Go ‘Round.  Work with consultants to quantify market opportunity: establish relevance of Nortel Networks key business areas.

Execution: Nortel Networks coupled its newly announced application service provider (ASP) strategy with Dataquest figures that predicted the ASP market will grow to $23 billion by 2003, a statistic that gave editorial weight to the announcement.

MEASUREMENT OF SUCCESS

Objective: Position Nortel Networks as a leader in building the high performance Internet…  

Between January and October 2000, Nortel Networks dramatically improved its position among key audiences.  A survey of industry analysts, journalists and senior-level executives surveyed revealed the following:

In January of 2000, 55% of those surveyed cited Nortel Networks as a leader in providing next generation Internet solutions.  By September, the number had grown to 61%.

Nortel Networks perceptual increase came at the expense of its two key competitors – Lucent and Cisco.   Between January and September, unaided awareness of Lucent as a leader in providing the next generation Internet solutions fell from 52% to 46%, while Cisco fell from 73% to 69%.

The result: Nortel Networks distanced itself from Lucent (opening up a 15-point lead), and gained considerable ground on formidable foe Cisco (shaving 10 points off the gap).   

Fueling this was the broadest, most impactful media coverage Nortel Networks had ever received:

Nortel Networks increased its presence among top-tier business media by 326% from Q3 1999 to Q3 2000, compared to 86% for Cisco and 46% for Lucent.

Among the best “As Lucent Slips, Nortel Fills Pipe,” Investor’s Business Daily; “Canadian Underdog Shows its Teeth,” Upside; “Lighting Up Nortel,” Forbes; “Nortel Networks puts pedal to the metal,” USA Today; “How Nortel Stole Optical,” Fortune.

Objective: …to support sales and release untapped market cap.

In 1999, after five years of revenue growth between 15 and 20 percent, Nortel Networks recorded sales of $22.22 billion, up 26 percent over the previous year.   Nortel Networks annual optical sales grew by 80% in 1999, and doubled 2Q00 over 2Q99.  Nortel Networks market share for optical networking grew from 31.1 percent at the end of 2999 to 43 percent in the second quarter of 2000.  In December, Nortel Networks surpassed Lucent as the leader in the burgeoning optical equipment market.  

Thirty-six of the 40 securities analysts who follow the company now rank Nortel Networks a “buy” or better.  In 1998, only 25 analysts even covered Nortel.

From September 1999 through September 2000, Nortel Networks stock price tripled, while Cisco and Lucent have struggled to stay afloat. (Fortune magazine, Oct. 2, 2000) 
Nortel Networks was named one of the “Top 10 Stocks for the Next Decade” by Smart Money magazine and named by Salomon Smith Barney as one of its “10+ Exceptional Names List.” These stocks possess solid fundamentals and growth potential in the year ahead, the company said. 

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