When I started at Tellabs, I worked for Carl DeWilde formerly of Fujista and Xtera. He had responsibility for more than Access. The former Occular, Vivace, Martis and DSC assets were all part of Carl’s group. One of the biggest challenges were that the different groups did not work together. Instead they positioned themselves against each other. It was fascinating, but today I really want to contrast the way Vivace had been treated and compare it to AFC.
Vivace had been purchased by Tellabs in May of 2003 or about 18 months before AFC was purchased. The product was envisioned as a Core MPLS router but by the 2003 it was considered an Edge device. Tellabs called the Vivace product the 8800 and positioned it with carriers. The good news for Tellabs was that Vivace had already made some progress even with Tier 1 carriers. The downside was that the team was really unprepared for that.
Let me use an example to explain what I mean by that last statement. I was asked to evaluate where we were with the 8800 Team in 2005. I talked to them and noticed that there was very little turnover from the acquisition. On top of that, not many processes had changed. In particular, testing was a challenge. When you release a new version of a product, you need to make sure that you haven’t broken older functionality. For Tier 1 carriers, this is an assumption of how their vendors will work. When we would release new functionality at AFC, we would sometimes ship new functionality to customers prior to the completion of the release in a limited fashion. We had to be sure that we informed the customers of what we were doing with them and they had to sign off on it. This was done normally in a situation where a customer needed the new functionality right now. To reach, General Availability we had to be clear that the older features still worked.
The 8800 Team worked differently. They made a release Generally Available before they started regression and validation testing. I recall the meeting where I uncovered this and it took me about 15 minutes to wrap my head around it. I was so surprised by their behavior, I thought that I misunderstood what was being said. 8800 customers were not known for wanting to upgrade their networks and then I understood why. They could not be sure of what they were getting.
This was all part of the hand’s off behavior at Tellabs as it related to Vivace. Given the heavy hand at AFC, it seems like things oscillated between extreme behaviors. Neither of these is the right way. If you acquire someone to be part of portfolio, you can’t leave them alone. You also can’t get rid of all the senior people. This process of integration has to be done carefully. This above and beyond the Systems Integration (IT, HR, Supply Chain, etc.). You buy a company in the long term for its people and their abilities. You have to get them to buy into the combined firm. Neither isolating them or eliminating them works and your path has to be understood before a purchase.
This problem is primarily why acquisitions fail. Statistically about 70% of them do. Both the 8800 and AFC acquisitions failed for Tellabs.
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