This article discusses the concept of Entrepreneurial Boot Camp that was used by Lucent Company to discover a way to turn small teams of employees into sources of innovative business ideas. The idea behind Entrepreneurial Boot Camp was simple. Small teams of employees would rally around an idea. Anyone could submit an idea or join a team, from researchers to office clerks. First, employees published their ideas on a website. Then everyone interested in joining a team gathered in an auditorium where the idea owners gave five-minute presentations. Afterwards, everyone adjourned to the cafeteria, where idea owners talked with people who wanted to work on a project. Those five people could come from anywhere in Lucent. The Boot Camps continued after Alcatel acquired Lucent in December 2006. More than 80% of the plans accepted by the company’s Innovation Board have been developed into new market opportunities. The most advanced is Touchatag, a wireless service that supports mobile payments, customer loyalty programs, and interactive advertising.
It was a classic death spiral. Lucent Technologies, the one-time darling of Wall Street composed of the former AT&T Bell Laboratories and Western Electric telecommunications equipment businesses, first missed its revenue estimates in 2000. Then it admitted to accounting irregularities and restated earnings. The company was forced to sell its consumer operations and spin off its business and microelectronics units as separate companies.
By 2002, its workforce, which had grown to 165,000 employees, was slashed by 60 percent.
Even more disturbingly, Lucent was not commercializing new ideas fast enough to keep up with the ever-changing telecom industry. The company's management had focused on acquisitions, and with 38 newly acquired technologies fighting with internal research projects for funding, a disconnect grew between decisionmakers and innovators closest to the market.
The management team at Lucent's Belgium operation decided to do something about its innovation gap. Lucent's footprint in that small nation was significant: 1,800 employees and 100 researchers. The company's laboratory in Antwerp was well known for its work in both high-speed Internet access over copper phone lines (marketed in the United States as DSL) and optical networking. Yet those technologies were a decade or more old, and the lab had developed few promising technologies since then.
Belgian management's first stab at generating new technologies was simple and not especially effective: a Web site where employees could post new ideas. It averaged about 10 ideas per month. “The quality and quantity of the ideas were not good,” recalled Guido Petit, director of the Alcatel-Lucent Technical Academy. (Alcatel acquired Lucent to form Alcatel-Lucent in 2006.)
In 2004, management decided it needed more. It launched an innovation contest. The prize was a new car, which the company parked at the entrance to its facilities so everyone could see it as they came to work each day. Within five months, the number of submissions had soared to 150 new ideas. A committee selected the best 11, and from them chose the winner. The successful employee received the car in a grand ceremony.
Problem solved? Not at all, Petit said: “The program rewarded only one person—who sold the car one week later because he bicycled to work—and made 149 other people unhappy. It created negative energy. It was not sustainable. And most important, the winning idea didn’t make it into a product. In fact, none of the top 11 ideas became products.”
Lucent conducted a root cause analysis of its lack of new technology business. The inquiry came to a surprising conclusion: Lucent did not need new ideas. What it really needed was new businesses based on innovative products or new applications of established technologies.
Equally important, it needed big ideas—specifically, enterprises capable of generating 50 million to 100 million euros (roughly $60 million to $120 million) within three to five years.
To get there, Lucent would have to ask more from employees than the few minutes it took to submit an idea to a Web site. There had to be a commitment large enough to transform an intriguing idea into a solid business plan.
Thus was born Entrepreneurial Boot Camp. The concept behind it was simple: Small teams of employees would rally around an idea. Anyone could submit an idea or join a team, from researchers to office clerks.
At three weekend-long retreats, the teams would learn how to turn their initial concepts into solid business plans. Then they would present their plans to a jury of top managers—including Lucent Belgium's CEO—and venture capitalists. Lucent would fund the winning proposals to create new businesses.
Boot Camp asked a lot from employees, all of it in addition to their daily business duties. “Before they subscribed, they had to discuss the time commitment with their family and managers. It would be up to them to spend 10, 20, or 30 percent of their available time to develop a business operations plan,” Petit said.
Boot Camp started with the entrepreneurial equivalent of speed dating to build teams. First, employees published their ideas on a Web site. Then everyone interested in joining a team gathered in an auditorium where the idea owners gave five-minute presentations. Afterwards, everyone adjourned to the cafeteria, where idea owners talked with people who wanted to work on a project.
“If the chemistry clicked, they formed a team. At the end of the day, they needed five people who were passionate about the idea,” Petit said.
Those five people could come from anywhere in Lucent. Like many corporations, Lucent was structured in what management consultants call silos: functional organizations such as research, engineering, development, finance, marketing, and sales. Each silo was stuffed with one type of expertise and separated from the other silos around it.
“There were talented people everywhere, but they were not connected,” Petit explained. “Our goal was to reduce the virtual distance between people in different organizations and establish relationships.”
Diverse teams, Petit reasoned, could draw on a wider range of human and corporate resources and knowledge. Often, key players were not the up-and-coming executives but talented individuals who never had an opportunity to try something new.
Oddly enough, some of the best-connected people were smokers, Petit noted. “If you look at who has the highest level of connectivity across silos, it's always the smokers. This is true in every organization.
“If they want to have a smoke, they have to go outside,” Petit said. “There, they meet other smokers from different silos. They phone each other to see if they want a smoke. It's a very social activity. This is the corporation's underground network. They’re the ones who know what's going on in all the different parts of the organization.
“This type of informal network is extremely important to boost innovation and technical exchanges,” Petit said, adding, “The boot camp manager was a smoker. This helped.”
Five teams were chosen for each Boot Camp. Lucent assumed that team members would have little (if any) experience creating a business plan. To bring them up to speed rapidly, it organized a series of three Friday-Saturday Boot Camp retreats at an inn in the Belgian countryside.
Lucent did not try to educate its employees alone. It teamed with Flanders Business School to develop a curriculum that focused on the practical. At the weekend retreats, participants spent about 20 percent of their time learning theory in the morning and the remaining 80 percent applying what they learned to their plans. Top managers were assigned to coach each team, helping them to assess technologies and markets and to prepare presentations.
The first weekend, teams learned to write a successful business plan, create a new venture, and develop opportunities for new technologies. Teams continued work on these assignments after they returned to work until the next retreat, one month later.
The second weekend covered entrepreneurial marketing and new product growth. The third weekend focused on entrepreneurial finance, business law, and intellectual property rights.
As they moved through the three-month program, teams discovered their strengths and weaknesses. Some team members were natural presenters, while others understood how to explain the benefits of a new technology to potential customers. Petit recalls several team members who emerged as leaders after working for years in positions where they never had had an opportunity to direct anything.
The finale came on Super Friday, when the teams presented their plans. The event took place in an auditorium at Fortis Bank. “We chose it because that's where the money was,” Petit quipped. The jury consisted of Lucent Belgium's CEO and other top executives, local venture capitalists (who often understood the target markets better than Lucent did), and Flanders Business School professors. In addition, Lucent invited about 150 employees to each session.
The presentations were short, only 15 minutes each. The real action took place during the question-and-answer period, where the jury grilled each team for 30 minutes.
Teams had to convince the jury of their vision, market trends and needs, sustainable opportunities, competition, and the financial payoff. The technology had to be “adjacent” to an existing business, so Lucent could execute without having to learn the engineering from scratch. Lucent also wanted to see a simple value chain of no more than three or four players (including partners and vendors). By answering these questions, teams demonstrated their strength.
The company's Innovation Board, which consisted of top Lucent managers, chose which businesses to fund based on company strategy as well as jury inputs. Those business plans that made the final cut moved to the incubation phase, where team members (now aided by Lucent specialists) met with potential customers and gathered feedback. If the feedback was positive, Lucent launched the project under the direction of an experienced manager.
The Boot Camps continued after Alcatel acquired Lucent in December 2006. So far, Alcatel-Lucent has held six Boot Camps in Belgium and has looked at 30 projects. Half of those projects originated with its research group, while the other half came from its business divisions. Four out of five plans addressed new markets.
More than 80 percent of the plans accepted by the company's Innovation Board have been developed into new market opportunities. Several businesses are in early commercialization. The most advanced is Touchatag, a wireless service that supports mobile payments, customer loyalty programs, and interactive advertising. The company is also developing an intelligent agent capable of finding and analyzing data on peer-to-peer networks.
Alcatel-Lucent has decided to expand the Entrepreneurial Boot Camp out of Belgium into other regions, including France, China, India, and the United States.
Innovation, as Petit noted, is more than just having an idea. It is the living embodiment of that idea as a vibrant and profitable business. “It is the critical and complex interplay between the best people inside and outside an organization,” he explained.
Boot Camp helped Alcatel-Lucent create those interactions, and made its idea drought a thing of the past.