Drawing on its strengths

Diversity can be a source of power-and problems. Harris Corp.'s telecom business has both. The prescription: Use the former to resolve the latter.

Harris packs a big telecom punch. Harris' Communications Sector includes telecom and broadcast, with telecom representing roughly 75% to 80% of the whole today, though broadcast is booming.

Communications is big, profitable, growing and central to Harris' overall corporate strategy. In the most recent quarter, sector sales grew by 15% to $240 million. Net income was up 28% to $12.3 million. Unlike many large U.S. telecom companies, Harris has built a strong international business, with roughly 44% of revenues currently generated outside North America.

Despite its telecom muscle, Harris lacks strategic clarity. Its telecom businesses span the spectrum, from Farinon, a leader in RF technology, to switching (Digital Telephone Systems), to the loop (Network Support Systems), to wireless (Wireless Access), to systems integration and network management (Telecommunication Systems & Services). The divisions traditionally have been run autonomously.

Clearly effective from a financial viewpoint, this approach has hampered strategic development and impeded the creation of a clear image, an important attribute in the increasingly fluid North American telecom market and even more important elsewhere.

Earlier this year, Harris brought Van Cullens in as president of the Communications Sector. Cullens has been around the telecom block a time or two. He has been a senior executive with GTE, Stromberg-Carlson (where he was pivotal in saving a traditional telecom power-now a major and productive part of the Siemens' family-that many industry observers then thought had both feet in the grave), GPT and Siemens. His mission: Create a strategy based on existing assets and communicate it effectively to customers.

"The general theme is focus, focus, focus," Cullens says. "We have to build out from strength rather than juggle things. I'm not a juggler. We're not going to try to be everything to everybody. We're going to be the best at what we do."

What Harris does best right now is RF. Farinon is first in the North American and fourth in world RF markets, Cullens says.

Other core strengths include switching, wireless access and network management, an existing capability that the new president is particularly excited about. Although merger and acquisition work is on hold, Cullens wants to add capability in access and data communications next year. Acquisitions will be less frequent than in the past, Cullens predicts, but will have "more mass."

Besides focusing on key technologies, Cullens plans to focus on key markets-and to continue to globalize Harris' telecom business, building the international component to 60% of the whole within three years. While Harris will continue to be active all around the world, the five key markets in order of priority are North America, China, Brazil, Mexico and Eastern Europe, including Russia. International growth will be driven by wireless, including RF, and the pull through for other products, like the network management system.

Harris also plans to expand its customer set, not only in terms of their geographic location but also in terms of their corporate pedigree. Like many growth-oriented companies, Harris is reaching out to new network operators, like the CLECs and PCS companies in the U.S., while developing existing relationships with traditional service providers here and abroad.

Harris' plan is nothing if not ambitious. But it can't get there from here without a marketing strategy. It has to communicate "a more cohesive image of what we are and where we're going," Cullens believes. Without effective strategic marketing, Harris has "zero chance" of making its three-year numbers.

The marketing strategy will be based on creating an image that communicates corporate depth and commitment, rather than on a series of capable but largely discrete products, services and technologies. Because customers are diverse, he believes Harris' diversity is a strategic strength.

"Stay tuned," Cullens advises. Once the marketing strategy is in place in 1998, the industry "will understand why our diversity makes sense."

"If we don't have sustained double-digit growth, I would be disappointed. That is tough to do because the base is always getting larger. But we have tremendous potential.

"I get up in the morning and can't wait to get to work."

FCC CHIEF ENDS TENURE

The commissioners aren't the only ones leaving the Federal Communications Commission. FCC Chief of Staff Blair Levin announced his resignation, effective Oct. 30, to pursue a private sector job. Levin is the longest-serving chief of staff in FCC history, according to the FCC. He's been on the job since December 1993.

AT&T'S DOMINANCE CONTINUES TO SLIDE

AT&T's share of the long-distance market continues to erode, shows a recent report by the FCC. AT&T accounted for 51% of all interstate switched minutes in mid-1997, down from more than 80% in late 1984. The company's traffic also grew more slowly-while AT&T's minutes more than doubled between mid-1984 and mid-1997, other carriers' grew almost tenfold.