Alcatel-Lucent’s new CEO vows big overhaul

Underscoring the company’s focus on profitability, Verwaayen pointed out that its sales people are paid not just in proportion to the revenue they bring in but the “end-to-end margins” of their sales. And proposals are often approved by a risk-assessment committee within the company that includes salespeople as well as those in finance roles.

Verwaayen recounted a story from his first week on the job, in which one sales proposal was opposed by committee members on the financial side.

“We looked at the whole process and said okay, the answer is no,” he said. “You have to be consistent. No is no. That’s it. And then [an executive] came back 10 days later [having] radically changed the cash profile because they’d taken civil works out. You can say, ‘What on earth would we do on civil works in the first place?’ But if you go to certain countries, the fact that you need to do civil works is part of the whole equation.”

To Verwaayen, it was an example of how changes can be made to satisfy both the sales and profitability goals of the company. Using those sorts of smart techniques, he said, is preferable to simply exiting entire markets that are less profitable. “It’s not just about labeling -- you’re in a market or out. There are many more ways to create a definition of success for customers. Just putting a pen down and walking away I don’t think is a great option. There are smarter, better ways of doing things.”

When asked about culture clashes at Alcatel-Lucent, Verwaayen acknowledged “a few issues to deal with” on that front, but he also joked that he was considering hiring a detective agency to help him find evidence of the Franco-American culture clash within the company that he has read about in the press. “It’s inevitable and true that at the very top of the house were some, let’s say, differences of opinion around corporate governance. And they are resolved now by -- I think, amongst others -- some personnel changes.”