Case Study Description of Lucent Technologies: Optical Networking Group
Set in June 1999, this case describes the development of a new platform product, the Wavestar OLS 400G, that responded both to a demand for greater "bandwidth" and aggressive competitors seeking to supply it. The 400G's development process took only 14 months and pioneered a number of new development approaches, while expanding customer and supplier bases. Yet traditional customers remained concerned that the 400G was not as "feature-rich" as they wanted, and many in Lucent's Optical Networking Group felt "burned out" by the hectic development pace. Students debate what should follow the 400G project. The first option is an evolutionary product, relatively consistent with the later releases of 400G but extending its performance by as much as a factor of two. The second option is to ignite another technological revolution, using a "clean sheet of paper" to completely redesign the 400G platform and potentially achieve more than a four-times performance improvement.
Swot Analysis of "Lucent Technologies: Optical Networking Group" written by Marco Iansiti, Barbara Feinberg includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that 400g Optical facing as an external strategic factors. Some of the topics covered in Lucent Technologies: Optical Networking Group case study are - Strategic Management Strategies, Operations management, Product development and Technology & Operations.
Some of the macro environment factors that can be used to understand the Lucent Technologies: Optical Networking Group casestudy better are - – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, there is backlash against globalization, increasing government debt because of Covid-19 spendings,
technology disruption, wage bills are increasing, etc
Introduction to SWOT Analysis of Lucent Technologies: Optical Networking Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lucent Technologies: Optical Networking Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the 400g Optical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which 400g Optical operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Lucent Technologies: Optical Networking Group can be done for the following purposes –
1. Strategic planning using facts provided in Lucent Technologies: Optical Networking Group case study
2. Improving business portfolio management of 400g Optical
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of 400g Optical
Strengths Lucent Technologies: Optical Networking Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of 400g Optical in Lucent Technologies: Optical Networking Group Harvard Business Review case study are -
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For 400g Optical digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. 400g Optical has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– 400g Optical is present in almost all the verticals within the industry. This has provided firm in Lucent Technologies: Optical Networking Group case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– 400g Optical is one of the leading recruiters in the industry. Managers in the Lucent Technologies: Optical Networking Group are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– 400g Optical has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Lucent Technologies: Optical Networking Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– 400g Optical has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lucent Technologies: Optical Networking Group Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– 400g Optical has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Lucent Technologies: Optical Networking Group - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– 400g Optical is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– 400g Optical has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled 400g Optical to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– 400g Optical has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. 400g Optical has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Technology & Operations field
– 400g Optical is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled 400g Optical in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of 400g Optical in the sector have low bargaining power. Lucent Technologies: Optical Networking Group has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps 400g Optical to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the 400g Optical are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Lucent Technologies: Optical Networking Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lucent Technologies: Optical Networking Group are -
High cash cycle compare to competitors
400g Optical has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– 400g Optical has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of 400g Optical supply chain. Even after few cautionary changes mentioned in the HBR case study - Lucent Technologies: Optical Networking Group, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left 400g Optical vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lucent Technologies: Optical Networking Group HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though 400g Optical has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lucent Technologies: Optical Networking Group, is just above the industry average. 400g Optical needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Marco Iansiti, Barbara Feinberg suggests that, 400g Optical is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Increasing silos among functional specialists
– The organizational structure of 400g Optical is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. 400g Optical needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help 400g Optical to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lucent Technologies: Optical Networking Group, it seems that the employees of 400g Optical don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of 400g Optical, firm in the HBR case study Lucent Technologies: Optical Networking Group needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at 400g Optical has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Products dominated business model
– Even though 400g Optical has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Lucent Technologies: Optical Networking Group should strive to include more intangible value offerings along with its core products and services.
Opportunities Lucent Technologies: Optical Networking Group | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Lucent Technologies: Optical Networking Group are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. 400g Optical can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. 400g Optical can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– 400g Optical has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– 400g Optical can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lucent Technologies: Optical Networking Group suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of 400g Optical has opened avenues for new revenue streams for the organization in the industry. This can help 400g Optical to build a more holistic ecosystem as suggested in the Lucent Technologies: Optical Networking Group case study. 400g Optical can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at 400g Optical can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for 400g Optical in the consumer business. Now 400g Optical can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. 400g Optical can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects 400g Optical can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for 400g Optical to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for 400g Optical to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– 400g Optical can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, 400g Optical can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Lucent Technologies: Optical Networking Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– 400g Optical can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– 400g Optical can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Lucent Technologies: Optical Networking Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lucent Technologies: Optical Networking Group are -
Environmental challenges
– 400g Optical needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. 400g Optical can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lucent Technologies: Optical Networking Group, 400g Optical may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. 400g Optical will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for 400g Optical in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– 400g Optical has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, 400g Optical needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. 400g Optical needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Regulatory challenges
– 400g Optical needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
High dependence on third party suppliers
– 400g Optical high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of 400g Optical business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on 400g Optical demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for 400g Optical in the Technology & Operations sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Lucent Technologies: Optical Networking Group Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Lucent Technologies: Optical Networking Group needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Lucent Technologies: Optical Networking Group is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Lucent Technologies: Optical Networking Group is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Lucent Technologies: Optical Networking Group is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that 400g Optical needs to make to build a sustainable competitive advantage.
