New Avaya CEO Jim Chirico acknowledged the old Avaya was the equivalent of a team that loses football games by playing a prevent defense, and told the company’s customers and partners that now they have a fundamentally different gameplan.
NEW ORLEANS — “The rumors of Avaya’s death have been greatly exaggerated,” said Jim Chirico, Avaya’s CEO, in his keynote officially kicking off the formal part of the Avaya Engage 2018 event here. “We are not only alive, but we are stronger than ever.”
Chirico’s ode to Mark Twain summed up the theme of his address, his first to the company’s assembled customers and partners since he rose to the helm of the company last October, and since Avaya completed their financial restructuring. They have now formally emerged from Chapter 11, with their crippling debt load gone – at the cost of their networking business, also gone, to Extreme Networks.
“What a difference a day makes,” Chirico said. “There’s something different in the air. It’s really an exciting time to be at Avaya. I’m extremely proud of the way Avaya got up off the mat. We have realigned and re-energized our partner community. We announced our Q1 revenues last week, and we have now completed four quarters of stabilized revenue – during a very challenging year.”
Chirico is no outsider brought in to lead the newly restructured company. He joined Avaya on January 1 2008, just after they went private, so had a front row seat over the last decade as the company attempted – and ultimately failed – to drive its revenue growth sufficient to overcome the debt load it had assumed. Throughout this period it was further challenged by the unified communications sector as a whole undergoing an expensive transition from a hardware and services-centric model, to a software and cloud-based one.
“To be a great company, you need not only a strong business model, but strong revenue growth,” Chirico told Avaya’s customers. “This company has been challenged on its top line for a number of years. Moving forward, we are focused on growth.”
Chirico said that the period we are in now is truly transformative, which presents new challenges, but also creates new opportunities for a company that can deliver on innovation.
“This will require investment and spending, but Avaya now has three critical factors for success,” Chirico said. “The first is financial strength. We can fund this journey. Secondly, we have the talent and expertise to execute. Third, we are the technology leader, and the trusted partner that delivers. Thanks to all of you [customers and partners], I’m proud to say that Avaya is up off the mat and positioned to win.”
Chirico identified six broad parts to the company’s strategy going forward.
“We are focusing on six key areas in transforming Avaya in ways that will drive sustainable improved performance,” he said. “We are focusing on revenue growth. We are developing compelling plans, and taking immediate action, which are grounded in solid objectives. We are building a world-class organization that will attract the best talent in industry. We will innovate to provide you all with a competitive advantage. We will drive shareholder value. And we will be customer-led in everything that we do.”
Cutting through these high-level goals is a task that Chirico acknowledged is a tough one – to fundamentally transform Avaya’s culture.
“If you want to change a company, you need to change its culture,” he said. “What we did to accomplish this was deploy five cultural principles, which are at the core and fabric of what we do.”
The first of these was to simplify things.
“We eliminated complexity and fragmentation to drive decisions faster,” Chirico said. As examples, he indicated that the Executive Committee has been reduced from 13 members to 6, and that Avaya has halved its number of VPs – from 100 to 50.
“We have also increased accountability,” he said. “Teams are now measured on their success and delivering on what we say that we going to do.”
Third is overcoming what he admitted was a historical inertia within Avaya, by fostering better teamwork.
“Inertia has deep roots in this company,” he stated. “We are breaking down the functional silos that enabled it.”
Changing what had been a cumbersome centralized decision-making process is another priority.
“We are moving decision-making to the field close to you,” Chirico told customers. “We aren’t done yet. We will move ALL decision making to the field in a short while.”
Last, and certainly not least – Chirico said he considered it the most important element – was earning back trust.
“We need to make sure we earn it day in and day out,” he said. He also indicated that this means being able to build more successfully from within.
“When I was at IBM, I learned most successful businesses are focused on investing in their people,” he said. “As a result, we are hiring more early career and recent college grads than ever.”
Chirico said that Avaya has already accomplished significant transformation in a challenging environment.
“When I joined the company ten years ago, we were bleeding cash, and operating metrics were a problem,” he said. “During this, we transitioned from a hardware-based business to where today, 80 per cent of our revenues are software and 60 per cent of these are services.”
Chirico summed up by explaining to Avaya customers that the new Avaya has learned from the mistakes of the past.
“Companies need to be mindful that they don’t become captive to their past experiences,” he said. “We did this, and our prevailing approach was caution. Caution paralyzes an organization. Our prevailing approach now will be thoughtfulness. Thoughtful leaders engage and empower, and will move us ahead.”
Chirico said that his new management team has a track record in successful transformations, and will move much more aggressively to seize opportunities.
“We are no longer playing prevent defense,” he said, making a football analogy in the week before the Super Bowl. “We are no longer playing not to lose.”