In the world of those who are developing next-generation global telecoms technology, there is still a place for that altogether old-fashioned form of communication - talk.
Talking to customers, and, more especially, listening to their requirements and problems, is a key ingredient in the success of Tellabs, according to its managing director, Mr Pat Shanahan. The company recently won the National Innovation Award, sponsored by PricewaterhouseCoopers, The Irish Times and Forfas, as part of the Government's Science, Technology and Innovation Awareness programme.
Tellabs recently returned from the Telecom '99 exhibition in Geneva, where Mr Shanahan's team was introducing the company's pioneering AN2100 Gateway Exchange product, part of the next generation of broadband voice/data switching equipment. Tellabs has a deal worth more than $100 million (€93 million) with US telecoms company Sprint.
At the industry talk-fest in Geneva, Tellabs' research and development team spent their time "speaking to a great number of customers, and responding to the great interest in AN2100", according to Mr Shanahan. As a result of the dialogue, said Mr Shanahan: "We identified new applications for our products, and new product opportunities - now we start the process of deciding which of those new possibilities will be the most profitable."
Similar attentiveness to the needs of the market-place a few years ago led to the development of the AN2100 product and also to Tellabs' recent $30 million expansion, including an increase from 40 engineers to 150, making it one of the State's largest research and development centres. The company employs 500 people at its 130,000 sq ft Shannon base and typically invests around 13 per cent of its annual revenues in research and development.
"In 1995, we had a lot of products but we saw they would begin to decline in coming years. By analysing the market-place and seeing customers' problems, we identified the area of broadband communications as a significant opportunity," said Mr Shanahan.
He said, however, that: "Innovation isn't just an idea. It's the ability to bring the idea to market. Unless you can do this rapidly, you can't really say you're innovative. If an idea sits there, it's useless. What makes the difference is turning the idea into a marketable product or service.
"When it came to broadband communications, our response was more rapid than our competitors," he said. "We have spent a good deal of time setting up systems and procedures to get results." Tellabs' research and development director, Mr Noel O'Brien, said the company must have the confidence to take educated risks. "To implement ideas, you've got to have both resources, and resourcefulness. Over the years, we have been over-budget many times. You've got to be able to convince shareholders you are doing the right thing," he said.
The Tellabs team has also learned that "you can't innovate everything yourself. There is no point in reinventing the wheel. So we've now made it a policy, where technology exists that partly or totally meets our needs, to partner with others," said Mr O'Brien.
The ingredients that go into creating the kind of corporate culture of innovation for which Tellabs was recognised last month can be hard to pin down. Among the elements singled out as important by Mr Shanahan and Mr O'Brien was the company's hiring policy.
"We are very picky about the people we hire," said Mr Shanahan. Along with that choosiness, however, goes a proactive approach towards finding and
keeping the right staff. All staff are stock holders in the company and enjoy highly competitive salaries as well as a state-of-the-art working environment, including full gym facilities.
Tellabs has close links with programmes at the University of Limerick, some of whose students are so smart "it's frightening", according to Mr Shanahan. About 35 per cent of the company's engineers are local hires. Around 10 per cent are from Britain, France, Spain and Germany.
The working environment is "pretty open and non-hierarchical, though there is a hierarchy", said Mr O'Brien. "This is typically seen as a place where people want to work. Employee turnover is 6 per cent, very low compared to what you find in Dublin." Mr Shanahan said: "We like to see this as a challenging place to work. The typical engineer wants variety and complexity in the job. Engineers are excited by the latest technology and at being part of something that's ahead of the curve." Mr Shanahan has been a key figure with the company over its various stages of development since 1976, when Mitel of Canada established a manufacturing plant in Shannon. In 1984, when Mitel decided to pull out, threatening the loss of 270 jobs, the then 30year-old Mr Shanahan led a management buy-out of the company, which was subsequently named Delta Communications.
Delta concentrated on building an integrated telecommunications manufacturing business by investing heavily in R & D and marketing, until by 1989, when it had grown to revenues of £7 million generated by internally designed products and services, it was decided that continued growth required more cash.
The business was sold to the US telecoms equipment company Tellabs, which has 40 plants worldwide and which last week announced record earnings for the third quarter of 1999. Worldwide sales for the first nine months of this year were $1.6 billion, up 35.6 per cent from sales in the same period last year. The company is on target to generate revenues of £2 billion this year. According to president and chief executive officer, Mr Michael J Birck, it should return revenues of $6 billion within three years, if it sustains its annual growth rate of 30 per cent.
As well as the new AN2100 GX system, other products manufactured in Shannon include the Cablespan 2300 Universal Telephony Distribution System, the VERITY echo canceller, Voice-Quality enhancement products, and the TITAN series of digital cross-connect and optical networking systems.
