Avaya CEO Has 'Changed The Locks'
In 1988 Lucinda Williams released "Changed The locks," a song about trying to leave the past behind. "I changed the lock on my front door so you can't see me anymore," she sang. But sometimes one change isn't enough, so she goes on to say she also changed the number on her phone, the kind of car she drives, the clothes she wears, the tracks underneath the train, and the name of the town she lives in. This might seem a bit dramatic, but she has a point: When you're looking to make a change, sometimes it's best to change everything.
I was reminded of "Changed The Locks" this week at Avaya Engage in Mexico City, for Latin America customers and partners. There, during his keynote, Avaya CEO Jim Chirico discussed all the changes he's made at the company with the aim of leaving the past behind and, essentially, giving the company a reboot.
Chirico didn't need to tear Avaya down to the ground, as the company does have a number of strong foundational elements on which to build. For example, Chirico pointed out that Avaya has more than 130,000 global customers, accounting for 145 million UC and contact center seats -- a massive installed base that represents 90% of the Fortune 100. In this market, that's more than a solid foundation, it's gold.
One of the most notable changes Chirico has ushered in at Avaya is increased R&D spending on new products, versus legacy offerings. The majority of product investment is now on new products whereas nine months ago 90% of R&D spending went to legacy products, he said. It's often hard for large incumbents to look to the future, so it's good to see this pivot at Avaya.
The investments seem to be paying dividends, and Chirico provided a number of points to support this:
- Refreshed endpoints, including a number of new Vantage phones that could open up some vertical opportunities
- 55% growth in cloud revenue last quarter, and the Spoken CCaaS business Avaya acquired earlier this year has more than $100 million of business in the pipeline
- Avaya is back in the Leader's quadrant in the Gartner Magic Quadrant for contact center infrastructure
In addition, Avaya has embraced artificial intelligence in a big way. While its voice interface, Ava, has been available for some time, Avaya has now complemented it with IntelligentWire from the Spoken acquisition and integration with AI partner, Afiniti (see related No Jitter post, "Avaya & Afiniti: Bringing AI to Contact Center Near You"). In an address at the event, Afiniti CEO Zia Chisthi explained the deep level of integration and how that can benefit Avaya's contact center customers. It's a slick platform -- and the least disruptive contact center AI product I've seen to date (more on this in a future post).
Cultural change factored heavily in Chirico's presentation. He explained, for example, how he has implemented five key values: teaming, accountability, simplification, trust, and empowerment.
Over the past decade, Avaya's management team could have been a case study taken out of "The Five Dysfunctions of a Team," by business writer Patrick Lencioni. The team had lots of talent, but executives didn't mesh well, and churn at the top seemed nonstop. At this week's event, Chirico made his message clear: Everyone is accountable, and needs to earn his or her seat at the table every day -- and that includes him.
His approach seems to be resonating. The Avaya insiders I've talked to up and down the corporate ladder seem to like Chirico's style, and with trust in him comes increased willingness to be held accountable. Executing on any plan is difficult when leadership keeps changing, so a stop in executive churn will be critical -- and we have seen some stability there for a while. I'm a big fan of a strong company culture, and often find that CEOs don't focus enough attention here so I'm pleased Chirico noted the importance of culture in his keynote.
Of course, another big change at Avaya is its return to the public market after coming out of bankruptcy. Being public is one of the sharpest double-edged swords in business today. The downside is that Wall Street scrutinizes every move the company makes. If a quarter comes up light, the stock falls and reams of negative press is created. However, being publicly traded does keep the company in the spotlight and creates access to capital. For example, Avaya recently issued convertible notes and raised $300 million it can use for investments, R&D, or whatever else it chooses.
Chirico was put into the CEO role to create change, and he's delivering. The company now has new people, products, and an entirely new mindset. Is it working? So far, so good: In its last quarter, the company grew year over year for the first time in six years. It's easy to say change is going to happen, but the proof is in the business results. I'm not saying Avaya is all the way back, but it's certainly headed in the right direction.