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Chapter VI - Alcatel Alsthom

Pousser en commun, mais non penser en commun.
(Push forward communally but don’t think communally.)
Marcus Aurelius, Thoughts

The year 1990 marked a turning point. On the international level the collapse of the Berlin wall clearly began a new era in the world. The dismantling of the Soviet communist empire liberated the East European nations and opened up an avenue toward German reunification, but brought with it as well the breaking up of the USSR and even of the old czarist Russia with the emancipation of the Ukraine, of Byelorussia and the Caucasus republics, and of Asia, which guaranteed the southern borders and of which successive conquests nourished the history of the Russian nation during the last centuries.

Such a disruption took the world by surprise. Not having seen this coming, political leaders had trouble appreciating the consequences, and as a result initially imagined the rapid and universal emergence of a world of liberty and democracy, accompanied by its free market economy and free trade.

That euphoria also fed off the end of the cold war and it was considered good form at the time to reduce defense expenditures in national budgets.

Few at the time foresaw that for Europe in particular we were entering a period of instability—economic as well as political. Neither did we sufficiently anticipate the degree to which the coming years would represent a period of hegemony by one sole world power—the United States—which, whatever may be its legacy and democratic practices, would conduct itself as a dominant power on all levels—political, military and economic—and would, with a good conscience, become the “gendarme” (policeman), censor and the obligatory reference point for the world.

This political disruption naturally influenced the economy. The late 1980’s was a period of flourishing activity and growth, including in France; but in 1990 the early signs of a reversal of the situation began to appear despite the sudden opening of new markets for the short term, often in weak financial condition. In fact, the first years of the new decade would bring a prosperity without equal to the United States, but Europe, and particularly France, would experience a slowing down. It was also during that period that, in going from the Common Market to the European Union, the Western European countries would, by difficult, conflictual but continuous steps, bring upon themselves an upheaval in their economic practices—the complete opening of national markets within the European Union, the disappearance of external tariff protections, strengthening of free trade laws at the European level, and in general the shift of decision making from the national capitals to Brussels.

In this world in redefinition, this Europe in a forced march toward liberalism, this France attached to its cultural or other exceptions, it was important that CGE equip itself with the structures, means and morale needed to cross with success, and profit from, these stormy seas.

The necessity to have the means to act on the scale of the world market wasn’t anything new for us. The creation of Alcatel NV and of GEC Alsthom is proof of that. I have indicated also that from early on the obligation to gain independence in the financial markets by increasing the company’s size had guided our actions. The necessary cohesion of the group thus became more and more essential, even if many clung to the idiosyncrasies traditionally cultivated in the subsidiaries.

The success of the group depended, when all is said and done, on its people, their motivation and their solidarity. I always made it a point to share and promote a few simple principles in leading and managing companies, as in all professional life. And I had the occasion to say so in addressing two young recipients of a prize awarded by the Académie des Sciences de Lyon. (Text Annexed.)

First comes work and effort, without which there is neither success nor personal satisfaction. Equally important is respect of others, which implies listening, receptiveness and delegation but without excluding the exercise of authority when circumstances require. Finally comes fairness, because it’s a universal moral requirement but also simply because it’s a recipe for being effective as long as men are injured by that which appears to them to be an injustice. These elementary principles should guide the conduct and attitude of all managers up and down the hierarchy—those of the superiors first because, borrowing the expression of Paul Valéry, “[a] boss is a man who needs others”—but it should also act as a guide for all employees regardless of their position. All in effect contribute to the same collective task—the development of their company. They must be conscious of that, understand the goals of the entity and the means available to attain them—in sum, subscribe to and participate in the common project.

I made it a point as early as 1987 to focus the group’s human relations department in that direction, giving priority to Alcatel for reasons of urgency. In that sector it was necessary to rally and bring closer together subsidiaries located in many countries and spread out over five continents, often with a brilliant history and strong traditions, in order to raise a common challenge.

The choice of a single name, Alcatel, having been rapidly made, we would do our best to create a common code of conduct. It would be the “Alcatel Way.”

English was the common language, but I always refused to make it the required language at Alcatel out of respect for each of the different national cultures represented. The principle adapted was free choice of language, as long as the person to whom the communication was addressed was able to understand. In practice, of course, as soon as there was a meeting of representatives from a certain number of countries, it was conducted in English. I remember the surprise of each of the participants at the first big budget meeting (the “management council”) in hearing the succession of accents when a German, an Italian, a Spaniard, a Portuguese, a Frenchman, an Australian, a Chinese, a Texan, a Norwegian, a Flemish, a Dutchman, or a Swiss, took the floor.< Everyone sensed behind this diversity the power and influence of Alcatel.

We put together a small brochure which was distributed to all employees to explain to them a code of conduct the "Alcatel Way," or how to create and spread values in the world of communications.

Alcatel fixed as an objective to serve its different constituents by creating values for each: For its customers, by offering them effective and creative solutions to their problems; for its employees, by rewarding outstanding performance and offering motivating career development; for its shareholders, by providing competitive financial results; and for the international community, by contributing to economic development in all countries where Alcatel operated.

The method chosen by Alcatel to develop its business activities combined novelty (because the group had been created in 1987) with experience (in uniting companies with long histories), a local image and an international image (with well-known national companies supported by an international technical and financial organization); and an actor playing the role of partner and leader, Alcatel, open to faithful collaboration with its customers and suppliers, also had, in its domain, to establish and maintain its leadership by its experience, its research, and its knowledge of the industry and the markets in which it operated.

Alcatel’s conduct would be guided by four words: Specialization and Growth, Quality and Productivity.

Finally, for the company’s internal organization the “Alcatel Way” was presented in this way:

"A network of people working together, in trust, in order to win. The method combines decentralization with central structures. Each local company is responsible for running its own business. This principle optimises flexibility and pragmatism by placing responsibility at the most suitable level. But each company is responsible for its results to the group and in the context of the policies of each product group. The group must make decisions and put them to work in the best interest of the whole. Dialogue and trust between companies are crucial elements for the group’s success."

At the individual employee level, Alcatel’s open management style implied confidence, respect, and the delegation and sharing of responsibility. Each employee had to feel responsible for customer satisfaction and for achieving the budgetary goals. Alcatel must avoid bureaucratic relations and favor interpersonal relationships. That means that all Alcatel employees had to be available, unpretentious, have an open mind and know how to work effectively with their colleagues of different nationalities and cultures.

Alcatel had to assure its employees recognition and reward for the good results that they obtain. It had to provide them with satisfying career development opportunities which would enable them to fulfill their personal potentials.

This code of good conduct was drawn up and tested in a series of management meetings, and progressively broadened, before being finalized and systematically distributed throughout the group. The principles were then presented in each unit to the whole of the staff. I invited each member of top management—and I set the example—to involve themselves in the process by participating in distributing the code personally in local meetings, even those far away. Communications managers, as well as those in human resources, led respectively by Françoise Sampermans and Paul Claudel, convinced of the necessity of motivating each employee with these common principles, played an essential role in the process of distributing the information and, I think, in the ultimate success of the “Alcatel Way.” These two words became a spontaneous reference, often used with humor, rarely with derision, when an obstacle appeared between individuals, between teams or between companies. Today, with the passing of time many of those who experienced that crusade reminisce nostalgically of comrades who led an audacious and slightly crazy, but ultimately successful, campaign.

On November 7 and 8, 1988 we held a convention, a first for CGE (though not for the former ITT subsidiaries) which brought together several hundred managers from companies located around the world. The first day, held at La Villette, was for Alcatel only. The second day the meeting was held at the Palais des Congrès in Paris and included all the units of CGE, including Alcatel. For Alcatel the convention was the culmination of the crazy gamble that had been made two years earlier in signing the agreement with ITT. The successes already obtained stimulated the spirits of the attendees, as did the successes still to be attained. The following day's program was a little different. We had to recognize the success and importance of Alcatel without demotivating the rest of the group, which had been invited to emphasize the restructuring and development policies which were already known. The negotiations with GEC were underway but remained confidential and the outcome was still uncertain. I of course would not speak of that but the convention was an occasion for me to directly address several hundreds of managers, to present my vision of the company and to prepare for the steps to be taken in the future. I set as objectives to increase productivity and to increase net income from the 3% of sales that would be attained in 1988 to 5% in two to three years. I indicated that we needed to accelerate our restructuring and refocus the company's principal business lines and our efforts to operate on an international scale. But I insisted especially on the need for solidarity and cohesion of CGE's entire workforce and announced that for high-potential managers we needed to develop a company-wide management and promotion policy. In fact, I was laying the groundwork for the announcements that would be made two years later in a similar convention, which was going to mark a decisive step in CGE's restructuring.

Last, in concluding the November 1988 convention I underlined how important it was to satisfy our shareholders and for the company to have a stable body of shareholders. I couldn't let the occasion go by without giving this large audience (a very interested one) my opinion and attitude on the hostile stock market raids, insidious or official, which were commonplace at the time. I expressed my view in these terms:

"I don’t exclude the possibility that our shares have been the object of a certain amount of speculation. But I don’t think that’s the situation today and, in particular, I don’t think that it’s the start of a concerted action. But naturally we are vigilant.

"And I take advantage of this occasion to convey some simple truths to those who feed unhealthy or hostile desires with respect to CGE:

"First of all, I would tell them, make no mistake about what CGE is today. CGE has changed substantially. We stressed all day long its international scope. It’s a recent phenomenon and one which I think is fundamental to the future of our group. But on the financial level also CGE has changed a lot. CGE’s market capitalization today is 15 times greater than it was in 1982 when the company was nationalized; but it’s also five times greater than the market value in 1986 when I was appointed chairman. So there has been an extremely rapid development of the group, which may not be evident to those who haven't known it from inside or who haven't been close enough to its evolution the last months.

"I would like to say again that we have solid relations with all of our shareholders, and especially the most stable, who in fact at this time are strengthening their position in our capital.  I am thinking in particular of the employees who, whether directly or through the Fonds Commun de Placement,[1] are obviously the most stable of our shareholders. The Fonds Commun de Placement is currently the second most important shareholder of the group; and I think its position will be strengthened by the next capital increase.

"Finally, I am aware of several large companies of international reputation which value CGE as it is and which, if need be, will be ready to support it.

"My last point—the last truth that I would like to share with you: It is that if circumstances require it, our determination, my determination, will of course be total to preserve the values and organization which have made, which make, and which will make tomorrow the success of CGE, because, my friends—and this will be my conclusion—we can be proud of what CGE has become. The future is even more bright provided we know how to realize all the potential that we have. I hope this convention has persuaded you and that you will know how to pass this message on to those around you. We have in our hands the means to our future and we have in our hearts the conviction to succeed. I am sure that this convention, the first for CGE, which has become an international one, will mark a decisive step in its long history and not only that of its 90th anniversary."

As was explained in connection with the transaction that led up to CGE’s privatization, I always strongly hoped the company would have a large number of employee shareholders. The first offering of shares reserved for the employees took place at this time, and the Fonds Commun de Placement mechanism was put into place during that period. Consequently, the transactions that followed seemed easier to organize and present.

Decided in June and concluded in September 1988, the first capital increase reserved for employees was a great success. In light of the strong demand, the number of new shares created was raised from 1 to 2 million. After the transaction the Fonds Common de Placement, representing the shareholder employees, held 6 percent of CGE’s capital, making it CGE’s second largest shareholder.

Another capital increase reserved for employees was decided at the end of 1989 and concluded in the beginning of 1990. Despite an uncertain economic environment, 26,000 employees from 17 countries subscribed to 1,100,000 shares.

The third capital increase reserved for employees was organized at the end of 1992 and turned out to be a big success. Close to 36,000 employees requested 1,700,000 shares of the 1,500,000 offered.

At the end of this fourth transaction about 100,000 employees—that is, almost half of the total number of employees in the group—held 5% of the capital, despite the doubling of the number of shares since the privatization.

This continual success showed the attachment which the employees had to this form of savings and, beyond that, evidenced their deep loyalty to the group. It also justified the decision made at the time of CGE’s privatization to have the employees represented on the board of directors by two directors from the Fonds Commun de Placement, the second largest shareholder.

By the turn of the next decade the group had already evolved significantly since its privatization.

Alcatel was structured. Alsthom had found its destiny in GEC Alsthom. Moreover, CGE’s business activities entered a world that was going to suddenly open up and be globalized. I’ve explained the financial reasons that led us to exclude the possibility of Alcatel’s direct stock market listing. The common destiny of all the businesses would depend, therefore, on CGE. It would be necessary to transform its image from that of a holding company at the top of a group of businesses of which each subsidiary had its own image, into a unified group, decentralized of course, but with a single image recognized by its customers, investors and, of course, its employees, who we hoped would extend to CGE the loyalty that they had towards the subsidiary that employed them.

For that it was necessary to change the name. Compagnie Générale d’Electricité and CGE were well known in France and the French speaking countries. But use of this name was, for legal and commercial reasons, impossible in North America and Great Britain. CGE appeared too close to the American company General Electric and to the British General Electric Company. This handicap had been identified a long time before. In the 1970’s an attempt had been made to use the trademark Fulmen. Several subsidiaries were given that name but it was never widely used.

The choice of a new name is always a delicate and costly undertaking. The alternatives were simple: Invent a new name or use an existing one. The elements required are well known: The name must be susceptible to protection in all countries where the company intends to operate—that is, all over the world in CGE’s case. It must also be easy to pronounce in the major languages and not have a bizarre phonetic sound in any country.

We were able to easily conclude the debate. CGE possessed two trademarks, Alcatel and Alsthom, which were protected and known worldwide. By combining them the new name—Alcatel Alsthom—would immediately represent more than 80% of the group’s businesses. To facilitate assimilation and unification of all the businesses, the same logo, borrowed from Alcatel, with the same graphics and the same colors, was imposed on all of the subsidiaries. From that point forward the affiliation with the Alcatel Alsthom family was obvious because Alcatel had already made famous the orange triangle, pointed downwards, and with a gray rectangle. All of the subsidiaries easily accepted this change.  The only difficulty came from GEC Alsthom, but at the price of a trip to London I was able to convince Lord Weinstock, against the advice of GEC Alsthom’s management, to agree that our mutual child wear the new Alcatel Alsthom uniform.

But I must admit also that I had some trouble at the board meeting convincing Ambroise Roux, who was imbued with the CGE name. The compromise that was voted on preserved the most essential: The name of the group, if approved at the general meeting, would from that time forward be Alcatel Alsthom Compagnie Général d’Electricité CGE; but the new text which was to be incorporated into the company's by-laws very wisely provided that the name could be used in its entirely or partially. It would be used partially!

That decision made someone happy. Compagnie Général des Eaux, which sometimes improperly called itself CGE, benefited from it in subsequent years and used the CGE acronym (still improperly, as we retained the rights to the name) until Vivendi radically resolved this old but amiable conflict between the two groups.

The new Alcatel Alsthom name, approved at the June 1990 general meeting, became effective January 1, 1991. The last six months of 1990 were largely occupied with updating all of the signage and familiarizing the employees, the customers, shareholders and the financial markets with the new name.

The 1990 convention (held on November 16 and 17), which again brought together several hundred managers at the Palais des Congrès in Paris, was the occasion, as had become customary, to lay out the “state of the union” as well as the goals and strategy for the 1990’s, but also to reconfirm the Alcatel Way program (which, in fact, had become the Alcatel Alsthom Way) and to reinforce the actions that were being taken (and which had been extended to the whole group) to strengthen professional training and motivation.

Since the Alcatel Alsthom Way program had been extended to the whole group, it received new impetus. During the period September 1991 to July 1992 alone, I participated personally in more than 12 seminars on this theme—in the Paris region, in Lake Como, in Belgium, Nice, Zurich, Madrid, Geneva, Grenoble, La Baule, Stockholm, Calais and Vienna.

Other programs also led me to participate in similar meetings. In particular, we launched two significant training programs.

One was designed to identify high potential managers, from 32 to 38 years old, who normally would fill management positions in the group ten or so years later, to prepare them to a certain extent for their future careers. We pulled together, generally one or two times a year, a “promotion class” of about 40 managers who went to several weeks of seminars spread out over 18 months. Teamwork and leadership skills were emphasized. A real life company project was chosen to be studied by a team of four or five participants under the guidance of a more senior manager, and then presented by the group at the closing session. I made it a point to attend all of these “examinations.” That gave me the chance to interact with the managers that I would never normally meet in routine business meetings and trips and to pass onto them directly my vision of the strategy and management of the group. It was for the participants, as I was told by the people who organized these seminars, a strong incentive to take this collective work seriously and also the occasion for a good number of employees to become acquainted with the chairman of the group. I have strong and very positive memories of those long sessions where we would analyze and discuss the conclusions, in general approving them, but sometimes also to modify or reject them. This program continued even after my departure and, I think, to the overall satisfaction of the participants and the company.

The second program, also designed to enrich management careers, was directed at heightening awareness within the hierarchy of performance management. It developed from a generalization of rather classic practices. Each manager received (and accepted) objectives (quantified if possible) for the following year and would have at least one meeting a year with the person to whom he reported during which his performance would be analyzed, objectives agreed upon, and career development desires discussed and recorded.

That program was centrally managed by Pierre Bollache, head of the Human Resources Department, who rapidly centralized administration of about 500 principal managers from the whole of the group, with the principal aim of following and promoting the careers of each of them. The natural tendency in a group as decentralized as CGE was for each business unit to want to completely control the management of its employees. On the other hand, building a true industrial group, particularly an international one, necessitated having a stable of highly qualified managers capable of assuming responsibilities of an international scope, nurtured in the culture of the group and therefore ready to take on new responsibilities wherever required in the interest of the group, such as with acquisitions or in connection with a crisis in one of the subsidiaries.

I wanted to avoid the easy solution of recruiting from outside when a new position needed to be filled. That practice, which I considered to be a failure in human resources management, often leads to costly errors. Persons doing the hiring can be misled by resumes prepared by professionals. More important, recruiting from outside closes career opportunities to internal managers whose qualities and profile are well known to the company. If the internal candidate's qualifications are lacking, this can be compensated for by specific training.

To facilitate an intermixing of competencies and to help develop the group’s culture, the mobility of managers was systematically encouraged. A central manager was responsible for promoting mobility. Each unit designated a contact person with that responsibility. Before any outside recruiting was undertaken, an open position of any importance had to be submitted to him. Periodically a list of open positions was published in all operating units of the group. These procedures seemed only natural; yet they went up against a long tradition and it took a lot of tenacity from group management to get them accepted and to have them practiced.

To reinforce the motivation of our managers and reward performance, as soon as I had the opportunity, I got the group to adapt a stock option program. In simple terms, options would be allocated to certain employees giving them the right to buy CGE shares at a fixed price at a later time. The mechanism is simple: The price for the exercise of the option was fixed by reference to the per-share value on the date the options were granted (in general, at a price equal to or slightly lower than that value). The shares could be acquired at the end of a certain period (in general, several years later), at a time when, if the company succeeded, the price would have gone up. Thus, the recipient of the option, if the company prospers, can hope to realize a capital gain. The recipients are therefore directly encouraged to do their part to contribute to the company's success.

This mechanism seemed to me to be particularly appropriate to accompany the creation of Alcatel NV. And it was important that the managers of the subsidiaries coming from ITT periodically receive stock options under the same type of plan that the American company had regularly used. This first plan was negotiated and put into place in 1987 using the ITT plan as a model and with the help of ITT's in-house lawyers. The shares subject to the option were those of Alcatel NV, a Dutch company. Eight hundred thousand options were granted to, at most, 100 Alcatel NV managers, at an exercise price of 100 ECUs per share.

After CGE’s privatization I adapted the same stock option system at the top holding company level and opened it up to all CGE subsidiaries. Four plans were successively approved by the board of directors—in January 1988, December 1989, September 1991, and April 1994—involving respectively 1,160,000, 1,026,800, 1,500,000, and then 1,967,850 shares, with an exercise price increasing from 215 francs to 400 to 530 and, finally, to 700 francs per share, and the number of managers receiving options increased from 117 to 311 to 380 and then to 739.

I don’t hesitate to speak of this policy in the first person, because the stock option plan was put in place only because there was a willingness continually to overcome obstacles and to ignore objections directed at the chairman. It is a fact that stock options do not have a good reputation in France. At CGE, before I became chairman, there was often talk of adopting these plans but every time it resulted only in disappointment. Since I was among those who experienced this, I understood the disappointment and skepticism of the managers of subsidiaries who were faced with this constant wavering of group management.

Thus, years later it was with true satisfaction that I received the thanks of colleagues who came to tell me, usually upon their retirement, that it was due to their stock options that they were able to buy their homes. One of them, Philippe Glotin (today unfortunately deceased), told me several times that every weekend when he returned to his property near Bordeaux he said to his wife and children, “Thank you Suard!”

Many other seminars and conventions permitted me to meet the managers of the group. I always attended with great pleasure the annual convention of the Cable group where I had so many friends from those difficult but enjoyable years that had marked my industrial experience. I also often participated in the conventions of the large subsidiaries, such as the Belgium company Bell, which was under the dynamic leadership of its chairman John Goossens, a good communicator, who used his communication skills regularly and with conviction to motivate his people.

I have a touching memory of the meeting of the Alcatel Australia managers, held on October 27, 1994 in Sydney, where I went to pay tribute to its chairman Gerald Page-Hanify, who was retiring, and to welcome his successor Ron Spithill. We were gratified, each of us, when we entered the room to a joyous standing ovation which seemed to be spontaneous. We were very far away from the pestilent Parisian atmosphere where the campaign to destabilize Alcatel Alsthom’s chairman was at its height.

I also regularly participated in a portion of the annual conventions that Françoise Sampermans and Louis-Jacques Companyo organized to bring together their contacts and representatives from around the world—that is, approximately 100 people from the communications department and more than 200 from Alcatel Trade International.

The multiplicity of seminars led Yves Réale, a professional development manager, to look for a permanent center where the Alcatel Alsthom spirit could take root. He proposed a building in a professional services park that was under construction near Geneva. I approved his proposal but I questioned the location. I feared the area, which was well suited for transportation, would be under construction for 10 or 20 years and so would be a continual nuisance, which would not be very conducive for seminars. Having visited for a long time for family reasons the shores of the lake at Annecy, I was familiar with a hotel that had been constructed at the beginning of the century, magnificently situated, but in the process of being abandoned. It was a little further from Geneva, but the enchanting surroundings made it an ideal place for study, reflection, and relaxation. I pointed out this hotel, which was called “Le Palace de Menthon.” That’s how Alcatel Alsthom came to acquire that facility, renovate it and make it its international training center. All who were able to stay at the facility appreciated the surroundings and atmosphere. Alcatel Alsthom was openly discussed there, its policies were dissected and its future was constructed with ideas, dedication and willingness. I didn’t have the time to add an historical touch—to redo the library, for example, which would have really made this place Alcatel Alsthom’s cultural center, the dream residence of the vestal virgins, where the magic of the group could forever seduce the guests.

This project, like many others, ended very quickly after my departure. It was however much less costly than reserving a lot of hotel rooms, which was the prior practice. But since the new training center was located not far from my secondary residence, it provided fodder to those who would later malign me, a subject to which I will turn subsequently. The experience which I had with the investment in the training center has often led me to think of the ingratitude which surrounds us in France. If I had located this center near a lake in Switzerland or Italy I would have had encouragement and gratitude from the local authorities instead of the sarcasm and gibes which poured out at me from the press. This is another example of the "French exception."

I always sought to meet employees outside of routine meetings, even at the lower levels, at their places of work, in the laboratories or factories. It gave me the opportunity directly to understand their problems. It was also a good way for me to hone in on and understand more clearly problem situations. It is for this reason that over the course of my years at Alcatel Alsthom that I visited over a hundred factories at least once.  Often those who received me said that as far as could be remembered it was the first time the chairman of a group had visited and that was true with respect to ITT’s former sites as well as CGE’s. Each visit entailed practically the same program—presentation of the unit’s history, its products, its production numbers, and of its projects or hopes for investment, followed by a visit of the facilities. At the end I met with the management (between 20 and 50 people depending upon the size of the site) for a discussion that I tried to ensure was open and lively. It was an excellent opportunity to take the pulse of the company and gage the reaction in the field to the objectives, decisions, and programs initiated centrally. Often the final conclusion was somewhat modest with respect to the transparency of the system but my visits reinforced my will to improve it

And it was especially for me the opportunity to see close-up what, in my opinion, was the particularity of industry, beyond its laboratories or research units—the manufacture of products. Whether it is cruise liners, turbines or microchips, in order to understand one’s business well and be able to speak intelligently about it, it’s necessary to have a direct knowledge of how its products are made, of the constraints, of the dexterity required, of the critical steps, of the elements necessary for quality and reliability, where one must look to make improvements, and of the aspects that distinguish the business from its competitors. Understanding the language, the psychology of the workers, foremen and engineers—all this helps to better communicate and handle crises. This doesn’t come from staying in the home offices. While I recognize the importance of subcontracting, I could never have imaged that a group like Alcatel could remain an industrial enterprise if it separated itself from all its factories. When my successor said that was his objective, I first thought it was a joke; but after confirmation, I felt an immense sadness at such a lack of understanding and in thinking of the disarray caused among the employees, workers and technicians who must have been dismayed by such an announcement.

Factory visits, the ultimate source of information, of knowledge, of personal exchanges, were sometimes intermixed with unanticipated events—visits to the kitchens of cafeterias which I insisted upon and which were usually met by uneasiness or amazement on the part of my hosts, as in Sao Paulo, in Mexico, and at Arnstadt in East Germany; meetings and discussions not on the program with union representatives, as in Battipaglia and Villeurbanne; the “midnight sun” in Bodo, Norway, north of the polar circle; the “dance of the dragon” at the Saft factory in Chekou; or the reception, well organized and orchestrated, with a cultural folk group, banners, and an applauding, flag-waving audience of employees. But it was in Kunming in southern China, where Alcatel was associated with the provincial postal and telecommunications minister that, several months after my visit, a tragic drama took place. One of two persons employed at Kunming was found assassinated in his hotel room. He was American and accompanied by a German, who hadn’t heard or seen anything even though he was also at the hotel in a nearby room and the assassination took place at about seven o’clock in the evening.  We never were able to gather information on this crime. The American Embassy, which had been alerted, immediately decided to take care of everything, to bring the body back home, to inform the family and handle relations with the Chinese authorities and told us that we could have total confidence in them. Not having significant resources at that location, we yielded thinking, without having (or having had) confirmation, that our American engineer must have received, without our knowledge, another assignment in this region, a base for drug trafficking. Big international companies (and Alcatel couldn’t escape it) provide, it is true, excellent cover for the various “services” of different countries. Back street wars are not just a subject for detective novels, as I was able to note several times during my years spent at Alcatel Alsthom.

I also remember a very unusual meeting arranged by our German subsidiaries whose 10-member “Vorstand” (board of directors) decided, at the “invitation” of their chairman, to spend a week together in Saint Moritz in order to develop their group spirit, undertaking required intense physical exercises. The day began with a swimming pool session, then gymnastics, then a walk in the mountains, all accompanied by health food—low calorie and no alcohol. The challenge was to lose the maximum weight in one week. I was invited, partially as a challenge, I think. I only participated in the two last days during which the program was different. The first day involved a long walk in the mountains and on the second day the prize would be awarded to the person who had lost the most “meat.” The program, meticulously organized, provided for the mountain hike to take place over three different courses, of increasing difficulty, but each arriving at the same village. To the surprise of the “Vorstanders,” I chose the longest and was not the one who suffered the most that day. There are moments when, even socially, you have to pay a physical price to reaffirm your authority!

I have stressed in this chapter the constant efforts which were made to create true solidarity within the group, despite its size and the number of nationalities involved. I had the chance to witness the true international dimension of Alcatel a number of times, as well as the deep pride sensed by its employees, when they got together beyond their national borders. In 1992 Alcatel had organized a big competition open to all its employees. The prize for the winners was a trip to Seville for the World Expo. I attended the dinner of the 100 “laureates” and found myself seated at a table with, among others, an employee of the Taipei subsidiary and another from Kunming. It was the first time that the one from Kunming had left China and that his colleague from Taipei had met a compatriot from mainland China. At the time trips between Taiwan and China were forbidden. They naturally spoke Chinese, visibly cautious, but I was sure that for them and their spouses this meeting was significant and Alcatel had the honor of making it possible. I also sensed an emotion of a similar sort when employees of the East and West German subsidiaries met and tried their best, despite their differences, to cooperate.

I sought to instill in the company’s retirees the same family spirit that I wanted for Alcatel Alsthom. They would feel some day that they had left a part of themselves in their companies—their best years, those in which they had the ambition and means to make sacrifices for something worthwhile, those in which health seemed eternal and combat natural, and those in which they had built solid relationships with colleagues that they still liked to see. Every year CGE’s pension fund organized a day for retirees to obtain information about the group that had previously employed them and also, and especially, to get together again. Several times I participated in those events. On a number of occasions attendees confided in me and I was told a number of anecdotes, often filled with lessons for those still working

It was in this context that I wanted to place the actions of Alcatel Alsthom and to rally its employees. Conscious of the richness of the past, the employees had to be convinced that the demands placed on them were part of a winning strategy directed at making Alcatel Alsthom the world leader in its field and that it had the human, technical and financial resources to succeed.

Alcatel Alsthom would demonstrate this by the rapid international development that it would undergo in the 1990’s and by its technical and commercial successes as well as by  its financial performance.

[1]  The Fonds Commun de Placement is the investment fund "GCE Privatization"  (FCP) referred to in Chapter 3. (Translator’s note)

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