"When I was in high school, I used to steal my uncle's BusinessWeeks," says Don Peterson. "I had a management bent, even then." Considering his career accomplishments—including leadership of global communications giants—the interest in management is pretty obvious. And judging from his accomplishments, a focus on high-tech finance has served him well, too.
Peterson explains that technology wasn't his only interest as he pursued a degree in mechanical engineering at Worcester Polytechnic Institute. "At WPI," he says, "I enjoyed business discussions as much as technology." Finance came to the fore in his first position after Tuck: unraveling bad investments for a Worcester insurance company. "The focus wasn't on making loans," he says, "but on getting the money back. It was a real education in finance." About the time things were getting on track in Worcester, Peterson got a call from Tuck classmate John Ranelli inviting him to join the American subsidiary of telephone equipment manufacturer Northern Electric. Peterson accepted readily, in part for the raise—from $18,000 to $24,000—and in part to start fresh in a new field. "Telecommunications then meant the telephone company. We had factories, and we made things."
But not for long. The industry soon plunged into a massive sea change, and Peterson rode the wave, assuming progressively senior roles and using his technical background primarily "to keep engineers from smothering me." In 2000, when Lucent's nascent enterprise networking group transformed into Avaya Inc., Peterson became the leader of a company whose prospects seemed doubtful to many. But he admits that the chance to be chairman and CEO outweighed the risks. "Like all good MBA students, you think you can run it all," he says.
Avaya was created as a provider of communications networks and services for businesses, but just as it entered the market, the demand for equipment tanked and the entire telecommunications industry went into a steep decline. Facing a net loss of nearly $700 million in 2002 and a 31 percent decline in sales by 2003, Peterson responded with strict cost-cutting (including outsourcing and large-scale layoffs), steady support for research and development, and strategic acquisitions and alliances. In effect, he rallied the company by reinventing it.
"At Avaya," Peterson says, "we'd ask our customers how they do what they do and help them rethink those operations to improve customer service, lower operational costs, and increase value." He is particularly proud of the job the company did building the communications infrastructure for the 2006 World Cup—a fixed and wireless network that transmitted more than 21 trillion bytes of converged voice and data traffic among officials, journalists, photographers, vendors, and a cumulative 30 billion fans around the world.
Peterson knows that the future of enterprise communications will feature unification and convergence of all communication assets—voice, text, data, email, instant messaging, video—into a seamless, transparent system. "There are huge opportunities in telephony over the Internet," he says. "And as we know from experience, there will be volatile competitive and technological challenges." But for that teenager who swiped his uncle's BusinessWeeks, the strategy for meeting the future is clear: "The value of any firm—even tomorrow's virtualized companies—continues to lie with people, their creativity, and their skill at conceptualization."
