Lucent Technologies

Lucent Technologies, Inc., is a $33 billion manufacturer and service provider in the communications industry, headquartered in New Jersey. With about 100,000 employees in more than 65

countries, Lucent's focus is in the mobile Internet and high-speed broadband markets for all types of communications networks. This includes Internet, e-business, wireless, optical, data, and voice communications products and services.

In this highly innovative and competitive industry, the speed to market is very important. To ensure rapid development, Lucent uses the services of its Bell Labs R&D community, which operates in thirty different countries. Lucent invests about 12 percent of revenues in R&D each year, making these labs the birthplace of innovative products in use by many millions of people around the globe.

One of the first divisions of Lucent to employ Critical Chain methodology was the Optical Fiber Solutions group. This group is headquartered out of Norcross, GA. It is a pioneer in the development and manufacture of optical fiber and fiber components. Optical fiber is rapidly growing in communications applications, due to its combination of high speed and reliability.

The Optical Fiber Solutions unit consists of several thousand employees, including several hundred scientists and engineers. A Bell Laboratories director of this group, Dr. William J. Baron, describes the project environment before Critical Chain implementation as constantly changing.

Within this division, there are some large projects with dedicated resources. However, many projects use resources that are shared between projects, characteristic of the multiproject environment. Before Critical Chain implementation, project priorities were constantly changing. About 40 percent of the projects finished on schedule. Project cycle times, according to benchmarks, appeared to be on par or shorter, compared to similar companies.

To make a Critical Chain implementation successful, Mr. Baron describes the change process as "99 percent culture change and 1 percent theory." He indicates that getting the business unit president and senior executives to understand the buffers, and buffer management is critical to success. At Lucent, Dr. Richard Franks, CEO of Oak Hill Consulting, accomplished this with an executive training program using simulations of three projects to reinforce the understanding. According to Dr. Franks, "Simulations are critical to holding the attention of senior executives and gaining their buy-in to the changes."

During the transition, one of the big questions was how to handle projects that were already started. Dr. Baron decided that if projects were "well-enough along," the implementation team would allow them to complete without converting their schedules to Critical Chain. The team began the process taking two very high priority projects, deciding on their drum resource, and scheduling them using Critical Chain.

Initially, their drum revolved around an incoming material used in development projects. After six months, they found that projects were still experiencing logjams. As a result, the drum was changed to later in their development process and has continued to prove effective as a staggering mechanism over several years.

This division of Lucent uses software called ProChain (a Microsoft Project add-on) to figure out their Critical Chain schedules. Projects are tracked using weekly buffer updates and tracking meetings.

In the initial two years of implementation, the following results were achieved:

• In the Premise Cable Products group (inside-building cables), 100 percent of the sixteen projects scheduled using Critical Chain were completed on time. Cycle times were reduced by 50 percent in the first year.

• In the Outside Plant Cable Products group, development capacity tripled, with no increase in staffing. Cycle times in this division were also reduced by 50 percent the first year.

• Over the two-year period, over 95 percent of all projects were delivered on time.

Mr. Baron credits Critical Chain methodology with having a major impact on new product introduction. Multitasking is no longer a way of life. Morale is also higher, with the feeling that when a commitment is given, the Critical Chain plan helps make it a reality. As noted by David and Suzan Bergland, the consulting team from TOC Solutions, LLC, who worked with Dr. Franks in a follow-on implementation at Lucent, "Bill Baron and his team have reaped huge gains by cutting away the old rules that bound them. Now their project commitments are predictable and with predictability comes the information they need to manage expectations as well as their work."

The increase in capacity to complete more projects has allowed the division to shift its mix of projects. As Dr. Baron describes, "The work has shifted to much more forward looking projects. Less work is of a trivial nature."

Critical Chain implementations within Lucent have spread to other divisions, where the competitive pressures are also driving the demand for both faster R&D and a higher volume of project completions.

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