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Paul G. Stern

When your competitors are telecommunications concerns AT&T, Alcatel, and Siemens, running with the pack is a tall order. But under …

When your competitors are telecommunications concerns AT&T, Alcatel, and Siemens, running with the pack is a tall order. But under the guiding hand of chief executive Paul G. Stern, Northern Telecom is doing just that.

Stern’s reputation as a disciplinarian in his previous post as president of Unisys won him the CEO’s job at Nashville, TN-based Northern in 1989. He had his work cut out for him: Beset by price wars and runaway operating expenses, the company’s profits had plunged 50 percent the previous year.

But last year, earnings jumped 14 percent at Northern, currently ranked No. 3 in the telecommunications market. Since Stern took the helm, Northern’s stock has tripled to the high 40s. And a global, quality improvement strategy the CEO calls “Vision 2000” is shifting into high gear.

“We own about 9.4 percent of the current market, and we believe we could own 10 percent by the year 2000,” says Stern, who estimates the telecommunications market will comprise some $300 billion by then.

Already a power in its North American backyard, Northern is gearing for an international thrust. The company wants more international customers like Nippon Telegraph & Telephone, which buys its digital switches, or Australia, which just awarded it a $200 million contract for switching equipment.

A major step in that direction was Northern’s $2.6 billion acquisition of STC, the British telecommunications equipment maker. That acquisition helped boost 1991 revenues by 21 percent to $8.2 billion and leaves Northern positioned for an assault on Europe. “We’re now taken seriously on the continent,” said Stern, adding that the number of opportunities has picked up in recent months.

Another boon to Northern’s global aspirations may be an agreement with Motorola announced last month, to form a joint venture that will sell and service cellular networks throughout the U.S., Canada, Central and South America, and the Caribbean. “As wireless technology becomes the driving telecommunications force of the future, our strong partnership with Motorola will expand the reach of our networking expertise,” Stern said. Underpinning the company’s global and domestic efforts, meanwhile, is Stern’s “Vision 2000” plan, a master design that will impose standards of excellence on all the company’s activities, from marketing and customer service to global research and development. Stern hopes the plan will speed the introduction of more new products like the company’s fiber-optics line.

Stern, 53, is personally pitching Vision 2000 to Northern’s 60,000 employees in places as far afield as Panang, Malaysia, and Calgary. Vision and innovation will drive the company, he says, not “five-year strategic plans with numbers.” He adds: “Some have had vision and failed, but if you don’t have it, it’s guaranteed you’ll fail.”

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