In Kevin Kennedy’s book, Going the Distance (2003), he highlights a number of challenges companies face as opportunities, which he groups into two sets of four, designated as execution challenges and governance challenges.
With regards to the Cerent startup experience, I’ll focus on the former with the execution challenges as opportunities, listed as market disruption, effective product transitions, differentiating strategy, and effective alignment. For completeness, I list his governance challenges, which include a culture of learning, strong leadership DNA, effective systems governance, and a strong board of directors’ oversight.
I agree with Kennedy’s assertion in my book, The Upstart Startup, that market disruption was a challenge that Cerent conquered with masterful execution. The company leveraged advances in a number of technological fronts to upend the existing optical transport market by defining a new product category, the Multi-Service Provisioning Platform (MSPP).
With regards to the Cerent startup experience, I’ll focus on the former with the execution challenges as opportunities, listed as market disruption, effective product transitions, differentiating strategy, and effective alignment. For completeness, I list his governance challenges, which include a culture of learning, strong leadership DNA, effective systems governance, and a strong board of directors’ oversight.
I agree with Kennedy’s assertion in my book, The Upstart Startup, that market disruption was a challenge that Cerent conquered with masterful execution. The company leveraged advances in a number of technological fronts to upend the existing optical transport market by defining a new product category, the Multi-Service Provisioning Platform (MSPP).
The Cerent 454 performed the role of a SONET multiplexer without being positioned or priced as a traditional SONET mux. It could operate at any optical bit rate, unlike others in the market; accommodate multiple service interfaces, including both telecom and datacom types; and it was initially priced at less than half of competing products when equipped for the popular 2.5 Gb/s rate. The technology packed into the Cerent product enabled a brilliant marketing strategy to take hold and distance the upstart from its entrenched competitors such as Nortel, Lucent, Alcatel, and Fujitsu.
And this was the beauty of the initial product. Cerent was able to support an effective product transition for customers with the Cerent 454. An upgrade from OC-12 to OC-48 was achieved by “dropping in” Cerent’s products at both ends of the optical link and treating the old OC-12 signal as an input to the new Cerent 454s. Moreover, Cerent was able to accommodate existing voice traffic in either of its popular DS1 and DS3 aggregate forms, but at the same time, accommodate Ethernet interfaces that were beginning to emerge from Enterprise networks. Competing products could only respond to Cerent’s elegant “coexistence solution” with a forklift upgrade.
And this TDM + IP duality was at the heart of Cerent’s differentiating strategy that Kennedy believes is so important for a company and its product. Indeed, the Cerent 454 accommodated voice traffic that scaled at any SONET bit rate with a built-in cross-connect capability, but its major claim to fame was its MSPP capability in support of converged networks – another form of coexistence. Both traditional voice traffic and burgeoning data traffic driven by the rise of the Internet could be accommodated by Cerent’s product offerings. No other company, established or new, could displace Cerent’s vision, story, product offerings, or vision for the future of optical transport. MSPPs became a unique segment of the optical transport market dominated by Cerent. In fact, the first billion dollars of sales came from Cerent during 1999 and no other supplier. That’s how far ahead of the competition the upstart startup was.
And this was the beauty of the initial product. Cerent was able to support an effective product transition for customers with the Cerent 454. An upgrade from OC-12 to OC-48 was achieved by “dropping in” Cerent’s products at both ends of the optical link and treating the old OC-12 signal as an input to the new Cerent 454s. Moreover, Cerent was able to accommodate existing voice traffic in either of its popular DS1 and DS3 aggregate forms, but at the same time, accommodate Ethernet interfaces that were beginning to emerge from Enterprise networks. Competing products could only respond to Cerent’s elegant “coexistence solution” with a forklift upgrade.
And this TDM + IP duality was at the heart of Cerent’s differentiating strategy that Kennedy believes is so important for a company and its product. Indeed, the Cerent 454 accommodated voice traffic that scaled at any SONET bit rate with a built-in cross-connect capability, but its major claim to fame was its MSPP capability in support of converged networks – another form of coexistence. Both traditional voice traffic and burgeoning data traffic driven by the rise of the Internet could be accommodated by Cerent’s product offerings. No other company, established or new, could displace Cerent’s vision, story, product offerings, or vision for the future of optical transport. MSPPs became a unique segment of the optical transport market dominated by Cerent. In fact, the first billion dollars of sales came from Cerent during 1999 and no other supplier. That’s how far ahead of the competition the upstart startup was.
Service provider customers resonated with Cerent and flocked to the solution the privately-held company offered them. Effective alignment doesn’t get any better than that – building a product that customers want, that fulfills their needs, and that fits into their existing fiber infrastructure.