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Ne w Business Design 51

seeking projects in which they add value beyond making cap-
ital investments. However, numerous opportunities will arise
that fit with the firm’s business development strategy but
appear in conflict with its existing ways of doing business.
These situations are often not apparent.
Sometimes what seems to be just a new product will not reach
its market potential unless it is treated like a new business. In
the introduction, we promised to come back to the story of the
noted telecommunications equipment firm Tellabs, which
encountered such a situation but failed to recognize the signs
until it was too late. Its Titan 6500 IP telecommunications sys-
tem worked as advertised, and Tellabs stuck with it for more
than three years, but the company eventually canceled the pro-
gram and wrote it off for a loss. Oddly, within months of Titan’s
cancellation, Tellabs’s mammoth competitor, Cisco Systems, Inc.,
introduced virtually the same product, the CSR-1. Cisco contin-
ues to profit from this product even today. What happened?
While there was a lot of interest in IP-based communications
at the time of Titan’s launch, Tellabs was a bit ahead of the
curve in terms of market readiness. Timing was certainly an
issue in the product’s eventual demise. Many buyers were still
unsure if and when IP-based solutions would provide the level
of quality required. Nonetheless, Tellabs withdrew its product
from the market only months prior to Cisco’s successful
launch, and Tellabs had clearly shown its willingness to sup-
port the product over the previous few years. Timing was by
no means everything.
There was another even more fundamental factor. Tellabs
took a solid product designed by some excellent engineers and
sold it through its existing channels to the same buyers with
the same sales approach. The company failed to recognize that
this product would require a different approach to the mar-
ket—in our terms, a different business system. Tellabs’s sales-