Towards an environmental awareness model integrating formal and informal mechanisms – Lessons learned from the Demise of Nortel

Abstract

This case study uses multiple lines of enquiry to better understand how Nortel went from being a ‘global powerhouse’ at the turn of the century to filing for bankruptcy just nine years later. It tracks competitive intelligence as well as other environmental awareness capabilities of the company and theorizes on how they have contributed to its rise and fall. The findings suggest that Nortel was a company with significant environmental awareness capability in the early 90’s that had all but lost this competency by the year 2000, which impacted their ability to make decisions consistent with a changing environment. Through interviews with 48% of all Nortel officers that were there during the period of interest as well as other stakeholders, the researchers identify a two-layer typology that includes a set of cognitive factors as well as three broad categories of monitoring practices that can help companies better understand their environment: 1) formal external monitoring practices, such as competitive intelligence units; 2) informal external monitoring practices such as board meetings with members with industry connections and knowledge, and 3) internal monitoring practices with external insight capability, such as performance management reviews and accounting reports. Cognitive factors identified include decision maker orientation, as either technical or business, internal vs., internal focus, cognitive complexity and open mindedness.