John Manley, a director with Nortel Networks and former deputy prime minister, shared his thoughts about the local tech sector and the latest developments at Nortel with the Ottawa Business Journal last week.

Mr. Manley is in town this week to give the keynote address at the annual Venture Capital Fair, taking place at the Chateau Laurier Thursday and Friday. His topic is Ottawa's success in commercializing technology.

The VC Fair comes only a week after Nortel spelled out the details of a fresh global restructuring plan from new CEO William Owens. As part of that plan, about 12.5 per cent of the local workforce, or 750 workers, will lose their jobs by next June. That will reduce the local headcount to around 5,250. At its peak, Nortel employed more than 18,000 staff in the nation's capital.

Nonetheless, the local operation will remain the largest for Nortel and its key R&D centre.

Mr. Manley spoke with the OBJ about what defines success in the tech sector and how the latest cuts do not stain Ottawa's status as the "crown jewel" of Nortel's operations.

OBJ: How do you define success in the commercialization of technology and how is that success evident in Ottawa?

MANLEY: There's lots of ways to measure commercialization success, including patents issued, licences issued, royalties earned, companies spun off. But I think what Ottawa exemplifies most and what attracts the investors to the Venture Capital Fair is the success we've had in spinning off companies; some of them from universities or other research organizations, some of them from existing companies such as Nortel.

OBJ: How do you respond to the criticism that Ottawa is good as an R&D centre and at launching companies, but lacks the leadership pool to build enduring, publicly traded companies? What defines a "successful" company?

MANLEY: I don't think (being acquired) is necessarily a failure. I think the whole ecosystem of technology companies largely functions that way. I don't think you'd find a very different phenomenon in Boston or in Silicon Valley. There are only a few that grow from startup to global companies. It doesn't necessarily mean a shortage of management skills. It's just that, as an organization becomes more viable, it becomes more attractive as an acquisition target. That case has been repeated many times over. We have a few (companies in Ottawa) that have remained independent, but I don't see that as the criteria for success. I'd rather measure the jobs, the ability to continue to produce winners.

OBJ: What is your outlook for the telecommunications sector and, in turn, the local tech sector?

MANLEY: I think, overall, the tech sector is becoming more positive. The investors are coming back. I don't think we're going to see a recreation of the bubble we saw a couple of years ago and don't I think anybody really would want that. I think you are seeing a lot more companies that are profitable, that have good business plans and that are building for the future. I think we're entering a period of stable growth.

OBJ: Nortel Networks announced last Thursday another 750 job cuts in Ottawa. Looking past the negative, what benefits can we expect to the local tech sector from the leadership direction of new CEO William Owens?

MANLEY: First of all, the long-term success of Nortel depends on Bill doing a balance sheet and an income statement that will sustain renewed growth. I think it's been clear that, compared to its competitors, Nortel's cost structure has been out of line and, therefore, it was necessary for management to take some important steps to get it into line with companies with which we compete in the marketplace. That was a necessity that had to be undertaken. Nortel, I think, has very good human resource policies. Cuts are implemented as much as possible through attrition, through voluntary programs. My experience has been that even people who have been laid off from Nortel have continued to be very loyal to the company ... even during the difficulties that company has experienced over the last couple of years, the attrition rate has been extraordinarily low, especially here in Ottawa, which I think demonstrates a remarkable degree of employee loyalty. But I think everyone recognizes that what we have to do with Nortel is build a strong company again. An important step in doing that is to make sure we have a cost structure that is in line with the industry.

OBJ: Even after the latest cuts, Ottawa remains the single largest location in the world for Nortel and the key R&D centre. How important is that "anchor tenant" to the local tech sector and how it is perceived abroad?

MANLEY: Nortel is both a training ground for scientists and researchers who then feed other companies in the area, as well as a source of technological development, much of which in the past has been spun off into other startups. As well, the Ottawa research facility, of course, is the cornerstone of the company's technological lead globally. So, the Ottawa campus remains, really, the crown jewel for Nortel. It's where customers and potential customers globally want to come and see what we're doing. There's no question that it remains a key component of the company's ongoing technological success. This is a company that is on the forefront of innovation and only does well, only succeeds, if its technology continues to be a leader.