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March 09, 2005

AT&T: Lesson from the Crypt #5: Navel Gazing is a Bad Culture

On my second day at AT&T, there was an E+ meeting for all New Jersey employees.  In English, that meant that everyone from director up assembled for updates by top officers including goal setting and then a series of breakout sessions.  I don’t remember much about the speeches except that the enemy was incorrectly identified as MCI – it was real cut-rate carriers that were responsible for markets share loss in the next year.

But I do remember the breakouts.  They were “facilitated” by consultants.  The exercise in each breakout was to identify and discuss those factors which would impact – favorably or unfavorably – our abilities to achieve the tactical and strategic goals which had just been given to us. 

The facilitators started out by going around the table of about twenty people – about half of them Vice Presidents - soliciting candidate factors to write on the flip charts.  By accident of seating, I was the last to respond in the three rounds of significant factor identification.

“Our procurement policy,” one person said.

“Inter-divisional rivalry,” said another.

“HR.”

“Office space.”

“The way transfer prices are set.”

Finally it got to me.  “The Internet,” I said.  This was 1994 and I had been hired to develop and implement an Internet strategy so no great surprise I would say this.  It was duly listed on the flip chart.  Then they went around the table again.

“The union contract.”

“The way bonuses are calculated.”

“Lack of clear agendas for meetings.”

“Network Systems Division.”

“Cultural problems.”

“Insufficient budget for consultants.”

And to me again.  “Directory services,” I said.  “AT&T had to give the Yellow Pages to the RBOCs but the Yellow Pages will be irrelevant soon. They’ll be replaced by Internet-based directories.”  [nb. As a prognosticator, I’m better at direction than timing.] And around again.

“Poor use of voice mail.”

“The brand police.”

“Consumer Division.”

“More cultural problems.”

“Dispersed locations.”

“Inward focus,” I said.  And I explained, as politely as I could, that it seemed to me as a newcomer that insufficient attention was being paid to factors outside the world of AT&T.  At Microsoft, from which I had just come, most focus was outward looking – fierce and aggressive but outward looking.  Microsofties talked about customers, technology, competitors, trends but rarely about Microsoft itself.  AT&Ters, I said, did seem somewhat focused on AT&T itself and not on the external world.  Perhaps, I theorized – talking too much – this was a result of AT&T having been a world onto itself in the old days.  I believe I even quoted Pogo as saying “We have met the enemy and it is us.”

To my surprise, everyone listened very politely. (At Microsoft no one listened politely to anything, let alone a minispeech in a half apologetic tone from a new guy talking about his old company.)  My suggestion was listed on the flip chart and now, since all three rounds were completed, the voting began.  The facilitators gave us sticky round disks: red for our first choice, blue for second, and yellow for third.  We all walked solemnly around the room and put our stickers on our selections.

For a moment, I was pleased that one of my selections made the list of the five most important factors.  The I realized the irony.  All of the factors chosen, including mine about inward focus, were inwardly focused!  All of the factors chosen, including mine, were obstacles and not opportunities. I had been captured after just three rounds!

Companies do have cultures.  The cultures are as distinct and different as the personalities of people.  The cultures have a huge effect on how successful companies are.  However, a culture in which any significant amount of time is spent talking about the company culture is, in my opinion, dysfunctional.  Great leaders create successful cultures by example. 

Primates – especially we humans – are great mimics; and we play follow the leader slavishly.  At Microsoft there was an unpleasant cadre of young managers who thought that mimicking Bill Gates’ famous rude impatience with what he considered brain dead was the same thing as being as smart as Bill.  But Microsoft succeeded because it recruited type A people who, besides being rude, mimicked Bill’s intensity, persistence, creative paranoia, will to win, external focus, and opportunism.  AT&T failed in part because it was navel gazing as the world turned and listing obstacles rather than seeking opportunities.

Lesson from the Crypt #1 is don’t manage for quarterly results.

Lesson from the Crypt #2 is you can’t innovate flawlessly.

Lesson from the Crypt #3 is vertical integration doesn’t work anymore.

Lesson from the Crypt #4 is don’t send your losers to heaven.

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