SMART Letter #48a
TALKING BACK TO THE NEWS
November 2, 2000
SMART Letter #48a -- November 2, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "what's new"
firstname.lastname@example.org -- http://isen.com/ -- 1-888-isen-com
> Quote of Note -- John Lennon & Paul McCartney
> Talking Back to the News, by David S. Isenberg
> AT&T's Failure of Purpose by Kevin Maney, USA Today
> Conferences on my Calendar, Copyright Notice, Administrivia
QUOTE OF NOTE
"I read the news today, oh boy. Four thousand holes in
Blackburn, Lancashire. And though the holes were rather
small, they had to count them all."
From "A day in the life," John Lennon & Paul McCartney, 1967
Talking Back to the News
by David S. Isenberg
I don't read newspapers the way I used to. Today, when I pick
up a paper, I know what I am looking for. My friends on the
Internet have told me.
I get the news from friends. Dewayne Hendricks and Phil Agre
and Dave Farber and David Weinberger and Bill St. Arnaud send
me what they think is important. I know them. If it is
important to them, it is probably important to me.
Dewayne and Phil and Dave and David and Bill have email
distribution lists that I belong to. They don't charge for
their lists. But if their experience is like mine, they find
that their production efforts pay back handsomely.
This very SMART Letter that you, gentle reader, are reading
keeps me in touch with a lot of fine people. Most of you care
about what I care about. You share your news and opinions
with me and make me a more informed -- and better-connected --
person. This leads me to fascinating engagements all over the
world (some of which I make money at -- but this is a second-
order effect). Now, gentle reader (and dare I say friend?)
you know my secret strategy for making money doing what I love
by giving the SMART Letter away. Here's another secret, just
between us -- so far it seems to be working.
I like reading Dewayne's and Phil's and Dave's and David's and
Bill's stuff even more because the Internet is a two-way
medium. (And the medium is the message now more than ever.)
If I know new details, or if I don't agree with something, or
if I have a new item that one of my newsletter friends might
want to know about, I'll send it along. I know they'll read
my input. In many cases they'll tell me what they think of it
by return email. And they might even include my contribution
in their next newsletter.
The overall effect, in my experience, is that "the news" has
become less like kontent and more like conversation. People
who passively read are a "Community of Interest". But
contributors form a "Community of Practice". Practice,
action, creates deeper bonds than mere interest. Participants
become a support group for a newsletter's distributor/author -
- and more. Potentially, a newsletter community (a small
group of committed people) can change the world.
Some of my newsletter friends have day jobs as *real*
reporters. Occasionally one entices me to cross over to the
kontent side. Hey, the readership is bigger over there. As a
result of last month's Fortune article there are about 100 new
In addition, when isen.kontent appears, I can put it in my
SMART Letter and talk back to it. See below.
Failure to define company's purpose led to AT&T's 4-way split
By Kevin Maney, USA TODAY, November 1, 2000
[USA Today's tech columnist Kevin Maney called last week to
get my take on the AT&T debacle. Kevin sees bigger trends
behind the news; he makes USA Today better than its McNews
rep. Kevin got me to look back on my own journey through
AT&T, which began in 1985. I realized that some of AT&T's
current woes date to the 1984 Bell System's break-up. The
AT&T I joined in 1985 was out of contact, deep in denial and
directionless as a bull on a freeway at rush hour.
The pharaohs of AT&T's pyramidal patrimony have no way to know
the pain of those who worked for them -- denial of pain is one
of the membership tests for the Senior Management Club. There
are no managerial, entrepreneurial or leadership criteria --
there's not enough time. Prospective club members have to
climb 26 layers of hierarchy to become a Basking Ridge big
shot. At one promotion a year there's no time for collection
of validated on-the-job-performance data. Instead, promotion
is based on style, perception and comfort level.
This system, which social anthropologist Robert Jackall calls
'patrimonial bureaucracy' (see Corporate Culture's Twisty
Passages -- SMART Letter #22), provides an early sidetrack for
thinkers, leaders and visionaries. One of the greatest AT&T
bosses I had was a 30-year vet with a natural ability to find,
cultivate and motivate talent. He had a clear, inspiring
vision of corporate purpose, albeit rooted in the pre-1984
service ethic. He was never invited to join the club. He
retired as a lowly supervisor.
People call C. Michael Armstrong an outsider, BUT HE ISN'T!
He came up through the IBM branch of the Patrimonial
Bureaucracy Club. I think Kevin Maney is too nice to
Armstrong below -- the best I can say about C. Mike is that
he's the guy that Bob Allen shoulda been, but who arrived a
decade too late. Here's Kevin's take: -- David I]
"It is so tempting to nail the downfall of AT&T right on the
head of leader C. Michael Armstrong. It's tempting because
Armstrong has crowed so confidently about his 'vision' for
AT&T. Tempting because, like a handsome, cocksure star
quarterback in high school, Armstrong clearly believes his
zillion-watt charisma allows him to do anything and get
away with it.
"But it would be wrong. Blaming Armstrong, that is. It's not
his fault that he's been the wrong man in the wrong job at
the wrong time.
[Yes it is, Kevin. Nobody *made* Armstrong take the job.]
"The tragedy of AT&T goes back to the 1984 breakup of the
Bell System. It has only a little to do with changing
technology, shifting regulation and dumb strategic moves,
though none of those helped. It has only a little to do
with Armstrong's frantic maneuvers and ping-ponging vision,
though those certainly haven't helped, either. At its core,
the company's troubles have everything to do with people -
and the consistent failure of AT&T's leadership to see
"Just so we're on the same page: Last week, Armstrong
announced that AT&T will split into four pieces - a
wireless company, a cable company, a consumer services
company and a business services company.
"The reaction from analysts and business leaders has pretty
consistently been that AT&T, as an important, powerful
force in American industry, is done. It's over. AT&T is
taking its first steps down the path to the Corporate Icon
Retirement Home, where the likes of Western Union, TWA and
RCA wheeze on oxygen tanks and tell each other the same war
stories again and again.
"Armstrong was supposed to prevent that from happening. He
was brought in with much fanfare in the fall of 1997, hired
away from a successful tenure as CEO of Hughes Electronics
to be the first outsider to run AT&T in the company's 120-
year history. At 59 then, he was hailed as aggressive,
energetic, fast-moving - everything AT&T supposedly was
"But what AT&T needed wasn't necessarily what hard-charging
Armstrong gave it - layoffs, cost cutting, reorganizations
and $100 billion in deals to buy cable companies. What AT&T
so desperately needed - what it had lost - was a reason to
"For decades before 1984, AT&T and all the people in it had
a purpose. Hokey as it might sound, the purpose was to
provide universal service - telephone service for all,
whether rich or poor, urban or rural - and to create the
world's best national communications system.
"'It gave people a reason for going into work every day,'
says David Isenberg, a former AT&T strategist who left
around the time Armstrong arrived. 'For all the backward
things AT&T represented in 1984, by golly, the telephone
system worked, and it was a public service to make it
"It was AT&T's organizing principle. It was why talented
people came to the company and why they stayed. It was why
investors bought the stock and kept faith in it.
"In 1984, antitrust action forced AT&T to split into seven
local telephone companies and one other company, called
AT&T, which would be the long-distance company. There's
nothing to regret about this. It opened the way for a U.S.
communications industry that is today monumentally stronger
than if the AT&T monopoly had continued.
"But the split shattered AT&T's purpose. In a newly
competitive industry, public service was out. What was in?
What would AT&T stand for? None of the subsequent CEOs -
Jim Olson, Robert Allen, then Armstrong - addressed that.
'Nobody managed the culture after there was no longer a
reason to come to work,' Isenberg says.
"Worse, the company continually made it hard to want to be a
part of AT&T. There were the rounds and rounds of layoffs.
There were big mergers (buying NCR, McCaw Cellular and
later cable company Tele-Communications Inc.) and big
undoings of those same big mergers (spinning off NCR; now
spinning off wireless and cable properties). Life at AT&T
has come with a heaping bowl of turmoil stew.
"Hordes of talented people have fled. Those who stayed don't
particularly know what to strive for. Customers don't quite
know what kind of company they're dealing with. Investors
aren't sure what to make of the stock.
"Think it's shallow to lay a company's troubles on a
confused culture? Apple Computer is one example. In the
late 1990s, under Gil Amelio, Apple lost its purpose and
nearly sank. When Steve Jobs returned, the most important
thing he did was reaffirm and give voice to Apple's
purpose: to be a counterculture maker of 'insanely great'
computers. United once again, Apple attracted talent,
focused its efforts and soared. The iMacs flowed from the
"Armstrong had the deck stacked against him. He was an
outsider, so it would've been hard for him to truly
understand AT&T. Not that he seemed to try: Within months
after joining the company, he cut his first major deal,
then kept them coming. He skipped understanding and went
right to action.
"He had to do something in a hurry, not rebuild AT&T brick
by brick over 20 years. 'There was tremendous pressure to
lead, with an exclamation point,' says Jim Collins, author
of the bestseller Built to Last , who is writing a book
about how good companies become great companies. 'It was a
recipe for disaster.'
"He adds: 'Instead of re-finding a sense of purpose, AT&T
tried to substitute charismatic leadership. That goes
"If evidence is needed that Armstrong missed the point on
people, it's in his letter to employees the day the split
was announced. It's a happy-talk letter, ignoring the
anxiety the split is causing and justifying his actions.
'This is the next logical step in the transformation begun
three years ago,' he writes, as if all along this
desperation split-up was part of his grand plan.
"'The changes for most of you on a day-to-day basis will be
small,' the letter says toward the end, which is like
telling Berliners in 1961 that the wall going up wouldn't
alter their daily life much. 'The big change is in the
exciting opportunity we gain by multiplying AT&T by the
power of four.'
"The best hope is that some or all of the four pieces find a
purpose and get on track. That will probably fall to a next
generation of leaders, who will be left to clean up a mess
more than 16 years in the making."
Copyright 2000 USA Today
CONFERENCES ON MY CALENDAR
November 5-9, 2000. Rose Hall, Jamaica. Porter Stansberry's
Pirate Investor's Ball, featuring Eric Raymond, Tom Petzinger,
Porter's impressive research director David Lashmet, and yours
truly. Porter is a big-picture guy, a cross between George
Gilder and Tony Robbins, with a nose for leading edge values
in infotech and biotech. Contact Andrea Shaw,
November 13-15, 2000. Hong Kong. Jeff Pulver's VON Asia.
VON stands for Voice on the 'Net. It's the premiere Internet
Telephony show in the U.S. and Europe; this is the first Asian
VON. I'll be doing a panel called "XON, with X = unknown."
THIS JUST IN: Dan Gillmor, the genius tech columnist for the
San Jose Mercury News, will be my co-panelist! For more, see
November 28-29, 2000. Montreal PQ. THE NETWORKED NATION:
CANARIE's 6th Advanced Networks Workshop. I'll be speaking,
and so will Francois Menard, Paul Hoffert and other (mostly
Canadian) folks who are honing Canada's leading edge.
SMART People will remember that last year the word from
CANARIE was Ethernet (see CANARIE Sings -- SMART Letter
#30, December 9, 1999). Months later the Ethernet story hit
The New York Times and Business Communications Review. This
year I hope to learn about grids -- watch this space.
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Copyright 2000 by David S. Isenberg
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