SMART Letter #48a
November 2, 2000

!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*() ------------------------------------------------------------ SMART Letter #48a -- November 2, 2000 Copyright 2000 by David S. Isenberg -- "what's new" -- -- 1-888-isen-com ------------------------------------------------------------ !@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*() CONTENTS > 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 SMART People! 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 that. "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 not. "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 be. "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 work.' "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 purpose. "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 nowhere.' "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,, 410-223-2648. 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. ------- COPYRIGHT NOTICE: Redistribution of this document, or any part of it, is permitted for non-commercial purposes, provided that the two lines below are reproduced with it: Copyright 2000 by David S. Isenberg -- -- 1-888-isen-com ------- [to subscribe to the SMART Letter, please send a brief, PERSONAL statement to (put "SMART" in the Subject field) saying who you are, what you do, maybe who you work for, maybe how you see your work connecting to mine, and why you are interested in joining the SMART List.] [to unsubscribe to the SMART List, send a brief unsubscribe message to] [for past SMART Letters, see] [Policy on reader contributions: Write to me. I won't quote you without your explicitly stated permission. If you're writing to me for inclusion in the SMART Letter, *please* say so. I'll probably edit your writing for brevity and clarity. If you ask for anonymity, you'll get it. ] ** David S. Isenberg, inc. 888-isen-com 908-654-0772 ** -- The brains behind the Stupid Network -- **