SMART Letter #22
June 1, 1999



            SMART Letter #22 - June 1, 1999

            Copyright 1999 by David S. Isenberg

      At we accumulate intellectual capital

           the old fashioned way -- we LEARN it. -- -- 1-888-isen-com





>  Corporate Culture's Twisty Passages

>  Quote of Note: Douglass Carmichael

>  Smart Remarks from SMART People

>       Peter Tingling, Bill Morrison, John Powell, 

>       Russell Nelson, Kingsley Hill, Anon Exec, 

>       Bob Frankston, David P. Reed.

>  Policy on "Smart Remarks from SMART People"

>  Quote of Note: Michael Dell

>  Conferences on my Calendar, Copyright Notice, Administrivia



A Social Anthropologist Studies How Managers Manage

by David S. Isenberg

In times of tension at AT&T, my colleagues and I would joke 

that our jobs were 10% technical and 90% political.  One day 

it dawned on me that it wasn't a joke. 

So I launched an effort to understand why I felt like such a 

maladapted fish in the invisible but omnipresent viscosity of 

corporate culture. Dilbert helped some, as did the stories of 

Gulliver, Alice in Wonderland, and The Emperor's New Clothes. 

But I suspected that there was a more systematic treatment.  

After years reading fawning analyses and how-to management 

success stories that rimmed but did not penetrate, I finally 

found Moral Mazes.

Moral Mazes, a 1988 book by social anthropologist Robert 

Jackall (Oxford, New York) is written as if the observer had 

just parachuted into a Fijian out-island or the Stone-Age 

Lacandon jungle.  But the bizarre alien culture of this book 

happens to be that of the big, modern, unreconstructed 

American corporation. 


An anthropologist needs informants -- high priests and 

warriors that can explain a culture's internal ceremonies and 

shibboleths.  But corporate culture is opaque and unfriendly 

to the outsider.  Thirty-six corporations refused to grant 

Jackall permission to study them. From these unsuccessful 

negotiations, Jackall learned enough of an insider's ways to 

gain admittance to three companies: a textile company, a 

chemical company and a public relations firm. He called them 

Weft, Alchemy, and Images Inc.


Once inside, Jackall observed that formal corporate processes 

are but a ritual veneer over intensely personal ones.  

Reflecting this, managers typically identify their jobs by 

their boss.  They say, "I work for Bill Jones," or "I'm in 

Jill Smith's organization." To Jackall's clinical eye, this 

phenomenon, "exactly reflects the way authority is structured, 

exercised, and experienced."

Jackall calls corporate culture a 'patrimonial bureaucracy.'  

He points out that such personalization makes it more like a 

royal court than a classical rule-and-process-driven 


Jackall describes in detail how 'management by objective' ties 

the patrimonial bureaucracy together.  The anthropologist 

observes that 'management by objective,' is, in fact, quite 

subjective. The data indicate that the boss's primary job is 

to make his or her organization look good to superiors.

Bosses use ambiguity to manipulate credit and blame, 

allocating blame downwards and pulling credit up. "Pushing 

details down protects the privilege of authority to declare 

that a mistake has been made," Jackall says.  A boss can't do 

this if procedures are too explicit or well established. So 

bosses often leave important details unspecified.  This 

creates more ambiguity, so personal relationships become even 

more important.

Personalization of authority extends from lowliest manager to 

CEO.  At every level, Jackall observes, "the most common topic 

of conversation is . . . speculation about the CEO's plans, 

intentions, strategies, actions, style, public image and 

ideological leanings of the moment," including who has the 

CEO's ear and who's out of favor. 


When there is good news, credit flows up -- so the boss, 

personifying the organization, looks good to superiors.  Then 

credit flows up again. 

When there is bad news, it is the boss's prerogative to push 

blame onto subordinates to keep it from escalating. Bad news 

that can't be contained threatens a boss's position; if bad 

news rises up, blame will come down. This is why they shoot 



So it's easier to ignore bad news.  Thus, Jackall's chemical 

company studiously ignored a $6 million maintenance item until 

it exploded (literally) into a $150 Million problem.  "To make 

a decision ahead of [its] time risks political catastrophe," 

said one manager, justifying the deferred maintenance.  Then, 

once the mess had been made, "The decision [to clean up] made 

itself," said another relieved manager. 


I first read Moral Mazes in 1996, when I was part of AT&T's 

Opportunity Discovery Department.  At the time, we were 

discovering that the ways that telcos create value were 

becoming obsolete.  This would be bad news for AT&T, indeed.  

One night while reading, I had a vivid dream that my 

Department colleagues and I were hanging on meat hooks in a 

cooler, like butchered cattle.

Moral Mazes is a difficult book to read for other reasons, 

too.  It is written in a convoluted, academic style.  But it 

casts a steely, objective, unapologetic eye on how corporate 

culture works, how decisions get made, how power flows, what 

it takes to get ahead, and why Dilbert is so funny so often.  

The book is a decade old, but it hasn't lost its edge.  It is 

a must-read for all of us whose work gets bogged down in the 

labyrinthine politics of big, seemingly bureaucratic 



[The article above appeared as the June 1, 1999 "Intelligence 

at the Edge" column in America's Network. Copyright Advanstar 

Communications, 1999.]


QUOTE OF NOTE: Douglass Carmichael

"Our near total belief in things like money, gross national 

product, the sanctity of jobs, the free market, the invisible 

hand, can be seen, if we look at our society with the eye of 

an anthropologist, to be basically, fundamentally, profoundly 

religious. From this perspective we can say that we have been 

living in one of the great ages of faith in history . . . To 

question all this by suggesting y2k [might make] a mess of it 

raises profound anxiety."



Peter Tingling (

     "One of the most overused phrases has to be value-

     added -- what is it? . . . There is a tremendous 

     amount of slack in most value chains.  Value 

     subtraction is what many actually practice. . . . 

     The hardest part about all of this disruptive 

     technology is format renewal and virtually no one 

     can do it -- not without a real crisis . . . The 

     telcos, as Clayton [Christensen] outlines in his 

     book, have been weaned on too-fat margins . . . 

     Like caged tigers they no longer know how to hunt 

     in the wild." 


Bill Morrison ( writes:

     "In any large organization, there will be multiple 

     'competitive analysis' functions. . . . Adding 

     analysis is the difference between a reference 

     librarian and a communications analyst, per the 

     axiom mentioned to me by a manager at IBM when I 

     was a lowly intern: 'The more people who come to 

     you for information, the more value you have in 

     that organization.'"

I guess that gives me value-subtracted at AT&T -- David I

John Powell ( writes:

     "I found your comments on hotel Internet access (see 

     SMART Letter #20) interesting.  I am a modem 

     engineer for 3Com/U.S. Robotics.  I travel a lot, 

     and dial into my corporate net.  I totally agree 

     with your disgust with a business hotel that 

     limits time on the phone.  That is a pretty 

     ignorant business practice.


     "Your idea on providing packet type access is 

     good, but you forget that many travelers need to 

     dial inside a firewall to gain access to email 

     and other resources.  Our company is starting to 

     play with encrypted tunneling to allow access 

     inside our firewall, but that is kind of rare.  

     Also, most people don't carry an Ethernet card (I 

     do, but I am a geek), so providing some way to 

     connect the customer's laptop would be 



     "I wrote a short app note on the topic (aimed at 

     the hospitality industry); it is posted here: "


Russell Nelson <> comments on my statement in 

SMART Letter #21 that AT&T people are "locked in by their 

incumbency, their legacy, and their culture.":

     "Nobody is 'locked in'. It's just that the way you 

     build value differs depending on whether you're 

     in a revolutionary or evolutionary period. During 

     evolutionary, you build value on top of value.  

     During revolutionary, you build value by 

     destroying other (more expensive) value. 

     Revolutionary periods are risky for incumbents 

     because it's their *own* value that gets 

     destroyed. If you use revolutionary tactics 

     during an evolutionary period, you destroy the 

     value you should have been building on."

And Russell Nelson rebuts my claim that we need equal access 

for cable (also in SMART Letter #21) with a quotation from the 

Fifth Amendment to the U.S. Constitution:

     "Who's gonna pay for it?  'nor shall private 

     property be taken for public use, without just 

     compensation.' " 

This is remarkably similar to a comment that Richard Green, 

the president of Cable Labs, made to me on the same issue in 

April at the Multimedia Roundtable in April.  We could 

discuss, perhaps, whether the taking of *public* property for 

*CATV* use already paid for Equal Access . . . David I

Kingsley Hill ( writes:

     "I was in London giving a speech on competitive 

     strategies to new entrants to the telecom 

     industry.  A representative from Lucent asked how 

     the 'Intelligent Network' (he meant IN (or AIN) 

     from a Lucent sense) fit into the future.  I 

     noted that as the network moves to an IP 

     environment, 'intelligent devices' will be 

     everything from handsets to microprocessor based 

     servers on the network.  He told me that given 

     Lucent's massive investment in IN and that of the 

     carriers it will not be allowed to die. 


     "I pointed out that if Lucent and the carriers 

     stand too much in the way of IN dying, they will 

     be caught in the cross-fire.  He stood firm and 

     was still not happy.  Finally, (should I have 

     done it?  yes!) I pointed out that the number of 

     brains that can offer their abilities to 

     develop/deploy services and products increases 

     exponentially (as the innovation increased when 

     PC's democratized the development of computer 

     software).  I asked him who whether he thought 

     the "Bill Gates" of telecom applications would 

     come from Lucent or perhaps from some thatched 

     hut in Bangalore."

"Anon Exec" <>


Subject: Re: Smart Letter #21

Date: Fri, 14 May 1999 07:57:05 PDT

Anon Exec ( writes:

     "I had a comment about your thesis that under 

     AT&T ownership that "IP networks are just IP 

     networks." [see SMART Letter #21.]  Nobody, to my 

     knowledge, has gone farther to break this model 

     than @Home. @Home has been creating the "@Home web

     partners program"; the way it works, if you're inside

     the fence (program member) your content runs fast, 

     gets cached on the servers, maxes out the customer's

     cable modem.  If you're outside the fence and you're 

     a target (high revenue/traffic), your service will 

     continue to operate, but there might just be a few 

     packets dropped on the floor -- unintentionally, of 

     course -- it's just Internet congestion . . . the fact 

     that your service runs at exactly 28.8 is just a 


[OK. I am an @Home customer who never visits the @Home 

"portal." I am a happy customer only to the extent that I get 

great access to the web sites that I visit.  The instant 

@Home's ability to pull down these sites drops, I'm gone . . . 

Meanwhile, I'm hoping some high-speed competition 

materializes. -- David I] 


Bob Frankston ( writes:

     "It's bad practice to tie two unrelated businesses 

     -- transport and content -- together. But this 

     doesn't mean [the telcos] won't cause damage by 

     trying. In particular, no matter what the 

     technology says, they can always create terms of 

     service that tell me what I'm allowed to think 

     while using the connection and can even try to 

     enforce it with invasive rules. . . . Sprint's 

     ION puts a card cage on your premises and then 

     slices up the bandwidth into services they 

     define. Mike Armstrong talks about charging for 

     IP telephony. Then there is the issue of TCI 

     using content to cover the costs of IP 

     connectivity. . . . [The telcos] are used to 

     detecting modem traffic and diverting it. 

     Wouldn't it seem natural to look for an H.323 

     connection and route over the PSTN in the name of 



     "The near term question is the extent to which the 

     FCC understands any of these issues and the 

     extent to which they can or should have a policy. 

     . . . At very least, perhaps, it could require 

     that IP packets are sacred."


David P. Reed ( writes:

     "AT&T will, nay must, move to satisfy the FCC and 

     the town/state grantors of wiring monopolies by 

     using Voice on Cable as a loss-leader . . . Voice 

     rates will plummet, driving the phone-only local 

     loops into a suicidal downward price spiral.


     "The big win is that AT&T now will hold monopoly 

     position on all other non-voice service access, 

     and unlike stagnant voice, these businesses are 

     growing, and eventually will dominate.


     "If I were AT&T, I would be violating my fiduciary 

     responsibility to my stockholders if I did not 

     try to capture this physical and regulatory 

     monopoly on the local loop.  I applaud them in 

     advance, if they can make it fly.  They have at 

     least a 50% chance of winning now, and I have 

     been accumulating a lot of AT&T stock for that 



     "But I am equally sure that it will kill value 

     creation to do so, and that it is technically 

     unnecessary.  If I could vote my AT&T stock on 

     the principle of encouraging value creation, 

     rather than on the principle of protecting my 

     retirement, I would.  But I think I'm going to 

     make a lot of money by betting that the 

     government will hand AT&T the protected role that 

     will enable it to win.  (Though I'm a fan of free 

     markets, it's hard not to be a fan of free 

     government handouts when I can put them into my 

     retirement fund.)


      ". . . There's no reason AT&T has to actually 

     _deliver_ on the promise of competitive local 

     telephony over cable. All they need is state and 

     local governments' cozy ties to incumbents blocking 

     new access providers from deploying wire, fiber, and 

     spectrum, and for the FCC and DoJ to hold back on 

     antitrust action at the federal level."



The only way I will quote from email that you send me is if I 

have your explicit permission to do so.  Then, if you give 

permission, and if I decide to use your comments, I'll edit 

them for succinctness and readability while attempting to 

preserve their meaning and spirit.  If you *want* your remarks 

included in a future SMART Letter, it'd save a step if you'd 

say so up front. I'd like to publish comments with authors' 

names and email addresses, but if you ask, I will withhold 

either or both.  David I


QUOTE OF NOTE: Michael Dell

"I saw my name written in blood on every page of your book." 

Michael Dell, in email to Clayton Christensen, as recounted by 

Christensen on May 19, 1999.



July 14-16, 1999, Memphis TN.  "Disruptive Innovation" with 

Clayton Christensen.  I will be there to root out closet 

sustainers with too many Internet stocks in their portfolio. 


September 27-29, 1999, Lake Tahoe CA. George Gilder's

TELECOSM!  Save these dates . . . I'm putting a high-level

panel together on The Stupid Network.  For more information,




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Copyright 1999 by David S. Isenberg -- -- 1-888-isen-com


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Date last modified: 5 June 99