Page 158 - The Resilient Organization

Case Study: Imaginative Thinking in Action 145

But ODD did leave an important legacy. With the group’s members
working tirelessly from their unsanctioned platform, they did manage to
convince many of the top executives that the Internet represented a direct
threat to the core value proposition of AT&T and that tinkering on a small
Internet project outside of the mainstream of the business was not adequate
to take care of “that Internet thing.” They also painted a convincing picture
of the rapid migration to an “untethered world” and accelerated AT&T’s
efforts into consumer wireless business.

AT&T’S STRATEGY FAILURE

So, ODD, the unwelcome messenger with rare pioneer spirit, was dead.
But in the absence of an ODD-like influence, AT&T’s stock price was itself
showing few signs of life. Indeed, during the three-year period following
ODD’s disbandment and ending October 31, 2001, the stock had lost
almost half its value while the Dow Jones Industrial Average had
gained some 3 percent. AT&T’s competitors have also performed consider-
ably better.
When Mike Armstrong became CEO in the fall of 1997, he embarked on
a bold strategy of acquiring two large cable companies (TCI and Media One)
for some $100 billion. These cable interests would give AT&T, for the first
time, direct access to subscribers’ premises, enabling it to deliver and bundle
a full line of telecommunications services (local and long-distance telephony,
cable television, and high-speed Internet access) to consumers and business
customers. But full integration of these services would prove more costly and
more technologically complex than Armstrong had anticipated. In late 2000,
in an apparent reversal of this grand integration strategy, Armstrong
announced that AT&T would be split into four entities: AT&T Wireless,
AT&T Broadband, AT&T Business, and AT&T Consumer.

The Origins of the Failure

Whether or not Armstrong was the “mute and deaf king” some insiders
claim, AT&T’s strategy-making process had unarguably been broken for
some time. To understand the origins of this strategic failure, one must