Page 159 - The Resilient Organization

146 Part Three: Step 2. Building Resilience into the Organization

briefly look at AT&T’s corporate history. For most of its life, which began
shortly after Alexander Graham Bell’s 1876 invention of the telephone,
AT&T has operated in a highly regulated industry. AT&T’s top-down
strategy-making process worked well during those times of slow change,
when its industry was regulated. The company enjoyed a measure of cer-
tainty that enabled it to plan for the needs of its customers. For example,
AT&T’s strategic planners could rely on the accuracy of basic demograph-
ic data to forecast long-distance call volumes or pay-phone usage.
However, such a cloistered past left AT&T unprepared for what was
to follow. The 1984 breakup of the Bell System and the 1996 Tele-
communications Act—the industry’s most important deregulatory provi-
sions in recent years—thrust AT&T into the midst of an industry that was
replete with aggressive competitors, fast-moving technologies, and unfor-
giving investors. Above all, it presented uncertainty as the new constant
companion to AT&T’s strategists, who were accustomed to growth extrap-
olation based on the relatively well understood discipline of demographics.
AT&T had never needed to confront the uncertainties of a dynamic and
competitive market before, and it now lacked the requisite strategic skills
and tools to do so. And as often seems to be the sad case, when strategy-
making skills are wanting, financial deal making takes over in many a com-
pany like AT&T.

HOW TO AVOID SYSTEMIC STRATEGY FAILURE

An important key to entering a dynamic market environment from a highly
regulated past is to search for the people who are the true strategists with-
in your firm. It is unlikely the strategic minds reside in the department
charged with corporate strategy in the prior, regulated world. Rather, look
for people who are used to dealing with uncertainty and trained in the art
of studying it. That these folks resided at the Bell Labs (and later in the
AT&T Labs) should not be such a big surprise. Dealing with imperfect
knowledge in an uncertain world is what scientists do.
Looking back, AT&T consistently made strategy as if the management
lived alone on an island, removed from the perspectives and opinions of
their own employees, not to mention the iniquities of competition and