How to spend $200+ Billion for a Train Wreck

Once upon a time, a paragon of American innovation lost its way.  It embodied Einstein’s definition of insanity, spending over $200B for a train wreck… and they’re doing it again. The story starts in the last century and my part about 28 years ago.

In the early 90’s at AT&T, I was on a ‘special project’ with some friends to design the next generation core domestic network.  We were from Bell Labs and had “grown up” with the Internet (Arpanet, initially).  We were young and idealistic so our designed was based on the TCP/IP protocol.  This let us move anything over the network – email, faxes, images, movies, songs, phone calls, photos, anything – in real time.  We knew that with enough bandwidth, routers, redundancy and diversity, someday we’d watch or listen to concerts and movies live.   This way, we only needed 1 network (with tons of security & safeguards obviously) to handle everything.  The days of a voice-only network built on big expensive switches was over.  We presented our design to the powers that were. Answer? Nope! They thought it was the dumbest thing they’d ever heard.  [About 13 years later, a friend asked me if I still had the designs because they were looking to build that network.]

The 90’s were a battle between the network/telecom providers (AT&T, MCI, etc.) and the PC/Software maker end points (Microsoft) deciding where to put the ‘smarts’.  Microsoft et. al., felt they owned the smarts and just needed commodity dumb pipes to connect them together.  The networks knew if they didn’t have any ‘smarts’, they didn’t have any differentiable value from each other.  The smart ends would win the battle, forever commoditizing the networks. I saw this and worked on this firsthand.  It wasn’t pretty.  It led to a lot of spending with little success:

• 1999: AT&T pays $44B to buy the cable company TCI, creating AT&T Broadband.
• 2002: AT&T sells AT&T Broadband to Comcast for $47.5B after having invested about $58B more for a total of $102B in AT&T Broadband.
• 2015: AT&T buys DirecTV for $49B.
• 2016: AT&T offers to buy Time Warner (not the cable, the content) for $85B (and I don’t think this is a bargain price).

The networks lost the smart-dumb battle.  So, if it hadn’t worked before, why now? Is “Media” that different from smart-ends? Really? Maybe this is what they’re thinking:

• AT&T is losing wireless customers with decreasing revenue/customer; 
• DirecTV is losing customers because of cord-cutting;
• Content drives revenue (yup, heard that 20 years ago); it uses lots of bits and time;
• “New” Media companies are becoming networks– Facebook, Amazon, and Google (take special notice of Google – if I were AT&T, I’d worry about them non-stop).

Over 17 years, AT&T spent about $236B (BILLION) dollars to get in, out and back in to the cable and content business.   Having lived through some of this and trying to show why it wouldn’t work financially, strategically, innovatively, and a bunch of other ‘ly’s, here are at least 6 lessons I learned:

1. If you can’t figure out how to add value to your own stuff, buying other stuff to bolt on, without understanding markets and customers, doesn’t work;
2. Culture matters, first and only; Making acquisitions outside your traditional space is hard, it’s virtually impossible if your cultures are radically different;
3. If you’re losing customers, DON’T buy a company in the same situation!!!
4. If you keep repeating solutions that don’t work STOP! Either figure out something different or figure out how to be a profitable commodity… it works for Coke!
5. Check the C-suite egos at the door; hanging out on the set of Game of Thrones isn’t worth billions to shareholders.
6. In my next life I want to come back as a company AT&T buys.

I Don't "Have it All" - Yeah!

After some tweet and email discussions with Anne Marie Slaughter and Cali Williams Yost about Anne Marie’s article on The Atlantic, and the uproar about Marissa Mayer becoming Yahoo’s CEO while she is pregnant, I decided to weigh in.  Finally, we are having an honest discussion of “having it all” instead of perpetuating a fairly tale.  While this has mainly been viewed as a ‘woman’s’ issue, it is a very human issue.

The phrase “having it all” is a huge part of the problem.  First, no human being can have it all, regardless of gender.  Second, as an advocate of Buber’s “I-Thou”, the focus of “having it all” is on I, not Thou.  I firmly believe that focusing on “I” always leads to disappointment (in ourselves and others), dissatisfaction with one’s life and an addiction to seeking satisfaction and happiness.  It leads to judging others and ourselves by what we don’t have but want, what we feel we are entitled to and what we did or didn’t do.  It leads to a treadmill of keeping up and keeping ahead.  It reinforces a binary world of it’s “me” or “them” - either/or – not “us”, not “and”.   Throughout my career, when I focus on the “Thou”, helping my clients’ solve challenges and innovate resulting in growth, jobs, philanthropy, the “I” takes care of itself.  When I focus on the needs of others, clients, entrepreneurs and students I mentor, my network, my own business grows as well, allowing me to do more “Thou”… a virtuous and incredibly rewarding (oh, “I”!) cycle.

My journey of work+life has been blessedly based on “I-Thou” + “AND”, very progressive for its time. Growing up in Bell Labs, I was very spoiled with a great deal of freedom, intellectual stimulation, and no sense of gender discrimination.  It was a discovery ‘factory’ that sought AND solutions.  My bosses were mentors who led with “I-Thou”:

• One put his credibility on the line to promote me, a 22yr old ‘kid’, to a level that required a Ph.D. or at least MS, making me the first, if not one of, to get to that level without the required degrees;  
• Another measured his success on his people’s success (output) and impact (outcome); he was one of the most admired, and loved, managers and had one of the highest promotion rates.

When I said I was quitting to move to Oberlin, OH to marry my husband in 1988, AT&T/Bell Labs offered to move me if I wouldn’t quit…another “I-Thou” moment.  My management made the case for paying to move me to Oberlin and pay for weekly commutes than lose me.  For 9 years I flew to NJ every week and to Europe or Asia monthly, was given a laptop with global network access, a cell phone and a fully equipped home office.  When I had children, with fabulous maternity-leave and benefits, I returned to work from home, no travel, part-time – keeping my same level and responsibilities. I was able to do very meaningful, impacting work because I demonstrated my talent and my management recognized my worth.

I love what I do. I am passionate (and blessed) about the impact my work can have on my clients’ business, employees and communities, my mentees, “portfolio companies” - professionally, organizationally and even personally.  I find it difficult to separate my passion for my ‘work’ from my passion for ‘life’ and hope to impart that to my children.  I pray they find an ‘avocation’ that integrates the various aspects of their lives.  I want them to know that they can impact the world in many ways – from career to marriage to parenthood to friendships etc.; that their solution is an AND, not Either/Or.  The workplace is evolving, in fits and starts as it fights the status quo, to make this goal more achievable than in the past. 

We’ve all make trade-offs in our lives.  It’s impossible not to.  Anne Marie Slaughter’s essay makes it clear that these are personal choices that require honest and straightforward discussion without judgment.  This is not to say that we don’t have an issue with women’s accessibility to influence and power in the ‘corporate’ world.  We do.  But we need to ease up on prescribing and focus on enabling solutions that meet the needs of the working person as a whole: as an employee, parent, spouse, sibling, child, community member, etc.   It’s messy – welcome to the 21^st C!  Everything is a ‘mess’ – and what a blessing!  This messiness is the foundation of change, transformation and innovation.  Perhaps we needed to reach this point to finally create flexible, agile, nimble solutions that don’t discriminate between “work” and “life”.  This is the century of AND not Either/Or…of trying to ‘give it all’ vs. ‘have it all’.

So, what can you do to evolve to an “I-Thou” management style, culture, habit? How can you leverage that to help you and your employees create an AND solution? How can you avoid creating a false choice of Either/Or? How can you change your perspective and leverage the opportunity this ‘mess’ provides to create incredible outcomes for Thou’s?

Innovation's Enemy? Success!

The saga of Congress, the White House and the budget is horrendous.  If they can’t agree on 1% of the budget for six months, can they really create a budget to cut the deficit and debt for a year?

Everyone took last year’s election as a mandate for one party over the other, but it really was a mandate for an economic revolution. Is the government capable of re-inventing itself? Of innovating?

We can look at other examples, like big companies. There has been a lot discussion of whether or not big companies can innovate. I've seen some do it, but not many. Does that answer the question? Kind of.

What is the biggest inhibitor to innovation? Success! So many of my clients have been both blessed--and cursed--with success, even in this recession, that it’s skewing their perspective of the future.

They are sitting on a lot of cash that they are hoarding...for lots of reasons (like fear of a double dip, etc.). But now is the time to really innovate - to disruptively innovate.

For most of them, the amount of money it would take to experiment, to prototype, to try some things is insignificant compared to what they have in the bank. This may be, for some, the least financially risky time to innovate - financially, not culturally. Culturally, the risk is huge!

They say to themselves, look at how we're doing despite the economy, we must be doing something right! And they were/are...but not for that long. For many their R&D and innovation pipelines are two or three years out max.

Let's look at some who didn't innovate. Remember Wang? DEC (Digital)? The original AT&T (bought out by the kids it spun off)? Hey, Smith Corona? Yahoo!? Blockbuster? In fact, ‘netflixed' is a now a verb! And Blockbuster even says they saw it coming but didn't really heed the warning signs.

Then there are those that were able to reinvent themselves. P&G, IBM, Ford, Apple. What was the difference? People. Management. New leadership (in the case of Apple, original leadership returning) brought in new insights, were not entrenched in the groupthink and were able to see and start the turn-around.

But this isn't easy nor is it typical.  I've had the privilege to work with a few companies that have been able to do this, but again, it's due to very special people. Check out one that still amazes me - Menasha Packaging .