Rise and Fall of a Roaming Empire part 1

This is the first of 3 blogs that will describe my observations over the course of 5 years. During this time I have seen the decline of a great company from inustry leader to one struggling to survive in an increasingly difficult market.

First, I apologize for a horrible pun. This story is about the meteoric rise and sudden fall of a Fortune 100 telecommunication company – a company that was once voted into the top 50 American companies to work for. The company name will go unsaid, but if the facts of the story don’t give the name away, then a few seconds with Google will.

The story begins in the 90’s when a well established and highly regarded telecommunications company decides to expand into the cell phone business. They correctly see that wireless communications is the wave of the future. In order to evolve their business, spectrum is purchased, technology is trialed, vendors and architectures are selected, equipment is procured, talent is reorganized and a state of the art network is built. Things go extremely well for the new business. Revenue hits $10 billion faster than any company in history. Customers are acquired at a rate greater than a million customers each quarter. The company’s wireless service is well respected in the industry and by its customer base. The company’s brand is seen as a corporate asset that must be protected at any cost. The new wireless entity is ready to become the cash cow for the parent corporation.

But, this is not to be. What happens next is a series of errors in leadership, judgment and execution. While the mistakes span the organization chart from top to bottom, a few of the errors made by leadership were so egregious as to seal the fate of the company.

The first error comes after a well intentioned acquisition. The CEO felt that to compete effectively with his larger competitors, the company would need a larger customer-base and a larger economy of scale. So discussions were started with a competitor that was roughly equivalent in size, and with lightening quickness a merger is formed. The merger is approved by the FCC, and shareholders vote positive based on the savings expected from “synergies”. Delivery of the synergy savings become the prime focus of the CEO and his staff.

The merger starts out rough, as most probably do. Obstacles to a smooth merger soon become insurmountable. The two company’s technologies are different, so little synergy is realized from combining and leaning out technology groups. Manufacturers do not see the new merged company as a new larger company, but only as 2 divisions that happen to belong to the same parent company. Duplicative common functions, such as Finance, Human Resources and Retail stores, take the brunt of the “right sizing”.

Pressure mounts to produce the “synergy savings” expected of the merger. Information Technology systems become the focus for finding savings in the new company. Systems become the primary key to meeting synergy expectations. So, a very large project is started to convert activation, account changes and billing for all customers to a single billing platform to be used by both pre-merger companies. The project is huge with many moving parts. Not only does the system need to draw from customer account information, it also needs to change network hardware settings for both technologies and the customer’s handset configuration. The changes will be complex and mistakes will carry a significant risk to the wireless experience of the company’s customer base.

The project is deemed so important that it is assigned to an officer, the CIO, of the corporation who forms a dedicated project management office to coordinate end to end. The project is kicked off with hundreds of vendor contractors and company employees participating. Implementation of the new billing system is segmented across multiple phases, each requiring a migration of customers from old to new billing systems. Dates for each phase and migration were set and the expectation was communicated that slippage of those dates would not be tolerated. There was only one possibility; MEET THE DATES.

Tomorrow, the impact of treating a project schedule as the primary objective to meet at all costs.