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Sol’s Magical Mystery Tour of Telstra.

February 25th, 2008 · Greg Atkinson · 3 Comments

You have to pay credit where credit is due and is appears that Telstra’s CEO, Sol Trujillo, is a master of the rules followed by many management consultants and top level executives. Thus he was able to impress a number of analysts and financial journalists with Telstra’s recent half year financial results, when in fact there was not much to be impressed about.

Therefore it might be a good time for me to outline some of the rules Sol and his inner team have been applying very successfully in their current roles.

Some golden rules for management consultants and top level executives.

Rule 1.

Highlight the bad and never mention the good when taking up an assignment. In that way you can always blame the “old” crew for all the problems that arise (even the ones you cause) and take credit for all the good things that happen during your watch.

Please note, you can even take credit for the good things even if they were as a result of changes being implemented years before you joined. Likewise you can blame the previous management for problems years after you started your watch because these problems were caused by an organisational culture that you are still striving to change.

Sol did this very well when he joined Telstra, he put some effort into talking down the company and created the perception that major changes were needed in order to save the organisation! He also claimed credit for much of Telstra’s broadband success when in fact Telstra were already leading the pack when he joined. Remember that Telstra was still making huge piles of cash and had seen off many competitors well before the new management team took the helm.

Rule 2.

Start a change programme! All consultants/executives know they cannot really exist without creating an atmosphere in the organisation of impending doom, and to prevent doom the only way to salvation is by following the path to organisational change.

Change means some form of change programme or in Telstra’s case, “A five year transformation plan”. The longer the programme the better for two reasons; the first reason is if things go well you (and your friends) get to ride the gravy train as long as possible and second reason is you have time to bail out if things start falling apart.

Consultants are rarely around when things fall apart and if the programme turns out to be a disaster after you left, you can always say “it was all going well when I was there!” (and you can blame the failure of your programme on the “old crew” who resisted change etc.)

Interesting to note that Sol will not commit to sticking around for the full term of the change program he initiated at Telstra. So it seems not only has he been successful in setting up a long duration change programme, but he has already issued himself with a parachute.

Also, remember anyone who opposes a change programme can be labelled as “not a team player”, “a dinosaur”, “part of the problem, not the solution” etc…the list of tags that can be given to these people is almost endless. It does not matter if they raise valid points, they threaten your existence and must be destroyed!

Rule 3.

Do something with Information Technology. (I.T) This may not be needed but I.T is sexy and you can use a lot of great terms in your MS Powerpoint presentations. Telstra is still pouring hundred millions of dollars into I.T improvements as part of the transformational plan so Sol seems to have this rule well covered.

Rule 4.

Under promise and over deliver…this is critical! As part of a consultants magical mystery tour into an organisation it is important that they set the expectations bar very, very, low. In other words, since the place was a total mess when you arrived (see Rule 1) your organisational masters should be happy that the company does not collapse and all employees are not forced to look for spare change behind office furniture.

By setting the expectations bar very low it means the new management team can appear as masters of the universe even after having delivered a pretty uninspiring result. (especially taking into account all the money that has been spent on the change programme)

Sol has excelled in his use of the “under promise and over deliver technique”.  For all his efforts and a 12 million dollar salary (plus the money being paid to his team of highly paid consultants) he has delivered a very average result.

After spending huge sums of money getting new products to the market all Telstra can boast is a 13% jump in half yearly profits. Operating expenses also rose so the underlying profit margin is not getting any great boost. Shareholders may have been better off without large chucks of the transformation programme in the first place.

Of course Telstra and their CEO will say they are only partially through the five year transformation programme and that shareholders need to wait longer before they see many of the benefits hit the bottom line. All I can say is if Sol and his team walk before the programme is completed (see Rule 2), then I would be a very worried shareholder.

P.S. I had an indirect interest in Telstra shares earlier in the year but these holdings were sold before the recent results were announced.


3 responses so far ↓

  • 1 Greg Atkinson // Apr 27, 2009 at 9:20 am

    Well…today in The Australian newspaper we hear “TELSTRA may be forced into large writedowns and the reduction of financial targets in coming months as widespread problems with Sol Trujillo’s $12 billion transformation project come to light at board level.” So I guess I was right on the money for once 🙂

  • 2 Senator13 // Apr 27, 2009 at 10:18 am

    Ol Sol has done more harm then good with TLS. He left TLS with blooning costs, no better profits, and bailed with millions in pay. The only one that did anygood out of Sol being at TLS was Sol himself.

  • 3 Greg Atkinson // Apr 27, 2009 at 9:00 pm

    Don’t forget his “amigo” pals that were flown in from the U.S., given ridiculously high salaries & allowances and then also departed leaving the place in a mess.

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