The Inertia of Culture

The hard won lesson was that a good product-market strategy is useless if important competencies, assumed present, are absent and their development  is blocked by long established culture. 

AT&T provides a close up look at corporate cultural inertia.  As the inventor of Unix, which today underlies the open source Linux and Apple's Mac OS X operating systems, AT&T should have been a major player, especially with regard to computer communications.  They retained a strategy consultant to work on new products and strategies in computing communications.  Plans included key software packages, a simpler version of Unix for the PC that would allow for a graphical user interface and add on modules that could be sold electronically over telephone lines. 

In working with some of the high-level managers at AT&T the consultant was let in on an embarrassing secret.  AT&T wasn't competent at product development.   They were the proud owner of Bell Labs; the inventor of the transistor, the C programming language, and Unix.  But there was no competence with AT&T at making working consumer products.  The problem at AT&T was not the competence of individuals but the culture--the work norms and mindsets.  Bell Labs did fundamental research, not product development.  Just as in a large university, the breakthroughs of a tiny number of very talented individuals had been used to justify a contemplative life for thousands of others.  Through many decades during which AT&T had been a regulated monopoly, this culture grew and flourished.   With deregulation, competition and the soaring opportunities in mass-market computing and data communications, this way of doing things was a huge impediment to actions.   With no real understanding of technology, most senior managers at AT&T did not comprehend or appreciate the problem.

The hard won lesson was that a good product-market strategy is useless if important competencies, assumed present, are absent and their development  is blocked by long established culture.  The seemingly clever objectives crafted by the consultants were infeasible.  It would be at least a decade before AT&T slimmed down and gained enough engineering agility to support work on competitive strategy.

ACTION POINT: Understand your cultural competencies and work within them.