Tuesday, May 26, 2009

Goodbye to the Sole True Hero (Sol Trujillo goes back to San Diego)

I am an outsider (an Australian) who keenly observes the ways of American CEOs.  As a group they have not covered themselves with glory – fat cats – overpaid and led their companies to ruin.  But they have their strengths and their weaknesses.  Mostly I like to focus on their strengths.

The strength of American CEOs is to a large extent an artefact of the strength of the US economy.  The US has a bigger and more homogeneous market than anywhere else on the planet (China included).  It has a decent swathe of entrepreneurs – and in almost every industry there is – as a result – fierce competition.  Competition is usually good for consumers – but rarely as nice for shareholders or managers.  It destroys bad businesses and it punishes bad management.  Competition breeds stronger businesses and stronger management.  It kills the weak and toughens the survivors.

The best American CEOs are – as a rule – the survivors from this competitive grind.  They are toughened – and in my opinion they are on balance the best senior executives in the world.  I am as a rule a fan of American management.

But not entirely.  Corporate governance in America sucks.  Only in America is it standard to combine the job of CEO and Chairman of the board – making the CEO answerable to nobody.  Only in America are boards so stacked with scratch-my-back-on-compensation buddies to make CEOs breathtakingly rich.  [Unfortunately America is exporting that cultural trait to the rest of the world.]  Moreover the pay of CEOs (often 100 times average) and the perks (private jets and exclusive golf clubs) have bred a CEO culture that is overweening and arrogant – and simply tone-deaf when it comes to many issues.  Only in America could a bunch of CEOs take private jets to Washington to beg for taxpayer dollars.

So I have a piece of advice to offer boards when searching for a new CEO.  

If you are a business which is struggling with fierce competition from numerous and new directions – and where your response to that threat will determine your future –then your default position should be to hire an American.  That is what they are generally good at.

If your business problems are not fierce competition but dealing with complex competing interests and government regulators in a way that creates win-win outcomes then do not hire an American.  You run the risk of alienating your target groups with arrogance and private jets.

There are exceptions – a few CEOs – especially in drug industries but also in IT – have created truly inclusive work places in which talent is catered for as individuals, and thrives.  Google springs to mind. 

Also there are the obvious non-American ruthlessly competitive CEOs who seem to meet any competitive threat with overwhelming force and tactical brilliance (Rupert Murdoch stands out).  

But despite the obvious exceptions the stereotype rings true because it has a basis in reality.  That really is how the modal American CEO is.  

Sol Trujillo – the bad American CEO

Telstra is the dominant Australian phone company – the now privatised former government owned monopoly.  It still owns the twisted copper pair of wires that goes into every home and now carries an increasing variety (and speed) of traditional telephony, voice over IP, internet and entertainment.  How it extracts value from that monopoly position will be the ultimate determinant of Telstra’s long term position.

That however requires continuous and careful negotiation with government as the monopoly is (justifiably) regulated to ensure appropriate contractual arrangements with a host of other parties that want access to the copper loop.  If you want the CEO to do that you don’t hire the stereotypical American Imperial Overlord.

Alas that is what Telstra did.  His name was Sol Trujillo – and almost immediately the wags noticed the self-centeredness of the man and dubbed him the Sole True Hero.  He proceeded over several years to alienate governments of both political persuasions with bombast and dodgy lawsuits.  He hired cronies who were equally tone deaf.

And he singularly failed to improve the competitive position of the company in the competitive business.

In other words Sol Trujillo was everything bad about American CEOs with few of the redeeming features.  He was a failure.

He departed Australia early – and there was no love lost.  When told of his departure the Prime Minister (Kevin Rudd) responded with a single word – “adios”.

Sol Trujillo says that word proves his assertion that his difficulties in Australia was because of racism.  Well say what you will about our Prime Minister but he is not a racist.  He speaks a few Asian languages – including Mandarin fluently.  His daughter has married a Chinese man.  He is empathetic to other cultures and has indeed immersed himself in them.  

Sol is grasping at straws to justify his failure – a failure rewarded, in American imperial CEO style, with cumulative pay above AUD30 million.

So – lest I be accused of racism I will give him a more appropriate farewell.  



PS.  Yes - I agree that Kevin Rudd's comment was a lapse.  But racism is not the explanation for the total failure of Sol Trujillo.


Anonymous said...

it IS racism, the way americans perceive it now. of course to an australian it doesn't seem that way, it's just a punt. in europe would have been even worse.

if the scene happened in US you would not see obama say 'sayonara' or 'arrivederci' to agnetti.

John Hempton said...

I agree it is racism - mild - but racism. There is plenty of not-so-mild racism in Australia and in most other countries.

There was no racism when he arrived - but he was unusual here. Australia does not have a wide range of Hispanic residents. We have a much wider range of Asians.

Geography in that sense is destiny. We also have almost no Africans. We did not import slaves.

But there was no problem hiring Sol. The problems were after he was hired.


Aussie Bloke said...

how can anyone who lives in a FREE country consider something so light humoured and inocious to be racist. in past times a farewell in ones native language - albeit this time it was sarcastic - was considered a great respect. Sol lives by the american way get rich no matter what gets in your way. To me the way he does business is more of an insult to my beliefs (Fairness being the main thing) than kevin rudds comment or the treatment he recived in the media.

Anonymous said...

I don't think it's racist, it's just angry with incompetence being rewarded 30M and not being able to do anything about it.... lets call it: being angry that some one steals you by contract....

Keiran said...

For the record, I'd take worse from most people for 30 million of most currencies.

Now there was something a little distasteful about the whole Sol and the Three Amigos meme. That bitchy aussie egalitarianism, cutting those big yanks down to size almost before they'd arrived. On the other hand, I have friends on the inside of Telstra and them yanks was pretty high handed. But why couldn't we just call them clowns at the time? Why the need for cheesy headlines??

To be fair to Kevin, after all the media coverage of the Amigos, it would have been hard to suppress that 'adiós'

Another fine post John, keep 'em coming.

Anonymous said...

Trujillo: he was a failure at US West (in the late '90's there was a six month waiting list for a landline); washed out of France Telecom's mobile business, and washed up on Australia's shores. He never 'got it'-and all he could do was bang the gov't/regulator while exploiting every inch of the network monopoly. Good riddance.


David Havyatt said...

Good commentary. He was certainly not subject to racism, as I note here.

Anonymous said...

The Telstra Board had a strategy in mind and picked the perfect abrasive personality to do their bidding.

No executive in Oz would be employable again in Oz after a performance like Sol gave.

So Sol blew in and then blew out.
He failed from Telstra's point of view but not his own.

Alexandra said...

The perfect example of the model top-level manager, be it executive or board member.
However, the common trait among them is not nationality or ethnicity. The commonality lies in their personality. They work especially well in creating a mess around them, getting people to fight eachother and then offering themselves as the one with the solution or as the mediator.
They thrive in adverse environments.
Is this unique to the US? No. They are just the ones doing the bullying in a more obvious way than the others. French, Swiss and Brits, for example, are more subtle in doing it, which makes them look more civilized. They are not.
The problem is cross-national, cross-ethnical and cross-cultural.

Hasta la vista.

Unknown said...

Sol Trujillo is a dangerous ego maniac. I worked with him in the states for over 15 years. He was always a self promoter, caring only for his own advancement.He only rose to the top due to an overzealous application of U.S. affirmative action policies by a weak minded predecessor.
It's laughable for him to now blame his failure in Australia on racism.It's a shame you Aussie's had to suffer through is tenure. You really hired to very worst that corporate America has to offer.

Anonymous said...

What happened to Sol in Australia had nothing to do with racism - it's about incompetence and hubris.

The real question should be why Sol was hired by Telstra in the first place. He was canned in less than a year from Orange for improper use of a corporate jet. He ran his previous employer, San Diego startup Graviton, right into the ground without accomplishing any of the things he promised. And before that he created one of the most unpleasant employee cultures at US West, while earning the nickname "US Worst" for their terrible service.

Sol's departing comments are typical of his style - blame the problems on someone or something else and always take credit for others' work. The real issue is his incompetence and the incompetence (or blindness) of those who hire him.

Anonymous said...

Don't forget that little blunder while CEO at Graviton in La Jolla (San Diego, California). He likes to leave that off his resume...

Anonymous said...

I was one of the executives at Graviton, though I have not been following his career and didn't even know that he had left Telstra and returned to the US until recently - though I have suspected that he has been aiming in that direction for some time. Sol retains several very good Public Relations firms/people and when I saw some articles about him - and interviews with him - here in the US media over the last year and a half, I figured he was looking for something back in the US.

My perspective is that Sol is sort of a tragic figure who - if you think about it - has failed at most of what he has tried to do; even as he has managed to get a very good salary in the process. When US West and Quest merged he lost out to Joe Nacchio for the CEO job, and when he came to Graviton he simply spent money to hire former US West executives at very high salaries to support him and build the company into a Fortune 500 company quickly. I think he totally failed to see that you have to grow a start up company into a basic revenue producing one before you can head for Fortune 500 status, and so he spent all of the money and then couldn't raise more.

Oh, he will take credit for raising $35 million but the truth is that much of that had been lined up already by the founder and others, and he simply ran through the money quickly. With his many trips to New York, Spain, Italy, etc., he had a good time however. When he got stuck in France due to the US shut down of air travel after the 9/11 terrorist attack, I offered to pay his secretary to go home rather than stay at work until late into the night trying to find a way to get him back into the US. It was interesting to those of us who worked there that he sort of left out any references to Graviton in his bio until others kept pointing it out (I told you he had good PR people).

The Orange job was a very short one and it seems to me that he didn't accomplish much there - though his PR people did claim he had accomplished what he had set out to do. I heard that he just barely had time to resign before he was to be fired.

I was quite surprised to read that, after he stepped down, he ranted about Australians being "racists". This is a charge he leveled at people who didn't agree with him over 10 years ago and I guess it is part of his makeup. He claims to be a "global executive" and yet he fails to recognize that there are country cultural differences that, as a Chief Executive, you have to recognize and take into account. When I worked with him, it was Sol who stuck me as a bit racist. He was always pushing to hire more Hispanics, was overly sensitive about being Hispanic himself, and seemed to look for any hint that someone disliked him because of that.

I will give him credit for convincing Boards of Directors to pay him a lot of money though. One of his former compensation people from another company told me once that he was always pushing the Board for a higher salary and more bonuses. At least in that, I guess, he succeeded.

I don't know what he is going to do in the US, but I just hope that any Board that considers him does careful due dilligence and doesn't give him the chance to ruin another company.


Anonymous said...

It is very much a racist comment. It's too bad the Austrailian empire couldn't find anyone in your own country to run a large corporation like this. What does that have to say for your locals? Losers! Your corporations reach outside to bring in talent because you have none there.
You didn't deserve his leadership.

Anonymous said...

While using Google recently I noticed a paid add for non other than Sol Trujillo. When I clicked on the banner ad I entered perhaps the slickest manifestation of over-the-top, hypo self promotion I've ever encountered.
Having worked with Sol for years, it was always clear that Sol cared about only one thing--SOL, or more aptly, $OL.
He now has apparently taken to using his Australian riches to pay advertising firms for a new chapter in his endless round of maniacal ego trips.
Any board considering hiring this lunatic should double up on their D&O coverage!

The PM said...

Re: Anonymous @ November 2, 2010 2:47 AM

I see what you did there.....

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