Building An Army Of Davids To Fight Goliath
When Bob Pons joined the eager recruits of MCI’s burgeoning sales force, Bill McGowan was already an American business legend. It was the early 1980s and, with McGowan leading the charge, MCI had accomplished the unbelievable – first breaking the grip of the 100-year-old telecommunications monopoly and then launching an all-out assault to win its customers.
“We all knew, growing up, that AT&T was the only source for long-distance calling. It had been so expensive, you barely made those calls,” Pons says. “When this company told us about the business model and explained to us that a call would be up to 40 percent less expensive than AT&T, I figured this is going to be the easiest thing in the world to sell. I was going to make so much money. I had no doubts.”
Of course, he was just out of college and teeming with ambition, and he’d just landed what was at the time a dream opportunity, working in a swanky Midtown Manhattan office for a company that had emerged from nothing to be among the most entrepreneurial, innovative companies in the world. By 1982, MCI had made its first billion dollars and had defeated a company that had more revenue and power than some small countries. Pons felt like he couldn’t fail; he was working for someone who had already done the impossible.
But that exhilaration was hard won.
MCI had started small, just a few microwave towers meant to offer regional service. With McGowan at the helm, a grander vision emerged. MCI aimed to break up the respected, government-backed monopoly that was Ma Bell. An absurd proposition, at the time. Pons and everyone else born before the 1980s had come to accept pricey long-distance service as a fact of modern life. AT&T had owned the entire network that supported local and long-distance phone service, as well as any equipment connected to it, including the phones in every home. People were required to have a phone, required to rent it from AT&T, and they had no choice but to purchase service through Bell companies, no matter the price. That line of thinking was so ingrained in the American way of life that, even after MCI won its landmark legal battles to allow competition in AT&T territory, Pons and other early salespeople would encounter people who asked whether it was even legal to purchase long-distance service from another provider. The phone company felt more like a government agency than a private business and had for as long as anybody could remember.
How did it change? Who could have forced competition on what seemed to be an unbreakable monopoly, an American institution? The change-maker was a tenacious, Harvard-educated businessman raised in Pennsylvania coal country. Someone who understood and appreciated the plight of the working man but also someone who believed in education and ideas. Someone who thought hard work, inspired by a shared vision, could make life an adventure. Someone who relished a fight and who managed to make people believe he could win it, too.
When he came to MCI in the 1960s to raise money for a small company fighting AT&T for the right to build a few microwave towers, McGowan already had made millions as a venture capitalist and a corporate consultant. He’d made a name for himself among certain circles as the man who salvaged companies on the brink of disaster by trying the opposite of the status quo. If companies paid their sales force on commission instead of salary, he’d reverse course. If the pay structure was opposite, he’d reverse course. He favored unconventional approaches and sought change. Soon he would take that idea that change is beneficial and apply it not to a single corporation but to an entire industry. It was attorney John Worthington who thought McGowan was the man to raise the money MCI needed to make regional service work. He saw in him a successful entrepreneur and a natural salesman - one who was also adept enough to “sell” the company’s cause to any investor and later to any potential employee MCI needed on the team.
Industry insider Larry Harris – one of the first executives with MCI and a legal expert who had managed corporate relations with AT&T, independent telephone companies, the FCC, and the White House’s Office of Telecommunications Policy – remembered McGowan’s constant search for the right answers. Here was a man who was a Baker Scholar at Harvard Business School, a man who had made millions consulting corporations on how to save their companies before he came to MCI – and yet he believed others could sometimes offer better ideas. “He was a great listener and read everything. He also never closed his door, and he let anyone talk to him about anything. When people would just drop in during one of our meetings, I would find myself thinking, ‘This is all bullshit.’ Bill’s response was classic: ‘You never know when some bullshit can save our company.’”
That was before the $1.8 billion verdict against AT&T in 1982. Before MCI won its first great battles, McGowan was able to rally an army of people to his side. “He went after bright people who had broad experience and liked a challenge,” Harris says. “They were people who had not become wealthy yet but were making good money. He was able to convince them that this was a good opportunity and they could make a lot of money.”
He came to be known as the hard-driving, chain-smoking boss who loved a challenge and who could get everyone to fight with him, a man who repeated the phrase: “A crisis is just an opportunity.” He was always opening others’ eyes to opportunities, and they trusted McGowan to take them to them because he showed that he wouldn’t stop until he found the right answers.
Gerald H. Taylor started out in 1969 as an executive assistant to McGowan and founder Jack Goeken and spent thirty years with the company, eventually rising to CEO before he retired from MCI WorldCom in 1998. Even in the early days, he knew MCI had serious potential with McGowan at the helm, constantly looking for the best new idea, no matter the rank of the person who suggested it. McGowan’s philosophy of running a flat organization - taking ideas and advice from any employee in the company - helped him ensure everyone was engaged throughout the company’s stages, from struggling against regulatory restrictions to winning market share. But he also made them owners in the business with employee stock options, a rarity in the ‘70s and ‘80s. “Those were what people worked for,” Taylor says. “It was hitched to the belief that we were going to be successful. Individually, you could make a lot of money and the options were based on the contributions you made.”
He was constantly asking employees to consider what three most important moves would make for success in the next year. His focus guided them, but his unrelenting appetite for work and knowledge inspired. Taylor would see McGowan on the weekends with armloads of books, newspapers, and magazines. “He had this amazing energy and intellect,” Taylor says. “People were in awe of him.” And that awe extended to regulators, who would play a role in the company’s fate - and employees knew it. “He was very charming and a great storyteller,” Taylor says. “People genuinely liked him and they could identify with him. Here’s a guy from a small town in Pennsylvania that really doesn’t consider himself a big shot. He won a lot of people over. Ralph Nader kind of worshipped him. He had an office down the street and Bill paid attention to him.”
Because employees saw his influence first-hand, they believed he could persuade the right people to let MCI have a fighting chance. McGowan inspired them to believe they were on the right side of history and he gave them each a stake in the outcome. And he demonstrated that he had the influence, drive, and intellect to make their collective effort victorious.
The result was a loyal team of people who, together, discovered the thrill of fighting through a challenge. And they held onto it. They won the battle of breaking into the telecommunications in a way that would have seemed unbelievable. They made long-distance calling affordable and pressed forward into other innovations: the first commercial email service and an early foray into cell phone technology and ultrafast fiber optic technology. MCI employees had a worldwide impact on telecommunications, and they did it because McGowan showed the fourth component of Trust: Capacity. He made people – legislators, employees, customers, investors – believe he was equipped with the resources to risk their careers, their money, and their reputations in a battle where the odds were stacked high against them.