Mike Armstrong's principles of leadership.

• Author: NEFF, THOMAS J.

Here is what the chairman and CEO of AT&T thinks is important for people to know about leading an organization today.

3. MICHAEL ARMSTRONG disappeared for 90 days immediately after being named AT&T Corp.'s new chairman and CEO in October 1997. He came to work every day, but no one outside of the company -- with the exception of key clients -- saw him. There were no press conferences. No speeches. No meetings with securities analysts.

   "I closed the top management team in a conference room for three months," Armstrong explains. "That's a long time. But during that time we did something extraordinary. We hammered out a complete redefinition of our strategy for AT&T."

   Ironically, Armstrong's lack of visibility spurred frenetic press coverage. It seemed that everyone had an opinion about what Armstrong would -- or should -- do with AT&T. But even the most rabid speculators were surprised. Ultimately, Armstrong and his team decided to turn the company on its head.

   Armstrong, who had run Hughes Electronics Corp. (which founded satellite television operator DirecTV) and was previously IBM Corp.'s Group Executive-Communications, understood the telecommunications industry. And having spent nearly three decades at IBM, a tenure which included restructuring the company's operations in Europe, he knew what it would take to turn a business around. So, he was no stranger to what had to be done.

   At the end of those 90 days, AT&T started down a path that would do nothing less than make it, once again, one of the world's great companies. Investors have responded enthusiastically. The company's stock price, which was $34 on October 21, 1997 (the day before Armstrong was named chairman and CEO), stood at $61 less than a year and a half later (May 7, 1999) -- a market value gain of $92 billion.

   As part of the interview process for our book Lessons from the Top, we sent every leader a list of questions ahead of time. We wanted to give them an idea of the kinds of topics we hoped to discuss.

   Some of the leaders just glanced at the questions, preferring that our conversations be spontaneous. Others wrote copious notes in the margins of what we had faxed to them and referred to them continuously during our talks. And a handful of others went so far as to pull out slides and talking points from speeches they had given. Still, we were not quite ready for Mike Armstrong.

   "I've looked at your questions as a whole," he began. "It seems what you really want to know is how I go about leading an organization like this one, right?" When we agreed, Armstrong launched into one of the most concise and articulate discussions of business leadership we have ever encountered.

   A defining idea

   In my view, there are five buckets. The first is widely reported and written about, but it's also plainly true: You've got to have a defining idea. Some people call it 'the vision.' Others call it 'the strategy.' I'm not sure that it matters how you describe it in its adjectival form. But it must be real, substantive, and something that people can buy into and believe in.

   Before Armstrong arrived, the strategy at AT&T was basically built around protecting the company's long-distance business, conserving capital, and optimizing cash flow.

   "I took a look and I didn't think that the company's strategy was sustainable or durable," Armstrong recalls. "My defining idea was for AT&T to move to facilities-based broadband communications. We couldn't just be domestic, but global in our reach. We would not just sell narrow-band long-distance service, we would operate seamlessly through broadband wireless, Internet, and cable. Instead of being a point-to-point long-distance company, we would be an 'any-distance company' from wherever a customer was to wherever a customer wanted to...