In Berlin by Christmas

In Berlin by Christmas

Today's CEOs are giving incompetence a bad name.

I have said it before in this column but I shall say so again. The current worldwide crop of CEOs make the generals of the First World War look innovative and forward thinking. They say the height of folly is to keep doing the same thing and to expect a different result. By this reckoning we are unlikely to encounter a more foolish group of people than these military colossuses. Typified by General Haig, who was commander in chief of the British forces, they persisted for most of the war in believing that force of numbers would eventually wear down the enemy. They anticipated they would be in Berlin by the first Christmas of the war. Regrettably a generation of young men ended up as cannon fodder in their failed attempts.

I was reminded of them at the recent CIO conference. A succession of excellent speeches offered CIOs advice on how they could improve their performance and be a more complete CIO. However, the assumption was that the CIO was working for an astute and intelligent CEO. Where, I wondered, was the conference telling CEOs that it's about time they lifted their performance? What chance has any subordinate of being effective when their executives are so hopeless?

You may have read recently that Dr Ziggy Switkowski was reappointed CEO of Telstra for another four years on an annual salary of around $1.5 million. This is the same executive who has presided over a company whose share price has fallen at least 20 per cent in the time he has been at the helm. This is a man whose billion dollar foray into Hong Kong has been completely written off and who has doggedly resisted the calls of people like Paul Budde to fast track the rollout of broadband around the country.

However, the real cause of my ire is the news that Telstra plans to slash its IT budget by 50 per cent in response to market pressures. In my reckoning this is at least the sixth restructuring the organisation has endured under Ziggy's stewardship. Why is this one likely to be any more successful than any of the others? When my InTEP contact at Telstra was retrenched in 2001 I found it impossible to find anyone in the company who even had overall responsibility for IT strategy and architecture in the largest IT shop in the country. Does anyone seriously think that, as a technology-centric organisation, a 50 per cent cut in its IT budget is not going to impact seriously the quality of Telstra's service deliveries.

In the end no one ever cost-cut themselves to greatness. However, there seems an inability in the modern executive to recognise that these downsizing strategies have run their course. They may temporarily impress the analyst community but eventually the chaos these moves generate becomes all too evident. Despite nearly five years where cost cutting has been the mantra, the sharemarket is still not back to the heady heights of the 1990s. Moreover, the only differentiator any organisation has is its staff and a never-ending cycle of disruption, anxiety and uncertainty only erodes staff morale even further.

It is worth remembering that it was an Australian, Sir John Monash, who broke the deadlock in the First World War. Monash differed from Haig's assessment of the role of infantry, believing less in a war of attrition, but rather in planning infantry assaults to most effectively coordinate with the use of heavy artillery. His objective was essentially to do anything to prevent what he deemed an unnecessary loss of life. Not surprisingly he won the respect of his troops who helped turn the tide of the war. Perhaps then, like Monash, there will be an Australian CEO who will help get the current corporate world out of the quagmire of its own restructuring killing fields.

Peter Hind is a Telstra shareholder.

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