Mci Founder Bill Mcgowan

The man who plotted the overthrow of Ma Bell's monopoly now runs a $3-billion shop by fighting bureaucracy, welcoming change, and constantly redefining what business he's in.

 

What the world has heard about MCI Communication Corp. chairman William G. McGowan is that his dogged pursuit of a piece of the long-distance market eventually broke AT&T Co.'s monopoly of the American telephone industry. What most people forget is that, all the while, he was building and managing a company that now has about 15,000 employees and this year should take in more than $3 billion.

There was nothing preordinated about MCI's political and legal victories, nor its unquestioned dominance among the new players in telecommunications. Credit the toughness and cunning of this son of a railway union official for getting the jump on such giants as ITT Corp. and GTE Sprint (or "Splint," as McGowan loves to call it) in the race for residential and small-business customers. Then just when you thought AT&T would get its revenge by matching MCI's low prices, McGowan signed up IBM Corp. as partner and largest shareholder -- in a single stroke gaining $600 million in capital and equal access to the brave new world of information technologies.

MCI has been McGowan's biggest, but not his only, success. He hustled alligator handbags and helped Hollywood's Mike Todd raise the money for the movie Oklahoma, then made his first million in the mid-1960s with the sale of a small defense contracting firm he had started. The idea for offering private long-distance telephone lines between major cities actually came to somebody else. But it was left to McGowan to sweet-talk Wall Street and rewire official Washington until it interconnected with MCI's ambitious business plan.

This student of Wilkes-Barre, Pa., nuns and Harvard Business School dons has now become an acerbic critic of the American corporation and its most sacred beliefs. He is, above all, a professional iconoclast who still runs his empire with the highly focused energy of the turnaround specialist he once was. His supreme confidence, say associates, is a mixture of public egoism and strongly private Catholic faith. Today, he seems driven less by the desire to change the world or make a larger fortune than by the need to conquer ever more difficult challenges.

McGowan spoke about his experience with management and managers with INC. editors Bo Burlingham and Steven Pearlstein.

INC.: You've taken a company from nothing and, in the span of 18 years, created a new industry and built a company doing almost $3 billion worth of business. How do you account for the fact that you didn't allow the company to outgrow you?

McGOWAN: Besides the fact that there is no accounting for it, I suppose it's because I realized at every point along the way that I didn't need to be the person who had to do any particular thing other than make sure that the focus and direction of the company was clear, and that the forces and people were set in motion to get us where we were going.

I'm naturally a delegator. I guess I realized early in life that, unless you're going to be a violinist or something, your success was probably going to depend on other people -- that's certainly true in business. And if you're going to be in a business of any size, you're going to have to develop the kind of leadership qualities that allow you to attract good people, guide them, encourage them, and ultimately trust them -- and let them go and do their jobs.Oh, sure, you have to take deep breaths occasionally. But mostly you have to trust them.

INC.: One can think of countless CEOs in growing companies who say yes to all that, that they're going to trust people . . .

McGOWAN: . . . And they second-guess them. They say, "I could do better. . . ."

INC.: Or they find out that they really like doing some of the jobs they are delegating, and so don't ever really give them up.

McGOWAN: Look, if you're in a growing business, that comes with a whole bunch of characteristics that you have to face up to. You can't say, "I'm going to take the pieces that I like and not the pieces that I don't like." If you don't like going up and down all the time, don't become an elevator operator. Or, to change the metaphor a bit, if you're happy running a million-dollar delicatessen, then don't naturally assume you want to run a $50-million delicatessen. It's unrelated -- there's no relationship at all except maybe you might buy from the same suppliers. Yet people want to do $50 million a year and run it like it was still a million-dollar delicatessen. And that just won't work.

INC: It takes most people a long time and a couple of failures to come by that wisdom.

McGOWAN: I had an advantage in that before I started MCI, I had a lot of experience, as a management consultant in New York City.My specialty was failing companies, and over the course of four years, I saw a lot of companies in trouble. And typically, they were failing because of the reason you just mentioned -- that the company had gotten to the size beyond the scope or breadth or willingness to accommodate the original owners.

INC.: How did you handle that?

McGOWAN: What I would do was come in and ask what the problem was with the company, and for the most part they all knew -- in fact, I never really ran across anyone who didn't know the answer. Even before I got there, everybody had been telling them exactly what they should do to get the company back on its feet. And if they could have done it, they would have. But they couldn't. So I did it. I would take over and run production, or manufacturing, or marketing, or the financial and administrative end of things -- wherever the problem was. And typically, whatever they were doing in these areas, I did the opposite. If they were on commission, I'd go to salary; if they were on salary, I'd go to commission. If they had automated the business, I'd go back to manual; if it was manual, I'd automate. Because I quickly realized they you had to have a traumatic change in order to break through the deadening, ongoing, day-to-day process that was leading them to failure. And by going through such changes, you quickly got everybody's attention, and were able to reexamine everything legitimately.

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