Telstra's Apprentice

Sol Trujillo, as he continues to bash and barge his way towards a lesson in cultural sensitivities, couldn't have wished for better "disappointing" figures last week. So far, Telstra chairman Donald McGauchie's imported CEO is performing fairly predictably.

The first rule for any new "outsider" CEO is to blame as much as possible on the predecessor and paint as bleak a picture as possible of the company outlook. That way, the new chief's performance is judged from a lower base, and credit can be claimed for anything positive that might come to pass. We saw all of that in spades last week. (In the greater scheme of things, this is something of a balancing act for all incumbent CEOs who stress that the glass is only half full. That's how they get their bonuses.)

Next, a CEO imported from America must quickly realise that Australia is quite a different country; and that its similar language provides only an illusion of cultural similarity. The vast majority of Australian companies that set off to do business in the US go through a painful process of learning how very different the two countries are. The smart learn this in time to recover; the not-so-smart end up folding their tents.

It's not that either side is right or wrong; it's simply that they are different. It's like cricket and baseball: each involves bats, balls and runs, but they really are very different games. Without considerable effort, goodwill and open minds, the dedicated followers of one are unlikely to grasp the subtleties and joys of the other.

Trujillo might only just be starting to learn this '” and it's not clear yet how open is his mind . Further, he could be slowing the process by surrounding himself with other Americans. The danger is that such a close group will decide everyone else is out of step and order them '” the whole Telstra army '” to change their stride. Such a command can have very messy results.

American CEOs imported into Australia over the past couple of decades have ranged from the excellent (Paul Anderson at BHP) to, well, does anyone remember Chris Tyler at Solution 6? Whatever their eventual merit, what really surprised those brought into big Australian companies (Anderson, Joss/Westpac, Trumbull/AMP, Blount/Telstra) was the vast amount of media and political attention they got; attention that brought pressures that took a while to learn to handle.

Anderson once told me that, at first, he was quite shocked by the constant media focus. With so many big companies in the US, there simply aren't the resources for so much attention to be focused on individual CEOs '” unless, of course, they have just been led out of their office in handcuffs or their name is Martha Stewart.

A key factor in George Trumbull coming unstuck at AMP was his failure to understand the combination of local political sensitivities and media attention. His crash-or-crash-through attitude to cultural change certainly has similarities with the early messages Trujillo's "three amigos" are said to be giving Telstra staff, although they are perhaps saying it a little more politely than Trumbull's FIFO dictum: "Fit in or fuck off".

There is nothing in Sol Trujillo's CV (CEO of Baby Bell, CEO of a failed dot-com, and a brief fling in European mobile phones) that has prepared him to deal with the attention and close analysis he's getting in Australia. The "full speed ahead, damn the torpedoes" line might go down a treat in cowboy country '” they re-elected Bush, didn't they? '” but successful Australian leadership needs to be more subtle.

And then there is the whole T3 privatisation thing that McGauchie and federal Finance Minister Nick Minchin hired Trujillo to sell. Before Telstra's profit was announced last week, I interviewed John Sevior, Perpetual's head of Australian equities, for today's Eureka Report. As we were recording the interview, Telstra shares were trading around $5. Sevior in the interview said T3 had a chance in the mid-$4 area, but it wouldn't happen over $5. Telstra finished last week at $4.74, a long way from the $5.40 the Government once targeted.

I might be reading too much into the way Sevior chose his words on Trujillo, but I couldn't help feeling he and other big funds managers are far from as confident as McGauchie that Telstra's new CEO is going to work wonders. (Watch the streaming video of the Telstra part of the Sevior interview and see what you think.)

Sol Trujillo may have lots of knowledge to impart. He certainly has lots to learn.