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Why Trujillo was the best CEO for Telstra

Everybody had their opinions about Sol Trujillo, but as a David Thodey-led Telstra signs away its long-held monopoly it's important to remember that we would never have seen this day if it weren't for the rootinest, tootinest CEO Telstra has ever had.
Written by David Braue, Contributor

We may not have realised it at the time, what with his constantly confrontational style and I'm-only-here-for-the-sizeable-pay-cheque manner, but as the ink dries on Telstra's industry-changing agreement with NBN Co it's eminently clear that Sol Trujillo was by far the best CEO for Telstra.


Most of Trujillo's tenure was a case of life imitating art.
(Screenshot by David Braue/ZDNet Australia)

His appointment in 2005 came after years of wishy-washy management that was happy to perpetuate the sorry compromises and fallacies behind the government's Telstra sale — which turned a one-time monopolist into a monopolist with shareholder obligations, thereby encouraging it to give absolutely nothing away to the competitive market unless it was forced to.

In the lack of any real force by the Howard Government, of course, Telstra was able to do exactly that, keeping prices high and churning out dividends for shareholders that were more than happy to be beneficiaries of a poorly conceived market structure that was the direct symptom of the government's failure to mandate a Telstra separation.

Howard's Liberals effectively set a group of schoolchildren loose on the field, added an 800-pound gorilla armed with a hefty bat, and told them all to play fairly. The rest of the industry got flyswatters, and the ACCC — the playground monitor in our little analogy — was distracted from its largely-ceremonial powers as it ran around the yard putting Band-Aids on the little kids' knees while the gorilla was ripping the others' heads off behind its back.

Many in the industry felt this was how you should toughen up small competitors in a sort of Darwinian process, yet by the time the first eight years of competition had completed, Telstra's power was largely undiminished and competing internet service providers (ISPs) had screamed themselves hoarse about the need for change. Fortunately for the government, it had stuffed cotton wool in its ears and was getting on with more important tasks: botching its refugee and other policies, fostering the antipathy that would finally lead to Labor's 2007 landslide election victory.

Trujillo's brash style highlighted to everybody just what a monster had been created.

By then, Sol Trujillo's appointment — a political hotcake largely because of his high salary, rootinest-tootinest-CEO swagger and cultural-cringe-inducing American accent — had already started to pave the way towards the new Telstra. The Howard Government thought Trujillo's experience and tough-nuts approach could bring new legitimacy to Telstra and, by extension, to the 1997 competition legislation.

And this is why Trujillo was absolutely the best CEO for Telstra: because, after years in which the government was happy to delude itself that it had handled Telstra's privatisation correctly, Trujillo's brash style highlighted to everybody just what a monster had been created — and made very clear that it could not be trusted to serve tea to your mother-in-law without eating her.

Some might consider this a good thing, but his pigheadedness over exchange access, ongoing vitriolic relationship with Graeme Samuel, and willingness to axe hundreds of employees to trim out the obvious fat turned Trujillo's tenure at the telco into something of a family intervention. It also produced a Telstra that was leaner, meaner and more efficient than it had ever been as a state-owned (or, for that matter, privately owned) monopoly or, as most Australians saw it, a bright orange-coloured government retirement bond.

He may have been a walking headline, but Trujillo was able to convince the rest of Telstra to stop pussyfooting around and revelling in the lazy comfort of working for an unchallenged ex-monopolist. His crowning achievements were the rapid construction of Telstra's Next G network and commencement of its Next IP backbone project — not only because they were essential to Telstra's future, but because they rekindled the spirit of achievement within an organisation that had simply lost its fire.

Telstra went from a company that was going through the motions of competition, to one that was capitalising on its position to drive through real and dramatic change. Trujillo's beat-'em-to-a-pulp mentality also forced the government to admit that it had, horribly and most wretchedly, dropped the ball on competition. The government thought if it let an 800-pound gorilla on the industry it would run around doing yard work and cleaning gutters — but Trujillo had identified the company's biggest strengths and unrepentantly capitalised upon them to advance his company.

This was exactly the kind of wake-up call Telstra, and the government that created its monster, needed: it was no longer possible for the government to pretend that the competitive structure it created was anything but a dismal failure and that it could be remedied by anything but a fundamental redesign of Australia's telecommunications environment.

Most importantly, it had to be one that was not dominated in any way by Telstra. Cue the NBN.

Of course, the first thing that had to change was Trujillo — and after years of confrontation, there would have been real cheers in Canberra as his band of agitators packed up and left (YouTube, conveniently, has a good summary of Trujillo's relationship with the government).

Trujillo's leadership style has been criticised by the likes of ex-CEO Ziggy Switkowski, who was generally happier to bask in post-monopoly ennui. But it is only now, six years after Trujillo's leadership began and two years after it ignominiously ended, that we have a Telstra with an industry-leading technology platform, competitive prices and a leadership position built around previously vague ideas such as "customer service".

The deal brokered with NBN Co today simply could not have happened under Trujillo's leadership.

These were all unthinkable when Trujillo sat down in the CEO's chair back in 2005. But they are now reality, and the deal brokered with NBN Co today simply could not have happened under Trujillo's leadership — nor without the government having endured four years of his pig-headedness.

Now it's up to nice-guy David Thodey, who was handed an organisation that had finally learned the difference between retail competition and unhealthy exploitation of an infrastructure monopoly, to guide the company into its next major phase.

Described upon his appointment as "aggressive" more in the sense of "constructive" rather than Trujillo's "combative", Thodey is, without a doubt, Telstra's best CEO. As his deal with NBN Co starts to pay dividends he will be heralded as the man that finally got Telstra to look to — and invest in — the future.

Trujillo's Telstra was marked by obstinacy and self-obsessed intimidation, while Thodey's biggest strength is his willingness to embrace change. In today's world that willingness is critical. Yet I'm not contradicting myself when I say that Trujillo still stands as the best CEO for Telstra — at the time. The thing is: that time has now passed.

What do you think? Is the Telstra-NBN Co deal a banner day for Telstra, or just the end of competition as we know it?

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