Dan Caruso is CEO of Zayo. He was at ICG and L3. In his blog he writes about Rolla taking over EarthLink.
"Earthlink is a classic telecom story. Their core business was end of life. This was clear prior to Rolla taking on the CEO position. The company he inherited didn’t feel too kindly about managing their business downward. The reality of a shrinking business isn’t innovation it is all about squeezing cash flows out of a declining revenue base. RIFs, minimal product development, no investment in new technologies, etc. is the game."
He makes good points and so does Rob Powell. Rob wrote about EarthLink's cash flow. It has settled the stock at $10 now that it has dropped every business gambit - Helio, Muni, BPL, etc. What happens now, though?
Caruso talks about the strategic thinking being clouded by the dial-up success. As I have pointed out before ELN was a Marketing company, then tried to be a Network Operator and forgot how to market.
"Earthink tried to do two things. One, it tried to deal with the realities of a permanently declining core business. Two, it also aggressively invested in highly speculative new businesses. ... Their passion for the Earthlink brand would have been an emotional roadblock to hard harvesting their declining core business. ... It is so important to understand how the emotions of an organization play into decision-making. If not properly understood, strategic thinking becomes clouded. Confidence that arose from past successes could lead to sloppy investments in speculative new businesses. Cultural tendencies–in Earthlink’s case, their dial up success was due to marketing prowess–could impede a company if its strategic challenge shifts dramatically."
Are you still reselling DSL because your strategic thinking is cloudy?