Oral Histories

Jack Koten

Interview Segments on Topic: Ethical Decisionmaking/Behavior

Jack Koten Biography

“Jack” Koten is a founding director and first president of the Arthur W. Page Society. During his career he worked in a variety of operating, financial and corporate communications departments for Illinois Bell, AT&T, New Jersey Bell and Ameritech Corp.

At Chicago-based Ameritech Corp., one of seven telecommunications companies divested by AT&T in 1984 as the result of a federal government antitrust lawsuit, he served as Senior Vice President of Corporate Communications.  He also was president of the Ameritech Foundation, which made grants totaling $25 million annually to education, economic development and cultural institutions.

After he retried, Koten organized The Wordsworth Group, a consulting firm dedicated to assisting non-profit organizations to improve their management practices, reputation and revenues. He has received numerous awards and honors, including honorary doctoral degrees from two institutions, and was inducted into the Arthur W. Page Society’s Hall of Fame in 1995.

Transcript

Block: We’re talking to Jack Koten. Jack’s a retired senior vice president public relations of the Ameritech Company which was absorbed into, what is the name, SBC which is now, if you haven’t seen the TV commercials, is now AT & T. Jack and I shared an experience 25 years ago. When the AT & T and the Justice Department of the United States settled an anti-trust suit that affectively broke up the Bell Telephone System. And which is where Ameritech came from. It was the Midwest piece of that breakup. And I wanted to talk to Jack about I saw my recollections of that were from the AT & T point of view where we were in affect had devised the announcement plan but Jack was in the telephone business side of it. And it would be interesting to me and I hope to everybody else to get his recollections and whatever lessons he may remember from that because AT & T was sort of the top of the pyramid. It was the holding company that owned all of the Bell Telephone Companies. But the fact of the matter the employees, for the most part a million of them, were immediately employees of the telephone companies and the customers were customers of the Bell Telephone Companies to AT & T so Jack saw that event, to put it politely, unfold from a different perspective than I did. And Jack talk to us about that. What happened?

Koten: Well I want to tell you. It’s a very good question and actually came somewhat as a shock to us even though the trial had gone longer than the negotiations had gone along for some time. But when the word was finally released that the break up of the Bell system was going to actually take place in January 1, 1984. It really came as a shock. I think to employees and particularly to employees in the operating companies. The company I was involved with at the time was Illinois Bell, which was designated one of the five Bell companies which were going to become part of the Midwestern Company. There were seven companies operating companies that were created from what became Nine X on the east, Bell South in the south, Southwestern Bell, US Western, Pacific Bell but we were located in the heartland and in our company was composed of the operating companies in Wisconsin, Michigan, Ohio, Indiana, and Illinois. And I would say that the very first sense besides the shock of it was a sense of divorce. Like there was an enormous divorce in the family. I mean we could not believe that something like this was going to happen. AT & T had been providing cover for us for years. We felt very much a part of the Bell System and part of the Bell family. In fact the entire Bell system was regarded by most of the million employees that you cited is a large family. We were all dedicated to providing service to our customers, to meeting their needs, and to doing community service type things and it was an extraordinary work experience. So the fact that this company was going to be severed from AT & T was at the outset was was quite a shock and employees were I would say at the outset sort of dazed. They were disappointed. They were mad at the government. They were mad at the FCC. They were mad at the Justice Department. Mad at most at AT & T for allowing such how could this actually happen. I mean who in their right mind would break up the world’s largest company even though it was a monopoly but a company that people liked, that provided good service, that provided good service at low rates. It just seemed incomprehensible to those of us who were on the street so to speak and working out in the heartlands. So when we recovered from that then the question became well what do we do about it.

Block: Transfer their allegiance. But I’m going to take you back to the human part of it, of breakup. Because this is the story that I don’t know. A couple of things happened. First of all there are no longer Bell system employees. They must have wondered where did my pension go was the kind of thing that might have come up. I don’t know. Also in the terms of the breakup there was one stinker business as you may recall which was who sells or leases the telephones. Because there was a dead last loser. You could not make money and there was in the Justice Department and the judge decided that was AT & T business. So you had many employees who were installers did repair work so on and so forth that were in limbo. They weren’t going to work for you anymore. They had to become AT & T employees or do something else. And of course you had customers. I remember where I was one of the television journalists entrapped me in an interview on the air by handing me three telephones which he had disconnected from his apartment he said and handed them back to me and said “Now what do I do?” So what happened to the customers and the employees in that in that it was a cultural shock for all of them at least those who cared.

Koten: Well it was a big cultural shock for the customers about the, and confusion about the telephone instrument itself, and the connection. And we did our best with it was what I would call customer information pieces that were direct mail. We used advertising. We used letters directly to the customers trying to explain the difference but I have to admit that the job was long and arduous to get people to really understand that we provide the service up to a certain point and then the inside wiring was either on their own or that we would do it for a special fee. It was no longer for the phone instrument was whatever instrument they might have back to the central office that that had been separated. And that was a point of great dissatisfaction as far as customers were concerned. Customers were confused about who to call for what whether it was repair service and if it was repair they’d be ask. Well where is it? I don’t know where my phone. The phone is dead. I don’t whether it’s outside or inside or what. You know and that was that I’d say as hard as we tried, in all the states to overcome that, that experience ultimately turned out to be the best teacher as far as the customers. After you’ve had a few run ins here and there, that’s a bit of a problem, the fact the customers got two bills now instead of one bill because of long distance services were provided by a different supplier, all of that is made time and time again when you go to a party or a meeting or whatever is they said the break up of the Bell system is the stupidest thing that the government has ever done. And then why did you let it happen. It was always our fault. It was like something gee we just said go ahead. Break us up. We don’t care. And time and time again that required you know kind of patience and being calm relatively speaking. To respond to some people who were quite irate. In the meantime the employees particularly the contact employees whether they were the service reps [inaudible] they had to deal with the customers just like the installers and repairmen who went out. And we equipped all of them with a little what I was going to call cheat sheets but I won’t that’s the wrong term to use here but with information pieces. Key talking points about what how to respond to these questions. And I would say that the majority of employees handled that pretty well. But as you well know not all employees are gifted with the ability to respond to people particularly irate customers. If the customer was friendly and nice usually that went pretty well. But if the employee was met head on either over the phone or face – to – face, those situations caused concern for us. We had a halo effect immediately after the breakup in ’84 and’85 where we had the Ma Bell influence carried over which we benefited from and then as customer experience multiplied, customer attitudes towards the service group providing dropped and all of that then required a regeneration of ability and of course in our company as you well know in the Bell system, the public relations department handled the customer information job. They were responsible for the advertising for the directory introduction pages everything that was explained to customers as well to employees funneled through our department. And I would have to say that our public relations people in the department understood this. They were willing to give of their time and energy and work extraordinary amounts of time to try to fix these things. But it was so pervasive that it just didn’t ever seemed to go away. Our advertising agencies and firms that we hired to help us with our customer information, they all worked diligently but it was a time factor that finally began to work in our advantage. When we would go to meet with state legislatures or and meet with the Congress. I remember meeting the representatives of various delegations in Washington, and of our congressmen and they all they are there in Washington. They had every opportunity to put their finger in the dike. But do we see much finger in the dike sort of thing. They are down there saying “I’m getting nothing but complaints back in my district about what you’re doing” like we should have actually tried to do something about it. And the fact is that it was a long pull. Now from your perspective you’re dealing with a whole different seam but we felt that we were in the field. We were in the front lines. And that the best thing that we could do is try to do our very best and not let the negative publicity that we got or comments whether it was on television, or whatever, really begin to get us down, and slowly that all began to turn around. I like to say that it was directly because of our efforts but it really was because of the efforts of really about 100,000 employees like when we were created, we were the 30th largest company I mean nobody really appreciated how big AT & T was. We came out as the 30th largest company in the United States. And it there were a lot of customers a lot of employees involved.

One of the things before we go to the next question and I just wanted to chip in is and thank you because this is stuff that I was to be happily involved in. But the judge gave us 18 months from the time we agreed to the settlement in order to actually operate separately. So you had your employees and our own…in limbo not the whole 18 months but a lot part of the time they many didn’t know which side of the dividing line they were going to land on or whether they would go to work for AT & T. Did they stay with Ma Bell. They’ve had angry customers. They were angry. And I think what probably did pull the whole outfit through all of this was that I, I used to say that the old Ma Bell was one third business, one third family, and one third religion. And it was a terrible shock but I believe that attitude that services our business many customers may not necessarily believe that every day, but service was our business and so we’re going to get through this mess and come out the other side. And the other thing is that it’s a high irony in terms of how government works in a democracy because it was 25 years ago more or less, that this happened and the whole darn thing has been put back together with the consent of the same Justice department. So, several hundred thousand employees went on the Bataan death march several tens of thousands of them lost their jobs and their careers altogether. Unknown amounts of marketing money was spent as you just described to explain we’re Ameritech and we’re here to serve you and it wasn’t very long that you’re AT & T again.

Block: So I try not to dwell on that but I think you all did a really marvelous job of. I think people who may be watching this some day will not recognize what a culture shock it was and what a difficult human problem it is. Not a management problem in that sense or a technical problem but a human problem to break apart a company over – I mean literally you closed business on Friday afternoon and you opened Monday morning as a different company, doing different kinds of things and different from what you had been doing before. And so I think you, to me the lesson or one of the lessons is that that management may really think it’s very very smart but if you want to turn a business around if you want to move it in another direction, it starts with your employees. Because if they decide to go where you want to go, you get there. And if management decides and they don’t’ want to get there, it isn’t going to work.

Koten: No it’s very true. It’s the employee on the street. The employee that customers come in contact with that makes your reputation, one way or the other. A person’s attitude a customer’s attitude is shaped by the personal contact they have with either the employee performing their job or an employee who may be off the job in a social setting. Included in that group is retired employees, and just to put a little footnote on that, retired employees; everybody who is retired, just accepted the fact that they had retired from the old Bell system. The reality of it was wasn’t very long before their pension checks, their benefits, were coming from their new company and it was always some uncertainty about that aspect of it.

Block: You mentioned one thing I was going to, I will talk about but you will understand because we were in this together. The old Ma Bell was probably the first corporation that ever did comprehensive consumer public opinion studies and from the time those studies were undertaken which was before you and I worked for the company, up until the last day, the one thing that affected a customer attitude to the company was the last contact with an employee and it is always boggled my mind that data never changed for more than 50 years and yet how many companies operate as though what the employee did on the last contact with a customer made any difference. You know it can’t be overcome with advertising. It can’t be overcome with anything else. If the employee is surly, if they screw up, if they don’t know what you know how to do the job, that affects how the customer feels about the whole darn company.

Koten: That contact also or that lasts for a long time. It doesn’t go away, that personal contact. You can see something in the newspaper or a magazine or see it on television and it will come and go out of your mind fairly quickly. But a contact that you’ve had with an employee that was disagreeable, shapes your opinion about whether you really want to do continue to do business with that organization. And as you said why all businesses that provide service to customers don’t recognize that is just absolutely amazing.

Block: And of course the flip of it is that the best way to hate a company based on your last contact, is when you can’t talk to them. You get a menu that finally gets around to saying the estimated time of your wait is 35 minutes. If you think that doesn’t sort of permanently ruin your image, I don’t know. Anyway let’s go.

Koten: What it does is it provides that there are great opportunities for people in the general customer information public relations world or whatever, in that contact are great opportunities for improvement.

Block: Simple.

Koten: Simple and if you talk about vocations that will eventually pay off for companies, because treating the customer right is going to make the difference, profit for profitability standpoint and general internal relations as well.

Block: Amazing insight.

Koten: I hate to share that with you at this moment.