Erik Peterson (A) - Harvard Canvas

Harvard Business School 9-494-005Rev. October 13, 1995

Professor John J. Gabarro prepared this case with the assistance of Professor Michael J. Roberts as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This case is a revised and redisguised version of Peter Olafson (A), no. 475-025. The circumstances described in this case are reported primarily from Erik Peterson’s point of view. Although others’ views have been incorporated, the case does not necessarily reflect all of these perceptions. It has been made available through the cooperation of both the individual and the company involved. All names, places, and companies have been disguised.

Copyright © 1993 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

1

Erik Peterson (A) Looking at his calendar dated March 10, Erik Peterson saw that he had roughly two weeks to

prepare for his meeting with Chip Knight, the newly appointed director of pre-operating systems for Cellular Communication Services, Inc. (CelluComm). Peterson was the general manager of Green Mountain Cellular, one of CelluComm’s subsidiaries. Knight had just called from the company’s Los Angeles headquarters to set up a two-day meeting with Peterson at the end of the month. The purpose of the meeting was to go over several problems that Peterson’s organization had been experiencing and to discuss Peterson’s plans for dealing with them. It would also give Knight a chance to meet Peterson and see the Green Mountain operations on a first-hand basis.

Background

Erik Peterson was general manager of the Green Mountain Cellular Telephone Company (GMCT), a cellular mobile telephone system located in an area that encompassed several cities and towns in New Hampshire and Vermont. Specifically, GMCT was licensed to offer cellular service to a 2,000-square-mile area that included West Lebanon and Hanover, New Hampshire (where Dartmouth College is located) as well as Woodstock and Burlington, Vermont (see Exhibit 1). This area was inhabited by approximately 400,000 people. GMCT was a “pre-operating” system—it was still in the construction phase, and had not yet begun operations.

Erik Peterson had joined CelluComm immediately after receiving his MBA the preceding June. He had taken charge of GMCT in August after a two-month orientation period, which consisted of visiting up-and-running systems within CelluComm. Peterson felt very fortunate to have a general management opportunity so early in his career.

GMCT had originally been targeted to begin service to subscribers on February 1, but it was now a month behind target because of several major problems. The newly revised turn-on date that Peterson had submitted to headquarters was April 1—three weeks away—and the purpose of the meeting with Knight was to go over Peterson’s plans for meeting that date. (Turn-on date refers to the day on which a system starts serving customers.)

Erik Peterson

A native of Minnesota, Erik Peterson was 31 years old, and married, with two children. Prior to attending business school, he had been an officer in the U.S. Army Signal Corps (the branch of the

For exclusive use at Harvard University, 2015

This document is authorized for use only in A608 Leadership, Entrepreneurship and Learning - 08262015 by Monica Higgins, Harvard University from August 2015 to February 2016.

494-005 Erik Peterson (A)

2

Army dealing with radio communications) and had worked briefly as a design engineer for a maker of avionics equipment. Peterson had earned his B.S. in electrical engineering from MIT, and a Master’s degree from Dartmouth’s Thayer School of Engineering. Peterson had been described by classmates in business school as being a very bright, conscientious, and well-liked person who seemed to be more mature and stable than most people his age.

Although Peterson had never worked in the cellular industry before joining CelluComm, his interest in the area had been growing for several years. During that time he concluded that the cellular industry was a field which offered great potential for growth and opportunity. It was one of the few remaining parts of the communications business that was heavily populated by private entrepreneurs on both the local and national levels and the industry still offered the promise of future expansion. Thus Peterson decided to interview companies in the industry as part of his second-year job search. CelluComm was one of the companies he visited and he was interviewed and hired by Ric Jenkins, its president and founder.

When Jenkins made him the offer, Jenkins explained that the Green Mountain system was having a number of serious start-up problems and that it was a relatively high-exposure situation for CelluComm. He added that the Green Mountain area promised to be a highly attractive and profitable market; it would certainly provide Peterson with a challenge. Jenkins explained that because of the departure of CelluComm’s vice president of operations, Jenkins would pay very close attention to the Green Mountain operations. Peterson felt very fortunate to have the opportunity, at least initially, to work directly for Jenkins.

The Cellular Telephone Industry

The cellular mobile telephone industry was born in the early 1980s. Engineers at AT&T’s Bell Laboratories had perfected a technology that allowed a geographic area to be divided into a honeycomb of “cells.” Within each cell, a tower communicated with the customer’s cellular mobile phone via radio signals. Each tower consisted of a complex set of antenna and radio transmission and receiving equipment. The towers were all connected—via dedicated lines provided by the local telephone company—to a mobile telephone switching office (MTSO) which essentially consisted of a large computer. The MTSO, in turn, was connected to the basic “land line” network of the local telephone company and long-distance carriers. From the MTSO, the call could be connected to the local or long-distance network. Thus, only the portion of the call from the subscriber’s phone to the tower was via radio transmission. The remainder was carried over basic telephone lines. (See Exhibit 2 for an overview of cellular technology.)

The innovation that made cellular service possible was the development of the ability to “handoff” calls as a subscriber drove across cell boundaries. Thus, if an average cell was 5 to 10 miles in diameter, a subscriber might well drive through two or three cell boundaries during a lengthy call. The cellular telephone—and the MTSO—had sufficient intelligence to detect when a subscriber was approaching a boundary, and when the signal strength was diminishing. The MTSO would then instruct the subscriber’s phone to begin transmitting/receiving on a new frequency and would alert the tower in the new cell to the presence of the approaching subscriber.

The commercialization of cellular technology began at roughly the same time as AT&T was broken up in the early 1980s. The Federal Communications Commission (FCC)—charged with regulating the cellular industry—divided the United States up into roughly 2,000 separate license territories. These territories corresponded to natural geographic regions. The Boston license area, for instance, included the region from New Hampshire to Rhode Island, and out to Worcester, Massachusetts. (See Exhibit 1 for an overview of the New England license territories.)

The FCC decided to award one license in each territory to the local telephone company—usually the Bell Telephone operating company in that area. In order to gain the benefits of competition, the FCC also decided to award one additional license in each territory to an independent company. New firms were founded to pursue these attractive opportunities. The FCC licensed the most populated territories first. By the mid-1980s all of these had been licensed, and most had begun



Erik Peterson (A) 494-005

3

operating. The business turned out to be more attractive than anyone had imagined. Thus, in 1989, when the FCC began licensing the last class of territories—the rural licenses—many small entrepreneurs applied through the lottery system used by the FCC to award the licenses.

CelluComm’s Development

CelluComm had been an early winner of some of the larger metropolitan area licenses, including Sacramento, California and Tampa, Florida, and it submitted applications for virtually all of the rural territories. While it did not win any of these licenses, it began an aggressive campaign to acquire licenses from small entrepreneurs who had won territories via the lottery system. By 1993, CelluComm had acquired 12 rural licenses, 9 of which had been built and were operating, and three were in the construction or pre-operating stage. GMCT was one such system.

Peterson had been very impressed by both CelluComm and Ric Jenkins, its president and founder. Jenkins had founded CelluComm and had built it from a small California-based system to a $200 million company which now ranked within the top 20 in the industry. He had a reputation for being one of the toughest businesspeople in the cellular industry, and was seen by many as an “Horatio Alger” type of self-made entrepreneur whose ability and aggressiveness had taken him from a modest beginning in Chicago to considerable success, wealth, and influence.

Indeed, Peterson knew that Jenkins was such a demanding task master that when the new Sacramento system had failed to meet his expectations, he replaced the former manager and had the new manager report directly to him. (Sacramento had been one of the first major license territories won by CelluComm and therefore a system in which CelluComm’s visibility and stakes were high.) Jenkins had seen Sacramento as an opportunity for CelluComm to develop a showcase system; instead, the operation had encountered enormous cost and schedule problems. To remedy the situation Jenkins put a promising young manager in charge of Sacramento, and he himself became actively involved in working with the new manager.

Green Mountain Cellular

The Green Mountain Cellular Telephone Co., Inc. (GMCT) had been legally in existence for one and one-half years prior to Peterson’s taking charge in August. The company had been formed by CelluComm (which owned 85% of its stock) and the local entrepreneur who had won the license, and owned the remaining 15%. When Peterson arrived in August, an existing organization of six people was already engaged in working on the design and initial construction of the system. GMCT’s offices were located in Hanover, New Hampshire.

The GMCT system consisted of 21 cells, although Peterson had planned on having only 16 operational when the system turned on and GMCT actually began marketing its services to customers. The remaining five cells would be added during the first eight months of operation to expand coverage on the system’s perimeter. While these fringe or perimeter cells could be added after the turn-on date, Peterson felt that it was vital that all 16 of the cells that formed the core of GMCT’s coverage area be operational by the turn-on date. Without such coverage, GMCT would not be able to offer seamless coverage to subscribers—they would experience dead spots within the service area. Moreover, GMCT would be at a distinct competitive disadvantage to its competitor in the region—New England Telephone (NET), the local Bell telephone company.

The Situation in Hanover

The past seven months had been a difficult and at times frustrating period for Erik Peterson. He regularly worked 60 to 80 hours a week, and at times GMCT’s problems seemed so incessant that he would wake up in the middle of the night thinking about them. The problems began almost immediately. On arriving in Hanover, he discovered that instead of reporting to Jenkins, as he had assumed would be the case, he was assigned to Jeff Hardy, CelluComm’s director of budgets and




4

plans. Hardy had been put in charge of all pre-operating systems in addition to his other duties during Peterson’s orientation period. (See Figure A for CelluComm’s organization at the time Peterson took charge of the Hanover system.) Hardy had received his MBA a couple of years before Peterson, but had never had any system operating experience. As a result, Peterson found that Hardy was unable to offer him any initial advice or guidance that was specific or helpful. The nature of their relationship was somewhat ambiguous and awkward in the beginning, in fact, because Peterson had never been formally told by either Jenkins or Hardy of the reporting relationship; it just seemed to have occurred.

Figure A Organization Chart, Cellular Communications Services, Inc.

ManagerOperating Systems

R.J. Rivers

14Systems Already

in Operation

PresidentRic Jenkins

DirectorBudgets & Plans

Jeff Hardy

3Pre-operating

Systems

GMCTGeneral Manager

Erik Peterson

ControllerDirector ofPurchasing

Vice PresidentLicense, Acquisition,

and DevelopmentScott Green

Vice PresidentOperations

(Vacant)

Vice PresidentFinance

Howard Tully

Other

Note: Organization prior to February 28.

Upon his arrival, Peterson also discovered that the initial construction of cellular towers, which was being performed by a subcontractor, was already several weeks behind schedule and that they would never meet the turn-on target at the rate they were going. Efforts to get the subcontractor to improve his construction rate failed, and Peterson found that GMCT was receiving an increasing number of complaints from local citizens about the way the subcontractor was cutting through privately owned trees and property. Thus Peterson’s first major decision was to terminate the relationship with the subcontractor and to contract with the Granite State Construction Company (a New Hampshire-based firm) which Peterson felt could provide better service. This decision was received somewhat reluctantly by headquarters in Los Angeles, however, because the prior subcontractor had done a great deal of work for CelluComm in the past. Since the former subcontractor was based in Oklahoma, Peterson felt that it was too far away to provide adequate backup support and he succeeded in convincing headquarters that the change was necessary.

The Chief Engineer

Peterson also found that he had difficulties getting his chief engineer, Curt Andrews, to do the planning and organizing necessary to ensure that equipment and supplies arrived when they were needed. This planning was particularly important, since five of the activities required to build the system had to be carefully coordinated if it was to work according to specifications and to meet the targeted turn-on date. These five activities included: the acquisition of tower sites; the construction of cellular towers; liaison with the local telephone company so that their private telephone lines—which interconnected the towers with the MTSO—were available and made ready




5

for these connections; the installation of the necessary power supplies, radios, and antennas in the system; tuning of the cell-site radio frequencies, and finally, the installation of the MTSO. The critical path to the turn-on date involved constructing the towers and then outfitting them with the required power supply, antenna, and radios. (See Exhibit 3 for a more detailed description of these activities and Figure B for the GMCT organization chart and how the work was apportioned within it.) Since the effective functioning and overall integrity of the system depended on all of its parts being compatible, it was especially important that the various parts fit together and that the specification, delivery, and installation of these components be carefully planned and coordinated.

Peterson first became aware of Curt Andrews’s difficulties in handling the planning aspects of the chief engineer’s job within his first few weeks in Hanover. He discussed this problem with Hardy several times and raised it again in Los Angeles in October, but to no avail. Curt Andrews had worked his way up from switch technician to chief engineer in the Tampa, Florida system, and he had gained a reputation within CelluComm for being technically first-rate. After his first three or four months in Hanover, however, Peterson came to realize that Curt did not have either the administrative ability or the prior knowledge needed to start up a brand new operation. None of his previous jobs had required the detailed planning and designing needed to build a new system. Peterson felt this limitation especially keenly, because he himself had no experience in the cellular industry and was in the process of learning about it and needed someone he could rely on in the chief engineer’s job.

During his October visit to Los Angeles, Peterson raised the possibility that Curt be reassigned and replaced by a person who had more pre-operating and start-up experience. Because of the company’s rapid expansion and the industry’s newness, these people were in short supply. In addition, the people he talked with in Los Angeles insisted that Curt had the potential to handle a start-up; all he needed was more coaching and help from Peterson. Furthermore, CelluComm had just relocated Curt and his family from Tampa to Hanover and Peterson suspected that the company did not wish to put him through another move. Peterson took several steps in attempting to help Curt improve the planning and coordination. One of these was having one-on-one counseling sessions with him in which Peterson tried to show Curt how to plan better.




6

Figure B Organization Chart, Green Mountain Cellular Telephone Co., Inc.

General ManagerErik Peterson, 31

Secretary andAccounts Payable

Accounting andActivations Manager

(2)Melissa Miczek, 27

Director ofMarketing

James Wescott, 23

Chief Engineer

Curtis Andrews, 38

Supervisor,Customer Service Dpt.

(3)Trevor Burns, 27

Secretary

Supervisor,MIS Department

(2)Stevana Hanes, 31

Inventory Department(2)

SupervisorSwitching Department

(2)

SupervisorConstruction Department

(2)Mike Delavo, 31

SupervisorRadio Engineering Department

(3)Todd Jones, 23

SubcontractorGranite State

Construction CompanySupervisor

(25)Smiley DiCicco, 24

Note: Organization prior to March 15. The number of people in each function is given in parentheses under the department head.

A second step he took was to have Curt call weekly construction meetings to which everyone in the organization was invited, including the new subcontractor’s supervisor, “Smiley” DiCicco. Peterson felt that these meetings would also increase the sense of participation and empowerment of people in the organization, as well as prevent rumors from spreading if everyone knew what was going on. Peterson found these meetings quite useful, but he believed Curt did not become involved enough in them. Peterson found himself getting most of his reports directly from Curt’s two subordinates—Todd Jones, supervisor of the radio engineering department, and Mike Delavo, supervisor of GMCT’s construction department—despite his attempts to get Curt more actively involved.

A third step was establishing an inventory control reporting system; but again Peterson found that Curt resisted the effort. Peterson suspected that Curt was somehow resentful that Peterson did not trust him implicitly. Whatever the reason, Peterson continued to have difficulty getting these reports from Curt completed and on time. In fact, the inventory control problem became so great that on two occasions GMCT ran short of the radios that were required to equip each cell site. It was particularly important that all 46 of the radios going into a cell be available at the time the cell was being outfitted, because the process of tuning each radio to the exact required frequency was a painstaking and time-consuming process. Several technicians with transmitting/receiving equipment set themselves up with this equipment at various points within the cell to simulate subscriber’s telephone equipment. If the radio installation team ran out of radios during the installation process the entire process had to be set up all over again, wasting valuable time and money.

On each of the occasions where Andrews ran out of radios, Peterson discovered this fact during the weekly construction meeting, and it was clear that the shortage was as much of a surprise to Curt as it was to him. The first time was in early December when Smiley DiCicco (the subcontractor’s supervisor) said that his crews were about to run out of radios at two cell sites and they would have to stop the installation process. Fortunately, Peterson was able to obtain an overnight shipment from his supplier; he handled the situation with Curt gently, trying to explain the need for better planning. During this and other discussions, however, Peterson sensed that Curt was angered by the implied criticism, but that he was “bottling it up.” Problems concerning radios reoccurred again in mid-January, and again, Peterson obtained another overnight shipment. On each




7

occasion, word of the impending problem had come from Smiley during one of the construction meetings. During this period, Peterson discussed these problems with Hardy and again raised the possibility of having Curt transferred, but Hardy was reluctant to take any action.

Peterson’s early problems with Curt were further complicated by difficulties that Curt had working with Todd Jones, supervisor of the radio engineering department. Curt and Todd had several conflicts over the selection and specification of antenna equipment. In fact, their differences over these issues had become so frequent that Todd told Peterson on several occasions that he felt he was better qualified than Curt and that he wanted Curt’s job. Despite Curt’s limitations, Peterson did not share Todd’s view.

Peterson also observed that Curt had several problems working with Melissa Miczek, Peterson’s secretary. Most of the arguments between Curt and Melissa were over errors in applications prepared by Curt, but typed by Melissa. In all of these cases each person attributed the errors to the other. Curt enjoyed describing himself as a “male chauvinist” and Peterson felt that this affected his ability to work with Melissa, whom Peterson found to be a highly competent, precise, and mature woman. Although Peterson did not know for sure, he suspected that Curt resented having his errors pointed out by a woman.

Key Personnel Assignments

During the fall, three additional key people joined GMCT. One of these was Jim Wescott, a 23-year-old college graduate, who was brought in as director of marketing. Wescott was an aggressive and ambitious man who often rubbed people the wrong way, particularly the technical personnel, in his hurry to get things done. Peterson also discovered that sometimes Jim’s market plans were not detailed enough and that they required careful review. Unfortunately, as GMCT’s technical problems mounted, Peterson found himself with less and less time to do this. But on balance, he found Jim to be competent and hard working.

The second person to join the GMCT management group was Trevor Burns, a 27-year-old college graduate who was hired to run the customer service department. Trevor had been in business for himself and had a great deal of hands-on knowledge, although he had no prior experience in the cellular industry. A member of a prominent and wealthy Massachusetts family, Peterson found Trevor to be very bright, knowledgeable, and sophisticated. Trevor and Curt soon developed problems working with each other, however, even though Trevor had been hired on Curt’s recommendation. Peterson believed that some of these difficulties occurred because of the many suggestions that Trevor made about equipment selection and procedures. Although many of Trevor’s ideas were excellent, some were impractical and his constant flow of new ideas eventually became a problem for everyone, including Todd Jones and even Peterson himself. It became such a problem by January that Peterson had to talk to Trevor about it. Over this period of time, the relationship between Trevor and Curt had become quite strained. Peterson suspected that some of these difficulties may have been caused by Curt’s defensiveness over not having a college degree, and his resulting annoyance at Trevor’s constant flow of criticisms and suggestions.

The third key person to join GMCT during this period was Stevana Hanes, a 31-year-old woman with a master’s degree in social work. Stevana was hired to establish and run the MIS department early in the fall. The MIS area handled many activities related to billing and customer service. Once the cellular system was turned on, the MTSO would “download” a detailed record of every call each night, so that the charges could be computed and applied to each customer’s account. The MIS area would also maintain and support the software that was used in the customer service department. When customers called in, the customer service representatives would be able to call up a record of each customer’s bills and other information regarding the account. The MIS department had been in major trouble when Peterson first arrived, and Peterson felt that Stevana had done an excellent job in organizing the department. Stevana was referred to within GMCT as the “ Hippy Queen” because of her style and the way she dressed, but she seemed to get along quite well with most of the staff. By late winter, Peterson had come to respect and trust her judgment a great deal.




8

She was a very outspoken woman with considerable ability to organize and get to the heart of a problem.

In addition to hiring these new people, Peterson had also promoted his secretary, Melissa Miczek, to manager of Accounting and Activations in February. Peterson encountered difficulties with Los Angeles over this assignment because he had offered her the job at a salary that Peterson felt was appropriate for the position, given the local job market. However, CelluComm headquarters thought that the resulting increase over her previous salary was excessive. Eventually, Los Angeles approved an increase that was 20% less than the amount he had originally offered to her. Peterson felt that Melissa and he knew the quality of her work had suffered as a result.

Peterson encountered another salary problem when he hired Trevor Burns. Peterson had offered Trevor the job at a competitive salary that Trevor had accepted. Prior to Trevor’s joining the company, however, Todd Jones, who was making 25% less, learned about the amount of Trevor’s salary. Todd complained vigorously to Curt about the difference and Curt brought the matter up with Peterson. Peterson then talked with both Curt and Todd about it. Peterson reminded Todd that he would be up for review in one month’s time and told him that he would receive an increase at that time. Still, Peterson had felt extremely uncomfortable with the apparent inequity, because Todd was a cooperative and effective worker who had considerable cellular telephone experience. Peterson then discussed the problem with Trevor to let him know that his salary had become known within the company. As a result, Trevor voluntarily offered to accept a salary cut of 20%, which brought his compensation closer to Todd’s, hoping that this would smooth over the organizational problems and make his entry into the organization easier. Trevor explained that one of his motivations in joining GMCT was to learn some of the more technical aspects of the cellular industry which he knew he would have to learn from Todd and Curt. Thus, Trevor joined the firm at the lower salary, but with the promise of an increase in six months’ time.

Despite these problems, Peterson believed that he had put together a good organization with high morale. It mattered to him that people worked as a team and that the organization be managed with as much participation as possible. In fact, Peterson had instituted weekly, companywide meetings to which all company employees were invited. The purpose of these meetings was to discuss problems various departments were having and to maximize the exchange of ideas among the people in the company. Many of the employees had remarked to Peterson that they had found the weekly meetings very effective, and they believed that morale and understanding of the company’s problems had increased substantially as a result of the greater interchange. (The basic organization established by February is shown in Figure B on page 6.)

Equipment Selection and Specification Problems

Peterson’s first six months in Hanover had also been complicated by several equipment problems. Although it was theoretically possible (and also desirable) to perform the activities in the order described in Exhibit 3, it was seldom practical to specify and select all of the system’s equipment before the construction or installation of the various phases began. This had been the case particularly at GMCT because CelluComm headquarters had delayed in making several key decisions and had made several changes in the equipment originally specified. The decision as to whether or not to use dual-mode radios (which Los Angeles promised would be made by October) had not been made by Jenkins until early February. These dual-mode radios would work with the current analog version of subscriber phones, or with the new digital telephones that were expected on the market shortly. GMCT was to be the first system within CelluComm to use dual-mode radios, and CelluComm had wished to defer the decision as long as possible in order to acquire more information. As a result of this delay, CelluComm’s prime supplier of radios could not deliver on time, and CelluComm had to go to an alternate source whose equipment was later found to be defective, thereby requiring renegotiation with the first supplier. In addition, headquarters had made a change in the power supply ratings in December which Hardy did not inform Peterson of until January. Thus the equipment that GMCT had in inventory could not be used and additional design changes had to be made. To further complicate the situation, headquarters made a subsequent




9

decision in January to have all power supplies include back-up batteries, rather than the generator system that had originally been specified. This also created problems with suppliers, and the new power supplies did not arrive until the end of February.

A further decision made by CelluComm in January changed the “frequency reuse pattern” used for laying out the system. The frequency reuse pattern determined which specific frequencies were used at which cell sites. The reason for the change was that it would improve the quality of reception in certain areas of hilly topography. Peterson could see its advantages, but he also felt the change would create many problems in adapting existing plans, and the change would further add to the work and coordination that Curt had to deal with. Peterson was unsuccessful, however, in influencing Hardy to reverse the decision as it applied to GMCT.

Indeed, Peterson had felt consistently hampered by his inability to get either support or clear direction from Hardy. Hardy’s only major suggestion (but one with which Peterson did not agree) was how to market to subscribers in the license area. Peterson wanted to begin marketing and promoting a relatively premium-priced set of services to business customers. He felt that this “cream skimming” strategy would allow GMCT to obtain very high margin customers, albeit a smaller number. He felt that GMCT could then begin marketing a lower priced set of services to middle market customers, while preserving the profitability of the customers who had indicated a higher willingness to pay. Hardy argued that the key was simply to get as many customers on the system as possible.

With this exception, however, Hardy’s four visits to Hanover had been characterized by what Peterson saw as “nit-picking,” such as how many uniforms the installers should be issued, but without resolution of any of the major problems that Peterson felt he had to deal with. Peterson suspected that some of Hardy’s indecisiveness was caused by Hardy’s uncertain relationship with his own boss, Ric Jenkins. Peterson had sensed from the beginning that Hardy was somewhat insecure and anxious regarding his standing with Jenkins. In many ways, Peterson could understand why that might be the case. Like Peterson, Hardy was hampered by having very little operating experience in cellular. In addition, many people in CelluComm saw Jenkins as a strong-willed and demanding person who could be both formidable and intimidating.

Hiring a Construction Coordinator

Although many of the technical problems just described had been resolved by early March, several other problems had come up which Peterson had to deal with if GMCT was to meet its April 1 turn-on target. Peterson had attempted to deal with Curt’s inability to plan by hiring a construction coordinator in January to do it for him. Peterson experienced difficulties, however, in finding a qualified person, given the salary limitations he had to work within. Finally, Peterson promoted a man from the construction ranks who had a college degree, but that person left after two weeks for a better salary. Peterson knew it would be difficult to find a replacement quickly, and as a result he appointed Stevana Hanes construction coordinator; he reorganized the Hanover operations in early March as shown in Figure C. Peterson had been very impressed with Stevana’s work establishing the MIS department and trusted her ability to get the job done. He was not completely comfortable with how Mike Delavo, the construction supervisor, would react to having her as a boss, so he had not as yet fully explained to Mike the new reporting relationship. He felt that once they began working with each other it would be easier to do so, and it would also allow Stevana time to become familiar with construction operations in more detail. Peterson believed that Stevana’s involvement in the construction effort would greatly improve the situation. Although Mike Delavo was a very likable, hard-working man, he had not attended college, had no prior experience as a supervisor, and Peterson felt he had limited planning ability.

Settling Zoning Problems

Another area which Peterson saw as a major problem was the current state of GMCT’s relationship with four of the towns in the license area. GMCT’s license had been awarded by the FCC,




10

and this license carried “public utility” status. This typically meant that cellular companies were exempt from zoning requirements, and could build their large towers wherever they decided to do so.

The industry—including CelluComm—had learned the hard way that it was often foolish to avoid the zoning process. It only angered the people who were important to the company’s relationship with the local community. In addition, many potential customers could be lost if GMCT built what was considered an “ugly” tower in the heart of a prosperous residential neighborhood.

Thus, CelluComm had a policy of going through the zoning process until it became convinced that it was simply not viable, at which point it could pull its “trump card” of public utility status, and proceed as it wished. There were four Vermont towns where—several months earlier—CelluComm’s corporate legal staff had concluded that the towers would never get built, and had proceeded with the building of four towers under GMCT’s public utility status.



494-

005

-

11-

Figu

re C

Rev

ised

Org

aniz

atio

n C

hart

, Gre

en M

ount

ain

Cel

lula

r

Mar

ketin

gJa

mes

Wes

cott

,23

Acc

ount

ing

and

Act

ivat

ions

Mel

issa

Nic

zek,

27

Gen

eral

Man

ager

Eri

k P

eter

son

,31

Sec

reta

ry a

ndA

ccou

nts

Pay

able

Con

stru

ctio

nC

oord

inat

orS

teva

na

Han

es,3

1

Chi

ef E

ngin

eer

Cu

rtis

An

dre

ws,

38

Sec

reta

ry

Con

stru

ctio

nD

epar

tmen

t

(2)

Mic

hae

l Del

avo

,31

Sup

ervi

sor,

Sw

itchi

ng D

epar

tmen

t(1

)

Rad

ioE

ngin

eerin

g D

epar

tmen

t

(4)

Todd

Jo

nes

,23

Sub

cont

ract

orS

uper

viso

r

(25)

Sm

iley

DiC

icco

,24

Inve

ntor

y D

epar

tmen

t(2

)

Cus

tom

er S

ervi

ceD

epar

tmen

t

(3)

Trev

or

Bu

rns,

27

MIS

Dep

artm

ent

(5)

Not

e: O

rgan

izat

ion

afte

r M

arch

15.

The

num

ber

of p

eopl

e in

eac

h fu

nctio

n is

giv

en in

par

enth

eses

und

er th

e de

part

men

t hea

d.




12

Peterson had tried to smooth the waters, and indeed, had been relatively successful in painting the “New York lawyers” as “the bad guys.” One of his tactics had been to promise the police, fire, and emergency service operations in these towns free phones and free cellular service.

However, Hardy had been unwilling to sign off on the agreements that Peterson had drawn up with these local governments. Peterson was particularly concerned because he had made agreements to use the fire department’s communications tower as a GMCT cell site in a neighboring town. Peterson feared that if he angered the fire departments in the four other towns where he was having the zoning problems, this arrangement—which was subject to the town council’s pending agreement—could be overturned. The fire department tower was in a particularly important location given the overall design of the system, and Peterson knew that it would be both costly and time-consuming to find another tower site.

To Peterson, the funds needed were insignificant, given the benefits the public and the company could derive, but every time he raised the matter with Hardy he felt he received a runaround. Because he got no definite answer from Hardy, Peterson found he had to equivocate with the local officials regarding what GMCT could actually offer. Peterson felt that Hardy had a very unrealistic picture of the local situation, and that Hardy’s only concern was the effect on the budget and ROI. Peterson was afraid that GMCT’s equivocation might affect its reputation and relations with local citizens’ groups. He was particularly concerned because the issue was receiving a great deal of publicity in local newspapers.

Peterson found these issues to be major problems because he did not have the time to become involved with local attorneys and town boards and public hearings. Peterson did feel some relief from the immediate pressures facing him, however, because corporate had become involved. Los Angeles was responsible for license acquisition and development. (See Figure A for CelluComm’s organization prior to February 28.) Two people from Los Angeles, Scott Green, CelluComm’s vice president of license acquisition and development, and Karen Cantor, a staff assistant, had become actively involved in the negotiating activities. In fact, Cantor had taken it on as a project. Peterson felt relieved that Cantor was handling the details and wondered whether he should ask Green to have her report directly to him on it because of its importance. A successful resolution of the issue was essential to GMCT and Peterson felt uneasy about not being directly involved in its solution. On the other hand, he felt he had enough problems with the technical aspects of the system without being immersed in this problem as well. Thus he welcomed the relief of not having to supervise the negotiations and hearings.

In addition, he felt somewhat uncomfortable in his relationships with both Cantor and Green because of an encounter he had had with them during his orientation period. This encounter had left him with such negative feelings that he was eager not to tangle with them again. As part of his summer orientation, Peterson had been asked to visit the Fort Wayne system and write a report on his observations. In this report, Peterson had criticized the system’s chief engineer, who he felt was technically brilliant but ineffective as a manager, whom he saw as not delegating enough responsibility. When he subsequently visited Los Angeles, Green asked him for his observations of the Fort Wayne operation. Peterson gave Green an oral summary of his impressions; after he finished, Green vehemently attacked him for criticizing what Green perceived to be one of the best systems in CelluComm. Peterson was quite surprised by Green’s hostile and emotional reaction, and during the exchange which ensued, Green asked Peterson what his background was. When Peterson explained that he had just finished his MBA, Green lectured him on how much he needed to learn about cellular. Green, who was only 37, was recognized by many as a “wunderkind” of the industry. He had a reputation for being a sharp and smooth wheeler-dealer, who had an entrepreneurial flair. Like Jenkins, he too had been raised in Chicago and had worked his way up in the cellular industry. Peterson resented what he perceived to be Green’s imperious and egotistical manner and ended up feeling a distinct dislike for him.

Prior to meeting with Green, Peterson had also met with Karen Cantor, Green’s staff assistant. During their meeting, Cantor had told him in no uncertain terms what she thought he needed to do at GMCT. Several of her suggestions struck Peterson as being blatantly incorrect, given




13

what he knew about the Hanover area from his days at Dartmouth. When he challenged some of her statements, she became agitated and was visibly upset by the time Green arrived. As a result of these two exchanges, he was not inclined to interfere with their work in the zoning problem, particularly since he sensed that Cantor would resent reporting to him on the project.

Other Problem Areas

In addition to these problems, Peterson had several other situations which had to be dealt with in order to ensure that the turn-on date was met. One of these was the difficulty GMCT was having with the local utility in getting it to “make ready” its telephone lines according to the promised schedule. These difficulties had become so great that Peterson had met with the local general manager of the utility in mid-February. Although the meeting had gone quite well, and the local general manger had promised better service, the utility continued to fall behind its make-ready schedule. From what Peterson could gather, many of the problems were caused by a union steward in the utility who, people reported, was intentionally slowing down the make-ready process. Whatever the cause, the utility’s make-ready speed was a severe problem. Peterson felt that since Curt had not been successful in either planning construction or dealing with the utility in the past, he would have to involve himself more deeply in these matters. If the utility did not respond, GMCT’s turn-on and further expansion would suffer costly delays.

Another area that Peterson saw as a major problem was the strained relationship between Curt and Trevor. As GMCT approached the turn-on date, the customer service function (which was Trevor’s area) became an increasingly important activity, as did the coordination between the two men. The most recent conflict between Trevor and Curt had been over the selection of what kind of trucks to order for the system repair and the on-site installation technicians. For customers who purchased “high-end” phones, with premium service packages, GMCT installation technicians would install the mobile phone in the customer’s vehicle at their home or office. Curt, whose experience was in the Tampa system, wanted to order open-bay pickup trucks because they would give the installer or technician easier access to the equipment, while Trevor wanted closed panel trucks because of the difficult winters in Hanover. Trevor argued that while open-bay trucks may have been practical in Tampa, they would impose a major hardship on installers and system repair technicians working in the cold Northern New England climate. Peterson settled the conflict by ordering all open-bay trucks except for two closed panel trucks. This latest conflict between the two men had deepened their mutual animosity, and Peterson felt that some action needed to be taken to help them work together better.

Peterson did not expect any problems in the marketing area once the system was turned on; he felt it would simply be a question of implementing the market plan.

Knight and CelluComm’s Reorganization

Peterson was looking forward to talking with Knight about his plans for dealing with these problems. He also felt the reorganization he had just implemented at GMCT was a good first step in alleviating the coordination and planning problems. Peterson had not yet met Knight and this would be their first face-to-face interaction. Knight, like several other new CelluComm executives, had been brought into the company as part of a reorganization recently implemented by CelluComm’s newly appointed vice president of operations, Dashiell Harper (see Figure D for the revised CelluComm organization). “Dash,” as Harper was generally referred to within CelluComm, had previously been in charge of data communication systems for a large defense contractor. Prior to that assignment, Dash had had a very successful career in the U.S. Army Signal Corps, having attained a general officer’s rank at a young age. Knight, like several other executives whom Dash had brought in, had previously served with a large West Coast defense firm.

Peterson expected that the infusion of experienced, professional managers at the top of the CelluComm organization would greatly improve CelluComm’s effectiveness. Peterson had been very impressed by Dash during a visit which he and Hardy had made to the GMCT operations, as well as




14

by the organizational changes that Dash had implemented. Dash had asked many questions during his day’s visit, took voluminous notes, and, in Peterson’s eyes, seemed generally satisfied with the way things were going. Hardy remained relatively silent during their visit.

Although he was not yet sure whether he would be reporting directly to Knight or to Hardy (whose new title was assistant director of pre-operating systems), Peterson felt that the situation could not help but improve. Hardy had told Peterson that he had been quite upset by his appointment to the new position, which he viewed as a demotion.




15

Figure D New Organization Chart, Cellular Communications Services, Inc.

President and ChiefExecutive Officer

Ric Jenkins

Vice PresidentLicense Acquisitionand Development

Scott Green

Vice PresidentOperations

Dashiell Harper

Vice PresidentFinance

Harold Curry

Controller Director ofPurchasing

OperationsManager

Eastern U.S.

OperationsManager

Western U.S.

OperationsManager

Central U.S.

DirectorPre-operating

SystemsChip Knight

Assistant DirectorJeff Hardy

Three Pre-operatingSystems

GMCTGeneral Manager

Erik Peterson

Note: Reorganization implemented on February 28.




16

Exhibit 1 New England Region—Cellular License Territories

VERMONTNEW HAMPSHIRE MAINE

Burlington

Woodstock

Middlebury

West Lebanon

Hanover

CONCORD

Manchester

Nashua

Portsmouth

AtlanticOcean

MassachusettsBay

Provincetown

MARTHA’SVINEYARD

NANTUCKET

BOSTONWorcester

Claremont

Keene

CapeCodBay

Hyannis

RHODEISLAND

PROVIDENCE

��

CONNECTICUT

Stamford

BridgeportNewLondon

MASSACHUSETTS

Springfield

GMCT

Portland

Note: Each differently shaded area represents a different license territory.



494-

005

-

17-

Exh

ibit

2O

verv

iew

of C

ellu

lar

Tel

epho

ne T

echn

olog

y

MT

SO

Ove

rvie

w o

f Cel

lula

r M

obile

Tele

phon

eTe

chno

logy

Long

Dis

tanc

eN

etw

ork

Offi

ce(s

)Lo

calT

elep

hone

Com

pany

Offi

ce

Mob

ileTe

leph

one

Sw

itchi

ngO

ffice

(Con

nect

ed to

each

tow

er)

Han

doff

assu

bscr

iber

pas

ses

betw

een

cell

boun

darie

s

Cel

l

Hex

agon

s ill

ustr

ate

appr

oxim

ate

cove

rage

of r

adio

sig

nal

from

eac

h to

wer

Cel

l Site

Tow

er




18

Exhibit 3 Overview of Key Tasks in System Design and Construction

The design and construction of a cellular telephone system required several interrelated steps, described below:

Overall system design This first phase involved deciding on what geographic areas were to be covered, how much traffic was likely to be generated from each specific area of the system, and therefore, how many cells would be required to offer both coverage of the area and sufficient capacity. These activities were performed by the chief engineer and the Radio Engineering Department.

Detailed design Given the above, a detailed design of the system was performed, using computer simulations of radio waves and topography. Thus, one could determine the optimal location for cell sites, given uneven terrain. Following this simulation phase, actual radio wave propagation studies were performed using mobile radio frequency transmitters and receivers, in order to gauge the actual coverage pattern of sites in different locations. These activities were conducted by the Radio Engineering group with input from the Switching (MTSO) group.

Site acquisition Once the optimal locations for sites were determined, GMCT attempted to purchase land to construct cell sites. Typically, many negotiations proceeded in parallel, because the inability to get a particular site could have a ripple effect, changing the layout of the entire system. In addition, it was important to preserve one’s options in order not to give up any bargaining power in a negotiation with a potential seller. Finally, it was during this phase that the cellular operator attempted to utilize any existing towers or structures, to avoid having to build a new tower from the ground up. Although these activities fell under the purview of the Construction Department, a number of people were often involved, including Peterson himself.

Construction Once sites were acquired, construction of the basic tower began. This involved pouring a concrete slab, and building a tall steel tower on the site. These activities were performed under the supervision of the Construction Department.

Cell site installation Once the tower was built, radio, antenna, and power supply equipment could be installed.

Radio tuning After the above equipment was installed in a cell site, it was necessary to tune all of the cell’s voice channel radios to the precise frequencies specified in the detailed design plan. This was a highly complex activity because each cell contained 46 individual radio receiver-transmitters which had to be tuned to exact frequencies in relationship to each other and in relationship to the radio frequencies of radios in adjacent cell sites. This was performed by the radio engineering group, with the occasional assistance of others who worked for the chief engineer.

Cell site interconnection with local telephone landlines All of the radio traffic generated at the cell site had to be brought back to the switch—the MTSO. This required a network of dedicated phone cables that were leased from the local telephone company. Arranging for these land line connections occurred under the general supervision of the Construction Department based on design instructions from the switching (MTSO) group. The actual interconnection, however, was performed by the local telephone company after it had made ready its facilities and the necessary dedicated lines.

Network interconnection (MTSO) The switch or MTSO—essentially a large and very high-capacity computer—had to be installed and integrated into the network. All of the dedicated lines from each of the cell sites were connected to the MTSO. In addition, the MTSO had to be interconnected to the basic landline network so that outgoing calls could be completed. The cellular companies typically negotiated high-volume traffic arrangements with various carriers. Thus, for instance, all international traffic might be delivered to one company, local traffic to another, and long distance to a third. This final step typically involved the Switching (MTSO) group, the Construction group, the Radio Engineering group and representatives from local, long distance, and international carriers. The chief engineer provided overall technical supervision.



Erik Peterson (A) - Harvard Canvas

Documents

Transcript of Erik Peterson (A) - Harvard Canvas