Heard loud and clear: Ginn passes business insights to students

STOCKTON -- "Can you hear me now?"

With those five words, Eberhardt Business School Dean Mark Plovnick quieted the audience gathered to hear the man who ran the company that made that phrase part of American pop culture.

Sam Ginn, an industrial engineer at the forefront of the wireless revolution who rose to become chairman of Vodafone, the world's leading mobile-telecommunications company that operates as Verizon in the United States, spoke at University of the Pacific.

Ginn's words on the strategic issues that future business leaders must consider and how to grow a company over time came through loud and clear for the 200 business students and others gathered for his 40-minute speech as part of the Pacific Business Forum, a free series that brings top business and government leaders to the community.

Addressing his remarks specifically to the students, "because they are the future business leaders of the country," Ginn discussed the importance of knowing the difference between strategy and operational performance.

"Strategic planning -- so that you understand your total environment." Knowing that, he explained, was key in the 1980s to his company at the time introducing the nation to cell phones.

Pacific President Don DeRosa called Ginn "a pathfinder who was in on the ground floor of this emerging technology."

Ginn himself said, "The conditions were perfect for wireless," pointing to five conditions that he recognized:

• People's innate need to communicate. "In 1984, we put up 16 cell sites for the Olympics (in Los Angeles). We had no idea what would happen, but what did happen is that thousands of people wanted a cell phone," he said.

• The world was undertelephoned. "In the '80s, 90 percent of all telephones in use were in eight countries," he said, adding that today, cell phones are the primary telephone used in the Third World.

• A strong move to deregulation and privatization.

• The technology was ready. Ginn explained that Bell Labs first developed cellular technology for commercial use in the 1940s.

• The market was enthusiastic. Wireless communication could be embraced by all nations, cultures and ages, he said.

• Ginn started his career with AT&T even before graduating from Auburn University with a degree in industrial engineering.

Following its 1984 breakup into seven regional companies and a shell of its former self -- "which changed the world forever," he said -- Ginn became chairman and CEO of Pacific Telesis Group in 1988. While there, he successfully developed Airtouch Communications and spun it off as a separate company in 1994, sticking with the new company as chairman and CEO until its successful $62 billion merger with Vodafone in 1999.

Ginn became chairman of the Newbury, England-based company that year, resigning in May 2000. Today, Vodafone is the world's 10th largest corporation with 340 million customers and a market capitalization of $176 billion.

Of Airtouch, Ginn said it went public in 1993, raising $10 billion with an initial public offering of $23 per share. Just 55 months later, Vodafone purchased it for $62 billion.

"That's an example of what you can do when you catch the indraft of a company in its infancy," he told his rapt audience.

At the conclusion of his talk, Juli Winterbotham, a freshman business major at Pacific from Los Altos, said Ginn's persistence paid off.

"He didn't stop. The sky was the limit," she said. "I don't know if I'm willing to take as many risks as he was."

Fellow freshman Simon Chen-Byerley was intrigued, though.

"Deep down, every business major wants to have their own business. He proved the rewards you can get by taking chances," said Chen-Byerley, a business student from the Chicago area.

Ginn admitted to having doubts himself about the future of wireless technology.

"It wasn't so clear a while back that this thing was going to take off and become a tsunami," he said.

He gave his audience a brief history lesson, noting that in 1830 the telegraph revolutionized communications in rural America. In 1876, Alexander Graham Bell introduced the first voice communications.

"It developed very oddly," Ginn said, describing the telephone monopoly as a franchised business under complete government regulation. "We had the best communications system in the world under that model."

It wasn't until the 1960s that other companies came along to say they could do the same job better and cheaper, catching the attention of the Federal Communications Commission and the Department of Justice. Those days led to the 1984 breakup.

With lots of questions going unanswered in the 1980s, it set the stage for the telecommunications revolution that followed.

Ginn presented a chart illustrating how long it took following the introduction of new technology before the public fully embraced it. For example, it took 60 years before 10 percent of the nation flew in an airplane and 50 years before electricity reached people's homes. The lines on the chart create the "knee effect," a sharp bend at the time the technology takes off.

"What's different about cell phones and the Internet?" Ginn asked. "There is no knee." And old-line companies completely missed what was happening.

"Those of us who are a little older remember AT&T was the most powerful company in the world," Ginn said, explaining it had more than 1 million employees, about 10 percent of the entire U.S. work force at the time. "Today, its debt is junk-rated. It's losing 15 percent of its revenue per quarter.

"Here's an example of a company that didn't read the strategic signals right," he said. "The major players never really understood wireless, and it cost them dearly." Even if they had, he said, they "lacked the entrepreneurial skills" to be successful.

During a question period at the end of his presentation, Ginn asked the audience how many of them use a cell phone exclusively and do not have a wire-line telephone. Hands went up from most of the students attending.

Noting that this is the future, he said, "The market leads you, and pretty soon you listen. The young user is particularly difficult to understand, but use it they will."