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CEO of the Year: Randall Stephenson

AT&T's top executive is changing the way his company and his competitors view the telecom industry.
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Illustration by Daniel Long.
For a chief executive tasked with leading the transformation of one of the nation’s largest companies, Randall Stephenson is one hard man to track down. The elusive Stephenson often foregoes media interviews and event appearances to tend to his business. Those close to him, however, know a different Stephenson: a mild-mannered, deep-thinking Oklahoma native with a penchant for golf, an iPad always within easy reach, and a passion for University of Oklahoma football. A man who can poke fun at himself just as easily as he can at others, making Stephenson a regular target of—and a conveyor of—wisecracks among friends. All jokes aside, though, Stephenson means business. Big business. At the forefront of Dallas-based AT&T, Stephenson is not only defining a company—he’s aiming to shape the landscape it competes in. “He’s rushing ahead, transforming industry after industry,” says Jeff Kagan, a wireless and telecommunications analyst who’s covered the space for three decades. He is “not just competing with existing industries, but he’s changing the playing field.” For this reason, D CEO has named Stephenson Dallas-Fort Worth’s CEO of the Year for 2016. A 56-year-old husband and father of two, Stephenson has spent nine years in the top spot at AT&T. He followed Edward Whitacre, who’d served as CEO of AT&T and its preceding companies for 17 years. More recently, Stephenson has been pushing AT&T beyond the telecom industry and redefining it as a technology giant. His latest efforts have led AT&T to take on streaming and mobile video, with its proposed $85.4 billion blockbuster purchase of Time Warner Inc., expected to close at the end of 2017, and the $48.5 billion acquisition of DirecTV last year. Under his leadership, AT&T also purchased Mexican telecom companies to create a North American network.

“He’s got demands pulling him in every direction. But when you’re with Randall, you feel like you’re the only person that matters to him.”

Dale Petroskey, CEO of the Dallas Regional Chamber
AT&T, which employs more than 270,000 people worldwide, also has been rolling out internet speeds of 1 gigabit per second with its fiber network, experimenting with the upcoming 5G network, and trying to capitalize on the growing market for connected devices, known as the Internet of Things. It’s also leveraging its AT&T Foundries to infuse innovative thinking and technology across sectors. And, the ball just keeps rolling. The technology giant, which generated $146.8 billion in revenue in 2015, is reportedly seeking other acquisitions in media and entertainment, according to Bloomberg. Meanwhile, it continues to debut developments spurring from its DirecTV acquisition and to brainstorm future products with Time Warner. “I think we have something here that’s going to find a sweet spot in the market, and managing this technology transition and service transition is going to be a big deal for us,” Stephenson said about AT&T’s foray into video at Goldman Sachs’ Communacopia Conference in September. “I also think what that will manifest is what a truly integrated suite of services looks like.” Although Stephenson has already accomplished some major feats, going forward he’ll continue to be challenged by tough regulations, innovative competitors, and a changing business model that could easily power down AT&T if not handled deftly. That’s because no company, no matter how large, can rest on their laurels at this point—and that’s especially true for those in the technology industry, says Amit Basu, chair of the Information Technology and Operations Management Department at Southern Methodist University. So, the CEO will be critical in making sure AT&T doesn’t get its wires crossed as it expands. “[Leadership] plays a huge role … because you’re taking about very complex business,” Basu says. “It takes a substantial amount of persuasive power and leadership to keep this gigantic multifaceted conglomerate that is trying to go in different directions to function as a whole.” Stephenson, who declined to be interviewed for this article, leads a company with deep historic roots in American commerce. AT&T began with Alexander Graham Bell, inventor of the telephone, who founded the Bell Telephone Co. in 1877. After acquiring a controlling interest in the Western Electric Co., its manufacturing arm, and most of its licensees, the company became the Bell System, which essentially was a legally operating monopoly. But after the U.S. Department of Justice launched an antitrust lawsuit in 1974, AT&T agreed to divest into a new company and seven regional Bell companies. The divestiture was completed in January of 1984. Fast-forward to 1990, when Southwestern Bell, one of the seven divested Bells, named Whitacre its CEO. A native of Ennis, Whitacre led the company through a series of acquisitions that included AT&T Corp. in 2005 and Bell South in 2006. After the 2005 acquisition, Southwestern Bell, then known as SBC, took AT&T’s name. Meanwhile, Stephenson was cutting his teeth on the lower rungs of Southwestern Bell, where he got his first job. He joined in 1982, after earning a B.S. degree in accounting from the University of Central Oklahoma. (He also has an MBA from the University of Oklahoma, which turned him into a die-hard OU fan.) He served as Southwestern Bell’s senior executive vice president and chief financial officer from 2001 to 2004 before becoming chief operating officer, a title he held until 2007 when he became AT&T’s CEO. He’d joined the board two years earlier. “Thinking back to Whitacre … he was like Gen. [George S.] Patton—a strong, powerful leader that got things done,” Kagan says. “If Whitacre was the brawn, Stephenson is the brain.” Stephenson is equipped with “great curiosity, intellect, and a moral compass,” says Dale Petroskey, CEO of the Dallas Regional Chamber. He’s watched Stephenson bounce from corporate to city initiatives, all while maintaining enough headspace to focus on Petroskey’s board and the chamber’s five-year strategic plan, called “Building Tomorrow Together.” “He’s got demands pulling him in every direction,” Petroskey says. “But when you’re with Randall, you feel like you’re the only person that matters to him, like he has all day.” He’s also a visionary, says David Farr, CEO of Emerson Electric Co., where Stephenson is on the board. “He puts issues forward to open our minds up to different approaches to different things,” says Farr, who enjoys outperforming Stephenson in golf. Stephenson is a bit of a “tech whiz,” as would be expected, and drove Farr to put all the necessary board documents in a digital format that Stephenson could store on his trusty iPad. “He told me, ‘Dave, if you don’t do this, I’m not coming,’” Farr recalls with a laugh. Stephenson’s job description could easily be whittled down to two words: problem solver. His list of current and upcoming AT&T problems includes a bad reputation for customer service, burdensome regulations, and an increasing number of competitors. And that’s just the beginning. Although many who know him hold him in high regard, Stephenson gets mixed reviews when it comes to his customers. AT&T’s customer satisfaction rating sits at 71 percent when it comes to its wireless service, tying Verizon, beating out Sprint, and trailing T-Mobile, according to the 2016 American Customer Satisfaction Index. The study took into account factors including coverage, helpfulness of staff, call center satisfaction, and data upload and download speed, and reliability. Although the study did not break down how the company performed on each measure, in recent history AT&T has struggled with an avalanche of customer complaints. In 2004, the FCC received more customer complaints about AT&T than any other company, according to The Wall Street Journal. Earlier this year, Stephenson took a meeting with a Dallas Morning News columnist to discuss a binder filled with more than 100 days of gripes from customers and employees. “This is where we invest more capital than anyplace else,” Stephenson told The News about customer service, before accepting the binder that he hoped would provide “valuable intel.” The company also ruffled feathers when it throttled customers’ speeds without proper notice based on their data usage. The FCC fined the company $100 million last year for the debacle. And, the jury is still out on Stephenson’s performance atop the FCC’s newly created Robocall Strike Force. In July, Stephenson became the the group’s chair, a role he was reportedly backed into after inaccurately claiming to have no control over stopping the automated calls, according to media reports. His biggest ongoing challenge, however, may be dealing with a rapidly changing market in which telecom companies can no longer bet on one primary service. AT&T now competes with the likes of technology giants Google and Facebook, entertainment and media companies, plus smaller nimble innovators. “The convergence, in terms of media and distribution, is happening fast,” Stephenson said in October on an AT&T analysts call about the proposed purchase of Time Warner. “We want to be in front of it. We don’t want to be chasing it.” Stephenson seems to have recognized the rising competition early on, based on the list of companies he’s acquired since taking the helm. And, he’s always looking for the next big buy. The CEO reportedly keeps a spreadsheet of 40 to 45 companies on his tablet, sources recently told Bloomberg. He whips it out when he’s sitting on an airplane and has time to consider potential targets. DirecTV was likely once on that list and, while all early indicators suggest Stephenson made the right call, expected returns and bottom-line figures are still only projections. Time Warner, a deal Stephenson said the company moved on quickly, could provide AT&T with new mobile content platforms and mobile video clip-sharing capabilities. But before the combined company can start innovating, the buy has to be approved by the U.S. Department of Justice, which, along with other regulators, could raise antitrust concerns. The pressure is on. But those close to Stephenson say that won’t faze the easygoing leader. “I’ve seen him under pressure. He’s a very tough, smart negotiator, but very level-headed,” says Richard Fisher, former president of the Federal Reserve Bank of Dallas who serves on the AT&T board. Fisher said in the decade that he’s known Stephenson, he’s never seen him lose his cool: “He uses humor … to offset the pressure.” It’s a good thing he does, as Stephenson regularly has to fend off football fans like Baylor University alumna Jennifer Sampson, CEO of United Way of Metropolitan Dallas. Sampson gifted Stephenson with a pair of Superman socks in 2011, the year Baylor’s Robert Griffin III won the Heisman Memorial Trophy. Griffin had worn similar socks at the trophy presentation, and Sampson puckishly wanted her gift to telegraph the sting of Baylor’s 45-38 upset win over OU one more time. “I called him ‘Super Stephenson,’” she says about the CEO who led the local United Way fundraising campaign that same year. “He just laughed.”

“The convergence, in terms of media and distribution, is happening fast. We want to be in front of it. We don’t want to be chasing it.”

Randall Stephenson, CEO of AT&T
While Stephenson focuses on scooping up companies that will aid in AT&T’s transformation, he’s requiring his staff to stay on its A-game, too. He launched a program about two years ago, according to The New York Times, that would help pay for classes to bring employees’ skills up to speed. But employees have to take it upon themselves to invest the time. He’s also pushing his workforce to face current social challenges head-on. “Our communities are being destroyed by racial tensions, and we’re too polite to talk about it,” Stephenson recently told employees, citing instances in Ferguson, Mo., Baton Rouge, La., and the Dallas police shootings. “Folks, you get the idea. We’ve got a problem.” Says Fisher: “There’s nothing that illustrates Randall better than that speech he gave. He’s a sensitive man, and that’s rare.” There’s no telling where Stephenson will lead AT&T over time, but it’s clear that, in a few years, the company likely will look nothing like the corporation it is today. “It’s still all brand new, so there’s no company or executive that understands it all yet,” Kagan, the industry analyst, says about the transforming telecom industry. And, he adds, AT&T is “still in its first inning.”

This year’s finalists for CEO of the Year lead some of the largest and fastest-growing companies in Dallas-Fort Worth. These esteemed executives have worked their way up to the top spots at their national and global organizations and are taking them to new levels. This year, we opted to honor four categories of leadership: Community Impact, Changemaker, Newcomer, and Lifetime Achievement. Although many worthy leaders were considered, four top-level executives stood out among the rest. Congratulations to this year’s finalists. Read more about their journeys, what they have accomplished, and their goals moving forward in the stories below.

 

lentzJim Lentz

CEO, Toyota North America

Community Impact

Thanks to Jim Lentz, about 4,000 jobs are coming to Plano at the Japanese automaker’s new, seven-building North American headquarters, which is scheduled to open next year. And about 30 percent of the positions will be filled by brand-new hires. It was Lentz who persuaded the parent company several years ago to consolidate Toyota’s far-flung North American operations in a single location. “To me, change is going to be more rapid in the future if we speak with one voice and if we communicate better,” Lentz says, explaining the consolidation. “That is what is going to make a sustainable future.”

—Glenn Hunter

mayKen May

CEO, Topgolf
Changemaker

Here’s a novel concept: sell golf to people who don’t know golf. Sell it to people who don’t realize the difference between a score of 67 and 104. Sell it to people who just want to bash a golf ball. Ken May, CEO of Dallas-based Topgolf since 2014, knows all this and believes the model will be just as popular in Florida as it is in Texas as it is in Virginia. So he’s taken the show on the road, building 28 locations in 14 states, with plans to open 15 more—all funded by a $275 million credit facility the company secured in September. “We’ve caught lightning in a bottle with Topgolf,” May says. “It reasonates with everyone.”

—Matt Goodman

reiffMelissa Reiff

CEO, The Container Store
Newcomer

When Melissa Reiff took the helm of The Container Store in July 2016, she became the only woman to lead one of the region’s top 150 public companies. Reiff joined The Container Store in 1995 and whipped its sales and marketing platform into shape. She was named president in 2006 and COO in 2013. The Coppell-based retail chain is known for its employee-centric culture, Fortune having named it one of the nation’s best places to work for 17 years straight. So, what has Reiff excited about the future? “The incredible and many opportunities The Container Store has to reach its full potential,” she says.

—Christine Perez

ruizAngel Ruiz

Chairman, Ericsson

Lifetime Achievement

Angel Ruiz has led Ericsson North America though decades of transformation as the company aimed to keep pace with the ever-changing telecommunications industry. He joined Ericsson in 1990 after working at companies including AT&T and Sprint, then rose through the ranks to become head of North America, based in Plano, in 2001. At the time, the North American region employed fewer than 3,500 and generated annual revenue of less than $500,000. Now it has about 16,000 employees and revenue of more than $8 billion. Says Ruiz: “I’ve accomplished a lot, but I’m not ready to retire. I want to give back more …” 

—Danielle Abril

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