just three months before we actually did announce a merger agreement with the TCI cable company. Meanwhile, when we announced that the targeted expense reduc- tions would be accomplished by eliminating about 18,000 jobs, news trucks raced to our Basking Ridge, New Jersey, headquarters to tape what they expected would be distraught employees. The only upset Work Inside Out Toward Your Customers people they found were those managers who were not eligible for the voluntary early retirement offer which included a 20 percent pension sweetener. Armstrong had broadcast the plan to employees just before the analyst meeting from a borrowed television studio in CBS' head- quarters building just across the street from the Hilton. Change Management The changes Armstrong set in motion during his first 90 days were consistent with his principles of managing risk-they built on AT&T's strengths. "To be credible and therefore doable," Armstrong has said, "change must draw from institutional and individual strength." In other words, it needs a solid foundation. The more radical the change, the deeper the foundation must be. People have to believe that they are capable of doing what is asked of them and they have to see a future for themselves in the new world that they are being asked to create. While what Armstrong asked of AT&T's people in his first eight months as CEO was challenging, it was in no way inconsistent with their sense of competency. Indeed, even the acquisition of TCG (which would later prove financially imprudent) was consistent with their sense of Mission. This would not necessarily be the case for Armstrong's next major move-the acquisition of the country's largest cable television system. None of us noticed it at the time, but as Armstrong was pulled deeper into Malone's orbit, he became increasingly pre-occupied with the company's share price, especially as companies with a fraction of AT&T's revenue or earnings surpassed it in market capitalization. But for now, in February of 1998, 4I percent of employees ex