hering. Over the course of several years, he led Hughes in simultaneously downsizing, spinning off businesses, and building a new source of earnings around satellites broadcasting entertainment programming into people's homes. It was a radical departure for the proud aviation and electronics company that traced its roots back to Howard Hughes. But it was arguably only a dress rehearsal for the challenges at AT&T. Armstrong said that the biggest lesson he had learned at Hughes was that "People make change happen; achieving successful change depends on winning people over." He knew that he had to simultane- ously restore AT&T employees' confidence in their own competence and convince them that they had to embrace radical change. He knew that everyone understood the problem the company faced: Its princi- pal source of revenue and profits, long-distance service, was slowly melting and when the Bell companies were free to offer long distance, AT&T's revenue would practically evaporate. But if defining the prob- lem was easy; the solution was not SO obvious. And developing a sense of urgency about solving it was even more difficult. AT&T's Culture AT&T people had been living with the issue of declining market share for more than a decade. They had become cynical about the "program du jour" designed to address it. Although many AT&T employees had something of a defeatist attitude, they were blissfully unaware of it. The consumer long distance people, in particular, were almost smug, glorying in their role as the single greatest source of company profits. When he led the consumer business, Joe Nacchio bragged that it was one of the most profitable legal businesses in the world. "In fact," he said, "cocaine dealers were moving into the distribution of counterfeit pre-paid cards because the profits are as good and there is less danger of being rubbed out." If anything, the consumer long-distance people Work Inside Out Toward Your Customers resented the annual demands for still better margins that were pressed upon them. In