As a former government-owned telecommunications monopoly, IbexTel enjoyed several decades of minimal competition in this mid-size European country. Even today as a publicly traded enterprise, the company’s control over most of the country’s core network keeps its profit margins above 40 percent.

Competitors continue to rely on IbexTel’s wholesale business, which generates substantially more profit than similar wholesale services in many other countries. However, competitors are gaining on IbexTel’s dominance in the latest iteration of mobile telecommunications, and are beginning to invest in emerging technologies such as device interconnectivity, cyber security, and artificial intelligence systems. Based on these threats, IbexTel’s board of directors decided to hire an outsider as the new chief executive.

Although several qualified candidates expressed an interest in IbexTel’s top job, the board selected Jason Turner, who had been CEO for six years of a publicly traded American telecommunications company, followed by a brief stint as CEO of a smaller mobile telecommunications company in the United Kingdom until it was acquired by a larger firm.

IbexTel’s board couldn’t believe its good fortune; Turner brought extensive industry knowledge and global experience, a high-octane energy level, self-confidence, decisiveness, and congenial yet strongly persuasive interpersonal style.

He also had a unique “presence,” which captured others’

attention and their quick respect for his leadership.

The board was also impressed with Turner’s strategy to bolster IbexTel’s profit margins. This included heavy investment in the latest satellite and next generation wireless technology before competitors could gain a foothold, cutting costs through layoffs and reduction of peripheral services, and putting pressure on government to deregulate its legacy and emerging businesses.

When Turner described his strategy to the board, one board member commented that this was the same strategy Turner used in his previous two CEO postings. Turner dismissed the comment, saying that each situation is unique.

Turner lived up to his reputation as a decisive executive.

Almost immediately after taking the CEO job at IbexTel, he hired two executives who had reported to him at the American company where he was a senior executive a few years earlier. Together over the next two years they cut the workforce by 10 percent, became one of the first organizations to roll out next generation wireless broadband technology, and invested in a company with early stage satellite communication systems. Costs increased due to downsizing expenses and the various investments. IbexTel’s wireless broadband subscriber list grew quickly because, in spite of its very high prices, the technology faced limited competition and IbexTel pushed customers onto the new network by reducing capacity on the older technology.

IbexTel’s customer satisfaction ratings fell, however. The wireless technology was one of the first large-scale implementations with that manufacturing provider, so the company experienced numerous system outages due to network software and integration problems. Industry experts criticized IbexTel for choosing its wireless technology from that manufacturer without sufficiently considering other technology competitors whose products were preferred in other countries. A national consumer research group also reported that IbexTel offered the country’s worst value for mobile telecommunication plans. Employee morale also declined due to layoffs and the sudden decline in the company’s public image. Turner’s aggressive campaign against government regulation also had unintended consequences. Rather than achieving less regulation, Turner’s relentless criticism of government regulation made IbexTel look even more arrogant in the eyes of both customers and government leaders.

IbexTel’s board was troubled by the company’s lackluster share price, which had declined 20 percent since Turner was hired. Some board members also worried that the company had bet on the wrong wireless and satellite technologies and that market share for these services would stall far below the number necessary to achieve the profits stated in Turner’s strategic plan. This concern came closer to reality when a foreign-owned telecommunications competitor won a large government contract to improve mobile and Internet services in areas of the country that were not adequately served. Turner was confident that IbexTel would be awarded the contract because of its market dominance, even though the company’s proposal was higher than that of other bidders. When the government announced its decision, IbexTel’s board fired Turner along with two executives he had hired from the United States. Now, the board had to figure out what went wrong and how to avoid this problem in the future.

Discussion Questions 1 Use specific leadership concepts to explain what went wrong at IbexTel.

2 Identify specific ways that IbexTel’s board of directors can reduce the risk of repeating these leadership problems.