November 28, 2011
TELSTRA chief executive David Thodey has given new meaning to the term "change management".
In just 30 months, he has seen a dozen senior executives leave, five major management reshuffles, a handful of divisional revamps and dramatic changes to the way the company treats its staff and customers.
For Thodey, these changes are the crucial steps to set in motion the transformation of Telstra from lumbering incumbent into a leaner, marketing and sales-driven company with ambitions to become the leading player in the National Broadband Network world.
By spending almost $1 billion in the past year to win back customers and remove complexity from its bureaucratic ranks, Thodey hopes to prepare the telco for the NBN world, where Telstra will be stripped of its historic near-monopoly status and fully exposed to new competition in the broadband market.
The transformation has seen divisions truncated, rebranded and sometimes, as in the case of Sensis, relegated. This has resulted in the culling of executives who had close ties to former chief executive Sol Trujillo and those too entrenched in the old ways of the monopoly telco.
Almost a dozen high-profile executives have left or been forced out of Telstra through Thodey's reshuffles in the past 30 months. There is now speculation that Sensis boss Bruce Akhurst could be the next to leave.
Akhurst was sidelined in Thodey's latest management revamp when the ailing directories arm was rolled into a new media division to be headed by TVNZ chief executive Rick Ellis, who joins the company in January.
There have been winners too, with hand-picked internal candidates and six new executives from the outside world being ushered into Telstra's corridors of power.
Chief customer officer Gordon Ballantyne and Project New head Robert Nason have already exceeded expectations and earned plaudits from the investor community: Ballantyne for turning around Telstra's struggling retail consumer arm, and Nason for simplifying the telco's operations to make it a more aggressive and competitive company.
The additions of former chief executive and managing director of St George Bank, Paul Fegan, as head of strategy as well as the incoming Ellis are expected to be just as pivotal to Thodey's vision.
Only a handful of other senior executives, including Kate McKenzie, Deena Shiff and chief financial officer John Stanhope, have survived Thodey's management purges. With the exception of Stanhope, who retires at the end of this year, Shiff and McKenzie appear to be with Thodey for the long haul.
While these executive changes have helped position Telstra on the road to revenue recovery, for Thodey the underlying challenge has been more about reversing the bureaucratic culture that Trujillo and his combative cohorts reinforced with their belief that Telstra was the biggest and best in the business.
Telstra is positioned well for the NBN. It is cashed up, courtesy of its $11bn deal with the NBN Co and the government, and is ready to relinquish control of its fixed-line monopoly and transfer its customers on to the new network.
But there are no certainties that Thodey's plan to prepare the telco for this world will pay off.
Telstra's blemished history of transformation programs -- such as the half-baked transformation under the controversial Trujillo -- recently led former chief executive Ziggy Switkowski to say that the telco has often been a victim of the Petronius Principle -- an aphorism that says constant reorganisations can often create "the illusion of progress while producing confusion, inefficiency and demoralisation".
It's a syndrome that has hit Telstra many times in the past,
particularly under the bellicose reign of Trujillo, and it's one that could threaten to undo the good work put in place by Thodey and his new team.
This time, however, the telco is adamant it is on the right track.
"These strategy changes have been necessitated by thinking about a future NBN world where the customer is king or queen," Ballantyne tells The Australian.
"It's also about preparing ourselves for the fight ahead and adapting to the transition as we think about NBN."
Ballantyne, an example of the good of Telstra's transformation into a customer-focused enterprise, has been the subject of change at the telco.
Although he joined Telstra as head of its consumer arm only 17 months ago, Ballantyne has already found himself promoted to chief customer officer.
It's a job that charges him with the responsibility of Telstra's customer-facing units.
He has already executed a wildly successful strategy to lure back 1.7 million customers.
"We still have lots of market share to win and we need to be organised better to do that. But we have said we will improve services, drive out costs and grow market share. And we are doing that. We are delivering," Ballantyne says.
"The strategy that David (Thodey) has put in place is all about moving from a business unit focus to a functional structure.
"We have now moved to a world where we have single accountability for service, we have single accountability for products and services and innovation, single accountability for operations and our media strategy and our international strategy."
The successful change wrought by Ballantyne and his team is reflective of Thodey's broader transformation strategy.
For Thodey, effecting wholesale change in a business that has been laden by the stuffy bureaucracy is about effecting wholesale change within the leadership of the business, to simplify management structures and focus the workforce on customer service.
It's a change that has altered the fabric of Telstra's workforce, shifting from eggheads and engineers to sales and marketing gurus. To underline those workplace changes, in the past year alone 25,000 of Telstra's 43,000 workers have had a change of title or job.
However, in the same period almost 5500 workers have been retrenched.
These job cuts and the fear that more could be on the way have unnerved the workers.
Many now say they are hesitant to take risks on creative projects because they are unsure if their duties will change or they will be made redundant.
"Sometimes it feels like you're in the previous NSW (Labor) government, where everyone was busy watching their backs instead of focusing on their real work," one Telstra staffer says.
"Every few months, the top gets changed. We don't know what to expect."
While Ballantyne concedes that Telstra in the past has not been very good at explaining change to its staff, he insists the company is more focused than ever on communicating with workers to ensure they know where they fit into the organisation.
"We have to be honest enough to articulate the need to drive out costs and that may have impacts on the size of the workforce," Ballantyne says.
"Change for change's sake never works.
"But if you can provide the context about why you are changing, and if you are very much anchored in an ambition to drive change, then it will work."
Article by The Australian