COMMENT: Telstra Strategy Boss Has A History Of Failed Companies
Telstra is a train wreck, and the man responsible for technology, innovation and strategy for the past two years is the man credited with the collapse of Nokia and the demise of Microsoft’s Windows phone.
Yesterday Telstra’s current CEO Andrew Penn who some say could be dumped, as a train wreck unfolds in front of him, is set to start sacking a quarter of his workforce some say closer to 10,000 than the 8,000 talked about yesterday. This includes middle management.
Penn who likes to turn up at technology shows such as CES and Mobile World Congress in Barcelona with his entourage of spin doctors and often talking about future technology and desperately trying to position Telstra as an International telco vs delivering a sound network that’s not constantly breaking down, is struggling to deliver a clear vision of how he plans to turn the seriously broken Telstra around.
Missing from yesterday’s briefing was any member of the Telstra board who along with Penn have to also take responsibility for their actions in failing to fix Telstra’s problems before yesterday’s disastrous briefing.
Also missing was Telstra executive Stephen Elop, this is one man who knows a lot about train wrecks and taking a great brand down.
Elop who Penn personally appointed to a newly created role of Group Executive, Technology, Innovation and Strategy at Telstra back in 2016 is better known as the man who took down Nokia and then struggled to deliver any mobile success for Microsoft.
He ditched Nokia’s existing platforms, Symbian and Meego in favour of the Windows Phone and we all know what happened to that strategy.
At the time Elop said Android failed to allow Nokia to differentiate itself from other Android phone makers.
Penn in appointing Elop in 2016, said that he will be responsible for leading the companies strategy to become a world class technology company.
Elop was a no show at yesterday’s briefing.
Today Telstra is a company which will report a $3.8 billion profit which ironically is the same profit they reported 20 years ago on 35 per cent less revenue.
Back then Telstra had double the staff levels than they have today.
Penn who is forecasting lower profits next financial year and $1.5bn in cost savings is now having to watch Telstra’s share value slide to a seven year low of $2.77 with some tipping it could fall further today.
At a briefing yesterday Penn said that he was splitting Telstra into two core operations an infrastructure Company and a retail operation. The Infrastructure Company is tipped to be valued at around $36 billion the retail business “next to nothing” said one observer.
He also tried to rationalise why costs need to be slashed, a process that several analysts claim should have started several years ago.
After all the spin about oversees ventures and pie in the sky revenue generators, Telstra is desperately trying to now become a customer friendly company in a demanding market. The only problem is that their overseas based customer service “stinks” with support operators in places such as India and the Philippines, failing to understand issues that are not on their script and their broadband and mobile networks constantly falling over.
I live in Mosman NSW and in the last month the broadband network has been down four times, my mobile network twice.
Return on capital at 12.4 per cent and a market share of more than 50 per cent are metrics many other companies would dream of.
Yesterday Penn said after casually announcing 8,000 job cuts, “This is about making a decision to effectively leave the legacy behind and we have been looking to transform the business,” he said.
“We are creating a new Telstra that is able to continue to lead the market. In the future our workforce will be a smaller, knowledge-based one with a structure and way of working that is agile enough to deal with rapid change.
“This means that some roles will no longer be required, some will change and there will also be new ones created.
“We understand the impact this will have on our employees and once we make decisions on specific changes, we are committed to talking to impacted staff first and ensuring we support them.”
His big bold plan labelled Telstra2022 shouldn’t impact on consumer service he claims.
“Our initial focus will be to flatten out the organisational structure … and protect customer-facing operations, until we can drive the volume of service inquiries down,” he said.
These are service inquiries that are being generated because their product offering is struggling, and their network is unstable.
The telco will establish a stand-alone infrastructure business unit to drive performance beyond the NBN rollout. It would greatly simplify its structure and “ways of working to empower our people and serve our customers”.
The Communications Workers Union labelled Telstra’s move as a short-sighted attempt to shore up its business at the expense of the community and the economy.
Union national president Shane Murphy said Telstra’s job cuts would “devastate thousands of Australian families and have a significant impact on Telstra’s ability to deliver for consumers”.
He was particularly worried about Telstra hiving off its infrastructure business. Telstra’s networks in the last two years have been hit with major outages, leaving millions of users stranded.