Digitally transforming Telkom and beyond

How can we deal with and overcome the many challenges facing SA business leaders today? Brian Armstrong, a key Telkom insider instrumental to the company’s turnaround, shares his account of leading through disruptive change. As former Group COO of Telkom & current Chair of Digital Business at WITS, he shares a powerful perspective on digital transformation.

I had the pleasure of interviewing Brian Armstrong at his home. Read on for a written version of the interview. Click the link below to watch the interview.

Later in the interview

“But for me, the biggest issue in South Africa with regard to digital transformation and technological change is almost a cultural one. And dare I say it, I'm going to be a bit provocative here. I think that a lot of South African industry has developed a sort of a bit of a siege mentality. For understandable reasons, doing business and being a business in South Africa is hard.”

Touch on some of the memorable highlights from your career so far.

“I had a really good mentor at CSRR who gave me an opportunity to move into a senior leadership position at one of the CSR divisions. And that move from the technology path into management path. I realized actually I quite like this. Another key move was moving from there into commercial industry and the cut and thrust and the pace of managing a sales organization and doing deals. So that was a big moment. And then when British Telecom found me moving into a big, multicultural, multinational organization and the challenge of setting up a business across Middle Eastern Africa with operations in 36 countries, that I learned a lot. And it was challenging. And then coming back to telecom and being part of that telecom turnaround story in 2010, when I joined the organization was in pretty poor shape. And I think over the last decade, including with my contributions, I think the organization has really moved forward very well.”

What were the challenges that left you with the biggest learnings?

“I mentioned I was given that leadership opportunity in CSR very early on. Well, the challenge with that was I took over a division that was losing money fast, so I had to do a restructure with a significant downsizing as a relatively young rookie manager. But there I learnt the importance of people, the importance of taking people into your confidence, taking people on the journey with you, that it’s almost impossible to overcommunicate. And then in telecom, it was about the focus on execution, on customer relationships, mending customer relationships, managing customer satisfaction and getting the basics right. And the other thing I really learned in telecom is resilience. When you're in an organization where every time you open a newspaper, turn on the radio, watch TV, it's how bad you are. But in a turnaround situation, resilience is probably the most important attribute that any leader needs.”

How should we be thinking about how we deal with the individual customer versus the business customer today?

“Firstly, in terms of the distinction between consumers and business customers, historically, there used to be quite a clear distinction. Corporate customers wanted bespoke solutions. It was about solution selling. It was about having the organizational DNA to do things on a bespoke unique basis for each customer. And main customers at a corporate level feel loved, but still being able to work within their procurement and acquisition processes and their supply chain processes. Whereas consumers was more transactional, it was about hopefully building some sort of loyal relationship with consumers on an individual basis. But the nature of engagement was transactional. It was about mass production of the actual offer that you delivered to customers. I think there's a little bit of merging of those two, mainly more from the enterprise space into the consumer space. In the ICT space, a lot of consumerization the distinction between BTB and BTC customer engagement is blurring. In BTC space, it is still about finding ways to build deep relationships with customers, but on a mass basis and with consumers, though, the issue is that an old marketing manager friend of mine always used to say that customers make decisions on the basis of how they feel more than on the basis of what they know.

So yes, they might go online and find out all the facts and figures about this car or all the details and data about that computer, whatever they're looking to buy. But at the end of the day, they will still make their purchase decision on the basis of how they feel. It's an emotionally led decision in many cases. And that's why brand remains so important. The way we engage with customers remains so important. The customer relationship we build up and their customer experience in previous encounters are absolutely critical determinants in the B2C market.”

How easy or difficult is it to get that right in South Africa right now?

“For significant parts of the market, there's no fundamental constraints or inhibitors on getting 360 degree views of the customer, how we use the data, getting access to the data, it's no different. There are huge challenges in terms of data ethics. But for me, the biggest issue in South Africa with regard to digital transformation and technological change is almost a cultural one. And dare I say it, I'm going to be a bit provocative here. I think that a lot of South African industry has developed a sort of a bit of a siege mentality. For understandable reasons, doing business and being a business in South Africa is hard. There are waves and waves of challenges which we have to deal with here that a lot of our international counterparts don't have to deal with. And the focus over the last two decades has moved towards one of really risk management, risk minimization consolidation, and let's not mess it up. But a lot of technological change is actually driven by opportunity. The reason you technologically transform is because technology can open up new opportunities. If you do it right, it might save you money as well. But the real reason you do is to open up new opportunities.

But if you've got, let's call it a pessimistic mindset, a risk minimisation mindset, you miss a lot of those opportunities. So my challenge to South African businesses for the last decade really has been. Yes, of course, we need to save cost. Of course we need to manage risk, make no doubt about it. But let's not miss the opportunity by having a narrow, defensive mindset, as opposed to expansive, opportunity driven mindset, because that's where technological transformation really can play a role.”

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It's about evaluating that decision across more than just the cost factor?

“Absolutely. So let me give you another example of that robotic process, automation or automation in general. So people say, why do we want to automate? And the knee jerk response comes back, it's going to save us money. It will. But the real reason you automate, there's actually four much more compelling reasons you automate. The first is there is incredible data which shows that the emotional nature of human beings impacts on their productivity and their ability to perform consistently. Machines are not emotional. So machines outperform human beings. With regard to being non emotional, there's a flip side to that which we can come back to. But in many core routine tasks, you don't want an emotional person doing the work. It must be a consistent, unemotional response. The second thing is machines are much quicker to scale up or down. If you used to run an outbound contact center or an insurance claims processing business using people and you wanted to double your capacity, you need to double the number of people. Whereas if you've digitalized all that and you want to double the capacity, go to fire up a few extra servers. And hey, Presto, you've doubled your capacity.

The third reason is that we've seen the data. Computers are just much faster at many routine cognitive tasks, let alone physical tasks, but routine cognitive tasks than people. So we've seen the data coming from RPA benchmarks, where computers can do things 5100 times quicker than people. And the most important reason, though, is computers don't make mistakes. I know people roll their eyes when we talk about self driving cars. Well, in South Africa, we kill 14,000 people a year on the roads. When self driving cars mature, I guarantee you they'll probably kill 140 and people will be up in arms because it's way too many. But the reality is computers make far fewer mistakes, so they're quicker to scale. They're not emotional, they're much faster. They make fewer mistakes. Therefore, because of all of that, they deliver incredible competitive advantage. And by the way, they might save you some money. So that's why you automate. And in a sense, it's the same with the view of the customer. It will give you incredible opportunities to understand what your customers want, know how, what you're doing, how they relate to what you are doing, how it affects them, what they are consuming, what their needs and wants are, and their emotional responses as well. As the practical responses. If you have that, that's sustainable competitive advantage, that's the reason to do it.”

What are your thoughts on relationships?

“Yeah, I think relationships. Ironically, the more digital the world becomes, the more important our humanness becomes. The majority of our engagements with customers, the customer will want an entirely end to end digital experience without hands or humans in the loop. If you book a flight or you book a hotel room or you buy something online, it must be always on instant gratification, instant confirmation, et cetera. So that is a process without any human in the loop. Every time a human gets into the loop, the human introduces error, slows it down, et cetera. I was speaking to the CEO of one of South Africa's big banks last year and he was saying what they are seeking to do is move towards to differentiating based on the humanness of the experience? Absolutely. There's a huge amount of tech below the surface, but you don't want the customer to feel that they're dealing with the machine. If you compare music of the 70s and 80s and even 90s to music of today, back in the 70s and 80s, the lead singers of bands could barely sing. Many of them had really shocking voices. If you listen to the popular music of today, almost every of the top popular songs is set to light by an incredible lead vocal performance.

Why do I mention that? It's because everything else now is done on a computer, from the drums to the keyboards to the Orchestra to even the guitar. Nowadays, heaven forbid, is done from a computer. The only thing that is human is the voice and that is what differentiates it and it's going to be the same in business, everything is going to come from computers, but what will differentiate in terms of a customer relationship will be the human face that you present to your customer.”

What are some of your thoughts regarding how we need to be rethinking our manufacturing or even assembly in the current circumstance while we are having to face such destructive change?

“When I look at the manufacturing industry, though, I think there are a few key trends that one sees and then thinks out. How do we respond so obviously trend, one that covert has made very evident is supply chain resilience. That in the globally connected world, I think we've really seen how we need more resilient supply chains and how we manage that supply chain in an optimal way. I think for manufacturing firms that have physical input products, physical input materials becomes really important. So that would be one thing. The second general trend that I think it impacts on manufacturing is the whole issue of acceleration. Digitalization is accelerating industry life cycles. Industries always have life cycles from introduction through to growth, to shake out to maturity and decline. And these industry life cycles over centuries have typically lost in 50 to 100 years. So you had 50 years at the maturity phase of an industry or more. What we see with digital disruption is industry life cycles are compressing. So the maturity phase of many industries is as short as a decade now, which means that we need to constantly reconfigure and rethink our value proposition in the industry.

And that means we need to industry life cycles. Accelerating means product life cycles are accelerating, which means manufacturing firms need to be agile to be able to, on the one hand, compress production cycles and make money on much shorter production runs, but also to be able to reconfigure their assets to create new products and have agility in the way they offer products to the market. So agility in the organization, so it's resilience on supply chains, agility in the actual manufacturing process. And then I think very much so. The thing is forecasting and understanding the future because if you only actually start setting up to produce something once the market demand manifests materially, you're probably going to miss the curve. So it is about sensing a sensing capability.”

Tell us a little bit about the importance of visibility across the organization.

“The more insight we can have about the market, the more insight we can have about our production processes and indeed about our competitors. The more we can move from range forecasting and predictions and scenarios to actual forecasts and plans. So the first thing that is really important to say is the more you can join up your organization with data from end to end, the better your forecasting and your planning will be. The second thing and this is really critical in the digital age coming back to acceleration. Once upon a time I mentioned I was an engineer. Control Theory 101 is the quicker you loop bandwidth, the greater degree of control you can exercise. So speed of getting data from the edge to the center and back the speed of control. In engineering terms, reducing the loop bandwidth of the system is absolutely fundamental to exercising precise control. Correct the latency in the system needs to be minimized. And that is where digital measurement tools and digital information systems are so powerful and important.”

How can we use some of this thinking to impact how we manage costs?

“The fundamental thing is the better the granularity of the data you have, the better the currency of the data you have. And the more extensive and complete that set of data you have is the better the decisions you'll be able to make about where the constraints in the organization are and to remove those constraints to maximize the efficiency and productivity of the system as a whole, which in a sense, reduces cost. Sometimes productivity can increase output and thereby reduce unit cost. Other times, it can actually reduce the actual overall cost base as well. So I think the quality, the currency and the granularity of information is fundamental to that. I think the other point to add to that, though, is disruption is an easy term to use. But in business, we found our research is that disruption comes from three broad categories. Your demand can be disrupted, in which case your business can be disrupted. The way the services are provided to the market, the way they are produced, sourced and provided to the market can be disrupted. And then your business will be disrupted. Or finding the way that you engage with the market or your competitors engage with the market can be disrupted, and then you will be disrupted.

Now, each one of those areas of disruption, we can break that down, but each one of them there's a cost side to it, that if someone can find a much cheaper way of producing a product or service or much cheaper way of input materials doing it, but with much cheaper input materials, or reducing supply chain inefficiencies and reducing supply chain cost, or reducing customer acquisition cost, or reducing overall customer management lifetime cost, all of these offer potential to disrupt the market. And the important thing is to be the disruptor rather than the disrupted. You don't want to be in the backseat on this one. You want to be in the driving seat.”

What would be your advice to those decision makers?

“Yeah, I think it's really critical. It's not patchwork. And technology, I don't think, should be applied as an elastoplast and pop a few pills of tech here and there. It has to be a more considered holistic approach to it. We've been speaking about the response to technological disruption and that firms need to transform. Right. The goal of that transformation, I would say, is what I call digital maturity. Now when you speak to people about digital maturity, most people would say, yes, it's about people process technology, many would add it's about the system. It's not just sort of independently about people in process and technology. It's about a holistic systems. We are bringing that together. I'd like to go a little bit further than that. Our research in terms of what does it take to be digitally mature, what is this notion of digital maturity and we looked at five of the leading books, we looked at all of the global advisory firms, we looked at more than 50 academic papers on what is digital maturity and what we found was that there's probably twelve things that you have to get right in the systems context to be properly digitally mature.

So let's start at the end. The end is business outcomes. Technology is not there for technology's sake. Technology has to deliver business outcomes be that revenue, be it customer loyalty, be it customer satisfaction, be it profit, whatever it's a business outcome, technology has to deliver. What are the levers what are the domains that directly affect business outcomes? It's the product domain how you digitalize your product. It is about your process domain optimizing your business processes. It's about your workforce domain. It is about how you actually use your workforce and empower them to really achieve great results and it is about your information and data domain about how you put that to work. And admittedly, there's a fifth one. It's about data ethics. We touched on it. But if you get your data ethics wrong, speak to some companies that have got it wrong, huge negative impact on the business outcomes. So those are the areas that direct the impact on the business outcomes. But what enables those? There's two things that enable all of those. The first is the skills of your people when we've spoken about skills and the second thing is it's your technology excellence, it is about it.

We can't get away from it. You need to invest in end to end technology excellence.”