Five lessons from a year at the coalface of transformation

This month marks one year since we first launched our T22 strategy to transform Telstra. We have made good progress, done a lot of heavy lifting and built great momentum for the next phase of what is a three year change program. One year on I wanted to share five key things we have learnt along the way.

The incumbent’s dilemma

Telstra traces its origins back more than 100 years and our focus all along has been to connect Australians to each other and the world using the best technology available. That focus has not changed but the world has and now we are changing too - faster and more profoundly than we ever have before.

Change at this scale and at this pace brings special challenges, particularly for large, incumbent companies like Telstra. Legacy systems, legacy processes, legacy thinking are all burdens that must be shed in a world where success is defined by agility, simplicity and the ability to respond quickly to changing customer expectations. Telstra’s strategy to face squarely into these challenges – to disrupt ourselves before we are disrupted by others - is called T22 and this month we are marking 12 months since its launch.

Four key pillars

When we first launched T22 we said it was built around four key pillars that would position Telstra for the future by making us far simpler, more efficient and easier for customers to deal with. We were very clear with what we said we would do and how we would hold ourselves to account:

We said we would radically simplify our product offerings, eliminate customer pain points and create all digital experiences – and we are, with initiatives like our new loyalty program, peace of mind data, no lock-in mobile plans and simpler, more flexible offerings for our big and small business customers.

We said we would create a standalone business to drive performance in our fixed assets and give us options post nbn-rollout – and we have, with Infraco up and running.

We said we would simplify our structure and ways of working to empower our people to better serve our customers – and we are, removing hierarchies, siloes, re-designing our organisation from the ground up, and introducing more agile ways of working to drive better results for customers and doing it faster, at a lower cost, and with a better employee experience. As we announced last week, our major, cross-company structural changes are now behind us with around 75 percent of our direct workforce role reductions announced. There is no question this has been difficult for our people and created a lot of uncertainty and we continue to do everything we can to provide support and get through the program as quickly as possible.

Finally we said we would put in place an industry leading cost reduction program and portfolio management program – and we have, and remain on track to reach our net cost out target of $2.5 billion by the end of 2022.

Our strategic investment in digitisation also means we are well progressed building new IT platforms and retiring many of our legacy systems. Our networks also continue to be recognised as among the world’s best (and certainly Australia’s best) and we are putting 5G into our customers hands ahead of our competitors. By any measure our progress and our ability to execute to plan is significant. That it has been delivered at a time of great change shows once again the calibre and spirit of the Telstra team.

Five lessons

Looking back one year into T22, Telstra today is already fundamentally a different business from what it was only 12 months ago and already we are starting to see green shoots from our program of change. With the benefit of hindsight I wanted to share five key lessons we have learnt so far.

Firstly, we have learnt not to expect to be comfortable. Transformation at this scale and pace is certainly not comfortable - it is a process with many moving, inter-dependent parts and considerable uncertainties and it is process where momentum has to trump perfection. You cannot expect every detail to be locked and pressure tested before you move and that is a very different approach from the past. Using Agile has enabled us to keep moving and improving.

Secondly, we learnt to be ruthlessly disciplined, resisting any temptation to complicate the solutions being developed, whether that’s in the systems and functionality we are building or the products and services we are launching. Unless we do this we will not deliver the simplification and remove the complexity necessary to deliver a better customer experience. Nor will we deliver the productivity and cost reductions we have promised.

Thirdly, we have learnt the importance of being able to move at pace. Netflix CEO Reed Hastings once said: “Companies rarely die from moving too fast, but they frequently die from moving too slowly.” That sentiment sums up the urgency with which we are now moving and why Agile at scale is so important for Telstra. For us it re-defines not just what we do but how we do it.

Fourthly, we have learnt that transformation at scale is not for the faint hearted. It requires courage to keep your eye on the prize knowing there will be peaks and troughs, knowing there are difficult decisions to be made, including decisions that affect our people and their families. There are many naysayers and it takes courage to hold the line, to take the hard decisions and be prepared to move when you might not be quite ready or know all of the answers. That does not mean that you do things recklessly – you try to build out a robust scaffolding of support where you can – but you cannot wait for and give the organisational antibodies the time to marshal their forces to hold you back.

My fifth and final thought is on a more personal note - if you are not a technologist, become one. When I started work 40 years ago many applications still worked on punch cards and paper tape. What I have learnt in the last seven years at Telstra is that almost every industry, every leader, every government is under-estimating the level of technological change that is coming. Singularity, the term used to describe the moment when computers will essentially overtake the intelligence of man, is predicted by some to be as little as a decade away. At that point computers will be capable of a million, trillion calculations per second. We can debate the risks and morals of this but we also have to face up to the reality that it is happening.

I am not a technologist by background but I have invested deeply in my own learning over the last few years because I can see the profound implications and opportunities it presents. What we need is agile and courageous leaders at every level of society to embrace technology and accelerate the transformation of their business, their sectors, our cities and our communities, to this new world. In many respects history has been characterized by us waiting for technologies to arrive to enable us to do what it is that we want to do. Today we are all at risk of the technology outpacing us unless we develop the skills and make the investments necessary to harness it.

Change will never be this slow again

It might already feel like the world is racing but in reality we are only at the dawn of this next industrial revolution of automation and robotics and it is sobering to consider that the rate of change will never be as slow again as it is today. The future is pounding at the door and the question for us all is can we change fast enough, and embrace the new technology that is coming, to transform ourselves for the future. That is what we are seeking to do at Telstra through our T22 strategy is all about. One year in we have made good progress, we have faced many challenges and know there will be many more ahead. But we remain determined to do everything we possibly can to transform Telstra from being a leader in the old world, to being the leader in the new world of telecommunications in Australia. We are not waiting for the future, we are building it right now.