Changing Telstra's tune

At face value, David Thodey's overhaul of Telstra's management structure looks messy and confusing. Under-pinning it, however, is a clear shift in strategic emphasis.

The new organisational structure looks, and is, complex, largely because Thodey hasn't rationalised the dizzying number of executives reporting directly to him. However, in announcing the changes he did refer to them as "another step" towards implementing the "refreshed" strategy outlined at Telstra's recent investor day. That strategy revolved around customer satisfaction and generating better returns from the $12 billion invested in the business during Sol Trujillo's period as chief executive.

Perhaps the most telling aspect of today's announcement was the departure of Holly Kramer, group managing director of product management "to pursue other opportunities". Earlier this month Telstra's consumer group managing director, David Moffatt, resigned after nearly a decade with the company.

Moffatt and Kramer were the two most senior executives with responsibilities for the product offerings and strategies within Telstra's core consumer businesses.

Telstra has been losing ground to its competitors in both fixed-line broadband and in its wireless business. While its lack of competiveness could be attributed to Trujillo's determination to maintain premium pricing for Telstra products, it appears Thodey has decided on a change of both strategy and senior personnel.

Last week Telstra announced a restructuring of the fixed-line broadband offers, offering faster speeds and bigger download limits for the pre-existing prices. It is expected to unveil significant changes to its pricing of its wireless products imminently. Optus' aggressive pricing of the new smart phones, the iPhone in particular, has seen it winning share from Telstra. (Winning the iPhone war, November 11.)

Thodey has created a new product unit structure, with Justine Milne's role expanding from overseeing Bigpond and media to including responsibility for all Telstra's fixed-line offering. Philip Jones will have a similar but acting responsibility for the wireless products.

The new structure creates very clear responsibility and accountability for Telstra performance in the market, apparently buttressed by new product-level analysis of profitability.

The other significant strategic shift relates to the creation of a new international unit headed by Tarek Robbiati, which will have responsibility for all Telstra's Asian businesses, including its Chinese online businesses.

Trujillo preached an absolute focus on Telstra's Australian businesses, with the relatively modest acquisitions offshore more of an opportunistic options play than a coherent strategy. Thodey is upgrading the status of the Asian operations, which include the CSL wireless business in Hong Kong and the Reach undersea cable network.

Taken together, the extra emphasis on products and Asia could be interpreted as a shift from the internal to the external, from networks and technology to applications and services.

Regardless of the outcome of the negotiations with NBN Co, there will be a new national fixed-line broadband network and Telstra will eventually have to compete on the basis of applications and services and its brand. The new structure better reflects the likely network-lite nature of Telstra in future.

Buttressing the changes at Telstra's coal face is the appointment of Tabcorp's managing director of wagering, Robert Nason, to head a new customer satisfaction, simplification and productivity unit.

Nason, a former director of technology consultant AT Kearney, has a reputation as a tough manager. The appointment underscores and will give some teeth to Thodey's commitment to improving customer service and satisfaction.

While the Thodey Telstra remains a work-in-progress, he is starting to put his own stamp on the organisation and the differences in style, substance and strategy are beginning to emerge. As with the NBN negotiations, Thodey may present as mild-mannered and conciliatory, but there does appear to be both steel and conviction in him.