Telstra's quest to stay relevant

The 'customer first' mantra may motivate the troops but true digital transformation requires a deeper, cultural change about where the customer fits into the final equation.

Opening of Telstra's new Sydney flagship store

David Thodey at the opening of Telstra’s Sydney flagship store. Source: News Corp Australia

It’s been a busy week at Telstra. Its $112 million Sydney flagship store is open for business; the health division has been officially christened as a stand-alone business unit; there’s a billion bucks earmarked for the Asian expansion; and it looks like that $11.2 billion deal with NBN Co should be signed off by the end of this year.

All in all, plenty of action for the incumbent telco, whose dominance in the local space is unlikely to disappear anytime soon. However, listening to Telstra chief executive David Thodey one picks ups a sense of urgency to redefine the telco and help it find its place in the digital world.

Thodey has spent this week banging the drum of innovation, digitisation and customer-centricity to all and sundry and it’s a job that he obviously relishes.

Telstra may be swimming in cash but securing its future will require a recognition that the ‘digital first’ mantra has less to do with technology and more with process and culture.

That’s one lesson that Thodey has obviously picked up from his trips to Silicon Valley, as he ponders the changing fortunes of erstwhile global giants and the new breed of innovative technology-driven companies.

Speaking at the Australian Digital Summit this week, Thodey pointed to the travails of Sony -- "one company that should've built the smartphone until Steve Jobs came along" -- as a case study of a company that didn't move with the time.

He was equally unabashed about borrowing a strategy from US streaming service Netflix in "doing away with expense accounts" at Telstra.

"That might sound small to you," he said.

"But expense accounts are the absolute curse of a big organisation. So we've said, we trust you. We trust you to make the right decision. If we find you don't make the right decision we'll do something about it, but that very small act has actually changed how people think about their role.”

"Big companies abdicate their responsibility. But we want people to own it, and to feel empowered to make a difference. That's the culture you've got to create. Google, Amazon, Facebook, they've done that. And it's what we're trying to do.  You can't treat customers well unless you treat each other well too."

The customer advocacy angle is high on Telstra’s agenda but it’s not the only telco looking to play nice with the punters.

The industry isn’t exactly synonymous with generosity as far as customers are concerned. And truth be told, if it wasn’t for this damn fangled digital disruption, that’s exactly how things would remain.

But the disruption is real and as the technology propelling the revolution becomes commoditised, the idea of what your customer needs, expects and is willing to put up with has been turned on its head.

For telcos that have long made their money by looking after the plumbing, future prosperity depends on forging new ways to interact with customers.

Revamping its Sydney headquarters into a "state-of-the-art customer technology hub" is just the latest manifestation of Telstra’s desire to establish a deeper, cultural change.

Fostering this change has an implication for all Australian businesses not just Telstra, as the balance of power shifts from the corporation to the customer.

A key feature of this shift is the demand for consistency of experience, says Dave Maunsell, managing director of Accenture Digital Australia.

Navigating the age of ecosystems has trained customers to demand an interaction that cuts across sectors. Whether buying shoes or the new iPhone, seeking advice on home loans or setting up that new modem, customers are seeking a digital experience that makes their life easier.

 “We're really blurring the physical and digital world, and organisations that focus on their customers and improving their experiences, and making life easier, they're the ones that will succeed,” Maunsell says.

Turning the ship around at Telstra, by Thodey’s own admission, will take time and the recent admonishment delivered to the telco by the Australian Competition and Consumer Commission highlights how much work remains to be done.

Telstra is set to boost staff training around mobile phone complaints after the regulator said that the telco’s staff had misled hundreds of people about their consumer rights.

For a company that’s become used to market dominance, old habits die hard.

While consumer advocacy is the big emphasis internally at Telstra, Thodey’s message to Australian businesses of finding new digital business models is useful not just for them but also for the telco.

Telstra’s effort to remain at the heart of the unfolding digital transition of Australian business revolves around the twin factors of connectivity and the network.

Providing the connective tissue for the evolving business models and putting itself at the heart of transition is what Telstra’s banking on.

It’s a place that Telstra held in the old world and there’s so no reason why it can’t occupy the same position in the new world. Fortunately for the telco, the billions delivered from the NBN process provide it plenty of ammunition and a healthy buffer as Thodey plots his next move.