Telstra's Sol Trujillo, left: change from regulatory
focus to customer focus. Jim Goodnight of SAS, right: focus
innovation towards what customers actually need
In a global marketplace, companies of all types and sizes
face new challenges - and need visionary leadership. The
challenge is about evolution: how companies evolve in their
marketplace. In a competitive world, they must change or
And that means company leaders have to express a vision of how
they will transform their companies in order to compete in this
fast-changing global market. They need to communicate that
vision to their staff, their customers, their suppliers and
business partners and their shareholders, and lead them all
through the transformation.
More than 800 industry leaders gathered in London in April to
hear two of the world's proven experts in company
transformation share their ideas about the realities of doing
business in the 21st century.
Sol Trujillo, CEO of Telstra, has led the Australian telecoms
operator for the past three years. "We've been making a change
from a company that is government owned, regulatory focused, to
one that is customer-focused," he told participants at the
London conference of the Premier Business Leadership series,
organised by SAS in association with BetterManagement.com.
He took part in a panel on leading the high-performance
organisation with Jim Goodnight, founder and CEO of SAS, who
has led the company through 32 consecutive years of growth and
profitability. Revenue is now $2.1 billion.
Delegates to the event - held at the newly transformed Wembley
Stadium in north London - represented industries from across
the world including telecommunications, banking and insurance,
manufacturing and transport as well as the public sector.
What customers need
Trujillo, formerly CEO of US West and then of the Orange
mobile phone group before moving to Telstra, said that the
culture in Telstra is now "around what customers need".
Goodnight pointed out the importance of analytics in this
process - although that is creating challenges for handling and
storing data in a world where, according to IDC, data volumes
are reaching 260-300 exabytes, more than the storage capacity
currently available in the world.
He offered a solution, which SAS has been applying in its
business with banks and other financial institutions.
"As they process hundreds of thousands of transactions", said
Goodnight, SAS uses its innovations to concentrate those huge
volumes of data down to just the essentials that are needed for
real-time business forecasting. "We're working with a number of
banks and other companies on this," he said.
Trujillo agreed with Goodnight: "Analytics and real-time data
use are imperative," he said. "We're moving to a real-time
Companies such as Telstra need to optimise the real-time
relationship with customers as they move from a wired world to
an environment in which they operate wirelessly, untethered, he
Today Telstra's market capitalisation is more than $A50
billion, said Trujillo, but "two years ago most of the
decisions were made around pleasing the regulator or the
With privatisation - the Australian government sold its final
stake in the company in November 2006 it is now a different
"When you have shareholders that own so much of the business,
it's important to be clear that we don't get up in the morning
to please a government or the regulator, we get up in the
morning to please our customers," said Trujillo.
"So when the government or a regulator tries to tell us what we
should do or not do, we finally started taking stands and
saying this isn't what the customer wants, or this won't make
returns on our investment."
And as part of that same process, Telstra has reorganised the
business. "We've segmented our business," Trujillo told the
conference. "Culture is driven around what customers
He agreed that "there's always tension between the old way and
the new way", but added: "People can always draw conclusions on
their own about what's right and not right."
Though SAS has not had to make the transformation from a
government-owned corporation in the way that Telstra has,
Goodnight had a similar story to tell.
"We've tried to focus our innovation more towards what
customers actually want or need," he said. "If you build a
product that customers actually want and need you're going to
Speed of competition
It's clear, the conference heard, that corporations have to
work in a very different world now from the one that existed
even a few years ago. In the past it took years to get a new
product on the market - but today the speed of competition
means that companies have just months to develop and offer new
products and services.
And it's one world, with one giant marketplace, with
competition coming from everywhere. Statistics show how many
companies from China, India and Brazil are now listed among the
As a result, the demands on business leaders are even greater
than in the past. "There's a new paradigm that's emerged and is
emerging," said Trujillo.
He explained how he has led the transformation of Telstra over
the past few years. "Innovation isn't just about new products
and services. It's about process changes, about doing things
differently, that includes things like taking costs out and
reducing cycle times," he said.
"I'll give you an example about something we've been doing at
Telstra. When I got there we had been losing market share for
10 years in a row, and our competitors had been gaining market
share. We had to change the game."
One of his priorities was to ensure that Telstra had a 3G
mobile network to allow it to compete with the other companies
in the Australian market. But under Trujillo's leadership,
Telstra went about this in a completely unprecedented
"We made some choices about innovating around technologies: we
were going to build a nationwide network in one year."
Three years in one
That meant ensuring coverage across an area of 20 million
square kilometres, he added. "Australia's a country about the
size of the US mainland. No one in the world has done anything
like that in less than three years."
How do you take a three-year process and make it one? That was
the fundamental question," said Trujillo.
It meant Telstra had to focus on "innovation around operational
processes, innovation around the channels, and innovation
around the technology", he said.
"Innovation comes in a lot of flavours. It's not just about new
products and new services, it's about the operations and
innovating around everything."
And it worked. Telstra's innovation was so successful that the
company beat its own expectations and built its nationwide 3G
network in only 10 months. Then it went one better: it was
turned on, nationwide, in only one day. That, too, had never
been done before.
The results have been tremendous. Telstra's customers now get
14.4 megabits a second data speeds into their phones, their
PDAs or their laptops. Just as importantly, it is "a real-time
experience", said Trujillo, so customers are now used to superb
coverage and to the service being always on and giving instant
The technology is the same as other operators offer around the
world. Trujillo himself was head of Orange when it was one of
the first to roll out 3G services, and "3G was kind of a yawn",
he recalled: Lots of hype, billions of dollars spent but not a
lot of differential value to consumers."
Now Telstra's customers are used to using the services and
applications without enduring that 10, 15 or 20 second wait
that is needed for many other mobile data services. "It's not
about the technology. It's about the end to end customer
experience." And NextG - as Telstra brands its 3G network - is
going to speed up further, to 21 megabits a second later in
2008, and then to 42 megabits in 2009, said Trujillo, and
eventually to so-called 4G levels of around 100 megabits.
As a result, Telstra customers are spending on average $20 a
month each more on services than are those who are still
connected to the 2G mobile network.
"No other company in the world that I'm aware of has achieved
that," said Trujillo.
Management of innovation
Management of innovation, in order to create such results,
is a highly skilled discipline, says Goodnight. Customer
awareness is crucial, and that is a principle he has applied in
"You can't just tell your development staff to go and
innovate," he said at the Wembley conference. "They will
produce a lot of technical things that are not useful."
He asked: "Do you remember in the dotcom days when people were
creating websites that did everything imaginable in the world,
except things that people actually needed or wanted?"
He told the 800-strong audience that sometimes SAS sets
competing development teams onto a project. "That does happen
occasionally," he said. "Internal competition spurs each team
on. We don't do it on every project."
The cycle time for investment in research and development is
speeding up. And the priorities have changed. Smart companies
have to optimise the business, but it is important, when they
take costs out of the business, that they know precisely what
Trujillo told Goodnight and the Business Leadership conference
that when he started at Telstra "we were a company that had
virtually zero growth at the top line" and expenses were high.
"We had to find ways to grow," he said. "The way to grow is to
Many believe the trend in the telecommunications industry over
the past few years has led to increased commoditisation of data
capacity. "Everything is about pipes," said Trujillo. There was
"no perception of value add".
So he set his teams to "innovate and change that perception",
with the aim of enabling Telstra to "differentiate against
those we compete with, to capture the dollars in the
At the same time the company had "to innovate around cost
structures, and to innovate essentially so you're always
creating more value", he said. "That's what's happened at
The business leaders in the forum at Wembley considered the
challenge of finding the right teams to innovate.
Goodnight pointed to the geographical change in the world of
creating the human resources for innovation. "Just look at the
sheer number of students who are graduating from college," he
said. "In the US last year it was 1.3 million graduated from
college. India had 3.1 million, China had 3.3 million."
That will inevitably mean that "innovation has to flow in the
direction of the educated population", he said. "It's the sheer
numbers of students that they are producing in those two
countries and in the rest of Asia."
Trujillo told the 800 business leaders at the conference that
Telstra has invested heavily to ensure its staff are able to
adapt to the IP world. "We spent $200 million retraining our
workforce. We now have to change, and retool everyone. In some
cases you invest in R&D and other cases you invest in your
people, so they fit with your strategy."
Goodnight explained how he has endowed the Cary Academy, an
independent school in the US for 11-17- year-olds. "Every child
has their own tablet computer."
In a world where students go home to play with MySpace,
YouTube, iPods and Xboxes, at school they still have to "watch
a teacher at a blackboard teaching them the way they taught
us", said Goodnight. "It hasn't changed. It's a government
monopoly for the most part and they don't have to respond to
The US education system is 100 years old, said Goodnight, "and
the current generation of kids is very bored with our system.
Quite a few are dropping out." A modern economy can't use
people who have dropped out of high school, he told the Wembley
"The really high-tech, high-paid jobs are going to have to
move. Jobs can very easily migrate. Virtually every company has
R&D facilities in India and it's far simpler to let these
jobs go where the people are."
Trujillo agreed with Goodnight, up to a point, but paid tribute
to the innovative energy of the western economies, including
the US. "A very strong economy is aided by educated and not so
educated," said Trujillo. "Smartness is not whether you have a
PhD or not."
But he accepted that many students from China, India and other
countries who would once have gone to university in the US are
now going to Australia. "They learn English, they learn a lot
of the western business policies. They're welcomed," said
"It does make a difference. There is a very strong economy
overall in Australia and investment going to Australia because
of some of those policies."
There is a political stalemate on this in the US, said
Goodnight, and the country is restricting the number of
foreigners who can come into the country to study.
"We are reducing the number the bright intelligent people that
are allowed into the US," he said. "The US has its head in the
sand. It won't change for years to come."
Meanwhile they both agreed that the aim of those leading
high-performance organisations is to plan for the future - "to
go where the puck is going to be", said the ice hockey
"We have to do the research today in order to capture the value
that everybody's going to be willing to pay for. We've been
doing lots of research trying to find what it is the customers
are wanting to do three years, five years, 10 years from now,"
Analytics is crucial to that, he repeated. "You have to have
some data, some facts, but then you apply judgement. You have
to create an energy in the organisation which allows people to
do things." GTB