Article Analysis

Change@Telstra Article analysis

Telstra is an example of a business where managers have led change. In response to internal and external changes and challenges, they devised a ‘transformation strategy’ and announced back in 2005 a five year, multi-faceted, end-to-end strategy which had four main elements – ‘customer focus, value differentiation, product innovation and cost take-out’. In his 30th of September 2008 speech* End to end transformation - From a telco to a media-comms company’, Sol Trujillo, Telstra’s then Chief Executive Officer (CEO), describes how vital it is to manage change and demonstrates the role of the CEO in the process. The speech is lengthy but well worth the read. In the speech, Sol Trujillo: - explains that his first action was to ‘examine the roadmap, review our position, and collate the real facts and data about the business.’ - describes Telstra’s situation in July 2005, referring to it being in dramatic decline and being beaten by its competitors. He goes on to describe Telstra’s position at the time in respect to such things as its (lack of) market share, its (declining) position as a technology leader, its (drop in) retail revenue, its (lack of) points of differentiation in the market and the (increasing) age of its networks. He also talks about other external influences at the time - such as the plans of the Australian Government to sell its remaining 51% of the company and to continue to impose regulations on Telstra’s operation. - states that ‘we would follow principles-based leadership’ and describes some of those principles - explains how he ‘invited any staff who harboured a liking for the old siloed ways to Catch the Vision or Catch the Bus’. - points out that the ‘big bets’ in the end-to-end transformation of Telstra ‘were all about differentiating our customer experience, by driving innovation and delivering premium value’ - describes the huge market research that Telstra undertook which included over a million interviews (in order to have the knowledge necessary to move Telstra from being a product-centric organisation to a customer-centric business). - explains that strategic global partners were chosen such as Accenture, IBM, Alcatel- Lucent, Ericcsson and Cisco. - describes steps in Telstra’s transformation into a ‘regional media-comms powerhouse with global reach’ including Telstra acquiring three leading Chinese online businesses, ‘with EBITDA growing at close to triple-diging levels’ - reports on how the ‘big bets’ of Telstra’s transformation were underpinned by ‘integrating the business and raising the technical skills of the workforce’. - shows more of his management style by stating that: ‘Transformation are about making tough calls, big bets. If you’re afraid of being wrong and choose marginal change, it won’t transform the company’.

Activities – Managing change at Telstra Your Task is to look through Sol Trujillo’s speech and respond to the following questions:

1. What were the external and internal influences or sources of change at Telstra?

2. Which of the structural responses to change did Telstra management adopt?

3. What did Telstra managers do to minimise resistance to the changes they wanted?

Managing change effectively includes the following elements:  identifying the need for change  Setting achievable goals  Creating a culture of change.

4. From your reading of Sol Trujillo’s speech, to what extent do you consider that change at Telstra has been managed effectively? Illustrate your response with examples.

5. Which of Telstra’s stakeholders may have been resistant to some of the elements of change Telstra management wanted? Explain.