Webinar lc ps e culturetransformationmay2010


Published on

Published in: Business, Education
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Webinar lc ps e culturetransformationmay2010

  1. 1. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010TELSTRA CASE STUDYThe CFO leads cultural transformation and acts as a guiding light forthe whole organization.“I set out to transform the Finance Group into a support group that wouldcreate new value, provide top service and be seen to be valuable by itscustomers…..and deliver millions of dollars to the bottom line.”John V. StanhopeChief Financial Officer and Group Managing Director, Finance andAdministration, Telstra CorporationTHE CONTEXTTelstra is a $25 billion Australian telecommunications and media services company. It ranks as11thlargest Telco worldwide in terms of market capitalization. It provides fixed line, mobile andbroadband Internet services. Its cable TV, online directory and Yellow Pages books form thebasis of its media services.Telstra’s cultural legacy is one of a government owned monopoly that has progressivelyadapted to an increasingly deregulated, commercial and competitive environment. The Financeand Administration (F&A) Group, a corporate support function of more than 2400 people hasoperated in a company that has always held strong market positions in all of its Australianmarkets. The company has undergone many changes over the years to become morecustomer-focused, but it is still known in several market segments for its poor customer service.The Chief Financial Officer (CFO) wanted to change this, starting within his own group. A“customer service” focused cultural change, known as value service culture (VSC) was initiatedin June 2008. This case traces the value service cultural change over its first 24 months to June2010.11  The  CFO  and  members  of  the  senior  leadership  team  were  interviewed  by  MarketCulture  several  times  over  the  course  of  the  2  year  journey.  Ongoing  discussions  took  place  with  the  CFO  throughout  the  period.  Internal  documents  were  used  to  identify  the  sequence  of  initiatives  undertaken.  Members  of  the  MarketCulture  team  were  engaged  at  the  start  and  participated  in  many  of  the  major  events  along  the  way.  
  2. 2. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010WHAT WAS THE PROCESS?A summary of the culture enhancement and change process is summarized in Figure 1.Figure 1: The Culture Change ProcessThe Telstra culture change process moved through the four phases, each having specific steps.1. Planning for Success: Included a culture assessment and a Culture Change Roadmap2. Culture Transformation: Involved upskilling, process reviews, short term wins and forums forsharing of best practices3. Embedded Culture: Making it Stick with best practice workshops and new performancereview systems and processes4. Continuous Monitoring and Revitalization: Culture measurement and profit gainsPHASE 1: PLANNING FOR SUCCESSA culture audit is an essential first step to planning the cultural change effort. The advantage ofthis is to gain more in-depth insight into the culture, build relationships and additional buy-in,reduce the risk of resistance to skill development and culture change, identify leaders that canbe change champions and provide key input into an Assessment and Implementation Plan. Thisis also a time for the executive leader to craft and refine the vision, goals, strategy and priorities.This needs to have within it a sense of urgency which can be easily communicated and
  3. 3. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010understood by everyone in the organization. These elements are inputs to a culture changeplan.The first step was for the CFO to articulate his vision and the sense of urgency. A culture auditwas undertaken involving interviews across all levels of the F&A Group and in the main lines ofbusiness. This reported an internally focused, siloed and hierarchical culture with littleunderstanding of the real needs of stakeholder groups serviced by F&A. It reflected a lack ofurgency in its attitude to making changes. A plan for change was developed starting with thelaunch of the vision and goals.PHASE 2: CULTURE TRANSFORMATIONLaunch of a culture change requires a memorable event and ongoing communication andactivities that demonstrate what the new culture is to look like. A powerful guiding coalition isneeded to coordinate and lead the changed behaviors. New skills may be required and methodsfor sharing learnings and experiences need to be put in place.The Launch of Value Service CultureAt an offsite conference with his top 80 people, John Stanhopereviewed his tenure as CFO starting in 2004 and asked thequestion: “Are we there yet?” He was referring to F&A as aneffective, valuable service organization to the rest of thebusiness.Answering this question with a resounding “no” the CFOposed the challenge of developing a strong service culture inorder to actively understand the needs of its customers anddeliver what is of most value to them. He called this a “valueservice culture” which soon took the mantle of “VSC”. The keygoal was defined:“To understand our customers’ needs and behaviors betterthan ever, and deliver what is of most value to them.”Creating the Relevance and Tangibility of VSCA “guiding coalition”, of several, but not all the seniorleadership team, was formed to steer the culture change andreport to the full senior leadership team. This included theCFO, executive HR representation and a marketingcommunications specialist who reported direct to the CFO.This group was able to focus on VSC initiatives with emphasison communications and planning for training.Heads of lines of business held their own offsite meetings tocommunicate the VSC initiative and set tasks to identify theirinternal customers.Tackling culture changeneeds a memorablewatershed event where thevision is clear, the stakesare raised, the leader leads,and the experience isemblazoned in peoples’minds. The “Are we ThereYet” offsite conference wasthat event.The desired new cultureneeds to be made real.People need to see it,“feel” it and emotionallyconnect to it. They have tosee it will benefit them andthey need to have the skillsand confidence to enact thenew behaviors.
  4. 4. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010As this occurred a two-day workshop was designed. This covered the VSC mindset andpractical “how to” tools to help people understand customer needs, monitor satisfaction,recognize value and non-value adding activities, along with tools to assist collaboration. It wasconducted with mixed groups across functions and levels. The first set of workshops covered200 people. The CFO’s attendance and participation reinforced his commitment to the culturechange.Making it Real: Passing on the VSC ExperienceFour months after the first wave of training, a VSC Summit wasconducted. Here, groups of past VSC workshop participantsand their teams presented to a wider audience the results oftheir experience applying the VSC tools. These experiencesoccurred at all levels in the F&A structure. They reported ongains made from stopping non-value activities such as theprovision of 250 large reports which were subsequently foundto be of little value to their intended users. Another reportedincreasing accuracy and speed of delivery of internal mail.This occurred through a better understanding of “customer”needs by simplifying the receipt and collection process andeducating customers on the process. These presentationscreated a sense of fun and heightened the collaboration of theteams doing them.Stories circulated about how VSC thinking had brought about positive results. One story was ofthe manager who noticed a worn carpet leading to a storeroom and asked the question as towhy it was so worn. The answer eventually led to discovering the storage of physical informationrecords that were being delivered on a regular basis with no record of their retrieval for intendedusers. This led to digitization and complete elimination of the physical records and their physicalstorage.WHAT’S THE IMPACT SO FAR?After the launch and implementation of communication andchange activities a major review of progress should beundertaken. What’s working and what’s stopping changeshould be assessed. This may be at the 9 to 12 months mark.First Year Anniversary of VSCAt the Telstra offsite conference, heads of F&A lines ofbusiness presented their plans for the 2009-2010 year andhow the VSC was embedded in them. These all containedinitiatives designed to weave VSC into the fabric of dailyactivities.Cross-functional workshop groups were formed at theconference to address a hypothetical question: “It is 2014 andWhat people see and hearneeds to create a sense offun and excitement for themto connect with the newcultural expectations.Stories are theconversations that createshared experiences andproduce a common culturalbond between people.It had reached the timewhen managers at all levelsneeded to takeresponsibility for theembedding of the valueservice culture. Blockingbehavior needed to beaddressed and a renewedcommitment and urgencywas required to achieve thecustomer satisfactiontargets that had been set.
  5. 5. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010the VSC has failed – why?” The answers revealed two key risks. The first and strongest was; “Itis John’s VSC – and he left the business”. The second referred to lack of momentum andurgency in embedding VSC behaviors deep into all parts of F&A and inability to overcomeblocking behaviour.The CFO asked all 100 attendees to provide him with a written one page commitment to VSCwith actions they would personally take to embed it in their areas. Also he threw out thechallenge to all lines of business to achieve the customer satisfaction benchmark identified bycustomers in the research study just completed.PHASE 3: EMBEDDING THE NEW CULTURE.During the culture transformation process (Phase 2) new attitudes, skills and shared learningsare experienced. Usually the systems and processes lag. This is for good reason becauselearning best practices is still occurring. But the time comes in the embedding phase whenorientation and performance evaluation systems and processes require redesign. These shouldinclude desired culture behaviors and targets to support the embedding process.Building Momentum of VSCAt this time in Telstra, emphasis shifted from focus on short term “wins” to systematizedperformance evaluation and reward systems. The HR Group worked with line of businessmanagers to incorporate VSC behavior descriptions and quantitative customer satisfactiontargets in the performance review system. These became “hard-wired” into everyone’sperformance goals.Workshops continued and another summit was conducted. While the previous summits hadbeen driven by HR, this one was planned by a small multi-function, multi-level group fromacross F&A. This summit took the form of a workshop in which examples of best practice wereshared and reward and recognition approaches discussed. Also an external company speakerprovided experience of another company’s cultural change. This was designed to provideanother perspective on the challenges of embedding a new culture. The issue of blockingbehavior was addressed and how to overcome it through coaching, communicating, motivatingand rewarding. The summit was regarded as successful by the 200 who attended in signalingthat it is “our VSC” and it is becoming embedded.In 2010 various groups moved to actively create a more open and innovative environment. Thisincluded cross-function communication forums, more frequently held discussion groups withcustomers, and coaching.PHASE 4: PERFORMANCE MONITORING AND REVITALIZATIONPerformance should be measured in terms of customer satisfaction and cultural behaviors. Bothshould be benchmarked so that targets for improvement can be set.Getting the F&A Customer ViewDuring this period the CFO commissioned the development of a rigorous new method ofcustomer satisfaction research focused on measuring the value perception of internalcustomers. A world “first” customized version of the Customer Value Analysis (CVA)
  6. 6. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010methodology was developed and implemented havingrelevance to a Support function servicing internal customers.The results showed that F&A’s internal customers perceivedimprovements had been made in the understanding of theirneeds and delivery of service. However, 7 of the 10 F&A linesof business did not yet reach the “satisfied” level and all wereshort of the “perfect world” expectation on the numeric scale.The results of the customer satisfaction survey was a definingmoment in the journey and helped demonstrate that VSC wasnot a fad. It demonstrated the seriousness of measuringsatisfaction and enabled targets to be set for the next year.Benchmarking F&A’s Culture against High PerformanceBusiness CulturesIn December 2009 a sample of F&A employees2completed aculture survey, called the Customer Responsiveness Index(CRI). It was used to measure seven behavioral factorsexhibited by F&A with reference to their internal customers.These factors are highly correlated with businessperformance. The results, reported in March 2010, showedaverage to above average scores relative to a database ofother organizations on all factors except “empowerment”3Thiswas consistently low across almost all sub-groups sampled.Lack of empowerment inhibits the ability of employees topropose new ideas and act on new ways of solving customers’problems.When investigated further it was found that many employeesdid not feel empowered because of their own lack ofconfidence in approaching customers. This lack of empowerment from “within” was overcomeby teaming them with an experienced “buddy” to gain confidence in customer interaction.Profit Impact and Business ValueCulture has a profit impact. The benefits of culture enhancement should be measured in dollars.There have been significant monetary benefits from the VSC change. An investigation by F&Aof estimated gains and savings revealed:• Annualized gains and cost savings of $15 million were estimated for 2009. These wereexpected to continue in future years with an erosion of these gains over time assumed if nofurther investment occurs.2  Details  of  the  CRI  methodology  can  be  found  at  www.marketculture.com.  The  seven  behavioral  factors  measured  by  this  tool  are  customer  insight,  customer  anticipation,  customer  alternatives,  peripheral  vision,  strategic  alignment,  cross-­‐functional  collaboration  and  empowerment.  3  Empowerment  is  defined  as  the  extent  to  which  employees  are  empowered  to  make  decisions,  propose  ideas  and  control  how  work  is  performed.  Measuring how well we aredoing ultimately depends onthe perceptions of ourcustomers. Objectivemeasurement providesbenchmarks of where westand and how much weneed to do to achieve futurecustomer satisfactiontargets.Research indicates thatculture has a substantialimpact on businessperformance. The CRIsurvey measures thosecultural factors that havebeen shown to have thestrongest predictivecorrelation with businessperformance.
  7. 7. A Strong Market Culture is the DNA of Profitable Businesses(800) 817-8582 ● Monterey ● Boston ● Sydney ● www.MarketCulture.com© MarketCulture Strategies. All Rights Reserved. 2010• Added value to the business of $55 million4These gains were derived from analysis of specific initiatives by:a) Credit Management acting to collaborate with Telstra’s customers to reduce bad debtsand achieve cost savings from less follow-up calls and longer customer retentionperiods.b) Risk Management & Assurance collaborating with internal customers through aneducation initiative clarifying compliance requirements and streamlined processes forreducing work for both parties. Cost savings resulted from labour savings.c) Corporate Security and Investigations working with Telstra retail shops to provide betterprocesses, follow-up and liaison with those shops most targeted by fraud. Reduction offraud yielded measurable cost savings.Care was taken to attribute only those gains and savings that could be aligned with VSCinitiatives to do with understanding customer needs, providing greater value for customers,monitoring customer feedback and collaborating with customers to deliver the Group’s fiduciaryresponsibilities more efficiently.WHAT CAN WE CONCLUDE?To lead a successful transformation, you have to capture the hearts and minds of the entiregroup. Then you must provide tools that are relevant to every function and level and provide acommon framework and way of thinking and doing.Measurement is key. If it is not measured, it “doesn’t exist”. This is particularly true of culture –something that is abstract in the minds of most people. Periodic in-process benchmarkingmeasurement of culture tracks the progress of the change initiatives undertaken and providesopportunities for corrective actions to be implemented. It makes culture real. Similarly,systematic measurement of customer satisfaction and perceived value makes customers “real”and represents the outcome of culture improvements. These outcomes can also be measured interms of dollar gains. Culture improvement can and should be measured as an asset that addsvalue to the business.Finally, the passion, leadership and support of the C-level executive sponsor and the executiveteam are crucial to success. The last word, as with the first word, is left to John Stanhope:“Culture change is simply a behavioural change. Simply said, not easy to do. Thechange in behaviour must come from within each and every one of my staff. Thebehaviour that always tests “Am I meeting the customer’s need and being valuable”.This testing must just become a natural behaviour. When this is the case we are trulythere.”MarketCulture Strategies, Incwww.marketculture.comJune 20104  This  was  calculated  by  projecting  the  annualized  gains  forward  for  10  years,  allowing  for  erosion  of  these  gains  over  time,  and  discounting  them  back  at  Telstra’s  pre-­‐tax  weighted  average  cost  of  capital.