Critically evaluate the process of transformation in Deutsche Telekom What should be the future course of action for Deutsche Telekom?

1. DEUTSCHE TELEKOM:
A TRANSFORMATIONAL
JOURNEY Group Members:
Mr. Sourav Roy (Roll MP16036)
Mr. Anshuman Anand (Roll MP 17004)
Mr. Ramakrishna Namburi (Roll MP17033)
Mr. Brajesh Singh (Roll MP 17011)
Mr. Bharat Bhushan (Roll MP 17009)

2. 2
Critically evaluate the process of transformation in Deutsche
Telekom
Triggering the Change:
The change observed in the Deutsche Telecom is a Reactive Organizational change. The downfall in
revenue & profit including the whooping fall in the share price from €100 per share to €11 pushed the
supervisory board for changes in leadership from Kai Ricke to Rene Obbermann. Ricke understood
the market competition very well & also understood the requirement for strategic shift. Firstly, Ricke
tried with Adaptation but later on with the change in leadership, Obberman explored the Re-creation
as organizational change. Both types of changes are described as below,
a) Adaptation: Incremental Change in response to competitor
It was very essential that DT focus on strategic business areas as their respective
business divisions often built overlapping to and non-communicating systems resulting
cannibalization of each other. The competitors moved ahead in pushing the “Triple play and
“quad play” offerings. At this situation Rene simplified the structure to three strategic areas as,
T-Home
T-Mobile
T-Systems
b) Re-creation: Strategic change in response to the business scenario
As leadership changes a radical departure from the past & changes in senior
leadership, strategy, culture etc. can be observed.
The Three Main Styles:
Under the leadership of Ricke there was only financial control observed under the name of strategic
meeting. But there was not any means deployed in the organization for Strategic Planning & Strategic
Control, which was a predominant change in the organization observed under Obberman, where he
organized,
 Strategic workshops: To turn around situation of T-Home
 Deciding on structural reforms: where they identified requirement of changes in sales & service
sectors only.
 Deriving new strategic flow: Focus, Fix & Grow.
 Retention of good talents
 Customer Focus

3. 3
Effective using of change levers:
External Interface: “T-TOUR”
It was very important for the organization to understand the business environment. For this a new
environmental scanning process is required in order to get unbiased data from the market. For this
HÖttges took “T- TOUR” and instructed the management not to change the performance metrics of
the frontlines.
Strategy:
Offering new products & innovation services like high speed internet services the company intended
to attract 40% of new customers which was strategized to be realized by opening of new telecom
shops, T-Mobile should position itself as innovation leader with a complementary focus on sales,
customer service and marketing.
Identification of strategic area of T-Service with three companies providing services separately.
And look for opportunities in acquisition & partnerships to grow in the technological innovation area to
attract future markets.
Mission: To reduce annual cost by €4.7billion by 2010:
The agreement with workers’ union have been reached for creation of T-Service incorporating three
service companies. The workers also agreed for salary cut & to work for longer hours. Along with
voluntary redundancies of 32000 employees the saving of cost would be €4.7billion by 2010.
Managing Task & people by matching actions & words (communication):
Shifting of people from T-Mobile to T-Home and retaining the good talents of T-Home created a
culture of cross learning. With added empowerment to the employees instilled the “winning culture”.
The Strategic Rope:
Political System: The decision on allocation of position in the time of Ricke was based on the
influence on top leadership and was more internal than the performance or generating value for the
company. But in the changed leadership, the performance was more valued than individual.
Technical System: A number of strategic shifts are observed like,
a) integration of departments to draw synergy,
b) develop innovations by partnering or acquiring and retaining good technical pool of resources.
Cultural System: Under Ricke though focus areas were identified, but urgency of change in
individuals were not ingrained. The resistant to change of managers were also high. So the break all
the barriers various tough minded decisions to fix the fundamental problems were taken. The
transparency in reporting of actual market condition and measurement of performance metrics also
being restored.

4. 4
What should be the future course of action for Deutsche Telekom?
Anchoring the changes in organization culture
All the cultural changes are to be institutionalize in the corporate culture. It is required to showcase
how the changed approach & attitude benefitted the organization. Updating the same in the DT
intranet can be benefitting the employees to motivate.
Structuring Effective Communication process to the employees at regular intervals
The structured communication to employees is always found missing whether in leadership of Ricke
or Obermann. To understand the real ground problems, or to eliminate the criticism of each other it is
very important for a platform of two-way communication at each hierarchy of the organization and
sometimes addressing the concerns directly by the top management to the bottom people.
Specifying performance Criteria
Specifying the performance criteria and measuring the same should be important for any
organizational position to award to anyone. The knowledge enhancement of any individual is also
important for any field of operation.
Managing Succession
The organization must ensure to have close look on the result post changes in organization. Though
the performance if proves to be unsatisfactory and require sudden changes once again then it shall
be more complicated & costly.
Recognition & celebrating short term wins
Recognition of an employee for justified reasons & celebrating the short term wins on the way to win
the organizational objectives are important to upkeep the motivation of the employees.
Assessing the environment
The company should maintain the technological advancements and should invest more in R&D. The
high customer switching cost also need to be planned otherwise several other innovative cost
effective solutions can prove to be future challenges in sustained growth of the organization.
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