Reinvention At Scale

Spark CEO, Simon Moutter, is leading our largest telco through the one of the most disruptive eras in business and the tech industry. All whilst reinventing the nature and structure of a company that employs thousands of New Zealanders and invests hundreds of millions into infrastructure. This is a process that is helped by the logic and pragmatism of a background in engineering, three words from a coach named Elan and the occasional Lee Childs book.

How would you describe a productive day?

When you’re the CEO, you’re making directional steers. So, a productive day for me is one where you can coalesce the information that you’re given, form a view on it and steer the group – usually a group of people (sometimes an individual) trying to make a call on that, and help steer them directionally and keep them in step. Because in a big business like ours, we have hundreds of senior people doing initiatives and things at the same time. So, a lot of my job is to make sure that we don’t get out of sync there. The initiatives are adding up to the bigger game plan. So, for me, productive means people are able to get on with their deliveries, their accountabilities, their actions. Usually if I’m involved, it’s because they need a choice or a confirmation or an allocation of resources or something like that.

Do you try and encourage a level of autonomy?

In a place like ours, we have hundreds of quite large initiatives running in parallel. So, autonomy is critical. The way you empower in a large organisation, it’s not a laissez-faire process. It’s not: “Hey guys, come up with a plan about something and let me know what it is, will you?” Some people would believe that was empowerment. Actually, that’s not empowering at all, because all you end up with is an organisation that goes off in 20 different directions and doesn’t deliver.

How you drive accountability is to make sure everyone is really clear on what good looks like. What is the outcome that you want? What access do they have to resources or things that they need? Money, whatever it is. And that every team is very clear about that, and then they can get on with it. So that’s how we empower people. We’re directionally very clear, and then they solve the how.

Who motivates you?

I’ve always been a driven person and I do it because I want anything I’m involved with to be successful, basically. If I’m going to spend time doing something, I may as well be good at it. I just push myself along every day really.

Where there are so many elements that are evolving and changing, and you’ve got feedback and information coming from all these different areas, is it a juggle to also be keeping eye on the bigger picture?

To an extent. You do have to have a big-picture view, but be prepared to go a long way into the detail in some areas where you have to make a choice. But on a strategic setting, the pathway doesn’t really change that fast. You’ve got to adjust it around where it’s working and the particular initiatives you are driving to advance your strategy.
The big picture for Spark was to transform from a telecommunications business into a digital services company. And that’s a very big change, so it could take a decade to execute that. So, all you’re really doing is advancing, every year, a set of steps that take you a bit closer to it, be it building a new company like Qrious, launching a new product like Lightbox, or solving a digital interaction, so a customer can buy a product online instead of over the phone or physically in-store. These are all just initiatives that advance that agenda.

So, we have a very clear longer-term agenda. And what we have, every year, are some quite large initiatives, and then, every 90 days, a set of quite clear actions to deliver against those. And most of the change is occurring in the 90-day stuff. So, you’re moving. Because you can get that wrong, or the world changes, or Vodafone does something and we have to change tack. So that’s where you’ll see [the short-term work]. But it’s not really altering the longer-term game plan. It’s altering the particular navigational paths you take to get there.

So even prior to the name change, the change in focus, did you have 10 years mapped out in terms of those steps?

No, you’ve got a directional view of what the world could look like. But we would not plan anything longer than three years, and even that’s pretty hard. So where you’d say, “Ah, we’ve got a definitive plan. We’re launching this new IPTV TV service called Lightbox, and we want it to be here”, we wouldn’t [plan] that for more than three years and we’d only have a broad vision of what it could be. Because by the time you’re halfway through that three-year period, the world will shift on you. And the sort of modern language around… ‘agile’ is the language of pivot… which is a new way of saying: “Ah, that didn’t work. Try again – a different way.” That is life in this game: environmental factors, or technological, or market shifts can happen so swiftly in our business – and they do. You’ve got to be prepared to pivot or adjust a lot. And that means not being too wedded to the choices you make.

Has there been anything happen that you didn’t see coming?

We didn’t see how fast core telco broadband and mobile would commoditise. The rate at which technology has enabled more gigabytes to be carried, with lower technology cost and be more readily available – be it across fixed broadband or wireless networks – has seen that market commoditise much more quickly than we would have anticipated. Mobile value has increased four-fold in the last two years. So, what you get for 50 bucks on a mobile plan is four times more than it was only two years ago. We didn’t get that right. And that forces you to rethink your model. Because if you get that wrong, your revenue assumptions are wrong. And you chase revenue when you should be chasing cost. In a commoditising world, you’ve got to chase cost. It’s a harder business to manage when you’re at rapid commoditisation.

How did you adjust to that?

We’ve made three quite important pivots, shifts. We call them ‘strategic shifts’ – not a change of strategy, because we’re still headed to be a digital services company, but we changed three things in our strategic posture around that this year. One was to favour wireless much more over the fixed network. Fixed networking is more complex and higher cost to serve – particularly copper, which is deteriorating today. We’ve massively increased our investment in the mobile networks, and shifted what is effectively fixed broadband into mobile, with a wireless broadband product today that does the same job for a home. It’s not just broadband on phones now. We offer cellular-based broadband into 100,000 homes in New Zealand.
We’ve made a second shift, which is to up the ante with our flanking brands. We own Skinny and we’re increasing the scale of that brand and its product set. So Skinny, a 1½ years ago, only did pre-paid mobile. Today it does post-paid mobile and has a ‘Skinny direct’ service – which is an online‑only, lowest-price mobile service in New Zealand. [It] does fixed broadband and wireless broadband as well. So we’ve expanded the product set and made it a much bigger, more price-seeker brand.

And then, thirdly, we’ve upped the ante on cost reduction through digitisation, simplification and automation. We have a big program running, called the Quantum Program, which is driving a set of initiatives using software robots and a lot of machine learning applications. We’ve got the chat bots up and running. We’ve narrowed our product set down to much fewer products and we’ve fully digitised the service interface of all of those –so, new generation apps [and] new generation websites that allow you to self-serve and self-manage all of those products. The focus there has been to try and lower the service cost around those products, so we can sell them for less and still be profitable.

What level of talent does it take to really be involved in something like machine learning and is it difficult to find that in New Zealand?

You need to combine international talent with the people here. We do have a great, educated group and we’re a very attractive employment brand. So we have no trouble getting people to want to work for Spark today. We do have a reasonable pick of the crop. And then you combine that with a bit of global expertise. Infosys, for example, have a very open, cloud-based automation platform. They bring the platform capability, and then we have the analytics gurus and the programming experts who interface with our knowledge and create the value. So you’ve got to combine local and international. There’s no solution in New Zealand for all of that.

But if you bring the best of the world and mate it up with the talent pool we’ve got, it’s pretty exciting. People love doing this stuff. And at Spark we have a lot of capability and resource that allows them to try new things. It’s why we’re moving toward the agile model as well. We’re increasingly adopting agile ways of working, which are the ways that digital companies/software businesses have worked for years, whereas traditional companies are hierarchically managed.

We’ve been on the sort of learning processes around ‘agile’ for three years and creating agile teams, which might see programmers sit in squads with marketers and lawyers. They may work in little teams to generate outcomes for certain objectives. That is extremely fulfilling because they get a lot done. It’s very empowering.

It’s quite a big structural change, though. How do you roll that out?

We are early on, [but] we’ve done a bit of it. We created our Spark Ventures unit as an agile organisation, for example, and we’re just now starting to work through into the main business. And we’re talking a lot with our people about the change to agile now. And everyone’s very excited about it, but it’s still very unknown territory to do at large scale.

Do you think some people will be worried?

They will be, because it is a very big change. I was, I’m a manager in hierarchical organisations, and always have been. So even for me it’s a daunting thing to confront such significant change in the approach to management of a business. So some people will be. Daunted is probably a better word. I don’t think anyone’s worrying. But it’s an extremely different way of working, and the conventional way of thinking about management just doesn’t exist in that model. You get no boss.

How do you define what it is to be a great leader?

There are lots of models of leadership, but I think the best leaders are very authentic. They lead something they care about. They’re probably reasonably competent at it as well. So, if you’re leading because you authentically care about, or are interested in, or passionate about something, that really shows. And it’s much easier to create followership when there’s a higher level of authenticity. You can sort of tell if the voice in their head is the same as the voice coming out their mouth. Humans are quite good at detecting whether there’s a difference between those two things.

Are there any that you admire?

I look at lots of leaders and think they’re pretty cool. I love what Jacinda Ardern has just done. That’s a remarkable demonstration of sincerity. You can argue with her ideas about how it will work, but there’s no doubting the portrayal of the authentic. [It’s] sort of the caring approach, the intent that kindness doesn’t have to impact on progress, and all those. I think that’s been a revelation in political leadership.

In terms of true inspirations in the world, it would be people like the Elon Musks of the world who are just pushing the boundaries; our own Peter Beck – the Rocket guy… these people who do incredible things, who believe they can achieve things that everyone else says are not possible. I think they are the leaders you look at.
And in business, while it isn’t as bold as getting people on Mars, but changing an old telco into a digital services company is a big, big goal. And most observers will say it’s not possible. So the analysts and owners and the people who comment on us would say: “why are they doing that? It’s a higher risk strategy. It probably won’t work. You don’t have any skills in that Google, Facebook, Apple, Amazon space.” They’ll just kill you.

And you can either stand aside and say: “well, yeah, okay, let’s not even bother to try, because we’re beaten before we start.” Or you can say: “well, actually, how do you be locally and comparatively good enough to stand alongside them? You’ll never be instead of them, but can you create a position that New Zealanders would want that sits alongside them?”
So we talk about Lightbox, for example, as an ‘as well as’ Netflix service. Not an ‘instead of’. There’s no chance we could ever beat them at their game, but could we create a similar product with a profile of content that is locally relevant and useful, that most New Zealand households would want alongside of Netflix? We believe that’s possible. But even to do that, you have to work in a digital service.

So that’s how those visions come true, or how they materialise in a big business like ours. They’re still very confronting. Because for 100 years the place has been run hierarchically, whereas those new organisations don’t work that way; they are software businesses, so we have to confront some very big decisions.
Everything [from] how you work, to what you resource, to how you take risk, which is completely different. And your competitors see the changes. So we would always be defined by our competition with Vodafone. But if you’re going to be a digital services company, your competition is these global software companies – a totally different competitor set.
In terms of market demand, and I’m speaking from a media perspective as well, do you think that demand for local relevance is there? Is there more growth than that? It’s hard to find. It’s hard to find what people are prepared to pay for. You’ll know that well, right, being in the media game? The internet has changed the world’s view on value. And when so much high-quality stuff is free and you try to turn up with some NZ high-quality stuff and it can’t be free because you’ve got 30 families to feed… in the mind of the customer, they don’t get why. “Well hang on, if that really good stuff over there is free, why am I paying for this?” So, you’re despositioned. And it’s not that the economics are not there, it’s a value issue. It’s a little bit like Sky TV. Sky TV, a few years ago, had a $70 bundle for 100 channels and included a whole pile of sport. People thought was great value, but along came YouTube, Netflix, Lightbox and a bunch of others, and [they] just reset the whole view of what that value was to a number more like $10.

Suddenly, Sky’s deal doesn’t look like value any more, but actually it’s no different really to what it was, it’s just been despositioned by the new wood. And so I think that’s the challenge in this: how can you create something locally relevant, that people are prepared to pay for, at a rate that allows you to keep the quality of it up? And it’s either a virtuous or a vicious circle; you don’t usually find an equilibrium part-way in the middle, right? It’s a very difficult place to be.

Now you brought up politics, so I’ll ask a question around it. Are you confident about how the next three years will roll out?

I am. We’ve got a great country, in great shape, and we were well served by the last government and I genuinely believe we will be well served by this one. There’s no upside in a small country to picking sides and saying: “well I’m not going to support this crowd because they don’t fit my ideology.” In a business like ours, we support whatever government is in power. There’s lots of common ground. And we will do our best.

 

Do you think New Zealand businesses should be bracing themselves for some tough times in terms of basic economics?

The 10-year cycle, debt levels – that sort of thing? Markets are always cyclic, so I don’t think it’s got anything to do with governments, by the way. It’s been a bull run for quite a long time and there’ll be a point where markets, generally, will take economies back on the decline. So you’ve always got to be positioned for that. We would never overleverage ourself, or get into risk positions that create too much of a problem when that happens.

I remember in old Telecom, back in the very early 2000s. We had a very tough time winding back our indebtedness, because we did get caught on the wrong side of the dot.com bust. We’d invested heavily, buying into Australia, and then markets tanked and we were left with a much higher level of gearing than we should have had. I think companies learn from those mistakes. Today we would not lever ourselves into a position where we had too much downside.

And you have to have a business that’s resilient to those cycles. And most companies today are well enough managed to know that you make hay when the sun’s shining, and you tighten up a bit when things aren’t good, and you get through.

In terms of the lessons you learn along the way, how would you describe your engineering background? Is there a mindset or thought process [from that] that has served you in this role?

Engineering is very practical and logical. I bring that flavour of leadership. A marketer will come at it at in a different way, but I’m a very thoughtful, logical, generally not terribly emotional about things [kind of guy]. I can take the negative, and I can take the positive. But I’ll take a lot of calculated risk, exhibited by the very big decisions we’ve made, but there’s a lot of logic goes into the flow.

And I don’t mean the paralysis level of analysis, but just strong logic flow, informed with good facts to make a choice and get on with it and take a risk. So, I bring that perspective. And I often say to my team it sometimes makes me a bit negative or glass-half-empty, but they should not worry about that, because I’ll watch the downside, and they can take care of the upside.
I intentionally put people around me who have a more emotional, more belief-based sort of view of how things get done. And I’ll let them run with the positive. But when they come in here for an approval, sometimes I don’t typically question their upside logic. But I’m very thorough in going through: “so if that doesn’t work, what will we do? And if that risk turns up, and if that thing comes in from the side – how will that work?”

Also, because I like technology, I’m interested in it. It causes me to invest more in understanding how things work. But that also helps you understand how the money works. So knowing how something physically works, and what drives the use of capital, is quite an important [part]: understanding how a mobile network gets built, what drives its capacity, how it works in the busy hour [gives you], therefore, what you have to build and how you deploy by sector, or spectrum bands or whatever, to resolve. It’s quite important to making good choices about what you sell. Because if you sell too much for the wrong price, you can go negative very quickly. So that sort of engineering knowledge in a business like this is very helpful.

And you touched on optimism there. Do you think that’s overrated in leadership?

I don’t think you could be an effective leader if you don’t have a good dollop of optimism, right? If you turned up as a dry-ball every day, and were negative about everything, you wouldn’t attract many followers. So, if by definition, leaders require followers to get anything done, I think an optimistic view is important. But at the same time, I’m a realist. I’ll set a bold plan, but I’ve usually got quite a lot of logic around why that can probably be delivered. And then a lot of belief behind that. Optimism in business, I think, better materialises as belief, which is a sense of: “we’re good at some stuff, we have skills, we have experience, we have our legacy, and our strong positions,” or whatever. I believe if we choose to do that, we can do it. Which is sort of different from blind optimism, which is, “with this, today, we’d really like to be there. Wouldn’t that be amazing, should we do that?” … not much logic.

I always talk to my team about “be, do, have”. [Even if it is just] in your mind, actually, part of their process is getting a really clear view of what ‘it’ is and ‘why it’s possible’. Then do the things necessary to have the result. You have to run in that order, which is why my word for optimism, is ‘belief’, actually. You [process] it in your mind before you do anything.
What book are you reading at the moment? I’m a reader mostly of crime thriller-type stuff. So I’ll go as far as Steven King. Getting a bit into the mystical. But what have I got at the moment? The Rooster Bar, I think, John Grisham? But my favourite is – and it’s very, very tacky I know, but I just love – Jack Reacher. So, I’m a massive consumer of the annual Lee Child.

What’s the best piece of advice you’ve ever been given?

I picked it up from someone when I was on Theresa Gattung’s team at the old Telecom; she used a leadership model – actually, leadership wasn’t quite the right word… it was like a personal coach that she had a lot of senior people work with. His name was Elan. He was one of those one-name people – Elan. And he always talked about the way people [should] interact with the world around them: “be, do, have.”

Most people think, or try to solve things, the other way around. They just want the answer, without ever doing anything. And they never have any belief. So [they’ll go:]“I’d like to lose weight, so magically I’ll just take a pill and fix it” versus – see yourself as what it is you want to be. Therefore, see it through and stay that way. And so that logic of ‘be, do, have – I found is very compelling.

Is legacy big for you?

When you run a company that’s 100 years old, there wouldn’t be a day go by that I’m not thinking about what I am doing to set up the next 100 years. It’s a sense of obligation. And you’ll succeed or fail, [but] you won’t know. But you have a sense of responsibility. And especially in a company like ours, where the nation depends on us. We’re the biggest investor in our sector by miles. We outspend all of our main competitors put together on critical infrastructure in New Zealand.

So, you’ve got this sort of sense of obligation to the country you serve, and the customers who depend on it. And in a sense, I’m here for my little slot, my name is on the wall. You know those shields you see in the school and who was the Principal over the years? Of course, we don’t actually do that in business, but it’s the same thing. I’m the caretaker and leader. I have to add something. Hand over a legacy, a positive legacy to whomever might come after me.