Exclusive: Telstra chief David Thodey Q&A

Telstra chief executive, David Thodey

Telstra chief executive and former IBM managing director, David Thodey, sat down with Computerworld Australia ahead of the 100th anniversary of Big Blue and reflected on his time at the company and how it set him up for the toughest role of his career.

Slideshow: Celebrating 100 years of IBM.

Computerworld Australia: How have you grown as a CEO since you managed IBM Australia to your time now at the head of Telstra?

David Thodey: When I left IBM there was about 15,000 people and Telstra now is 55-56,000 of which 41,000 are full time. I stepped from running IBM to running the mobiles division [at Telstra]. At the time IBM would have been $3.5 billion and mobiles would have been $5.5 billion-$6 billion business.

But the biggest change in moving from IBM would be that one is a big, really important company in Australia and the other is a subsidiary. That creates a very big dynamic. Also, when you’re running a company that is very much in the public eye —we touch, what, 3.5 million customers in Australia every week — it is different. We are also a consumer business, an infrastructure business, a complex engineering business, the biggest media company in Australia.

What new skills have you had to acquire for the Telstra CEO role – government relations in particular?

The principles of leadership are no different: clarity of vision, purpose, having a good sense of operational discipline, managing many stakeholders, driving to outcomes…

What really set me on the road were the values and things I learnt at IBM about running large companies. And of course, values and beliefs are what makes companies. There are many other things you need to know about technology and innovation and being a good manager but it is actually about what you stand for.

What are IBM’s and Telstra’s values?

Respect for the individual, commitment to excellence in everything you do, and great customer service. They were the three, but I think they have changed. They’re now innovation, dedication to the client, and trust and personal responsibility. They are similar but reworked a little bit. Telstra’s values are very similar. It is about a customer-centric culture and servicing our customers…

That hasn’t been the case before, though?

That is true. But it is a very important part of our culture now. We have always had very strong values in Telstra… there is this incredible Australian-ness about Telstra. The other [value] is about commitment community — no matter where you go in Australia there is always a Telstra technician somewhere. While Telstra gets a lot of billings, that commitment to community is really important to us.

What was your biggest challenge at IBM and Telstra?

The biggest challenge at IBM would have been that that industry has changed and the company has reinvented itself a number of times. [IBM] was hardware oriented, then it went to services, then software, and I think IBM has gone through than enormous amount of change and so has Telstra. We started as a fixed line copper business, then we moved to a wireless innovator, then moved o a services business and we will move to applications in a slightly different way.

Given your announcement of $800 million investment in your hybrid Cloud offering over the next five years, you’re now a Cloud company, too?

The Cloud side is very important. It is about investing large amounts of capital for long tem returns, but going to a Cloud infrastructure is also consistent with what we do in terms of our core network. But remember we invest $3.5-4 billion every year in capital expenditure; so long run returns are important to us…. Cloud is a pillar but not the only one.

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So is your major challenge at Telstra more about splitting a company in two without falling apart or is it about successful cultural change — it’s a big ship to turn around?

It is a big company to change, but if you get the DNA right and you return to what you stand for it is amazing how people respond, but yes it is a big challenge.

Was Telstra valueless before you took over?

No. Absolutely not. Telstra’s values and principles have always been very strong. I think it is just a new focussing, greater clarity and a reprioritisation. In fact, I would say the customer-centricty at Telstra has always been there. Now, I’m not saying we deliver good service every time, but the truth is that if you actually talk to Telstra staff about their desire to help [the customer]; have management gotten in the way? Have processes gotten in the way? Have there been misdirected decisions? Yes. But at the heart of what Telstra people get value from it is actually helping people. But let me be clear: customer service isn’t where it needs to be and we have a long way to go.

Does the market understand that and have you been able to communicate that need to change things internally before things will change externally?

I think I have been able to communicate it, but I’m not sure [the market] has yet seen enough to say we have been successful. People will see there is a different focus but at the end of the day until you get the proof out that there is something different about Telstra, then it is just words.

IBM can be characterised as an innovation company. Can the same be said of Telstra?

If you had to characterise Telstra, at its heart it is an outstanding engineering company. And that is what it has always been. But our challenge is to keep that but put a service, sales and marketing company over the top of that. But it is an engineering excellence company. Within that there is an element of innovation…. But I think I would say our IP TV offering is innovative, our NextG wireless has been very innovative, the LTE rollout... we are the first telco in the world to roll out in 1800 spectrum. The new shops have been innovative…

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