Business

Crisis-triggered transformation to a digital future

Covid-19 quickly put Vodafone NZ to the test, but CEO Jason Paris - working out of his son's bedroom - tells Rod Oram the telco is in good shape, with the crisis giving it the opportunity "to accelerate to our digital future"

Vodafone New Zealand got an early start preparing for Covid-19 because “we're so well connected through the Vodafone Group to other markets that were impacted ahead of us,” says Jason Paris, its chief executive.

“Spain, Italy, Germany, the UK…regardless of what the varying government policies were, we could see the people impact, the customer impact and the business impact early.” Italy was particularly instructive on helping staff cope with mental health issues from the escalating crisis. Paris and his acting CFO, John Boniciolli, are keeping up their regular phone calls with overseas counterparts.

Vodafone NZ was quickly put to the test. A staff member had had brief contact at an event with a person who soon after was one of the first Kiwis to test positive for the virus. The staff member went into self-isolation and people he had contact with were also tested for the virus. Only when they were declared clear of the virus could they return to work.

Meanwhile, it ramped up remote working for its staff, leaving only a very small proportion who need to work in physical proximity because of the nature of their jobs. While it closed most of its retail stores, it turned some 40 of them into Essential Connectivity Hubs. So far several hundred customers have booked online to visit them to get problems with phones and modems fixed.

The crisis is already having a major financial impact on Vodafone. It has lost all its revenues from roaming, both from Kiwis abroad and visitors here – a loss that will persist for at least six months or longer, Paris expects. Yet, costs are rising as it meets much stronger demand for calls and data. To help curb costs, any proposal to spend over $2,000 now requires approval by Paris or his CFO.

At the opposite end of the financial scale, Infratil and Brookfield Asset Management, which paid $3.4 billion last year to acquire Vodafone NZ, are highly supportive, Paris says. Their representatives on its board “are pretty cool, calm customers” who remain focused on developing its potential.

“We’re in good shape operationally.” For example, Downer, the Australian-NZ construction and services company which does much of Vodafone’s infrastructure work, also prepared early for the crisis.

Access to the global procurement system of Vodafone Group, the UK-based multinational which is one of the largest mobile players in the world, “ensures we get all the network and spare parts we require to maintain our network and to ensure we've got the right resilience in place and can allow for additional capacity.”

To help guide them through such enormous and rapid changes, Paris says he and his colleagues make decisions in “three buckets.”

- “Survival minimum:” What people and financial resources does the company need to keep the network and business running? “We do not want to take any risk with the networks, the IT and the service levels that we currently provide.”

- “Enhancements to the core:” These are actions the company could take over the next 12 months to automate or update systems to incrementally improve its performance. “We've pretty much stopped all of those until further notice.”

- “Strategic optimum:” These are investments which “we think are going to significantly transform our organisation in the eyes of our customers, our people and our shareholders over the medium to long term.”

Examples include “radical simplification of our products, radical digitisation of our customer journeys, and migrating off complex legacy systems to cloud-based, lower cost systems. We’re making sure that we invest in the things that will genuinely create long term value. Those are the bets we're still placing.”

Covid-19 “is giving us the opportunity to accelerate to our digital future.” Rather than taking, say, three years for some of the investments, “we’re thinking of doing them over a 12 month period.”

This mirrors the crisis-triggered transformation Vodafone’s seeing in the marketplace, Paris says. Many customers are: adopting new digital ways of working such as from home; becoming more familiar with self-help through apps and websites; and getting more comfortable using apps to enable their businesses.

“Imagine the economic benefit for NZ if we decided to be the best at trying to eradicate or control Covid-19. We could say to the world that we are open for business. That could outweigh all the financial short term impacts everyone is experiencing now ..."

The crisis is also changing his personal and professional life, Paris says. “I've actually kicked my son out of his bedroom so I don't disturb him and the rest of the family too much…with video conferencing or working till 2:00 in the morning and then getting up at 7:00. I'm probably not doing myself any favours in terms of best practice work-from-home at the moment. But I'm hoping that this week or the next week things will come more back under control.”

Work-wise, “I've always been a person that likes to do probably too much. And now this has helped me really focus on what is genuinely value creating for our people, customers and for our business.”

“I’m also a bit of an extrovert. I've always liked people, but the crisis has made me value human contact more. I wonder if it will be an opportunity for people to be kinder to each other.”

“I'm also trying to over-communicate. I'm even more active on Twitter. It's the best way for me to learn what's really happening in the market and in our business. I’m being very transparent on where we're at, and where it's not going so well with my teams. And we're using our own internal channels to communicate frequently with updates, celebrating a lot more, picking up the phone and talking to people or video calling versus sending emails.”

Looking to the near future: “Imagine the economic benefit for New Zealand if we decided to be the best at trying to eradicate or control Covid-19. We could say to the world that we are open for business. That could outweigh all the financial short term impacts everyone is experiencing now and give us real long term benefit if we can rally together as a country.”

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