Much to be gained from succession planning in telecoms

CEO and senior management succession planning is a critical area for telecoms operators, yet is an area where operators have not done particularly well in, according to a consultant from strategic management firm Arthur D. Little.

Klaus von den Hoff of Arthur D. Little believes telecoms operators need more careful consideration of their succession planning to ensure their leaders reflect the changing market

Global practice leader for the telecoms, information, media and electronics (TIME) practice, Klaus von den Hoff, said that the first generation of telecoms managers are still leading many mobile operators, while the market dynamics have progressed significantly. He believes that companies need to carefully plan their successions in order to select a generation of leaders that will drive growth within a much more dynamic and multifaceted environment than the original leaders would have been accustomed to.

“The first generation had to master the challenge of building and rolling-out networks and selling a simple product. Strict cost-management wasn’t an issue while profit margins were high at around 40 per cent,” comments von den Hoff.

“Meanwhile the market has changed dramatically and is now characterised by hyper-segmentation in marketing, an innovation race in product management and technology, and a permanent need for strict cost-control.”

Zoran Vasiljev, a director of Arthur D. Little in the Middle East, asserts that since the 1990s there has been an explosion of complexity in the telecoms market, which the new generation of leaders must adapt to and manage. However, the succession of leadership and management style at operators has not changed much to reflect this.

An example of the increase in complexity is the number of product launches an operator would make per year. In the 1990s an operator would launch less than five products per year, in early 2000s that number had increased to between 10 and 20, and the current average of new product launches is between 20 and 40.

Some companies have tried to deal with the change by instituting cross-business management – moving executives from the fixed-line business to mobile and vice versa – or bringing in fresh blood from the consumer industry. For example, Vodafone Group did the latter when it started to push the brand globally, hiring executives from Coca Cola, Pepsi and Mars.