BT Group appointed Michael Sherman, a US-based management consultant, to the role of Chief Strategy & Transformation Officer.

  • Boston Consulting veteran flying in to revamped executive team in May 2018.
  • New senior team member will be an advocate of agile management approaches and major overhaul of traditional telco thinking.
  • Sherman enthusiastic on virtualisation, but sceptical on vendors pushing products principally intended to protect entrenched legacy positions.
  • While a new role, Sherman appears to be taking responsibilities previously offered to ex-Consumer CEO John Petter.

In the newly created position, Sherman will report directly to Chief Executive (CEO) Gavin Patterson, and form part of a revamped executive team as the telco attempts a reset and refresh after its troubles of 2017.

He is expected to work with the BT board and leadership of BT’s major divisions in his new role, with a brief to update and deliver strategies in areas including customer experience and operational transformation.

Sherman is joining from Boston Consulting Group, where he was most recently Partner and Managing Director for Technology, Media and Telecommunications covering southern USA. He joins BT at the start of May 2018.

Agility evangelist may try to convert a new congregation…

In recent years in his consultancy role, Sherman has been a keen advocate of bringing agile management approaches, traditionally the domain of software-focused enterprises and startups, into the telco environment.

The incoming executive has written extensively about the benefits of taking a non-traditional approach to telecoms models to support greater efficiency and im-prove the customer experience. He has stressed the need for more close-knit cross-disciplinary teams taking responsibility for a range of functions, and a move away from overly specialised employee roles where practicable.

These approaches are said to minimise duplication in effort that can occur as multiple specialist teams manage a single issue, and improve customer satisfaction by providing results more quickly.

Sherman has acknowledged the challenges in bringing a more agile approach to major enterprises, with the need to foster a more entrepreneurial approach to many projects, with a greater sense of employee ownership on specific projects, and away from capable ‘safe pair of hands’ management. This change in mindset, which perhaps feels more intuitive in a faster moving, younger software development sector, may be more challenging to adopt in a conservative ‘safety-first’ incumbent telco such as BT.

Not only may there be cultural resistance to overcome, but the approach championed by Sherman is also expected to result in significant consolidation in roles that could see a substantial number of staff at risk of being surplus to requirements. BT has traditionally managed staff cuts in a relatively smooth, voluntary departure-driven way, with re-training and re-deployment of staff smoothing over the harsh edges of such programmes.

However, should the new strategy executive implement bold new plans, confrontation with unions, which has generally been avoided in recent years, may become another trouble hotspot for senior management.

Patterson may be put to work on transformation

The prospect of significant change may also be hinted at through Sherman’s enthusiasm for virtualisation within communications companies, which he has said will require operators to “fundamentally revise their operating model, skill profiles, and organisational structure” to prepare for the virtual new world.

Sherman cautions against rushing into action, however, where traditional systems are currently working well (likely music to many BT ears), but emphasises that the CEO needs to ensure a clear transformation plan is in place, and closely oversee progress to be certain it is followed.

Interestingly, Sherman appears to consider that the architecture and form of software-defined virtualised networking is not going to be led by the telecoms operators managing the explosion in data traffic and demand. Instead, he considers that the coming together of networks and IT will be led by the software side of the equation, with “Google, the Open Networking Foundation, and Silicon Valley startups” defining the concepts that will form the basis of the new environment.

Tying in with his enthusiasm for agile management structures, Sherman considers that overcoming the challenges of integrating existing network infrastructure with virtualised elements will require more flexibility in integration plans, and a willingness to embrace failure quickly. This is considered particularly important as integration costs are expected to account for a greater proportion of operational spending, and keeping up with technology shifts will be key to efficiency.

This flexibility is expected to require closer collaboration across different internal disciplines, and open up partnerships with external suppliers. Commercial and technical teams will also need to work closely to ensure customers remain on side as they are migrated to new systems.

Once again, Sherman’s views on how a future telco will look entail embracing new structure, new skills, and a different attitude.

Vendors beware

As BT looks to align with suppliers on networks that are moving towards convergence with the evolution of 5G, Sherman also has views on the relationships operators should have with their vendors.

He warns that major network vendors are defending legacy portfolios by overpricing more disruptive alternatives, or may be attempting to promote customised virtualised solutions that will veer too far from emerging industry standards.

This kind of scepticism may chime with views of existing BT thought leaders on transformation, such as Chief Architect Neil McRae, who has regularly questioned the approach of vendors to selling new technologies such as network slicing, even as others at BT have have been promoting them. The new head of BT’s strategic direction has a clear answer to addressing this issue:

“ Switching vendors can be difficult, but it’s often necessary. ” — Sherman.

‘I’m in charge!’ Patterson reasserting his authority?

The formal statement unveiling Michael Sherman as Chief Strategy & Transformation Officer was strident in insisting that the appointment was the decision of Patterson as part of a grand plan for the reinvention of BT Group. As well as welcoming Sherman on-board, the telco reminded its audience of a range of other key leadership changes, such as Marc Allera at Consumer and Bas Burger at Global Services, and several new faces to handle legal and regulatory affairs. While this may have been intended principally as demonstrating that BT as a Group is looking forward with strong leadership, the release had a hint of protesting too much.

It is also worth noting that the new appointment appears to be for a role that was previously offered to long-term Patterson ally John Petter, who ultimately chose to leave the Group rather than step sideways (or downwards) from his Consumer CEO post.

Press reports earlier in the year had also suggested that responsibility for the transformation programme had then been handed off to Group Finance Officer Simon Lowth.

With the new appointment, the growing influence of Lowth in the top echelons of management has at least been partially scaled back.

Investor audience also being targeted

The declaration of the injection of new blood into the senior management team comes in the wake of apparent unease among major investors regarding the performance and direction of BT Group.

Investor Forum (IF), an independent nonprofit body intended to improve shareholder engagement with listed companies, was vocal in relation to its concerns regarding the management of BT Group. The IF features many of the UK’s largest investment firms among its members, including the BT Pension Scheme’s own Hermes Investment Management.

In the case of BT, it is believed that members of the Forum manage around 12% of all issued shares in BT Group. It apparently began an “engagement” with BT in the wake of the BT Italia scandal and the subsequent profits warning with the goal of ensuring BT “had a clear view of investor frustrations, as well as an understanding of the need for prompt and decisive action to help restore the reputation of the company.

The Forum called for the telco to prepare itself for a period of transformational change in the sector, and provide more transparency on how decisions are made on major capital allocation, as well as explanations of how long-term decisions in areas that could affect the “long-term franchise value of the company” are taken.

Although the Forum’s “collective engagement” intervention was brought to a close on the arrival of new BT Chairman Jan du Plessis in summer 2017, it considered more work is still needed to re-build investor confidence, particularly in relationship to management and strategy.

Image: The Boston Consulting Group.

Table of Contents

EXECUTIVE BRIEF

GROUP

  • BT gender pay gap report finds women paid 7% less on average

Management update

Agile new strategy and transformation head at BT [p6]

  • ‘I’m in charge!’ Patterson reasserting his authority?
  • Investor audience also being targeted
  • Agility evangelist may try to convert a new congregation…
  • Hancock knocks heads together
  • Patterson may be put to work on transformation
  • Vendors beware

5G

BT trumpets 5G advances at MWC [p9]

  • BT signs new agreement with Huawei; focus on 5G…
  • … ADVA and BT after a slice of the 5G pie
  • Nokia also gets a virtual look-in…
  • BT thinking deeply on 5G research
  • …while Ericsson concentrates on other operators at MWC

Watson open-minded on 5G vendor profile [p15]

  • Hybrid standards progress getting the ball rolling
  • An open relationship with RAN technology
  • Not the end for end-to-end vendors

BT to trial Qualcomm Snapdragon X50 in 5G NR trials [p17]

Suppliers

BT trials new supplier contract clause to reduce emissions [p18]

  • Huawei concern turned to evangelistic zeal

Telecom Infra Project

BT flags new TIP lab and vRAN trials [p19]

  • Cheaper solutions and innovative thinking promised – with an eye on G.fast?
  • Cavium the TIP of the iceberg

People

Table 1: People movement highlights

CONSUMER/EE

  • CityFibre challenges ASA ruling on ‘fake fibre’
  • BT boasts of HDR broadcast for mobile

ESN

New blows for ESN [p23]

  • Airwave to be kept up and running
  • EE’s defences may be slipping a little
  • Vodafone remains a thorn in EE side

Spectrum

Ofcom sets out 5G spectrum auction process [p28]

  • Preparations underway for a 2019 700MHz auction
  • Two stages, several rounds
  • New kids on the block

BT TV

BT aims to be TV “super-aggregator” but Sky keeping up [p30]

  • Rivals also score aggregate deals
  • BT takes control of YouView updates as platform base passes three million

GLOBAL SERVICES

BT Security

BT Italia gets on right side of the law [p34]

BT flags UK security role [p35]

Ireland

  • BT questions competitiveness of country’s National Broadband Plan

BT secures Irish 999 deal [p35]

WHOLESALE & VENTURES

Partners

Wholesale to resell Semafone secure payments [p38]

OPENREACH

Operations

Openreach in recruitment drive for Fibre First [p41]

Competitors

VXFIBER to target councils with FTTP proposition [p42]

FURTHER READING

INDEX

Index

Symbols

6WIND 12, 20
21st Century Fox
– Sky
– – Sky Mobile 26

A

Accelleran 12, 20
ADVA Optical Networking 9, 11, 12, 19, 20
Advertising Standards Authority 24
Airspan Spectrum 28, 29
Algomi 21
Amazon 30, 32
– Alexa 32
AMC 30
Apple 17
Athonet 12, 20
AT&T 12, 16, 17
Avaya, Inc. 38

B

Boston Consulting Group 6
British Broadcasting Corporation (BBC) 13
British Gas 21
BSI Speedway 31
BT Group 6, 7, 8, 10, 13, 17, 18, 21, 38, 42
– Asia
– – Tech Mahindra 9
– BT Business & Public Sector 21
– – BT Ireland 34, 36
– BT Consumer 21, 30
– – BT Fusion 20
– – BT Home Hub 21
– – BT Mobile 21
– – BT TV 30
– – Plusnet 10, 32
– BT Global Services 6, 21, 33
– – BT Federal 21
– – BT Italia 7, 34
– – BT Security 34, 35
– BT Technology, Service and Operations 9, 10, 12
– – Adastral Park 13, 19
– BT Wholesale & Ventures 21, 38, 39
– Directors
– – du Plessis, Jan 7
– EE 9, 10, 11, 12, 17, 19, 20, 21, 22, 25, 26, 28, 39
– – Emergency Services Network 23
– Executives
– – Allera, Marc 6, 26
– – Andrews, Steve 21
– – Atmore, Sharon 21
– – Brunkard, Phil 21
– – Burger, Bas 6
– – Cuevas, Maria 11
– – Edelstein, Howard 21
Ginér, Gabrielle 19
– – Hanif, Mansoor 20
– – Haston, Simon 21
– – Honrubia, Javier 21
– – Howey, Angela 21
– – Lowth, Simon 6
– – MacKenzie, Richard 19
– – McRae, Neil 8
– – Messore, Ben 21
– – Patterson, Gavin 6, 30
– – Shaw, Tim 21
– – Sherman, Michael 6
– – Vague, Jamie 21
– – Varley, Wray 21
– – Waldren, Paul 21
– – Wallace, David 21
– – Walsh, Shay 36
– – Watson, Howard 9, 10, 12, 15
– – White, Georgina 21
– Ex-executives
– – Petter, John 6
– Openreach 10, 11, 21, 38, 40, 41, 42
– Wholesale & Ventures
– – BT Cables 38

C

Cavium 19, 20
Centrica 21
Channel 4 31
China Mobile 16
China Unicom 20
Cisco Systems, Inc. 29
CityFibre 8, 24, 42
CK Hutchison 28
– Three Group
– – Three UK 28
Communications Workers Union 34
Connexin 29

D

Department for Digital, Culture, Media and Sport (DCMS, UK)
– Hancock, Matt 8
Deutsche Telekom 12, 16, 17, 20
Digital Britain 8
Dolby Laboratories, Inc. 25
Dorna Sports 30

E

eir 36
Electricity Supply Board (Ireland) 36
Ericsson 9, 13

F

Facebook 12, 16, 19, 20, 34
– OpenCellular 20
Football Association
– Football League 32
Fujitsu 17

G

Gigaclear 8, 42
Google 8

H

Home Office (UK) 23, 24, 25, 26
House of Commons
– Public Accounts Committee 23, 25, 26
HTC 17
Huawei Technologies 9, 10, 13, 17, 18, 19
Hyperoptic 42

I

IBM 23
Infinera 21
Infosys 9
Intel 12, 13
Intracom Telecom 13
Investor Forum 7

K

Kingston Communications (KCOM) 42

L

LG 17
Liberty Global 32
– Virgin Media 8, 11, 31, 32, 42
Lumina Networks 12, 20

M

Maintel
– Azzurri 21
MotoGP 30, 31
Motorola 23, 24, 25
Motorola Solutions
– Airwave 23, 24

N

National Audit Office 23
Navigil 39
Netflix 30, 31
Nokia 9, 12, 13, 17, 20
NTT 16, 17

O

Ofcom 8, 28, 29, 42
– White, Sharon 8
Orange 12, 16, 17

P

Parallel Wireless 12
PHAZR 12

Q

Qualcomm 15, 17
Qwest 21

R

Rohde & Schwarz 13
Royal Mail 21

S

Samsung 13, 17, 25
Semafone 38, 39
Sigfox 13
SK Telecom 20
Sony 17
Speed-5G 13
Spirent 12, 20
Sprint 17, 20, 29
SSE plc 36

T

TalkTalk Telecom Group 8, 11, 32, 42
Tata Group
– Tata Consultancy Services Ltd (TCS) 9
Tech Mahindra 9
Technology
– 3G 13
– 4K (Ultra HD TV) 25, 30
– 5G 8, 9, 10, 11, 12, 13, 15, 17, 19, 20, 28, 29
– Bluetooth 13
– Broadband 11, 15, 17, 20, 24, 26, 36, 42
– CCTV 35
– Convergence 21
– DSL 17
– Ethernet 11, 19
– Fibre 8, 17, 19, 20, 21, 24, 36, 38, 41, 42
– Fibre-to-the-premises (FTTP) 41, 42
– G.fast 20, 42
– HD 25
– HDR 25
– ICT 34
– Internet of Things 35
– IP 24
– LTE 10, 13, 15, 17, 20, 25, 29
– LTE-Advanced 10
– M2M 39
– Microwave 19
– mmWave 12, 17
– OTT 31
– R&D 10
– SMS 25, 36
– TDM 24
– Ultra High Definition 25, 30
– VoD 32
– Wi-Fi 13, 21
Telecom Infra Project 12, 16, 19
– OpenCellular 20
– TEAC 19
Telecom Italia SpA 12, 13
Telefónica 8, 12, 21, 28
Telenor 20
Telstra 17
Toshiba 11
Transport for London 25
– London Underground 25
Twitter 26

U

UEFA 12, 25
– Champions League 12, 25

V

Verizon Communications 12, 17, 21
– Bell Atlantic 21
Virtusa 9
Vodafone 17, 20, 21, 23, 24, 26, 28, 36
– SIRO 36
– UK 21, 24, 26, 28
VXFIBER 42

W

Wireless Broadband Alliance (WBA) 21

Y

YouView 31, 32
– Halton, Richard 32

Z

ZTE 17

About

About BTwatch

Report: #294
Published: March 2018
Next report: April 2018
For more information visit: BTwatch