A new direction

When Jim Marsh was appointed Cable & Wireless’ CEO for Europe, Asia and US in April 2006, he was taking on a company that badly needed a new direction. Now well over a year into the turnaround, CXO sat down with him to find out how things were going.

CXO: When you took over your position as CEO of Cable & Wireless Europe, Asia and US, the company was experiencing a wide range of difficulties, so what was your first priority when you took control?
JM: The priority was to focus firstly on customers. Customers had previously had very patchy experiences with Cable & Wireless and we wanted to focus on being very clear and very honest with them about the problems we had as a business and what we were going to do about them. Of course, we recognise that the customers are our lifeblood and we need to take them with us on the journey we’re on. But the principal thing was we wanted to be really honest about our problems and face into them. If you’re honest and straight with customers, then they will be understanding. That was number one. 

But almost as important - and a very close second - were the colleagues in the business. Our colleagues had also put up with a lot over the years and our philosophy was that they were the solution to our problems, rather then being the problem themselves. We  invested a lot of time making sure that colleagues understood exactly where we were, exactly what our problems were and what they needed to do to help us on the recovery journey.

CXO: Coming back to what you said first about the customers, did you find that being honest in that way had the positive effect you were hoping for?
JM: Yes. The term most often used by customers was that it was “refreshing” we were so honest. We were very upfront about what we were good at, what we were not good at, where we had problems and what wasn’t working.  But that kind of principle is something we hold very dear and one that we’ve tried to carry through with all our customers. A lot of the problems that customers experienced are problems throughout our industry. Our industry is fundamentally broken. So they were relieved that Cable & Wireless was facing into this but, even more than that, they were very refreshed that a telecoms company was facing into the fact that the whole industry needed to change.

CXO: You’ve obviously been in position for a while now, so how do you feel you’re progressing with the company?  Have there been major successes and what are the things that still need to be done?
JM: Well I’m sure you’ve seen the reported results, a 20% rise on Group EBITDA over last year. The share price has improved a lot, but there’s much more to it then that. We’ve had a lot of success in the marketplace with some very significant deals. We tend to take BT head on and we beat them eight out of 10 times where we really want to.  So the market piece has gone very well. Our colleagues in the business are also a lot more engaged. We survey all colleagues at least twice a year to get their feedback. The colleague response rate to these surveys has greatly improved: when we first arrived it was 30 percent and now its 70 percent plus. So our people are feeling a lot more engaged.

We also set our stall out to refocus the business on giving outstanding service to customers in an industry that’s renowned for poor service. A lot of those underlying service measures have really started to improve. As an example, 30 percent of our customers feel that over the course of a year we’ve made a significant improvement in service. We’ve been able to reduce lead and customer response times dramatically. All those kinds of things are good demonstrations that we’re on the right track towards making our industry and our business focused on giving better service to customers.

CXO: In working to turn around a company like Cable & Wireless, you must be forced to make some very difficult choices to facilitate essential changes.  What are the hardest decisions you have had to make as CEO?
JM: Of course, the decisions to exit people from the business are difficult. Through the process that we’ve been through, we’ve had to exit a number of colleagues. Perhaps one of the most touching things was a letter I received from a guy who we had just made redundant. What he said in the letter was that he was very disappointed to have been made redundant, mainly because he thought this was the first time he actually felt the management of the business was going to solve the problem. So it’s difficult that you have to make decisions like that, but my responsibility is to fix the business for the customers and for the colleagues who we need to remain with us through the journey.  And obviously that means some difficult decisions.

CXO: So you have to do these things for the good of the company?  It won’t do anybody any good if you just carry on with a broken setup.
JM: Absolutely. And I think this earlier point about honesty is really important. When we do take decisions to exit groups of people, we’re very open about it. We consult so it doesn’t come as a surprise. I think investing in colleagues right from the start pays back because they understand it’s going to be a difficult journey, but likewise, they can see the improvements. We gave all colleagues in the business shares when we first arrived and in excess of  70 percent of them have retained those shares. So they can see for themselves how performance is tracking up. 

CXO: You keep coming back to this idea of honesty and being upfront about things, whether the news is good or bad. Would you say that’s something that’s really central to your whole approach?
JM: I think it is. We have acknowledged that our industry has survived on the basis of giving generally poor service. We’re facing into this and saying ‘okay, this is what doesn’t work in the industry, this is what needs to change’ and we’re acting on it. I think that’s very important. For example, one of the things that we do is make sure that we recruit a significant number of people into our business who are not from our industry.

We recruited a guy that runs most of our multi-national customers. He comes from a Fast Moving Consumer Goods background and, of course, I came from a retail background. So you come into the industry and you start to question, ‘why does it have to be that way?’ It doesn’t actually have to be that way. That gives you the catalyst to start the change.

CXO: Moving onto a different sort of subject, do you use outsourcing much in your operations or are things generally done in-house?
JM: Actually, one of the first things we did was in-source a couple of previous outsourcing contracts. We looked at the underlying contracts and they were not going to work for the business, so we in-sourced. Then we undertook a rigorous examination of everything we’ve got in the business to decide what we should be doing ourselves and what we should outsource. But probably more relevant for us is the need to offshore as opposed to outsource, simply because we run a global business. We have many big customers across the globe, including many in Asia, and therefore it’s just not economic to deliver a 24/7 service based entirely out of the Thames Valley in the UK.

So we’ve done a significant amount of offshoring. Some of that offshoring is also outsourcing to a third party - but we also have quite a large captive operation in India. So to answer your question, on balance we have probably outsourced more then we’ve in-sourced, but off shoring has been something that has been a more significant part of our strategy so far.

CXO: And of course, for a global company like Cable & Wireless, what looks like offshoring to a customer in the UK will be perceived very differently by a customer in another part of the world.
JM: Exactly. Just to give you an example, we started with a situation where we had a lot of customers based in Asia and India who were being serviced from the UK during UK working hours. That just doesn’t work. So, if you then want to make three shifts a day in order to provide 24/7 service, you know you can’t economically do that from the UK. But, when you explore this opportunity, you also realise that there’s a lot of real skilled capability in India that can complement our existing resources.

One of our main principles is that we would not offshore any direct customer contact.  Many of the problems that other companies have had have been in that customer contact area. So all of our customer contact is now driven from the home geography of the customer. The areas we have off shored have been those that are purely back office for us. So customers in the UK will still talk to colleagues in the UK. The UK colleagues will then have to deal more frequently with colleagues in India to get resolution.

So going back to the philosophy we’re trying to operate, we absolutely went on the front foot with our customers because we believe so much in this service principle – so if they’re telling us they don’t want that direct contact to be offshored, then we won’t do it.

CXO: You touched on it earlier but how does your relationship with BT work here in the UK?  Is it strange kind of relationship you have with each other?  You use their infrastructure to a certain degree.
JM: The relationships between telecoms companies are quite unusual compared to other industries I’ve worked in because we all tend to supply each other, be customers of each other and then compete with each other too. BT would be the extreme example of that.  There are elements of infrastructure in the UK where there is currently no option other than work with BT and we have to buy from them. 

We are a very large customer of BT Wholesale. That’s a challenging relationship because I don’t always feel like a customer despite spending such a huge amount with them. We compete head on with BT Global Services and finally you have BT Retail which is the consumer business. We don’t do consumer-based services. So there is one area where we’re a big customer, one where we’re a big competitor and one that’s not really relevant for us.

CXO: It’s an interesting relationship. Do you ever envision a time when Cable & Wireless could overtake BT and push up to that very top level, particularly in the UK?
JM: I think it depends on what you mean by overtake. We have no desire to be a consumer business so we’ll never be interested in competing with that. We are ahead of BT in some of our chosen markets. For example in Asia, a very important geography for us, we take BT head on and we haven’t lost on a major deal there. The other thing is that in the past a lot of telecoms companies have focused on being big. Being big isn’t necessarily good, and we’re focused on being profitable, cash generative and giving good service rather than simply on our size. So I don’t really lie awake at night worrying about BT. We’ve beaten them where we want to beat them and as a customer, I try and make them listen to me. I’m often asked who I consider our competitors to be. Inside the UK its only really BT. Internationally, we compete with BT, maybe Orange Business Services, maybe AT&T and maybe Verizon.

CXO:  Are there any major differences between the UK and mainland European markets? Do you have to vary greatly your approaches depending on where you are operating?
JM: The challenge in providing multi-national services is you have to rely on local carriers for the last part of the connectivity. So it really differs by country based on how good the local carriers in those areas are. You can’t really talk about the whole of Europe. We’ve got connectivity to over 150 odd countries and we’re fortunate that a lot of these in-country carriers want that global connectivity from us. That enables us to create generally good relationships with carriers in other countries.

CXO: Finally, what do you see as being the big developments for Cable & Wireless in the coming months and years?  Do you have anything in the pipeline which is going to be shaking things up?
JM: Number one is our continued focus on improving customer service. We have also been working on some new developments, which I can’t give you all the details of just yet. The plan is to completely revolutionise what service from a telecoms company means in the minds of customers and completely change the game for them. So that’s very important for us and we’re working up to launch towards the end of this calendar year. The other thing that’s important for us is, as more and more of our customers are globalising, we need to be in a position to provide multi-national customers with multi-national solutions. And we are placed at absolutely the forefront of being able to deliver those needs because of the level of international connectivity we’ve got. So my answer would be absolutely more of the same. We are very proud of the fact that we are sticking to one strategy. We are clear with the strategy and we’re executing that strategy, but every minute of every day we’re trying to turn up the heat to do it faster and better. That’s our mission. 

Jim Marsh is Cable & Wireless’ Chief Executive Officer Europe, Asia and US of joining the company as a result of the acquisition of Energis.

At Energis, Jim was Business Development Director and as such was responsible for developing and servicing all of the company’s channels to market. Before joining the company at the start of 2004, Jim was Chief Operating Officer at Atos KPMG Consulting and oversaw the consulting business across all industry sectors.

Prior to becoming a partner at KPMG in 1997, he was head of strategic planning at Boots the Chemists. He is a qualified chartered accountant specialising in corporate finance and recovery.