BT's Quality Journey
A presentation to the World Productivity Congress, Edinburgh, October 1999
by David Thomas, Head of Change Management, BT
I am going to try, in a relatively short time, to share with you the 'quality journey' that BT has been through in recent years, particularly in the 15 years since privatisation.
In BT we are on a mission to be the world's most successful telecommunications company. This means, obviously, that we have got to compete for customers in the world's most competitive market - for that is what telecomms is today. This is why we are on 'our journey' and why we have to take our people with us, because it is a journey of change, for the organisation and for them.
So far, we have been through structural change, organisational change, and process change - looking at how we do things. Perhaps most importantly, we have been through an attitude change within BT. We have been through a 'measurement phase' related to those external standards which provide the benchmarks against which we can be measured.
At privatisation in 1984 (15 years ago!) a quarter of a million people worked for us, We were essentially a UK company, with no competition; we had 100% market share here in the UK, no cellphones and a pretty moderate standard of service measured by things like call failures. Now, 15 years on, we have less than half the people we had when we were privatised - a good definition of productivity, I suppose - and our revenue has nearly trebled. We have 4.5 million cellphones now compared with none when we were privatised - and all this on the basis of what is now a 70% market share.
One thing that we are sure of in BT is that our market share inevitably goes downwards. In fact we have a regulator much of whose business is achieving exactly that! Now we have only 0.4% call failures. We do however have price controls, price controls which surprise, even shock, many people from outside the UK. For most of the last 10 years, we have had a price control of the rate of inflation minus 7.5% year on year. This means that each year the maximum by which we have been able to increase prices is the rate of inflation minus 7.5%. The rate of inflation has been at about 3% for most of those years, which means we have had to reduce our prices for the basket of our major services by approximately - on average - 4.5% a year. That price control has just been slightly lessened to the rate of inflation minus 4.5%.
When we started there was only one other telecomms licence holder, now there are approximately 150 here in the UK - so that is a huge amount of change. The change has not just centred on those facts and figures. We have also changed in other ways, and these are amongst the things we are proud of. We are the largest organisation to be recognised as an Investor in People, a UK standard for developing and training people. We were the award winner for the Opportunity 2000 award for companies that 'go the extra mile', in terms of promoting the interests of women and addressing gender issues in the work place. We were named company of the year, this year, by Business in the Community here in the UK, and we have won a number of European Foundation for Quality Management awards.
We have used a variety of improvement and change programmes - with mysterious names such as Care and Breakout and For a Better Life - to help us to 'ride the wave'. The secret about riding a wave is to know when to get off it and get on to the next wave! Perhaps that's where BT is at present - we are trying to see how we can continue to manage this transformation process. Right now, we feel we are pretty near the top of a wave - we need to start a new one.
Following privatisation, our first big change was reorganisation. In fact, there were a number of reorganisations - but the big one was tertmed Project Sovereign. This was based on asking the big question : what would the organisation be like if it were to suit our customers. The result was Project Sovereign - called Sovereign because the customer is king! We tried to create an organisation centred on the customer. For BT, this was a fundamental change.
In just over a year - a remarkably short timescale - we halved our layers of management (from 12!).
You can probably imagine what that did in terms of both the structure of the company and in terms of the view of managers. Previous to this, managers had had a view of life which was one of gradual progress up these relatively small twelve steps of the management chain. Suddenly that was all changed. All the managers (some of whom in other organisations may be known as supervisors) - at that time 35,000 people - were re-appointed to their jobs or to another job. Nobody carried their job forward; every single management job in the company was re-created and re-appointed to. Many people ended up doing the same work but there was a very, very important and difficult process to go through to achieve that.
At the same time 22,000 people left BT - 21,000 of them on one day as the first step in our continuing programme of voluntary severance. We have gone from 240,000 to 120,000 people under a voluntary programme with, as of today, no industrial action having been taken concerning our downsizing programme. We are proud of that - and with the good relations we have maintained throughout with our trades unions. If you were to speak to Sir Iain Valance, our chairman and ask him to define the most important thing about Sovereign and about what he has done in the company, he would say it is the creation of the BT values.
Our core values are enshrined in five simple statements which we can all remember and which we introduced at the time of this reorganisation as a focus for the cultural change. Old BT didn't put its customers first. It was a magnificent organisation, a wonderful organisation, but one thing it didn't do was put its customer first. Project Sovereign was supported subsequently by a programme that was run by my team, called the Leadership Programme, whose central element was a two and a half day event called Leading through Teamwork. We looked at our five values, and we discovered that the two values that were lowest on people's agendas were firstly, that we work as one team, and secondly, that we respect each other. So we addressed those two issues in a leadership context in this day. Every one of our then managers went through this programme, which was really rather remarkable because to put over 30,000 managers through this programme in just over a year meant that, at the height of the programme we were running 36 programmes a week, 18 from Monday to Wednesday and 18 from Wednesday to Friday using a massive team to deliver them. The programme was jointly delivered by the line and by human resources (HR) - it wasn't just an HR programme that was carried out on the rest of the company. Each event was led by both an HR person and a line person; this was a very important element of it. Each event was also 'owned' by a senior manager who appeared at the start of the event, set the task, and then came back at the end to receive the output of the event. This meant that we also had a huge number of senior managers taking part in this programme.
Up until this point senior managers in BT had just been a crack of light under a door because that was all you ever saw of them.
Now they had to be out there, and be successful in this sort of event. Everybody who took part in this event received 360 degree feedback for the first time ever in BT. Before you went on the event you went through a 360 feedback process - you couldn't go on the event until you had received that feedback. So, for the first time, we introduced an appraisal by people other than the immediate superior. This was a very significant cultural change. We also then started to move on process change. The biggest single initiative (from many) has been what we have called Breakout. This was an attempt to break out from our old ways of doing things, and centred on four elements.
Firstly, we wanted to re-engineer our processes - we felt that we were not managing things as efficiently as we should. Secondly, we had to raise the profile of the customer. Thirdly, we had to ensure that people knew we were in this business to make money! - the time had come to push forward our revenue generation. Fourthly, and perhaps most of all, it was about BT people.
We created a new senior executive profile, a snapshot of what we felt a leader, a senior manager in BT should look like. Deceptively simple, consisting of just five competence clusters, but very much representing the way in which we wanted to our leaders to act. Leadership of change is about knowing both where you are going, and how you are going to get there; then it is about taking people with you, and about getting results. It looks simple but I remember when we first presented it to our top management, one of them turned to me and said: 'Are we supposed to be able to do all of this?' He was actually one of our very most successful managers, and had understood the full implications of that whole model.
Remember, although BT people had not been civil servants, they had been part of that structure. 15 years ago the major competence required by senior managers in BT was being able to provide answers to Parliamentary questions, so that the Postmaster General could answer MPs questions about the telephone service.
Sometimes we forget how quick the change has been.
We also had to deal with a number of Union agreements, restrictive practices and job security agreements. There was a large number of varied terms and conditions for BT people. We had to take this rigid, bureaucratic structure to a situation where reward and promotion is based on performance and effectiveness. This has been something that perhaps we are all used to now but in BT it is something on which we have first had to bring our managers on board. Gradually we have changed things for everybody : hours of attendance, use of part time staff, etc. Only recently we have got through the taboo about working in hours of darkness, for example (part of the hours of attendance issue) and we now have people working effectively with new systems and processes. This all happened as long ago as 1993 - this is when we made our major process change. It was commented on by The New York Times and we were pleased to receive such recognition only 10 years after privatisation. Things have scarcely stood still in the intervening six years!
Measurement and external standards
We have developed measurement tools for what we do. One of the most important of these is CARE : Communications and Attitude Research for Employees. CARE is our annual survey of employee attitudes. It gets approximately a 79% return rate which is pretty good. It has about 100 items on it - it is reasonably complex. We can get feedback not just on the individual items - but we bring a number of items together to construct indices of performance for the company. So, for example, we have an index of line management - a measure of how well people think they are being managed. We have a (strange-sounding) committed people's index - a measure of how committed people feel to the company and what it is seeking to do. There is an overall result across the whole company. It is also broken down into units of 10 people or more, so departments and groups receive their own local report. If you have got a bigger team, you get your own report for the whole team, plus the individual reports for all the different groups within your unit, so it is a very valuable tool that you can use to address the real issues that are affecting your people, what they think about the company, and what it is doing. It has been a very, very valuable tool. CARE Contrasts is the same tool but this time used to benchmark us against other blue chip companies so we can compare the way that our people think with similar results in other companies. The whole thing is very difficult to manage because we want to keep on changing and improving it, and yet we need and value year-on-year comparisons. I have a great deal of admiration for my colleagues who do manage CARE!
We have also developed a large number of customer satisfaction measures based on talking to our customers. We want to know how our own people think we are doing, but we also want to know how our customers think we are doing. These are very important measures for us. As a result of these and other developments we have moved on to use the balanced scorecard as our principal tool for assessing the company's success. The balanced scorecard suggests that, for any project that we are doing, we should not ask only 'will it make money?'; we should also ask 'do our customers want it?', 'can we do it really well?', 'will we learn from it?'. We use the European Quality Award model (connected closely with the Baldridge model) as an assessment of our overall effectiveness across the whole company. And, of course, there are also always the measures that the City chooses to put on us - something of which we are very conscious.
We have also gone for external recognition via established standards - we have company-wide recognition under ISO9000 and that has been a critical success factor for BT. We have now started to add to this a number of other external standards and, as you can imagine for an organisation as big as BT, maintaining ISO 9000 accreditation across the company requires a lot of work, auditing and real commitment. Investors in People is a UK standard which relates to the commitment that a company has to the development and training of its people. We achieved company-wide recognition as an Investor in People just over a year ago and, even a year later, we remain the largest organisation to have that company-wide recognition. I think that perhaps again provides a clear indication of where we are going - and of our values.
We have now moved into a further phase of change - attitude change, the winning of people's hearts and minds. We need to remove the reasons why people don't want to play, why they don't want to get committed to the new ways in which we are doing business. We need them to help us drive up customer satisfaction, to drive down costs and to drive up profitable revenue. A number of programmes have addressed this but perhaps the most significant is one called Local Partnership. Local Partnership was built on the fact that, throughout the UK, gradually BT was not being recognised as the local telecommunications company. The cable companies were becoming 'local' via careful; branding as 'Bristol Cable' and so on. Of course many of them are really American 'Baby Bells' masquerading as Bristol Cable; but the customers' perception is that it is a local company. So, we decided to re-invent BT in lots of important cities. We took this programme to eight cities over two years, and in each of these cities we put on a huge customer experience. It was a very outward-facing event and in broad terms, though it changed slightly from city to city, lasted for five weeks. In each week, we brought in 250 BT people from across the country. We put them up in hotels and they each stayed in the city for a week. We gave them one day's training in talking to customers and selling directly, and then they went out to take part in one of 12 activities. These included 'buddying up' with engineers to visit customers' premises, cold calling, stopping people in shopping centres - all sorts of activities.
It was a chance for people whose normal job was perhaps as a secretary or a clerical officer or whatever, to go out and meet customers and earn revenue at the very front end. Lots of people in BT would say that this was the most important and significant change programme that we did, because it really put people in contact with customers and it also gave them the thrill of actually doing business, making money in a way that many of them never had.
Of course, it released talents they didn't know that they had.
I remember members of my team really found themselves transformed by this experience; they got a real idea of what BT's business was about, so even when they went back to their ordinary jobs they now look at them in a different way. They look at them in a way which asks how they can best support the people that actually interface with the customer, and deliver the service which gets us our revenue. As well as providing all this development for our people, we made a real impact and we made money! It was a huge task logistically, absolutely massive, and involved building a customer centre in each of these cities. This is why, in the end, we could only do eight cities over a period of slightly more than two years but it was a great programme for winning people's hearts and minds.
There are two other programmes called For a Better Life and Investing in our Future in which we are doing the same thing right back in the day-to-day workplace, addressing the same issues and making BT a more enjoyable place to work in and seeing the impact of this on our customers. All these initiatives have promoted a very important change of attitudes.
The next step forward is perhaps the fundamental change for the next century. We have a new vision for BT here in the UK, which also relates to our world-wide mission.
We aim to be a trusted guide to the communication skills that people are going to need for the globally-connected future.
We are using the 3Es which represent :
and Enterprise, and
Unless we achieve the first three across the second three, we can't succeed. We can make a difference in a tiny bit of the company or in some aspects but in the world market, that is not enough.
The key lessons learnt? That re-organisation is not what changes you - it is a part of the process. That a focus on cost reduction will only work when carried out alongside a focus on customer requirements and aspirations. Staff development using the 'sheep dip' approach where you apply the same short, sharp process to all people in the organisation can be very useful : it has become quite unfashionable but you do need programmes such as the Leadership Programme.
You do, though, have to remember that a large organisation is a large collection of individuals. We couldn't have done what we have done without co-operation from our people and their trades unions (although we still get annoyed with each other from time to time).
Perhaps our most important lesson - going back to the Local Partnership programme - has been that acceptance of the need for change, the need for productivity and culture change in a company is directly linked to the exposure to customers. In the early days, when we were starting these change programmes, most people weren't aware of the competition, let alone of the customers, and it was only once they became exposed to the competition in the context of our customer relationship, that they began to realise why things had to change, and that they could stop looking back at a golden age in the past.
Organisational change is a marathon rather than a 100 metre sprint!
Finally, you need to have somebody in charge who understands all of this. During this great period of change, this has predominantly been Iain Valance. It is Sir Iain who has really seen throughout that, no matter how successful we were, we have to keep on re-inventing ourselves because it would be easy to look from the company that Sir Iain inherited in the late 1980s to BT today and think we've made it! We do need to keep on re-inventing ourselves and changing waves.
As our Chief Executive, Sir Peter Bonfield says: 'It has been a rollercoaster ride'.
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