Telstra’s leadership magic trick

When Telstra’s former CEO, American Sol Trujillo, rode off into the sunset after his four-year reign, the air around the telco was thick. Customers, regulators, rivals and shareholders (especially the federal government) all had a lot to say about Telstra. None of it was good. Trujillo had all guns blazing during his controversial leadership, and no one had escaped a bullet.

In May 2009, David Thodey strode into the froth and bubble Trujillo left behind with little fanfare. He held counsel with the inner executive, and secured agreement that Telstra needed to change.

Telecommunications analyst, Paul Budde, tells LeadingCompany: “He immediately changed the whole tune of Telstra. From continuously attacking every one, he immediately said: ‘We have to embrace the broader sentiment: customers, competitors, regulators and government.’ That created some tension at that point in time, but the reality was the majority of board and senior executives agreed with the need for a change.”

Gaining time

Thodey said little publicly, other than to indicate Telstra intended to have a “renewed focus on customer service”. He put his effort into talking and listening to stakeholders.

“Soon after his appointment, I invited him to a dinner to build bridges with industry,” Budde says. “There were 50 industry people there. The whole night, he went from one table to another, talking to the people there. He didn’t have any dinner.”

The positive impression he made working behind the scenes gave him the breathing space he needed to start changing the corporate culture at Telstra from arrogant to responsive. It was something that had defeated every prior CEO. “CEOs are clever people, but no one was able to make the change,” Budde says. “It is his personality that has made it possible for him to make the cultural change, and not with a lot of noise, but with action.”

Cynics might argue that there was little Thodey could get wrong; Trujillo’s performance left Telstra at rock bottom. The company’s market share and share price began to tank. When Trujillo started in July 2005, Telstra’s share price was about $4.06. When he left in May 2009 is was $2.49.

When Trujillo announced his resignation from Telstra, the then prime minister, Kevin Rudd, responded with a single word: “Adios.”

Trujillo departed with a spray of abuse about Australia’s racist attitudes (possibly justified) but the reality was the nation could not wait to see the back of this most arrogant of CEOs.

Shifting strategy

Strategy-wise, Thodey and Trujillo are polar opposites.