Igniting the Spark — The Heart of NZ's Digital Future

Friday, 15 August 2014, 1:42 pm
Article: Igniting the Spark by Scoop Amplifier

Spark New Zealand strongly believes that it is building on the legacy of an initial telephone infrastructure originally started by the New Zealand Post Office. Today it is no longer about copper wires going into peoples' homes, but about digital services and wireless networks seamlessly linking friends, family, business and government.

There are hundreds of millions of dollars invested in this infrastructure — and it is certain that ongoing investment will be needed to keep pace with customer needs and expectations. It competes in a market with ever increasing consumer expectations and demand for services, preferably at the same or lower cost.

Spark New Zealand sees its own and New Zealand's business success as inextricably linked. If people love it, because Spark delivers better digital experiences than its competitors, that success will be mutual.

In Part III of Scoop Amplifier's Igniting the Spark series, Bill Bennett and Peter Kerr outline what New Zealand can expect to see in the immediate and near future.

Contents - Igniting The Spark - Part 3 :

Hard and soft will measure success
At its heart, Spark New Zealand is about its people
Engineering evolution for New Zealand's benefit
The journey continues, not begins for Spark Digital
Constant challenge to create value in a digital world
Cloud infrastructure provides a new New Zealand backbone
Disruption, embraced, drives ideas development
Why not just bring new ideas in from overseas?
Qrious – looking for patterns in numbers
Spark's success will be when people are proud to be part of the brand

Declaration: This content series was commissioned by Spark New Zealand Ltd. A strict protocol for the purposes of editorial freedom was agreed. The series was edited by Scoop Editor Alastair Thompson. Scoop Amplifier is a business unit of Scoop Media. Please send feedback to amplifier@scoop.co.nz

Jason Paris - Spark GM Home, Mobile & Business

Hard and soft will measure success

Even an element such as an exit interview can help create better, more successful businesses

As a stockmarket listed company, Spark New Zealand's share price ultimately reflects the value shareholders think it is worth.

Paris reminds us that Spark New Zealand's shareholder dividend return has been one of the best of the larger NZX-listed companies. Its current share price is nearly $3 and shareholders have received a strong return over the past 12 months as Telecom.

“Spark is the next phase of that shareholder story as well,” says Paris.

With the company, as well as soft measures, Spark New Zealand will keep a close eye on three main areas.

Commercial success will include making sure it creates the right commercial outcomes — around customer growth, customer turnover, products per customer and the cost to acquire and retain customers.

“By focusing increasingly on our existing customer base, hopefully they'll turn into our best acquisition channel,” says Paris.

“For that to work we'll have to have advocacy and empathy.”

Spark New Zealand will, naturally, also track its competitors — aiming to be faster, more agile and have better and higher brand performance.

Finally there are cultural measures, a gauge on organisational health of all companies' main asset, its people.

“This is around factors such as people applying for roles,” says Paris.

“There's also measures such as the number of sick days, staff tenure and how long they're sticking around. Then there's your exit interviews which provide another opportunity to learn.”

Neal Richardson - Spark Fixed Voice & Mobile Network Resource Manager

At its heart, Spark New Zealand is about its people

Though it has an impressive infrastructure and network, Spark's main asset is its people

Neal Richardson has seen a lot of change in what is now Spark.

The engineer and now Manager for Voice and Mobile Networks started with the NZ Post Office when it managed the original telephone systems.

In 1985 things were changing from electromechanical switchgear to digital phone connections at the exchange. He was one of 40,000 people, including plumbers, gasfitters and carpenters.

“In the blink of an eye in 1987 we became a state owned enterprise, a corporation,” says Richardson.

“That was a big cultural change, and we had another when we were privatised and listed on the sharemarket in 1990.”

Richardson says that brought in an American view of what a corporation should look like.

The late 1990s and early 2000s saw a fair bit of the then Telecom's head people dueling regulation changes imposed by government, and then came the drawing off of Chorus, “and the last four years have lead to today,” he says on Spark launch day August 8.

“During all that time, underneath whatever the corporation may've looked like, the heart has been our people.

“You get a layer up there at the top who have need a focus on governments and stockmarkets but underneath are people who all want to do their best for New Zealand.

“With the changes that have taken place, one thing I think Simon Moutter (Spark New Zealand Managing Director) is trying to do is show how we have that heart.”

For Richardson, a key defining moment showing that was the Christchurch earthquake.

A public Facebook page was set up ensuring all Telecom colleagues and families were OK, and if not, to ask how they could be helped. WiFi hot spots were set up to help the people of Christchurch connect with their loved ones.

“The bottom line is that people are the most important part of a company,” he says.

“That message was shown loud and clear.

“It's been one of those anchor points. It shows what we believe in is true without a doubt.”

Richardson is confident that Spark and New Zealand's survival go hand in hand.

“If we're not doing the right thing for New Zealand, then I don't want to be here.”

“We really are about connecting people, New Zealanders, so they can reach their potential.

“I can see a new culture driving our people around here, this is what we're doing.”

Neal Richardson inside Spark’s Wellington Innovation Centre

Engineering evolution for New Zealand's benefit

"I get to work with the newest technologies with the smartest people in the industry”

There are people who ask Spark's National Manager of Voice and Mobile Networks how he could stand being in the same job for 30 years?

As an engineer who grew up with a party line telephone, joined the then Post Office as digital switching was just coming in, and has seen a migration to non-ownership of the copper wire network, Richardson has seen plenty of evolution.

“From an engineering point of view, it is moving forward all the time,” he says.

It is a different type of infrastructure that he and his team of 14 look after — noting that every couple of years it changes.

“I get to work with the newest technologies with the smartest people in the industry,” he says.

“It is something that is beneficial to New Zealand. We're essentially providing services to New Zealand for us to do business.”

He feels the vast majority of Spark New Zealand employees feel the same; the fact the company's publicly showing New Zealanders that it is about our country reinforces this service.

Richardson too finds it important that Simon Moutter has changed his title to Managing Director, from Chief Executive Officer.

“That's the way it used to be before we went all American, what our leaders used to be called.

“We like to be known as a New Zealand company. We are one.”

Tim Miles - Spark Digital Chief Executive

The journey continues, not begins for Spark Digital

Understanding of customers' customers is where the magic of digital can make a difference

For the former Telecom business unit known as Gen-i, the journey doesn't start with the official name change to Spark Digital on August 8.

“In terms of the things we do, in essence we've been making changes for the past 18 months,” says the business and enterprise focused Spark Digital chief executive, Tim Miles.

This means following up on two key decisions made for Spark Digital, essentially around what its purpose is:

• Standing for New Zealand
• Enabling digital faster, for New Zealanders and NZ organisations

Miles says the sale of former Australian subsidiary AAPT, even though it was well-performing, means some of the $500 million price was brought back and can be invested in New Zealand.

It also means addressing different customer segments, financial, government, healthcare and construction being just some, and engaging with them to use digital much better.

This doesn't mean employing more technical people says Miles.

Instead, in a major effort to understand Spark Digital's customers' customers, new employees from those industries have been brought under his team's wings.

“We have to do more than just sell tech,” says Miles.

“There's magic when we can demonstrate we understand the opportunities for our clients and their business, and can bring those opportunities to life. It is important to understand the context in with our own customers are operating.

“It means we're not starting with a product mindset, but with a business mindset and their issues, then use our technical specialists to help solve these.”

Miles says that as a dedicated New Zealand business, Spark Digital and the Spark New Zealand Group have an important role in the country's success as a trading nation.

“One of the best things and the worst things about New Zealand is we're a long way from the rest of the world,” he says.

“Much of our livelihood is our ability to work as part of a global community, and through our services, infrastructure and support, to close that distance — virtually close it.”

Chris Quin - Spark Home, Business and Mobile Chief Executive

Constant challenge to create value in a digital world

In other businesses, doubling and tripling of demand would equate to healthy books — but digital consumers expect more for less

For the majority of New Zealanders Spark Home, Business and Mobile will be essentially the business's shop front. It is where most of us will interact with the rebranded former Telecom.

The business unit’s chief executive, Chris Quin, says though August 8 is the official brand launch date, the changes inside it have been going on for the past 18 months.

At that point “we understood that what was inhibiting about Telecom and its name was deep-seated,” says Quin.

“They were things that would be tough to move such as it was old, white and rich, government owned and in fixed not mobile phones.

“To shift that brand perception would have taken a lot of time and money.”

Hence the decision to move to a new brand. Naturally customers were quizzed about the name change — and answers ranged from “brilliant to a profanity or two” says Quin.

While constantly monitoring feedback and in not wishing to be seen to be putting lipstick on a pig, Spark has been working on its internal culture in Home, Business and Mobile while it has tested its customer-inspired initiatives.

“We're now confident that people will like and choose Spark,” he says.

“At the moment some people may focus on whether they like the word Spark or not. What they should judge us on though is Spark in a year's time, and then they can decide if what Spark does for them is valuable, rather than just concentrating on the word itself.”

"Valuable" in the digital environment will be a constant challenge Quin says.

“The industry is probably unique globally, where demand for fixed broadband is tripling each year, and for mobile broadband it is doubling,” he says.

“For that sort of growth over time, normally the industry would do quite well.

“But what you're getting is the customers are paying about the same and getting a lot more.

“The same customers might even be prepared to pay a little bit more — but they expect an exponential increase in value.”

In such an environment, to remain competitive and provide returns expected by shareholders, Spark has been reengineering, changing its cost base and putting in processes that are much more effortless, smart and easy.

“If we run the business well, we will also grow value for shareholders,” says Quin.

“There's big investments of hundreds of millions of dollars, and shareholders expect a return that recognises the inherent risk.

“It is our job to attract more customers. So far we've been successful, and over the past 18 months, we've added thousands and thousands of customers. It is visible evidence that what we're offering is working.”

Quin says the customer insights obtained at the beginning of Telecom's change process are a powerful tool for him and his team.

“We can proceed with confidence that what we're doing is right, because we know what customers want,” he says.

“If we didn't have that confidence, it would be a much more nervous investment.”

Some of Home, Business and Mobile's new products and services are already available and August 8 will see even more offered.

In the next one or two years, Quin says Spark will have even more services that can be obtained by a network connection.

“You'll see more across entertainment, business services, cool ways of doing things, services that are much more integrated,” he says.

“We've got other products up our sleeve too; but we want to keep the surprise factor on those ones.”

Datacentres, part of Spark’s cloud infrastructure

Cloud infrastructure provides a new New Zealand backbone

Knowing that data is kept only in New Zealand is one attractive advantage as Spark Digital cranks up its cloud offer

The fact that Spark Digital has a foot in both the telco and IT worlds is extremely important for New Zealand says its chief executive, Tim Miles.

The Spark business unit has people and capability depths unmatched by anyone else in the country.

“If you believe in convergence, it is my belief we offer some real advantages in the marketplace,” he says.

One of those advantages, and an infrastructural asset on which Spark Digital has spent millions of dollars over the past 18 months, is in the construction of new datacentres around the country.

Datacentres and the connections to them effectively make up the cloud.

A 400 rack system (with the capability to go to 1200 racks) in Takanini and new datacentres in Wellington, Christchurch and Dunedin allow Spark Digital to provide a backbone of cloud services to New Zealand companies says Miles.

Processing power, redundancy and resilience are catered for under this model — and its availability have already attracted two large national businesses to come under the Spark Digital umbrella.

Some customers are particularly sensitive to sending important data to offshore datacentres — and by now having high availability, earthquake resistant and multi-powered sites, Spark Digital is finding it can attract mission critical business partners whose IT systems “absolutely have to work.”

The change to Spark is because it would probably be impossible to change the name Telecom to mean anything more than a landline says Miles.

“The new name is about a move to a digital future and for us to be a customer-inspired organisation,” he says.

“Digital is so important for New Zealand and such a responsibility. You also have to ask the question, if we don't invest in this infrastructure, who is going to?”

Spark's future is based only in New Zealand and therefore doesn't regard New Zealand as being a small part of a much larger global operation.

“We definitely need to start writing some new chapters for Spark,” Miles says.

“Some of our people and others are asking, how is the story going to end?

"I say, you're the guys holding the pen, together we will write the next chapters.”

Spark Ventures, website image shows the current startups

Disruption, embraced, drives ideas development

A team with possibly the best job in New Zealand, is charged with finding, developing (and maybe ditching) digital businesses

If, in a digitally connected world, life is considered as a service, then Spark Ventures aims to be the force delivering those services.

It is unlikely the former Telecom would have approved and backed what is a separate business unit, charged with being an internal incubator and accelerator to turn good ideas into business opportunities.

Spark Ventures' chief executive since its inception in April 2013, Rod Snodgrass, says it has a broad mandate to do things differently, to have an appetite for risk and to be aggressive.

The unit follows lean startup methodology, where "proof of concept" and "minimum viable product" are a mantra to determine whether a new product or service should be continued or scrapped.

So far Spark Ventures has nine products in its portfolio — all having gone through a scan, selection, validation, quick build and launch process; often in as little as six months.

“We're like a holding company that can make the investment, bring synergies to its development and operation and then see if it works,” says Snodgrass.

These products and services are outside the core business of Spark.

“Our role is to embrace disruption, not consider it to be a negative,” he says.

“When you have super fast networks, smart devices and cloud-based services, there's a whole range of opportunities for businesses. In a new digitally connected world, experiences, if delivered, will unleash peoples' lives.”

In such a disruptive environment, Spark Ventures has adopted three postures says Snodgrass:

• To create businesses and brands in niches that are currently not served well
• To bring some services first to New Zealand (such as the Lightbox internet TV)
• To develop applications (apps) within New Zealand that improve customers' lives

Rod Snodgrass - Spark Ventures Chief Executive

Why not just bring new ideas in from overseas?

"Now is a very different beast. It is time to recognise there is a revolution going on, and we're the people to drive that.”

Rod Snodgrass says that ideas developed overseas are but one place to find them.

“We're happy to bring those in, and try to improve them,” says Spark Ventures chief executive.

However he points out that other telcos and former telcos around the world have a common theme of introducing new potential services to their businesses, Spark Ventures is probably the fastest moving.

“Because we've adopted lean and agile processes, we're probably the closest to using those more startup methodologies,” he says.

This is part of the reason Spark Ventures is involved with and sponsors initiatives like Startup Weekend or Lightning Lab.

Not only is it part of being a good corporate citizen, but it provides exposure to other good ideas, and to young talent — who just might be interested in being part of the Spark Ventures team.

“If you make the analogy that we're on the reservation, we're also able to act like Indians. We have and want a culture of innovation and curiosity,” says Snodgrass.

“We have to change because in a mobile digital world, it is not about a landline telephone.

“Now is a very different beast. It is time to recognise there is a revolution going on, and we're the people to drive that.

“Failure will be part of our learning process, we have to make sure they're not epic fails. We have to move quickly and embrace the idea.”

What those next ideas and proto-businesses might be, Snodgrass isn't telling.

“But I will say one thing, there's plenty more awesomeness around the corner.”

Qrious – looking for patterns in numbers

"By understanding data better, we're out to create benefits for individuals.”

As the world tries to figure out how to use 'big data', Spark Ventures Qrious is out to make its own play in the New Zealand context.

While emphasising that such meta data from its own networks remains secure, anonymised and private, Rod Snodgrass says by better understanding and using data from its mobile networks it can be of considerable value.

How people are moving in real-time in a transportation sense can help transport authorities predict and better cope with something like rain at 8am on a weekday morning for example.

Alternatively, looking at New Zealand residents' overseas calling patterns can help develop better plans for different ethnic groups.

“By understanding data better, we're out to create benefits for individuals, for businesses and for communities,” says Snodgrass.

“It's early days for Qrious, but we're already seeing what a valuable platform that it is.”

Simon Moutter - Spark New Zealand Managing Director

Spark's success will be when people are proud to be part of the brand

The company clearly believes its mission is to do a great digital connection job for New Zealand

When the general public understands that Spark New Zealand cares about the country and is investing in its future, Simon Moutter will feel part of his job is done.

The Spark New Zealand Managing Director says “it is great to have a company that is focused solely on New Zealand aiming to be a strong, long term value creator for the country.”

“For us to succeed in the global market, we have a very strong alignment that we need to do a great job for New Zealand.”

Moutter says he doesn't lose much sleep wondering whether Spark New Zealand has embarked on the right strategy.

For a start being paid to lead a large company is part and parcel of the challenge he says.

“We embarked on a very big change programme 18 months ago, and the brand name shift was just one element of that,” says Moutter.

“It has been designed to make us different. Of course, when you do something big and radical, you hope you get it right.”

Moutter says it is important for him and Spark New Zealand to lead with confidence, and that it is up to all of the company to make it work.

Part of his inspiration has been the positive progress that Mike Bennetts and his team have made in changing what was Shell into Z Energy. This focus and reinvention has come from a customer focused strategy.

“If Z can do it, so can Spark New Zealand,” says Moutter.

“You've also got to remember that as a business, Telecom had been in decline for 10 years. It is only in the past one and a half years that we've kicked that around and started moving forward.

“We intend in that move to Spark to provide another injection of vigour to that turnaround story.

“We hope to encourage those customers who are with us, or those who have never had a look to consider what we have to offer...and consider it to be pretty.”

With the name change behind it, the real work is about to start for Spark New Zealand. The company has promised a lot, it has the products, attitude and, most of all, the people it needs. Now the challenge is to deliver.

New Zealand will watch its progress with interest.

ENDS

© Scoop Media

Igniting the Spark

by Scoop Amplifier

When an iconic New Zealand brand such as Telecom decides it needs to change its name, it has to be supposed it has pretty good reasons for doing so.

This series of articles explores:

• What is the purpose of rebranding and repositioning as Spark?
• How does a major New Zealand business go about reinventing itself?
• Why does it matter for New Zealand?

As a globally isolated country, digital connectedness can erase much of the tyranny of distance for New Zealand as a trading nation.

The new Spark contends that its success and New Zealand's future will go hand in hand.

Scoop Amplifier, and its writers, Bill Bennett and Peter Kerr and Editor Alastair Thompson, examine how true this might be.

IGNITING THE SPARK SERIES

• Part 1 - Why Telecom Wanted To Change
• Part 2 - Bringing The Digital Enabler To Life
• Part 3 - The Heart of New Zealand's Digital Future

Declaration: This content series was commissioned by Spark New Zealand Ltd. A strict protocol for the purposes of editorial freedom was agreed. Scoop Amplifier is a business unit of Scoop Media.

Contact Igniting the Spark

• Feedback - amplifier@scoop.co.nz
• Corporate Website - spark.co.nz