It’s lonely at the top: “Do people come up to you at parties and tell you their broadband speed?” I asked Gavin Patterson, the chief executive of BT Group. “Oh yes,” he said, and rolled his eyes.
We were scheduled as the opening act of the annual conference of the Market Research Society, the world’s largest organisation of people who give chief executives the information they need to make the business bets that decide the future of their companies.
Predicting the return on investment in technology is notoriously difficult for executives in any business, at any level. Models of payback time or net present value struggle to model markets that can be disrupted, have volatile prices, and constantly changing services.
Agile development processes, in which projects proceed by small steps and the next step depends on the success of the previous one, simply can’t be valued in the long run. And much innovation in competitive environments has to be made, whatever the price, because the cost of not innovating is too high (Kirstin Gillon, technical manager at the IT faculty of the Institute of Chartered Accountants had previously described these to me as “do it or you’re dead” investments).
At BT, domestic fibre investment has been more than £10bn so far, with an extra £1bn every year. To capitalise on fixed-mobile convergence, BT has bought mobile operator EE for £12.5bn. To increase demand for its retail broadband, BT paid more than £1bn for the rights to show European football. On the other side of the ledger, an anonymous executive recently told a parliamentary inquiry that BT was wasting £1bn a year in botched engineering.
Therefore being a telco CEO is inevitably a lonely role, Patterson admits, because he has to stand behind the big bets, and will be judged a success on how many of them pay off. “The role of the CEO is one that many people look forward to,” he said, “But there are so many things that could go wrong at any time, you have to get attuned to that. When you are head of a division, you work with your peers, and they act as confidantes and advisors. But you don’t have that role with anyone else when you’re a CEO, and your relationship with the board is different – they’re there to push you and challenge you, not train and develop you.”
For a carrier, the payback time of many of these investments is much longer than in any sectors, even comparing telecoms with automobile manufacturing or retailing: the longevity of telecoms investments exceeds the average tenure of the average telecoms CEO by a factor of two or three.
Patterson explains that, because research makes it impossible to predict returns on investment with a high degree of certainty, he actively recruits executives who can act instinctively as well as read market data.
“The competitors I faced at BT 10 years ago were a completely different set. Yet I have to make decisions that have a 10- or 15-year payback… You never make [big decisions] with complete confidence. As CEO you focus on the big ones and try to make sure you’re not shafted by the small ones.”
Patterson’s appearance was scheduled to end at exactly 9.30am because 30 minutes after our interview finished he was in parliament, answering to the politicians who make up the culture, media and sport select committee.
The UK’s members of parliament used the opportunity to shaft him with accusations that 60% of installations done by BT’s infrastructure division – which controls fibre to the cabinet in the UK, and so is a business partner for every major service provider – go wrong, that his engineers were missing 1,000 appointments a week, and that he also didn’t deserve his £1.3m bonus.
It’s a reminder that, in a global carrier, most of the decisions you make are big when you look at them from the outside.
Earlier, before he left the market research conference, Patterson had time for a couple of audience questions. A hand went up in the front row: “I’m sorry,” she said, “I just have to ask you about my broadband speed.”
