New Rules for Telecommunications in an Era of Apps: Interview with Karl Schultz, TeliaSonera

Companies within the Nordic region have typically lead the way in telecommunciations. But lately there’s been a lot of "Apps" and "Apples" around adding to the ever increasing complexity and competitive pressure on the industry. So just where is the telecoms industry headed and what role does process improvement play in supporting that direction?

It’s time for the telecommunications industry "to really show that we know how to upgrade our processes in this new virtual world" says Karl Schultz, Vice President within TeliaSonera - northern Europe’s largest telecoms operator and one of the top 3 carriers worldwide. One of the main challenges, he argues, is the cultural differences between approaches to quality and customer care of internet, IT, and telecommunications companies. As the world converges and customers are accessing various content services on different hardware devices via telecommunication platforms, the old rules no longer apply.

"What we need is a cultural transformation so that we all have the same view on quality and end to end performance," he says.

In this interview, an edited transcript of a recent Process Perspectives interview, Schultz discusses why he believes there is an increasing convergence between IT and the telecoms industry and why IT needs to catch up to manufacturing with regards approaches to quality. He also explains how he believes quality approaches need to adapt to better serve customers in the more complex technological world which they inhabit.

Editor’s note: this transcript has been edited for readability.

Traditionally countries in the Nordic Region have been seen as world leaders with regards their quality of life, companies and global competitiveness. What do you think is behind that? Do you think process excellence approaches like Lean play a role in that competitiveness?

Karl Schultz: I think it does but I think it also connects to the culture because in Nordic culture our organizations tend to have non-hierarchical structures. To manage an organization with that approach you really need to work on getting the buy in of employees and when you have them on board you really gain the full effect. Iif you don’t get buy-in they will continue to do as they have always done and I think that is the main challenge on all levels, but especially when you’re dealing with employees working at the practical process level. There, you really need to have them on board on the new way you’re working or the process improvement otherwise it will not work. I think during the years we have developed secured assistance where the employees buy in and join in to the newest group or the changed process.

In the telecommunications industry - your industry - Nordic players like Finland’s Nokia have really led the way. But the telecoms industry is undergoing massive changes and ones where once world-beating companies find themselves now facing stiff competition. What do you think are some of the major challenges for telecoms in the years ahead?

K Schultz: I think it’s very clear that there is a major transformation happening in both the telecom and IT worlds as well as increasing convergence between them. For instance, in the future everyone will be using Smart Phones and the applications that run on those Smart Phones are downloaded via the Internet. What that means for us as a telecommunications provider is that you need to understand this shifting context and the impact that it has on how you’re working and how you’re producing or providing services. For instance, we’re somewhere in the middle between hardware providers like Apple, Nokia, Erikson and others, and the content providers like Google. If something goes wrong, it could be a problem with the hardware, the content or the telecommunications services, but the customer doesn’t care where it’s going wrong, just that it’s going wrong. So, as a telecommunications provider, we understand that we need to secure end to end quality at all times.

Let’s talk about that end to end quality. Do you think the traditional tools and techniques of process improvement, whether it’s Lean, Six Sigma, etc need to adapt in order to respond to these challenges?

K Schultz: Generally speaking the methods and the models still work. The real challenge is the cultural differences between the traditional internet world, IT, and telecoms world. What we need is a cultural transformation so that we all have the same view on quality and end to end performance.

Here we need to do some modifications in the classic production industry models to make them understandable in the new IT world. At the same time the "internet geeks" need to adapt to take an end to end perspective on quality. Previously on the internet, it has been provided on best effort, but as we’re moving to more and more time critical and quality critical applications such as on demand TV and video services on the Internet you need adopt a high quality approach.

Would it be fair to say that you think IT needs to catch up to some extent to where manufacturers are with regards process improvement and quality approaches?

K Schultz: Definitely. At the same time the content developers - traditionally from the internet world - need to catch up with both the telecom and the IT guys. Along this journey I think we can copy a lot from traditional production industries like the car industry’s evolution over the last 120 years.

Do you see this causing many companies within the telecom space - perhaps maybe even your own - to really re-evaluate how you are running your process excellence programmes?

K Schultz: Yes for us and other telecommunications providers have more or less been focusing on improving our net promoter scores and improving how the customer feels about our products because we are the only ones that have a customer care line that you can call. You can’t call Google, for instance. Because of that we have a good opportunity in the telecommunications world to gain new market share. On the other hand, you only have one time to show off how good you are. So I think it’s time for the telecommunications industry to really show that we know how to upgrade our processes for this new virtual world.

Can you maybe take me through an example of what you mean by this? Can you think of anything specific that you’ve been doing at TeliaSonera that illustrates this?

K Schultz: A very simple example is our TV service. We have more than one million customers in the Nordics today. The way we approach TV is this: it’s a service produced somewhere in the network, sent home over the broadband subscription to the customer and the customer sees the service typically on the TV or on the tablet. To really secure them we are measuring customer experience, the feeling, the TV programmes because you need to have 100% picture quality and sound quality. If you don’t you really need to have a provider that helps you to change that. We have developed specific tools that make these measurements for us and by having the outcome from the measurement we proactively call the customer and ask them and help them to either change the setup at home when it comes to the TV or the broadband subscription or we adjust issues in our network.

Where do you see process excellence for telecommunications headed in the year ahead and beyond?

K Schultz: I think it’s important for the industry that we start to develop this new way of approaching the customer experience and the way we’re producing services. From a process perspective we must have end to end ownership across the value chain; that requires a new way of thinking and new interfaces with customers. We need to engage in dialogue with all stakeholders involved in the production of the services to the end consumer.

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