Category Archives: CFOs

Customer Obsession: Its a Mindset! Here’s one senior leader’s take on it.


I have known and worked with John Stanhope over many years. John had a long career with Telstra culminating as CFO. He is now Chairman of Australia Post. Ever since I have known him he has had a customer mindset. Almost an obsession!

When I spoke to him about the mindset challenges in today’s business he said: “Today the focus must be on ‘customer innovation’. Many companies focus on innovation, but it is customer innovation that counts. At Australia Post our customers want their parcels anywhere, anytime, so we ask: How can we provide a great delivery process that gets better and better over time and do it profitably? Innovation must occur to meet our customer’s need and expectation of ‘anywhere, anytime’.”

He says all leaders must have a mindset that is externally and future-focused. This includes foresight and peripheral vision with future customer needs and changes in customer behaviour as central. This is what drives customer innovation.

To develop this mindset leaders must have a relentless pursuit that everything is about the customer. John says: “There are little signs that tell you. At the start of a meeting ask – Is this about our customers? If not, don’t have the meeting. Another key sign is ‘language’.  How do you frame a problem or an issue? Is it framed in terms of the customer or not?”

I asked John how you get this mindset. He says: “ There are many factors, but I think a key one is that you must immerse yourself with customers. Ask them questions, listen to what they say, observe their behavior and then put yourself in the customer’s position. If I were the customer, what would I want to solve this problem? How would I like to be treated? That applies to anyone in a business no matter what level and what function.”

In every company that is continually successful at innovation, there are leaders and employees that have a customer obsession mindset. Like Amazon, that has developed a customer-obsessed mindset and a customer culture to match, this is required for sustainable success.

The only way to future-proof your business, your leadership or your team is with a strong adaptable, innovative customer culture.

Learn more here

Is Telstra Australia’s Amazon? – Its Customer Centric Strategy is Paying Dividends

Making Customer Connections

While some may argue you cannot compare a telecommunications company with an online shopping mega star like Amazon, I beg to differ.

There is one core element both companies now share – their absolute commitment to being customer centric.

In 2009 when David Thodey took over as CEO of Australia’s largest telecommunications company, Telstra, he was asked what would differentiate his tenure from his predecessors. He said:

“I want to be an agent for the customer”.

It was a time when Australia’s highest profile company was being criticized on all fronts for its arrogance, poor customer service, unjustifiably high prices and monopolistic practices.

Thodey set about changing the culture at Telstra to a customer focused culture and invested heavily in defining and communicating internally a vision, values and strategy that had the customer at its center and customer service as its catch-cry. It included intense training of its 5,000 people leaders in Australia, India and the Philippines as well as new systems and processes that empowered customer facing staff to provide much better service to customers and solve their problems with least fuss. A new division was set up that enabled staff who heard of a friend’s problem at a barbeque to give them a direct line to a solution if they were having trouble getting it solved. Telstra embarked on a program to create advocacy with its customers and its staff. Use of the net promoter measurement system with daily feedback from thousands of customers fed to the areas in Telstra responsible was a trigger for focus on customers. Other customer feedback measures and progressive culture assessments have supported Telstra’s customer-centric journey.

Telstra: Improving Customer Advocacy

Now it is paying dividends. The company has posted seven successive half years of earnings growth to AUD$2.1 billion for this latest half – up 21% on last year. Dividends have been steady, but are now set to increase. Telstra is on a roll with its customer-centric strategy and stronger customer culture proving Thodey’s stance. Stock price is at an all-time high at around AUD$6.50 per share with steady and continuing growth up from around AUD$4.50 two years ago.

Telstra posts 22pc net profit rise

David Thodey is the first to say that Telstra still has some way to go. But his leadership of a strategy and culture in which the customer is at the center of decisions and service delivery is creating a highly sustainable profitable business.

If you want to see how it all began you will find it was originally initiated first in the Finance Group at Telstra and described in a case study about the CFO’s value service culture initiative. See Case Study Highlight: Telstra Transformation.

Telstra’s transformation story can also be found in “The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance”

12 Lessons from a CFO that created a Customer Culture in the finance function

Culture Transformation

In my last blog post I described the customer transformation experience of the Finance & Administration support function in Telstra, a $25 billion Australian telecommunications company. Their CFO developed and implemented a vision of a “value service culture” (known as VSC) in which leaders and individuals viewed their stakeholders as customers and found ways of increasing the value (actual and perceived) they delivered to them. This transformation created a $15 million bottom line impact

In this post I summarize their 12 key learnings from this transformation.

  1. The senior leaders’ passion, ‘walking the talk’, ongoing monitoring and follow-through is critical to success
  2. Initially there is need for a Customer Engagement Council that guides the culture change. It works best if it is relatively small (5-8 members), has a mix of senior leaders and opinion leaders and focuses on overall planning and key initiatives. As embedding of new behaviors occur and support systems are implemented there is less need for such a group as responsibility is spread throughout the organization.
  3. Linking a culture change to a long term corporate or business strategy creates relevance and reduces perception that it is a fad.
  4. A set of guiding principles that reflect an emphasis on corporate values such as empathy and transparency is important in changing mindsets to embrace customer needs. It is necessary to continually emphasize these principles with practical examples to create the new cultural norms.
  5. Creating an emotional connection to the culture change and acceptance of a logical reason for urgency to change takes time in a large group. Creating a sense of fun, competition and reporting of “wins” in the short term can accelerate the diffusion.
  6. For Corporate Support groups that have limited experience in thinking about what they deliver from the customer’s perspective and lack a mindset related to delivering perceived value, the launch phase should provide concrete guidelines at the outset. A comprehensive communication strategy that continually provides examples of the new desired activities usually needs dedicated resources and focus to provide clarity.leading_culture_transformation
  7. Collaborating across lines of business can speed the desired cultural change across an organization. In disparate functions it takes time to find common ground for sharing. An initiative like VSC creates the common ground. Cross-fertilization of best practices makes the cultural change more exciting and effective and demonstrates to new staff the relevance and scope of the customer responsive culture. It also promotes collaboration and innovation.
  8. A clear framework and measurement toolsare vital to guide improvements and reinforce desired behaviors. These include:
    1. Customer culture measurement as a starting benchmark, then for tracking culture improvements
    2. Customer satisfaction metrics that point to areas that need improvement
    3. Customer focus behavior norms incorporated in manager and staff reviews and their key performance indicators.
  9. Technical people who have little experience in treating colleagues as customers will require a set of new tangible skills as well as an emotional connection that sees personal value in doing things differently. The emotional connection is essential for people to take “ownership” of the customer’s problem and follow through with a solution.
  10. Well structured workshops are valuable to alter mindsets and provide skills. These should be implemented as early as possible to provide immediate ‘how to’ concreteness to the desired change in behavior. Workshop attendees who represented all lines of business and all levels were generally inspired by the VSC initiative. Train-the-trainer follow-on enabled them to reinforce their skills, train others and leverage the benefits for the wider group. Also, management workshops to evaluate their own VSC behaviors as role models were useful in presenting a common picture of VSC across the entire group.
  11. People at all levels need to understand that behavior change is difficult. It takes more time than expected to embed new behaviors in an organization, particularly those that require new skills as well as a new mindset. A strong ‘command and control’ hierarchy is present in many corporate support functions because of compliance requirements. It takes substantial and continued effort to break the “police” mindset to enable people to take customer initiatives freely and without fear. Initiatives emanatingfrom the lower levels in the organization need to be encouraged, nurtured and reported.
  12. Culture change can be effected more rapidly in smaller groups, particularly roles that are consultative and rely less on systems that may be unaligned to customer needs. This means that in large groups, the new culture mindset, skills and processes must be effectively taken into all of the small sub-groups as quickly as possible to have the greatest chance of making them stick.

A culture change that produces a customer responsive organization makes culture one of the most valuable assets of a business. It is a organizational capability that can and should be measured and the profit impacts assessed. The end result of this VSC transformation was annualized savings and benefits of $15 million after an 18-month period. These benefits increased as the customer culture became more embedded.

Interested to find out more about how to measure and manage a customer culture? Visit our resources page here.

How CFOs can use a customer culture to deliver $15m to the bottom line!

Internal Customer Culture

A lot of the discussion about building a more customer focused organization centers on the customer facing parts of a business. While there is no doubt major improvements can be driven by sales, marketing and customer service, the real turbo boost to organizational performance comes from support functions that creates a culture around their internal customers.

“If your not serving customers make sure you are serving someone that does”

 Corporate Support functions like Finance, IT and Operations have the potential for releasing huge gains to the business in terms of cost savings and profit improvement. How? By developing a culture where they see their internal stakeholders – that is those to whom they provide their services – as customers.

When they develop a “customer” mindset they think about the value (or lack of) they are providing. They stop delivering reports or services that have no value to their customers and focus on things that will increase value.

John Stanhope, CFO of Telstra, a $25 billion Australian telecommunications business set out to transform his Finance & Administration Group of 2500 people into a support group that would create new value, provide top service and be seen to be valuable by its customers. He painted a vision of what he called a “Value Service Culture” (known as VSC) in which he wanted all his staff to identify their internal (to Telstra) customers and deliver services of value to them. This journey from 2008 to 2012 was an outstanding success.

“We have delivered $15 million per annum in recurring gains from stopping non-value services and activities while creating more value in those services that were needed by our customers. This translates to an additional $55 million added to the value of our business.” – John Stanhope, CFO, Telstra Corporation, 2012.

An investigation by Telstra’s Finance & Administration group of estimated gains and savings conducted in 2010 showed annualized gains and cost savings of $15 million for 2009 representing added value to the business of $55 million.

These gains were derived from analysis of specific initiatives by:

a)    Credit Management acting to collaborate with Telstra customers to reduce bad debts, cost savings from less follow-up calls and longer customer retention periods.

b)   Risk Management & Assurance collaborating with internal customers through an education initiative clarifying compliance requirements and streamlined processes for reducing work for both parties. Cost savings from labor savings.

c)    Corporate Security and Investigations working with Telstra retail shops to provide better processes, follow-up and liaison with those shops most targeted by consumer fraud. Reduction of fraud yielded large cost savings.

d)   All finance and administration groups engaged in activities to reduce duplication and eliminate non value-add activities and reports resulting in measurable savings.

Care was taken to attribute only those gains and savings that could be aligned with VSC initiatives to do with understanding customer needs, providing greater value for customers, monitoring customer feedback and collaborating with customers to deliver the Group’s fiduciary responsibilities more efficiently. Later analysis showed these gains were continued over 2010 to 2012.

Stay tuned for my next blog post in which I will summarize the actions vital to Telstra’s VSC success and the lessons learned from this transformation experience.

The customer focused CFO

Congratulations to John Stanhope, recognized as this year’s CFO of the Year in Australia at the CFO Dealbook Awards for 2011 , an event sponsored by Australia’s professional accounting body, CPA Australia.

The CFO Awards recognize the achievements of the very best in Australian finance over the past 12 months.

There are a broad range of categories and specific criteria, with entries judged at a finalist and national winner level.

In John’s last year at Telstra it appears he is leaving on the top of his game. He has been instrumental in driving and leading positive customer focused cultural change inside the finance function. An initiative that has since been taken on by other parts of the business and has started to have an impact on customer perceptions of Telstra.

Telstra recently refined its efforts further with the creation of the Chief Customer Officer role and increased investments on improving service across the organization.

See more of John here in this video interview on the journey towards customer focus from a CFO’s perspective.

What legacy will you leave as CFO?