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April 2017
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WE INTERVIEW THE MOST DISRUPTIVE CIO OF THE YEAR
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WRITTEN BY: JOHN O’HANLON PRODUCED BY: KIRON CHAVDA PHOTOGRAPHY BY: JOHN HARRIS
INTERVIEW
TELEFÓNICA’S HIGH PROFILE CIO P H I L J O R DA N I S K E E N O N S A I L I N G : I N T H E L AU N C H E D I T I O N O F G I G A B I T H E D E S C R I B E S H O W H E CO N T I N U E S TO N AV I G AT E H I S B U S I N E S S T H R O U G H C H O P P Y S E A S A N D M U R K Y W E AT H E R TO I T S D E S T I N AT I O N
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P HIL JORDAN IS known in the Global CIO community as an agent of disruption. The European CIO of the year 2016 doesn’t come across that way; unfailingly affable and accessible, his demeanour is that of a benevolent uncle, and for someone with the future digital capability of a €40 billion organisation depending on his decisions, he is surprisingly relaxed. This belies intellectual rigour and the twin passions for IT and for communication that have marked his time as Global CIO of Telefónica at a time of yes, unprecedented disruption.
Maybe more than most industries, telecommunications service providers – or telcos – like Telefónica that used to be communications monopolies controlling fixed line networks in their own territories, have been shaken up by the internet. True, they quickly moved in to colonise the mobile space, and added services around TV and cable, but audacious upstarts like Twitter, Skype and WhatsApp have thrown such a large spanner into their traditional business model that they have all had to start transitioning to a new, digital model, and that has 7
INTERVIEW been a journey without maps. Telcos have been transforming with varying degrees of success, but it’s widely, if grudgingly, accepted that Telefónica is one of the leaders in the race to provide a fully digital, endto-end customer experience. Since Jordan took up his post in September 2011 it has developed a bold global IT transformation strategy. To set the scene, revenues from simply connecting customers to a fixed or mobile network have been hit hard and will continue to dwindle – future growth has to come from far more intuitive and collaborative relationships with customers, whether corporate or private. As Jordan told me when we previously met in 2015: “Of course networks have always been important to us and remain our number one asset, but IT has become mission critical because it’s driving our business to be digital in its DNA, creating omni-channel digital experiences and also creating worldclass virtual shared infrastructures right across the group.” The outcome for customers will be access through a single digital interface, wherever they want, for whatever they want in a personalised way. 8
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MAKING SENSE The CIO role has emerged from the shadows, says Phil, and there’s no doubt that in the last three years those CIOs who stay in the back office are missing the opportunity to lead their business through transformation. In his case he really begins to sound like Merlin at Camelot as the era of the ‘sense maker’ dawns. “I think digital transformation demands that the CIO become chief story teller and sense maker for the business. All the boundaries are blurring; people are confused, excited, but also bewildered. If everything is merging and connecting, they ask, what is our role? What do we prioritise?” The CIO who can make sense out of these uncertainties is a real asset to any business – but only if he or she understands that business to its core. While he wouldn’t claim to be the only person in the business with a broad vision, as CIO he is in a unique position to navigate through its complexities – and this is a highly complex organisation. “My role requires an understanding of both the business and of the technology. Technology
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without business is contextless, and these days, however well you understand the business, if you can’t see the opportunity of technology disruption, then you are a danger to it! As a CIO you have to corral people and lead them on a journey – and to do that you have to be able to communicate well.” Sense-making is not what he set out to do. As far as he remembers, he came into IT in the footsteps of his brother, who seemed to be making a good living at it, and because it looked easy! Starting out in the late 1980s as an operator on a big IBM mainframe for Clarks shoes has worked in his favour. “Now that I am a global CIO I find that people quite like the fact that I grew up from the IT shop floor. It has given me a good overall understanding of all aspects of technology, particularly how they relate to the business. Two things struck me right from the beginning. One was the modernisation impact IT 9
was already having and the potential it could have. The other was that I found a rare ability to talk about it in a way that was not too nerdy or weird and connected with business people. In whatever role I have had I have been able to find a way of communicating the approach, goals, challenges and progress, within the business and with IT people, and I think that it remains a very important part of my contribution in the role I have today.” 10
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Another place it comes in useful is at home. As a father of three, he doesn’t post on his LinkedIn profile that he is honorary Domestic CTO and head of technical support to three children and his wife. It’s a job that grows in significance as the family grows, and he wherever he is in the world he has to take regular support calls! Whatever path he had chosen one senses he would have made use of the same qualities. “Perhaps the
reason I have had some success in what I have done is that I am a sense maker by nature. I am pragmatic and practical.” Pushed further he admits that the sense making starts with his own process of rationalisation. “I simply can’t engage until it makes sense to me. Once I get it, I am very intuitive. I see the shape of the story, what the value is and how we might influence the business in the right direction I will really go with it.”
CREATING A LANGUAGE In pushing forward the digitisation of the business he pays tribute to the support he’s had from chairman and CEO José Maria Álvarez-Pallete López. “I believe in what we are doing. Sometimes my convictions are tested sorely, but I stick to them.” Being an outsider, an Englishman in a predominantly Spanish and 11
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Latin American environment, that support has been reassuring. “I explained early into the digital transformation process that I’d have to be so disruptive that I’d have to be prepared to be fired. José Maria has the same views about the need to be brave to lead real change and that gives me great confidence, the attitude that says we will do it or go down fighting.” It took him quite a long time to find the right engagement and language for digital transformation, he recalls. “Everyone understood we had to be digital, but wanted to know how and when that would happen, and how digital we are today. I gather from talking to CIOs in other industries that not many businesses have done what we did. I went out looking for a metric; something that would truly engage the board. Not all the board members have intimate knowledge of how the business really operates. To move to a truly digital world you have to get right inside the operation and really understand how your business works so we looked at
every process in every segment of our business in every market, to determine if each process, operation or customer experience was happening in real time and to what extent it was automated. We did the hard work of assessing that, then we rolled it up, and I am able to say now not only what our digital capability is today but where it will be in a year’s time and in two. “I think we have been able to create a language that the board can understand – a language that is communicable so we can describe our journey to the external world, something we can track, and something that targets investment. That is a good example of sense making. Today I can point to which geographies, segments and and processes we are not digital enough – to let us make sure the investment is focused in these places. That is how I can bring value to the business as a leader, taking all these inputs, making sense of it and driving a journey of change that is no-regrets.”
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DIG
WHAT WE EXPECT FROM Of course there was no way the young Phil Jordan could have foreseen any part of what he is doing today. January 1 1985, he points out, was the date of the first public phone call made on a mobile phone in the UK: today there are 86 million connected devices, driving, dictating, controlling and ultimately enhancing people’s lives. The world has woken up to digital but a large section of business still doesn’t get it. Many larger enterprises indulge in ‘digitalwash’. “It makes no sense to disguise yourself as a digital business. Customers will quickly see through businesses that put lipstick on the bulldog and fiddle around with their online channel to give the impression that they are a digital company.” A complex service business like Telefónica cannot afford to do this. As customers engage they won’t be slow to pick up that the experience is not end-to-end, not real time or not automated. “Amazon is an excellent example of a digital business. It’s super-easy to engage, quick, intuitive, frictionless, painless. Speaking as a consumer, it is all the things I 14
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want. I have never spoken to them, never had cause to ring them, I can do anything I want to, where I want, on whatever screen I choose.” That kind of experience creates trust, and that level of trust is what he want Telefónica customers to have. Whilst admiring Amazon, he doesn’t make too much of the comparison with the ecommerce giant, which hasn’t the complexity, the 90 year history or the large fixed and mobile infrastructure and data centre estate to deal with. However, end-to-end digital is vital to both. Sixty million Telefónica customers in seven countries are already experiencing a tranfromed experience, with millions more to follow in 2017. Pressed for
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an example he chooses an unlikely one. Not many people know much about Moquegua, small town more than 700 miles from Lima, but it was selected one of the first Peruvian locations to migrate. “Naturally, we select where to start migrations to minimise risk now it’s great to think of our customers in Moquegua having a more Digital experience
than many more major cities.” The majority of customers in Latin America will have migrated by the end of this year and the digital transformation will be complete in the current strategic planning horizon. This will enable the company to leapfrog competitors in its market, and enable the next priority, the movement from digital to data. 15
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DIGITAL TO DATA
DEMOCRATISATION Networks, IT and digital services make up the company’s first three “platforms”. Telefonica now describe the fourth as the customer’s data and insight, which Telefónica is preparing to put back into the hands of customers. As a business Telefónica has accrued a tremendous amount of data from its 341 million subscribers, but that data has traditionally been used to build and optimise networks. Jordan explains: “Telcos have access to millions of bits, and historically this was mostly used to build and optimise networks. There’s so much richness about a customer’s life in that data, so just think what could be achieved by liberating and using the data in partnership with our customers to create the insights and intelligence that will provide a secure but predictive, personalised and context sensitive experience.” To fully realise that vision, the entire world would have to change, though. He worries that political and regulatory change will put the brakes on change. “We need policy makers to be the most progressive they have ever been 18
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and I worry that the political landscape is moving the other way. We seem to be seeing more fragmentation, isolation and protectionism precisely at a time when this digital world need progressive law making that is not bounded by geographical boundaries. Artificial Intelligence (AI) will become mainstream in the next three years. We need to decide ethically and legally what role it will have in thousands of different industries and applications. It makes no sense to do that in isolation. We should be getting together and collaborating on what the role of technology will be as the virtual and ‘real’ worlds blur and decision making moves from being rule-based to machine-based.” Jordan worries that the space between the regulatory and digital worlds that exists today will get wider as the potentialities of data, for good or ill, expand. “It is terrifying that there is such a big gap between the opportunities technology can offer and our ability to lay down a framework for it.” The next phase of what he calls the digital industrial revolution is already upon us. Every sector will have to engage with it, and here he sees a golden opportunity for Telefónica.
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“WE CAN APPLY SOMETHING THAT IS EASY FOR US – CONNECTIVITY. WE WILL ALWAYS HAVE A PLACE IN THAT VALUE CHAIN BECAUSE WE PROVIDE CONNECTIVITY. WHERE WE HAVE CLOSE ASSOCIATION WITH A BUSINESS IN THE CONNECTIVITY SECTOR WE WILL GO BEYOND AND PROVIDE THEM WITH THINGS LIKE CUSTOMER PRIVACY, DATA MANAGEMENT AND CLOUD. WHERE WE DON’T WE WILL BE THE CONNECTIVITY PROVIDER” 19
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DISRUPTION IS A DANGEROUS
GAME Jordan makes a clear distinction between disruptive technology, which is just another tool at the end of the day, and the process of disrupting a business through technology. It’s only in the latter context that he would like to be considered as one of the more disruptive CIOs in the IT industry. “What I’d call disruption is challenging the business to be something different by deploying technology. The scale of the change I have been driving for some time now among the boldest in the telecoms industry. Disruption is a dangerous game. The successes are 20
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remembered but there are hundreds that failed and got fired. My personal contribution as a leader in disruption tends to be in sense making, storytelling and challenging inertia.” The advice that other CIOs would be wise to listen to from the European CEO of 2016 would start with the need to know and understand the business at least as well as the others round the table. “IT is the only function that touches all parts of the business. CIOs who just run IT and understand technology are not remotely transformational given the challenge we have all got. I’d
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S suggest they engage the board on the need and the destination of digital transformation, define clear actions and clear KPIs, and then show progress. Digital destination, definition and delivery, balance all three or risk getting fired - this is the dangerous game for CIOs in 2017.” When he gets the chance, Phil Jordan loves boats and sailing. It has some valuable lessons for a CIO, he believes. “As I see it, one of my key roles is to hold the business on its Technological journey and not allow short term tactical headwinds to blow it off course.” You need to keep your
destination firmly in sight, even when reaching it means taking in a different direction. Without conviction as to the destination, the tack will become its own end. In his work for Telefónica he has had to do a lot of tacking, and explain an apparently erratic course even to his own team. “In the blurred world I have been talking about it would be great if there was a GPS for business evolution, but don’t believe the consultancies that tell you they have one – it’s all about team work, reading the environment, making good decisions and sometimes, sailing close to the wind.” 21