How Creative Destruction Transformed Telecommunications

Dan sits down with CEO Forum Magazine to discuss how the Internet and digital world were formed, as well as the direct impact this development will have on the telecommunications industry moving forward. The following was featured in the April edition of CEO Forum Magazine. 

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Robert Reiss: Prior to becoming CEO of Sprint, you were CEO of AT&T Wireless and witnessed firsthand the formative years of digital. Can you share some inside-the-scenes historical perspective?

Dan Hesse: You mentioned AT&T. It was back in the early 80’s and our main business back then was voice telephony. That was the core business – remember “reach out and touch someone?” But during that period, we were given two new technologies to start using ourselves. One was email. This was long before the internet – an “intranet” called AT&T Mail. The second was voicemail, but not from the point of view of you call somebody, miss them, and get their answering machine.
The primary new application of voicemail was allowing the user to record a message and send it through the network. These new applications were moving us away from analog, using digital bits, both email and voicemail, to disrupt the core business. The first big “aha moment” was the ability to shift time. If I wanted to send somebody a message at midnight or 1 o’clock in the morning, I didn’t have to worry about waking them up. I could send and receive messages whenever I wanted to.
Time shifting is now a big deal in all types of media. For example, it has changed cable television. If you have a DVR or you get your programs over the internet or overthe-
top, you watch when you want to watch. You create your viewing schedule, not the schedule of the TV networks.
But what was so instructive for me very early in my career was the notion of “creative destruction.” Our primary business was real-time voice telephone calls. We were coming up with new concepts that were going to compete directly with the core business. What made these time shifting tools even more useful was mobility, where place, which had been so important in our landline world, lost relevancy. As soon as I got a car phone in the mid-80s, I learned how much more powerful voicemail could be because place was no longer important. I used voicemail to send and receive messages, while in my car (hands free, of course!). It used to be time and place were critically important. Now, time wasn’t important and with mobile phones, place wasn’t important either. The real game-changers I learned about early on were time shifting, place shifting, and the power of creative destruction.

Consistency is the Key to Quality Improvement in the Digital Age

Reposted from Dan Hesse's LinkedIn series on Executive Leadership and Corporate Responsibility. The following was published May 12, 2016. 

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The digital world, with its real-time customer feedback, the ability for consumers to share their positive and negative experiences with others, and customers with many competitive choices at their fingertips via their cellphones, even while shopping in a bricks-and-mortar store, make quality and customer satisfaction more important than ever.

But improvement in quality and customer satisfaction can only be accomplished with consistency of priority and strategy as opposed to a constantly-changing agenda and “program of the month.” Chaos is the enemy of improvement.

To learn more about consistency’s transformative role in business and learn why quality costs less, please see this round table discussion in Forbes (Quality Shifts From Measurement To Driver Of Innovation).

Great Customer Service Costs Less

Reposted from Dan Hesse's LinkedIn series on Executive Leadership and Corporate Responsibility. The following was published September 10, 2015. 

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There’s a widely-held belief that it’s expensive to provide customers with superior service. In my experience, the opposite is true. In fact, Sprint spent $2 billion less per year for customer care when it reached the top of its industry’s overall customer satisfaction rankings than it did when it was at the bottom of the rankings.

Companies owe it to their customers and employees to provide great customer service.  A strong service culture can create a virtuous circle between employees and customers, engaging everyone in the firm in customer service improvement, not only the people on the front lines.

In this brief article entitled Great Customer Service Costs Less running in the current CEO Forum magazine, I discuss the six-point plan that took Sprint from “worst-to-first.”  According to the prestigious American Customer Satisfaction Index, when Sprint reached the #1 spot, Sprint was the only company that they had seen go from last place to first place in its industry, and Sprint was the most improved U.S. company in overall customer satisfaction across all 43 industries studied from 2008-2014.

The six steps Sprint relentlessly followed were to:

1. Align Compensation and Rewards: Sprint aligned the compensation of every employee in the company around the same metrics, which included customer turnover (churn) and the number of calls to customer care.  
2. Place the customer experience first on the agenda: The agenda of every Operations Team meeting began with churn and the number of calls to customer care.
3. Perform root cause analysis: Sprint collected and analyzed data from customer calls to identify the root causes of customer dissatisfaction.
4. Hold the right organizations and people accountable: The customer care organization is usually not the cause of customer dissatisfaction, but often, inappropriately, they’re held accountable for customer experiences they don’t control.
5. Assign strong project leaders: If you don’t assign strong people to lead the projects, the organization won’t think customer service is important.
6. Simplify the business: It is not simple to simplify, but customers crave, and they’ll pay a premium, for simplicity.  Complexity creates more reasons for customers to call care, and complexity makes it more difficult for care reps to solve problems.

If you’re so inclined, please clickthrough to read more on these six steps and key factors in providing great customer service. I invite you to share your ideas on this important subject with me.

Great Customer Service Costs Less - CEO Forum, Volume IV, Issue 2, 2015

A CEO Worth Emulating

This article, reviewing Dan Hesse's corporate leadership, originally appeared on Talent Zoo's Digital Pivot blog. Published January 2013. 

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As someone who grew up watching a parent run a business, I’ve always paid attention to CEOs who rise to the forefront of media attention. Many of them, like the revolving door of those unfortunate souls in charge of RIM, incur nothing but a growing disappointment in heads of major corporations and a concern for the future of our country.

However, Dan Hesse, CEO of Sprint, long ago earned a place in my heart. Although Sprint may not be the chief carrier in the nation, his manner of running a business is an inspiration to any current or aspiring entrepreneurs.

While other major cell-phone carriers remain faceless corporations, whose customers continually have nothing but ill to speak of them, Sprint has featured Dan Hesse in its commercials for years, a move that gives consumers a name and a face to associate with their cellular provider. This decision alone stands head and shoulders above the choices of other major carriers, who hide in the shadow of their brand and never emerge to address or appreciate their customer base.

Hesse has even, at times, invited customers with complaints about their cellular service to email him directly. Prior to that, when it became apparent that Sprint customers were increasingly dissatisfied, Hesse took steps to ensure that Sprint rose from having one of the worst customer service departments in America with whom to deal to having the absolute best.

Coming from a very technology-proficient family, and being a person who can occasionally be hard on mobile devices, I have personally been a thorn in Sprint’s customer service department at times, but have always had my issues resolved quickly and in the best way possible for all parties. If more CEOs truly took the time to listen, sincerely, to customer complaints, it would surely do wonders for the economy.

...Click for full article. 

The Business Impact Of An Outside-In Perspective At Sprint | Forrester

This article, chronicling Dan's customer service efforts at Sprint originally appeared on the blog of Forrester magazine. Published May 2012. 

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Sometimes a CEO takes the reins at a company that’s in such great shape, I can’t help thinking, “Wow, it must be great to be that guy!”

And then there’s Dan Hesse, CEO at Sprint. Given the shape that Sprint was in when he got the top job in 2008, I was thinking more along the lines of, “Wow, he must be working off a karmic burden!” That’s because back then, the company had the lowest customer satisfaction ratings of any of the major wireless carriers. As a result, it was bleeding cash from high customer care costs and lost subscribers.

Faced with this mess, Dan decided to focus on systematically improving the quality of Sprint’s customer experience as a way of improving Sprint’s bottom line. We were so impressed by his efforts that we included a case study about Dan in Chapter 2 of our upcoming book, Outside In: The Power Of Putting Customers At The Center Of Your Business.

The book won’t be out until August 28th, but you don’t have to wait until then to get a sense of how effective Dan’s efforts have been. That’s because on May 15th, Hesse gave an address at Sprint’s shareholder meeting, and he had this news:

• Sprint now has the highest overall customer satisfaction rating among all major US wireless carriers. Yeah, that’s right — it went from distant last to first, according to the American Customer Satisfaction Index.

• As a result of eliminating the customer experience problems that fueled ridiculous amounts of contact center traffic, Sprint took its customer care costs down from $3.7 billion per year in 2008 to $2 billion per year today. That’s a savings of $1.7 billion per year from improving customer experience.

• Improved customer experience paid off in terms of customer acquisition and retention as well as cost savings: Sprint has now had six consecutive quarters of adding 1 million net new subscribers per quarter.

...Click for full article.

Sprint CEO Dan Hesse's plan to fight AT&T and Verizon: 'doing the right thing' | The Verge

This article detailing Dan Hesse's corporate strategy originally appeared in The Verge. Published August 2012. 

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"At Sprint, we describe it internally as being the good guys, of doing the right thing," he said today. That moral component pervades many of the PR-friendly activities Sprint engages in, from eco-friendly recycling programs to distracted driving prevention, but it also, Hesse says, informs what would otherwise seem like calculated business decisions like continuing to offer unlimited data.

The topline example is Sprint's place in the American Customer Satisfaction Index, which since Hesse's four-and-a-half-year tenure as CEO have gone from worst to first amongst carriers. Hesse says that "doing the right thing" when it comes to better customer service not only makes customers happier, but saves the company money: "Customer care costs are roughly half of what they were four and a half years ago."

While Sprint is making some headway in customer service and its cash position, that's not to say the company or its CEO has illusions that everything is great, "What you’re not going to see around here are any mission accomplished signs," Hesse says. Amongst the reasons Sprint is struggling is the vastly more powerful and entrenched competition it's up against: AT&T and Verizon.

...Click for full article.