Point of View May 2004

Will it be evolutionary or revolutionary?

Making change happen at mobile operators
By Tom Barry and Tunc Yorulmaz

A majority of mobile operators today appear to How to go about making the necessary changes is
have settled for tactical optimization while a dilemma facing every mobile operator. But, as is
waiting to see if a major threat would emerge to almost always the case, it is best to start at the top.
justify stronger action.
The impact of leadership styles
This status quo cannot suffice for much longer.
Major threats such as new data services, cut- Research Accenture conducted among CEOs at
throat competition, fickle customers and regulatory several Groupe Spéciale Mobile operators in major
pressures are gathering into a perfect storm that European mobile markets enabled us to identify
will force operators to take action to survive. four key leadership types (see Table 1 and sidebar
Accenture believes speed to reorganize will be the “How CEO leadership styles emerge”):
main differentiator in terms of achieving higher • CEO chameleons, the largest group, have adapted
performance and total return to shareholders for to the current environment and are waiting for
mobile operators. Furthermore, the reorganization the next pick-up in the market.
will be a painful, challenging and complicated task. • CEO captains differentiate themselves from the
chameleons by focusing on sales and future
revenues rather than cutting costs.
Table 1. Four leadership styles in European mobile industry
Both the captains and chameleons take an
evolutionary approach to management.
Captains (20 percent) Cavaliers (25 percent)
Revenue • CEO cavaliers and CEO chainsaws, the
• Mostly external CEOs with • Mostly external and
enhancement
(Increase average
telco/IT experience non-telco CEOs revolutionaries, are more limited in number within
• New orientation for innovation • Expect to see more CEOs
revenue per user) and segmentation taking this route in future
the industry and tend to focus on revenue
enhancement rather than cost cutting.
Chameleons (45 percent) Chainsaws (10 percent) Accenture understands that determining how fast
Delivery
• Mostly, CEOs promoted internally • Limited popularity to change is complicated and is dictated by the
efficiency • Limited number of bold • Avoidance from
(Decrease cost base)
moves with increments the establishment leadership style of the CEO. Our research shows
that most CEOs prefer an evolutionary approach.
Evolutionary Revolutionary But is that the one most likely to lead to higher
(Limited change at (Major change at
a slower speed) a high speed)
performance?

Source: Accenture Industry Survey, 2004. Sample size includes approximately 20 European mobile Evolutionary change
operators from different countries and varying market positions. Note: The subjective nature of CEO
categorization and lack of relevant data on certain mobile operator performance had an impact on
statistical completeness. Therefore, the percentages used in this article should not be taken out of their CEOs attempting an organizational transformation
original context. have to select the right pace for change, and face
 How CEO leadership styles emerge
At an anecdotal level, Accenture categorizes the
most influential factors or preconditions that
tend to impact a CEO’s preference for a certain
leadership type (see Table 1) into four areas:
• Operator’s market position: Market leaders
select CEO captains from other telecom
companies rather than promoting internally. This
could be explained by boards’ increasing focus
on appointing individuals who can make a
difference to the business, and who are not
burdened with internal politics.
• Internal versus external promotion: Both CEO
captains and CEO cavaliers tend to come from
external sources. An interesting observation is
that while captains have usually gained their
experience at telecom and IT companies,
cavaliers bring a fresh mindset from widely
varying industries such as media, cosmetics and
fast-moving consumer goods.
• Burning platform: As you might have
recognized, our perspective on CEO chainsaws
was restricted by a relative lack of information
and real-world examples. Firstly, such CEOs are
currently quite rare, and secondly, our survey
included a very narrow sample size of only two
CEOs for this category. As you might expect,
both of these CEOs assumed their position
following a management crisis—with one being
tasked with curing the hangover from the
telecom bubble and the other brought in to
accelerate a disappointingly slow market entry.
• Operator’s history and culture: Operators which
are spin-offs from incumbents mainly have
preferred to fill the top position by promoting
internally. Such companies tend to offer the job
to an external candidate only if they are looking
for a captain. Another striking tendency we
noted was that incumbent CEO chameleons
were mainly internal promotions, while mobile-
only operator chameleons came predominantly
from other companies.
Most of these factors are determined before a
CEO accepts the job. To a significant extent, the
CEO’s future path and—up to a certain level—his
potential leadership style are bound by these
complex preconditions. What differentiates the
stars from the rest is how they manage to
redefine their own role as well as their business
during the journey.

the dilemma of going for a revolutionary or evolutionary
approach. The two main factors influencing these
decisions are:
• Burning platform: Existence of a major issue that requires a
turnaround.
• Establishment power: How strong the existing function
heads are, compared to the CEO.
As we mentioned, our research shows the majority of CEOs
have decided to move at an evolutionary pace, reflecting the
absence of a burning platform and the presence of a very
strong establishment. An evolutionary approach starts with a
small benchmarking initiative at the selected area, building a
platform for further changes. This initial step is generally
followed by a targeted reorganization to send a strong signal
to the establishment.
To date, revolutionary CEOs generally have delivered
relatively better corporate performance than evolutionary
ones, especially when they concentrated on revenue enhance-
ment. Only time will tell whether they can sustain their
momentum. But their achievements do present a lesson for
evolutionary CEOs that—at least in some instances—there can
be clear benefits in seizing the initiative and taking a firm line.
Whether evolutionary or revolutionary, mobile operator CEOs
are at a performance crossroads. Accenture believes CEOs can
use the relatively calm period immediately ahead to assess
performance goals and build and reshape the business.
This Outlook Point of View is one of three related articles examining the
state of executive leadership in the European mobile industry. The other
articles in the series are “The first half is up: Evaluating leadership styles and
performance in the European mobile industry” and “Achieving higher
performance at mobile operations: A CEO’s challenge.”

The chances of success are greatest if the reorganization is
accompanied by process changes underpinned by strict
performance management. If these initiatives fail, then the
reorganized functions may start to slip back into their old
habits—basically doing old things under a new name.
Evolutionary CEOs understand and show respect to the
power of the entrenched establishment. They take their time
to test the limits of the establishment’s power, and prefer to
work with it rather than against it. Though this is time
consuming and explains why most CEOs have been relatively
slow to make a major impact, it is a safer and more secure
way to resolve issues—at least in this industry.
Or revolutionary change?
On the other hand, revolutionary CEOs generally have the
luxury of a burning platform to face down resistance to
change. In our survey sample, all of the CEOs who drove
quick and sweeping restructuring originally had been
brought in as turn-around specialists. This allowed them to
confront and undermine the establishment, and make
appointments without worrying about the reaction elsewhere.
The main challenge revolutionary CEOs face is lower morale
and the migration of critical workers out of the company
in the wake of their leaders. So revolutionary CEOs are
usually accompanied by very strong human resources and
staffing teams to enable them to take and drive through
tough decisions.
Tom Barry, managing partner-Accenture Wireless industry
group, Europe and Latin America, can be reached at
tom.barry@accenture.com.
Tunc Yorulmaz, senior manager-Accenture Wireless industry
group, can be reached at tunc.yorulmaz@accenture.com.
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