By James Penn
An overwhelming 92 per cent of respondents to the 2017 Mood of the Boardroom Survey predict that their company will change more over the next five years than it has over the past five years.
Already 76 per cent of the CEOs consider their companies to be "technology companies."
One director referred to this as "The Great Acceleration" - comprising climate change, technological change, and social change. Another said that "if New Zealand ever had an economic moat, it certainly does not now."
"The move to customer centricity, the use of data, the emergence of artificial intelligence, and the need to increase organisational clockspeed will be areas of key strategic focus for most companies."
Spark Managing Director Simon Moutter suggests this is because technological change is now "exponential and combinatorial".
This theory suggests that each new technological leap is an order of magnitude larger than its predecessor, and is amplified in its effect by other technological developments occurring alongside it.
Spark itself is perhaps the best embodiment of this.
Moutter describes his business as a "digital services company" now -- quite the contrast from the telecommunications descriptor that would have been applicable in years prior.
"We're endeavouring to navigate from traditional telco to a digital services company," he says.
Asked to look five years into the future, Moutter says "Spark's emphasis is on not just connectivity; our interest is in providing valuable services for individuals, families and business customers that make their lives easier, add some value to them, or improve their businesses."
Crossing the line
Respondents to the Herald's CEO Survey were also asked to rate the importance of various emerging technologies to their ability to remain competitive over the next three years. On a scale of one to 10, technologies such as artificial intelligence, machine learning, the internet of Things, automation, and mobile and cloud computing all rated between 6.5 and 8.1 on average.
A common theme was the idea that there exists a threshold for many of these technologies, after which they become far more widely applicable and cost effective. Many indicated that we are close to, or perhaps have crossed, that threshold.
Simplicity's Sam Stubbs was one of those: "Much technology considered expensive today will be almost free as SaaS (software as a service) applications within 5 years."
"The trick will be the utilisation of this as easily as possible, while choosing which ones to focus on for more sustainable competitive technology," says Stubbs.
"Picking the right technology to focus on is more important than trying to stay on top of, and employing, all technologies."
Carolyn Luey, MYOB's GM Enterprise Solutions & New Zealand, cautions "the most important thing is how we take people with us and ensure everyone can benefit from New Zealand's tech future".
This reflects a broader sense among executives that while technology may will affect the nature of work, the hope is that it frees up employees to perform higher value tasks. That process appears well under way at Spark. Technologies such as chatbots and virtual assistants are now being utilised to improve the customer experience and streamline internal operations for Spark's core services.
"A large portion of broadband monitoring, fault detection and workload initiation is all done by a machine learning software system today," says Moutter. "And it works extremely well.
"We have robotic chat services coming online. Those types of capabilities have come past the line of where they're going to become pretty normal, versus only applied in very specific areas and only of marginal benefit."
Moutter says this is "less about eliminating jobs, but more about impacting a lot of jobs to a significant extent; and therefore requiring for the human to adapt to the higher value-add elements of their roles today."
A Lightbox Moment?
In pursuing the "digital services" vision, Lightbox is one example of where Spark has broadened its offering, introducing a television on demand subscription service. But Moutter hints at a shift in strategy for the service as it attempts to deliver value distinct from that offered by the major global players such as Netflix and Hulu.
"We do not believe Lightbox can continue to look just like Netflix. In the end, we will not win by competing head to head against Netflix.
"We've used the fact that we were first mover and have gained a good position to get a start," says Moutter. "But you'll see us adapt, now that we've built an audience, to try to position as a different business."
The Spark boss said the company plans to work with content partners in a different model where "we're effectively facilitating their direct access with their own brands and content via our platform."
"We have to try to create a different offering that has appeal locally and appeal to other parties who don't want to work with Netflix," Moutter explains. "And Netflix is a good business: we're a partner with them too. So we see anything we do as an 'as well as Netflix strategy'.
"Nothing we do will ever dissuade a customer from having Netflix. But can we persuade them to have us as well?"
Spark also packages Spotify with many of its mobile plans, has spawned smart home security brand Morepork and data analytics firm Qrious through Spark Ventures, and helps businesses to integrate crucial new technologies such as cloud computing.
"Increasingly, we're now starting to invest in our own virtual assistants, machine learning capabilities," says Moutter. "We expect to be the market leader in enabling businesses to embrace those technologies."
As the venture landscape of Spark All change for the future
We're now thinking about agile at scale. What if we made that our main operating model? [It would be] an almighty leap.
Simon Moutterdeepens, this gives the company the ability to develop digital services capabilities internally before retailing the services to other Kiwi businesses looking to keep pace with technological change. "We're learning on ourselves," he says.
Qrious' first customer brief, for example, was analysing data for and supporting the growth of Skinny Mobile, Spark's barebones mobile brand. It was only after developing those capabilities internally that there was a value proposition to be offered to external parties.
Qrious has recently acquired and absorbed another analytics company, Ubiquity, and is now "hitting around a million dollars a month in revenue.
"Most large organisations know they've got the information," says Moutter. "They just can't get it out, they can't put it into a framework where they can manipulate it, and they can't get it joined with the data they've got in other places, let alone external data."
Remaining competitive in times of change has management implications as well. Moutter says Spark is currently considering whether to roll out agile working practices across its entire business.
Agile methodologies involve devolved accountability with self-managing teams, launching prototypes and minimum viable propositions as early as possible, before iterating based on customer feedback.
Beginning with Spark Ventures, the company has begun to apply the methodology more widely. There is now a Spark customer lab, where customers sit beside coders and provide real time feedback as products are fine tuned: "We're now thinking about agile at scale. What if we made that our main operating model?" It's a move Moutter says would be "an almighty leap".
Protection of the areas where the innovation is most likely to occur is also important.
"One of the challenges for large businesses in growth is that when you have a $3.5 billion revenue line, everything new you start is de minimis," says Moutter. "How do you give it organisational attention?"
Investors and other internal decision makers often have reason to be sceptical about how even a fast growing internal venture can actually matter much in the context of a major company. The revenue growth might be impressive in the context of a start up but seem irrelevant to some in the context of Spark.
"It takes a lot of work, and as the CEO I have to do a lot of protecting of new ventures. I have to push people to stop trying to interfere or shut it down. You've got to give them room to grow."