Spark chair Justine Smyth. Photo/Supplied
"Today's companies need constant reinvention to stay relevant", says Spark chairwoman Justine Smyth. She says it's no longer a matter of going through successive cycles transformation.
"We've decided as a company to centre ourselves on the customer. We aim to be completely agile to deliver whatever the customer demands from us. That is how we will win."
Spark already has impressive runs on the board when it comes to adapting. In 2011 the company was still called Telecom New Zealand. Its performance was poor when benchmarked against other telecommunications companies around the world. Now it has moved to the top rank.
At the time, all telecommunications companies faced external disruption: they still do.
Telecom also had to deal with structural separation after demerging the Chorus business.
That was disruptive. It moved from a traditional telecommunications infrastructure role to a retail service provider.
Smyth says Spark is the only telco that has moved from being an integrated incumbent to a separated business. It's a regulatory change not seen anywhere else in the world.
That change meant reimagining the entire enterprise. It was a management challenge on a scale not seen before in New Zealand. The numbers tell the story and act as a scorecard.
Between 2012 and 2017 the organisation's revenue dropped by a billion dollars. Yet over the same period the EBITDA (Earnings before interest, taxes, depreciation and amortization) remained stable.
The company's net earnings increased by $100 million. Its dividend climbed 25 per cent and the share price is up more than 50 per cent.
Smyth says because of the different structure it doesn't make sense to compare Spark with overseas telcos. Yet, from a shareholder return point of view, Spark is among the world's best performers.
She says the revenue decline came as the company lost fixed-line phone customers: "We had to make that up by selling other services, such as cloud computing. It meant we had to change the mix of what we do. But also, we had to take out cost along the way.
"(CEO) Simon Moutter has led comprehensive change in terms of resetting the business across the board," Smyth adds.
"There's been a strategy transformation, a technology transformation and a cultural transformation. It was any one of those things, it was all of them. We've made some bold decisions along the way."
Spark has made a conscious strategic shift away from being a traditional telecommunications company with some international interests. Today it is a New Zealand-focused digital services company.
Along the way came that name change and the investment in what it sees as future growth business such as the cloud, data analytics and online television.
A less visible move was the way it re-orientated the business towards mobile communications.
Smyth says the company invested significant sums in spectrum and mobile network assets: a total of around $700m over that time.
Spark's signature move was to outbid rival Vodafone for the last slice of the important 700 MHz spectrum that became available during the auction of frequencies after the analogue television service switched to digital transmission. The 700 MHz spectrum band is particularly useful for delivering wireless data.
Spark paid $158m to take the largest share of the spectrum. There was also a major investment in building mobile towers to use the extra capacity gained from more spectrum.
Smyth says: "It was important for us to become market leader in terms of mobile. It also gave us the capacity to allow us to do what we want to do with mobile. It helped pave the way for our wireless proposition".
In the past 18 months Spark has moved around 100,000 customers from the copper network to fixed wireless broadband services.
Alongside these investments, it has focused on reducing the cost of serving customers.
This meant upgrading all the IT systems to improve the way it delivers digital services.
To make this happen Moutter had to change the company. It went from what Smyth describes as a "slow, defensive culture to one more centred on the customer and focused on winning."
Though this is already showing up in the company's financial performance, Smyth says the transformation work so far has been about making the business match-fit. "You don't get this transformation unless you have a skilled leader at the top."
Though technology and business change is a given, there's also pressure from customers. Their expectations and behaviour is moving at least as fast.
"It's exponential. We know that every two years data consumption doubles, that's down to customer demand, but telecommunications revenues stay flat."
There's also a change in how customers want to interact with the business. Spark uses automation and other technologies to put more power in the hands of customers.
"That's what they want," Smyth explains.
"Customers want to do more things for themselves. They don't want to rely on talking to people to get them to do things for them."
The customer experience has moved centre-stage.
"No business is going to survive if it doesn't keep pace and understand how customers want to interact and what they want," Smyth says. "It's vital to stay relevant."
When it comes to staying relevant Spark faces a challenge its rivals and other large local technology-centred business do not. It is New Zealand-based, there's no overseas head office.
It's important for the company to stay connected to global trends and developments.
Smyth says: "We do that through the board and management having global connections.
One director, Paul Berryman, is Chief Technology Officer of PCCW in Hong Kong. He is on the board of the organisation setting the standards for 5G mobile.
"Spark's management liaises with companies like (US telecoms giant) Verizon to tap into their ideas. We've formed international partnerships with the likes of Spotify, which gives us an ability to learn and share information.
"We're not disconnected from what's happening globally."