The company has embraced its new focus with a passion, says strategy leader Rod Snodgrass
Spark is strongly focused on its "Digital First" strategy with a firm ambition set to be a winning business "inspired by customers to unleash the potential of all New Zealanders".
It's a major shift for Spark - but one which falls naturally out of the transformation process that chief executive Simon Moutter put in play when he took up the reins at the-then Telecom in 2012.
When Moutter announced the new strategy earlier this year he said his goal was to create New Zealand's leading digital services platform.
He plucked Rod Snodgrass who was heading Digital Ventures (described by some as an internal "skunk works" to lead cutting-edge change) to head up the overall Digital First strategy.
Snodgrass had earlier taken a "more provocative view" on what was necessary for Spark to keep evolving, at a time when its legacy business was eroding. His concern was that as the company moved to the next level it might just simply digitise the current business.
In an interview with the Herald, Snodgrass said he put the case to Moutter.
"What we really needed to think about was using digital in a very disruptive way to recreate our business models so we are fit for the future."
It's a focus that found favour with the Spark board when the executives outlined why the Digital First strategy was imperative.
"We are living in digital times," was the message. A raft of metrics was chosen to make the point clear:
•Apple paid more to app developers in 2014 than Hollywood made at the box office;
•Expedia gets 90 per cent of its revenue from apps; Salesforce gets 50 per cent and eBay's share of revenue from apps is a whopping 60 per cent;
•80 per cent of consumers are more likely to recommend a brand that offers a simpler-magical experience.
The executives talked about how experiential competitors were winning with digital disruption. Among them was Netflix which had changed the market twice - first through convenient physical home delivery, then through OTT (over-the-top content or the delivery of video and audio via broadband without the involvement of a multiple-system operator in the control or distribution of the content) and is now doing it again with analytic driven programming and digital delivery.
Uber, which has re-imagined the taxi experience making it better for both consumers and drivers, was also cited. And Amazon.com which combined analytics and a one-click buy, was now bigger than physical retailers and had totally rewritten categories like books.
"You either get disrupted or you disrupt," says Snodgrass. "We needed to disrupt ourselves before someone else did."
The digital businesses were growing faster and many were now bigger than their non-digital competitors, as the compelling financials showed.
In essence, what Moutter and Snodgrass proposed was the fourth phase of Spark's transformation process. The first had been launched in August 2012 when Moutter returned to Telecom, drew a line under broadband and said the company needed to win back mobile where it had been conceding market share; it then re-engineered the core platform, stripping out decades of complexity that had been wired in.
The third phase was to transform cost structures and assert financial disciplines.
What was evident to the Spark executives was how the digital businesses focused first and foremost on magical customer experiences, changing the way digital is delivered to the consumer.
Snodgrass points to Air New Zealand as a traditional business which has done a "fabulous job" in this area.
"We are going to look across the group to work out where we go first," he says.
"It's a little like Air New Zealand. They built an app and it got better and better -- and my relationship with Air New Zealand is awesome. It's got better and better.
"They've used data and digital to do that and they've created an experiential model that's greater than their peers."
Much of the details of what Spark is evolving is under wraps. But asked for a concrete example of something that might evolve from the experiential focus Snodgrass's teams will adopt, he replies "Why can't you order broadband fibre like you order an Uber taxi? I can't see any reason why you couldn't, other than a bit of design and build.
"We're going to look across our customer journeys by products and we're looking for pain points or frictions for customers that we can move by applying digital capabilities at pace."
Snodgrass acknowledges the digital-first approach may be somewhat "confronting" for Spark staff in the initial stages.
"But I'm pretty confident there is a lot of innovation in our workforce, particularly in process. Staff are awesome at finding fixes to things."
Some core principles have been adopted, among them: obsess on the customer experience; reimagine the business model from the customer back; challenge everything; set quite unreasonable targets internally; digital best practices; acquire and ring-fence key talent; follow the money.
Inevitably there will be the occasional epic fail but Snodgrass says Spark has embraced Digital First with a passion.
"New Zealand should do the same."