Telstra's Great Leap Forward

Telstra's transformation is a leadership tale with fundamental lessons for business worldwide.
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NEW YORK (TheStreet) -- Throughout 2010, American telecommunications companies have been touting next-generation mobile networks they say represent leaps and bounds forward in speed and reliability. Sprint's (S) - Get Report new system, for example, which is being rolled out in selected markets, allows voice, video and data information to reach mobile phones and other digital devices at speeds peaking at 12 mbps (megabits per second), with average speeds of 3-6 mbps -- about 10 times faster than previous commercial networks in the United States.

Impressive as that sounds, consider that a year earlier (an eternity in technology time), Australia's

Telstra

launched a wireless Internet with peak speeds of up to 21 Mbps across a nation about the size of the U.S. lower 48. Each extra megabit makes it that much easier and faster to transmit video, text or even vital medical scans wherever they're needed. Telstra already has 42 Mbps peak speeds operating in the five largest cities, with more to come.

Telstra's great leap forward in the mobile Internet is sobering for those who assume a U.S. lead in technological markets, especially for a company never considered cutting-edge. Indeed, for much of its history, Telstra was a large and plodding government-owned utility. The rapid transformation of Telstra -- encompassing not only technology innovation, but also radical changes in the company's culture, marketing and financial performance -- is a leadership tale with fundamental lessons for business worldwide.

Telstra's business transformation -- from caution, conformity and status quo to flexibility, innovation and change -- coincides with the 2005-2009 tenure of Sol Trujillo as chief executive. Trujillo, an American with a long track record leading high-cap telecom companies in the U.S. and Europe, was invited to Australia by Telstra's board specifically to shake things up. Though privatization began during the mid-1990s, when Trujillo arrived, Telstra was still majority government-owned, bureaucratic and hidebound even as it steadily lost market share to competitors in a deregulated market.

Trujillo moved fast to identify and execute necessary changes. For example, Telstra needed to shed around 20 percent of its workforce - no easy task in a culture accustomed to lifetime employment. "We imposed performance benchmarks. Low performers were given time to improve. Many did. If they didn't, they were removed from the business," recalls Trujillo.

As the cuts were made, Trujillo himself was the point person for all internal communications, justifying the RIF with his vision of a leaner, stronger, more nimble Telstra. "It was difficult. It was gut-wrenching. But I was also heartened by a number of employees who told me it was like a breath of fresh air," he says. "Morale, measured by annual employee engagement surveys administered by a third party, went up -- dramatically. It was very encouraging."

In addition, Telstra shifted its external focus away from the political needs of the national government in Canberra and toward the commercial needs of consumers. "Government still wanted to tell us what to do," says Trujillo. "My focus and that of the Board was different -- to work on satisfying customers, providing a foundation for growing shareholder value, creating a digital future for a nation that needed a digital future and making Telstra a great place to work."

Still, it was a big challenge to convince some political and media leaders of the need for a world-leading wireless system. "They said, 'Why in the world do we need that?' The answer was, 'The quality of life in rural and remote regions of a vast nation requires high-speed access to medical, education and other advanced information services. We now compete in a global market and need to be able to compete on all fronts, especially when natural resources run out. We need next-generation high-speed broadband now.'"

Trujillo decided on a strategy that was as much communications-based as it was service-oriented -- a spectacular new offering that would symbolize Australia's emergence into the global technological marketplace. To guarantee its impact, he would both surprise and overwhelm the skeptics. And, to do that, deployment would need to be completed expeditiously and under the radar.

So he gave Telstra employees just ten months to create the world's largest, fastest, most advanced nationwide mobile Internet, and ready it for market.

The Australian government and the nation's insular (and often vicious) media assailed the project. "My position was, you have to stand before the skeptics and take questions. My job was to be out front. I took the heat, so the engineers and others could stay focused on the task before them," says Trujillo.

And focused they were. In

less

than 10 months and

under

budget, Telstra was, on October 6, 2006, the world's first to deploy a nationwide high-speed mobile Internet and turn it on, not in selected markets, but around the entire nation. Telstra's mobile Internet had many other "firsts." It was the first to bring more than 30 live television channels to the small screen while pioneering access to integrated

Yellow Pages

and go-to maps in an anytime, anyplace mode.

When the performance of the new mobile Internet trumped attacks on his business strategy, his detractors got personal, resorting to slurs on Trujillo's Hispanic background. "Their behavior was as wrong-headed as it was disappointing. But as CEO, my job is to solve problems -- and let deeds in the marketplace, not disputes in the media, answer the naysayers. In my view, action is character -- both for individuals and organizations."

Last year Trujillo returned to the United States. He now serves on the boards of several prominent companies in the U.S., the EU, and China. Some Australians still decry his deliberate American management style and fondness to compete. But, by day's end, he left them with a dazzling nationwide, high-speed mobile Internet that deserves to be the envy of the world.

Keep in mind that Australia is not like other nations with high-performing mobile Internets such as Singapore, South Korea or Japan, where distances are short and population densities are high, reducing the cost and complexity of building high-speed wireless connections. Indeed, Telstra's rapid deployment of a mobile Internet with deca-megabit speeds was achieved in a market characterized by high costs, long distances and low population densities -- not unlike the U.S.

There is clearly no reason for American consumers, U.S. businesses, government agencies and nonprofits to be operating at one-fourth the capacity of those served by this global leader from down-under. American telcos would do better to model future strategies on the larger template of Trujillo's resolute leadership that can induce radical overnight change when nothing less will do -- leadership that harnesses advanced technologies, market-based management, integrated services and a clear vision for the role of wireless embedded in every sector of the New Economy.