New Zealand CEO Survey 2017

Interview with Mark Ratcliffe

Former CEO, Chorus

"We’ve also seen everyone in a business become more tech savvy. 20 years ago, technology was only for the “geeks” in the IT department who knew how to use email and senior people would print out or dictate their emails. Now all of us are in much more control of our communication."

Mark Ratcliffe has worked more than 20 years in the telecommunications industry. Before his appointment as Chief Executive of the new Chorus in 2011, Mark was Chief Executive Officer of Chorus as an operationally separate business unit within Telecom. Mark led the transition of Chorus through the demerger, and was also Telecom’s executive lead for the ultra-fast broadband initiative.

We sat down with Mark to discuss how he has seen the business landscape changing, and how technology is reshaping the role of the CEO.

PwC: What is the biggest change you’ve seen in the last 20 years?

Mark: I think the biggest change I’ve seen, particularly in executive roles, is the dependence on email and electronic tools has been huge. Twenty years ago, I was on the phone all the time, now I’m hardly ever use the phone to communicate. There’s much more text-based communication, thanks to email and text-based messaging services.

We’ve also seen everyone in a business become more tech savvy. 20 years ago, technology was only for the “geeks” in the IT department who knew how to use email and senior people would print out or dictate their emails. Now all of us are in much more control of our communication.

PwC: Do you think that means we are more informal?

Mark: Mostly, yes it is. We now have so much more of our own thoughts and our own materials out there than we ever used to have. In the past, everything was carefully scripted and everything I communicated was carefully scripted. Now I have to think that everything I potentially write is in the public domain.

So there’s hardly anybody under the age of 65 who isn’t pretty good with technology. The internet dominates the lives of all of us who sit behind desks all day.

PwC: In terms of threats to your organisation, what do you think it is facing now that it didn’t encounter three or five years ago?

Mark: I think the threat we are facing at Chorus is that there are substitute technologies that can compete with the technology we’ve got. Principally fixed wireless and mobile technology that can’t perform at the premium level of our services but that are a substitute.

An equivalent might be that we are the butcher who has a great product, but now we have the supermarket moving in next door offering cheaper cuts. Now I can’t compete with those cheap cuts and not everyone wants to buy the premium product. So we’ve got these high-quality fibre products and we’ve got these inferior mobile products that provide a similar experience at a price that means people are prepared to compromise.

Interestingly, those competitors are also our customers – they’re the companies that use our services but they also have the capacity to offer an alternative service to the end user.

PwC: So what are your thoughts on the future? How will the next few years affect your business?

Mark: Our biggest opportunity for growth is for the New Zealand population to keep growing. Immigration is absolutely marvellous for us and doubling the size of the population would be great for our business.

Now putting all of our population growth into that Auckland-Hamilton Tauranga triangle perhaps isn’t the smartest way to approach growth, because we’re putting strain onto the infrastructure there.

PwC: And what about the global economy? How would changing interest rates affect your organisation?

Mark: It looks like we will have cheap financing here for the future, which is a positive for us. I think New Zealand is massively well insulated from what goes on politically in the rest of the world. When things have gone wrong in the New Zealand economy, it’s been caused by idiotic behaviour locally, rather than anything from overseas. I think that was true in 1987 and again in 2006 with the finance companies.

PwC: But isn’t there still a risk that New Zealand isn’t as insulated as it used to be and that anti-trade, anti-globalisation sentiments will affect the country?

Mark: I think we have a much more diverse range of trading partners than we did say 20 or 30 years ago. We are selling more products and services into more markets than we have ever done before. So we could be impact by individual markets changing conditions. And even those that do change their trade policies, those changes take years to occur, it’s not like any of them will pass legislation that has immediate impact.

Now I wasn’t in New Zealand when the UK chose to enter the common market with the EU but from what I recall it didn’t happen overnight. There was years of debate about it in the UK but New Zealand chose not to act until after the changes had come into force. In those days we only had a few major exports and they were almost all heading to a single overseas market. We now have a much more sophisticated range of exports and some very savvy operators that are selling products in a whole range of different markets. New Zealand is much more sophisticated and we have much more scope to see when the wind is changing.

PwC: So you’re quite optimistic about New Zealand’s opportunities for growth in the coming years?

Mark: I think so. We produce things in New Zealand that the rest of the world, particularly the developing world, wants.

PwC: Looking to technology and automation, how are these shaping your organisation?

Mark: The internet is designed to put the power in the hands of the end users. We’re moving towards an increasingly internet-aware generation who don’t need intermediaries to control and help them make choices. It then becomes really difficult for traditional businesses that pride themselves on owning those relationships with customers.

At the moment, there’s not a lot of automation happening in New Zealand. In our industry, we went through a period of major automation back in about 1994, in what was then Telecom. The computer-based process that was put into the business replaced 1,300 people in one day by automating the dispatch of work to technicians and we are still using that system today.

What that means is the really big savings in our industry where made 20-odd years ago. Now, when we invest in technology, we aren’t looking at a major cost saving. After 20 years of automation, all that low-hanging fruit has already been picked.

PwC: That makes you quite unique among the CEOs we’ve spoken to. In most of them they are seeing roles with parts of them automating, but still retaining the same number of staff. Do you see any of that in your business?

Mark: Nearly every one of the technology investments I’ve seen over the last 20 years doesn’t have a payback, they are justified on “avoided cost”. We might need to make an investment in order to support the brand or to improve the customer experience or to maintain revenue, but we haven’t really saved any money.

PwC: Speaking of cost efficiencies, there seems to be a tension between maintaining profit and keeping a lid on expenses, and being a good corporate citizen that is active in the community. How do you reconcile that?

Mark: I think that in today’s world, it’s really hard to have a brand that is synonymous with being a poor corporate citizen. If you continue to make choices about your business that reflect poorly on your brand then people won’t want to do business with you and they won’t want to work for you. So people are much more discerning around their perceptions of organisations. If you’re not a good corporate citizen, then ultimately everyone will vote with their feet. Fortunately I can’t think of any examples of that in New Zealand because everyone has embraced these ideas.

PwC: Are you seeing any challenges around talent? In terms of both attracting and retaining the right staff members with the right skills?

Mark: Look we’ve been best employer in Australasia for the last five years running so we have a very strong employee brand and our turnover’s way less than 10 per cent. We do have challenges in some areas though. The average age in our business is decreasing and is now in line with the average for New Zealand, whereas we used to be a lot higher. When Chorus first formed it included a lot of people with 30 or 40 years’ experience and since then the company has grown massively – we’re about eight times where we were when we started – and all of that growth has been below the average age of the company.

We try hard to provide everyone within the organisation with a career roadmap, so that we can say that if you come in to the organisation at this point, this is what your career with us will look like.

I think that’s something that’s going to stay the same is we will still need people who have a good education, are willing to take chances in their work, have open minds and are good at collaborating – those are going to be just as important in the future. The technical requirements might change but those core skills you look for in people are going to stay the same.

PwC: And how are you as a CEO rising to the challenge around talent?

Mark: Being a CEO means you really have to listen. It’s very easy to just talk and tell people your opinion. What you have to train yourself to do is ask questions and listen to others. If you go to a lot of these CEO forums, a lot of them are just sitting around waiting for their turn to talk. All too often, we will show up as a CEO and tell people our opinion. We don’t spend enough time listening, but that’s where you learn things.

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