We spoke with Marcus Haas about #FutureGoodGovernance.
The interview was conducted before the outbreak of the Corona Pandemic.
A ship needs a captain. There is much talk about new leadership concepts, about participation and freedom. How much leadership does a company need in the future and how much agility can it tolerate? How do you envisage corporate management in the future?
A high degree of personal responsibility and agile working methods will clearly be at the centre of this. In the future, we will need much more self-reliant cooperation in order to achieve one goal – in our case maximum customer satisfaction. It is precisely this kind of results-oriented management that we are necessarily experiencing with the Corona pandemic. When the majority of the workforce no longer meets in the office and work is organized there, a new type of leadership and distribution of responsibility in the specific task at hand is needed. In order to develop exactly that, a strong corporate culture and a consensus of values, which I have found to be very helpful.
The Greetas of the world have also drawn attention to companies and their fields of action. What challenges do you expect in terms of social responsibility and thus sustainability in the company?
Our customers, our employees, but also our shareholders and lenders rightly expect us as a company to work towards our goals and make our contribution in a future-oriented manner. As an industry, we are obliged to go the extra mile in this field and help others to make a positive contribution to the climate balance. We at Telefónica are consciously taking a step forward in this respect and have set ourselves the goal of working in a climate-neutral manner by 2025 at the latest. The digitalisation of the economy and social life offers enormous opportunities in the fight against climate change. The new 5G mobile communications technology, which requires up to 90 percent less electricity per byte transported, will further strengthen this development. Digital inclusion is another important social issue in the context of digitization. For many years, we have been working on projects to familiarize all sections of the population with the digital world – even beyond a pricing policy suitable for the mass market.
Trust is good, control is better. Today, it’s still primarily about numbers and compliance. However, artificial intelligence is also changing perspectives and thinking here. How can you imagine a future system for monitoring the board of directors? Will there still be a supervisory board watching over the management or will the ‘monitoring’ be replaced by a technically highly equipped external service provider?
The system of co-determination on German supervisory boards has proven itself and I cannot imagine that this system will be “outsourced”. The shareholders decide on the composition of the Supervisory Board and, in deciding on the respective composition, associate a high degree of trust in people and their competence. In my view, no monitoring system can anticipate or replace the important discussions between employer and employee representatives which then lead to the right decisions for the respective company. Telefónica was, incidentally, one of the first companies in this country to adopt binding rules for dealing with AI, and one of the main principles is that people are and remain the highest decision-making authority.
Companies are subject to a constant process of change. What challenges do you expect for your company in the next 10 years? How will they change your company? What will change for employment and qualification of the employees?
In the current decade, mobile communications in particular will play a prominent role in the digitalization of Germany as a business location. More than ever before, the digital network infrastructure will become the trampoline of any digitization project in this country. With 5G, companies can jump higher and further digitally. For example, 5G will make production significantly more efficient and faster. We are opening up new mobility concepts and making life in smart cities possible with 5G. Telefónica Deutschland has set itself ambitious goals for the latest mobile communications standard. We want to supply half the population with the technology by 2022 and the whole of Germany by 2025. This has never been achieved so quickly with any standard before. And this despite the fact that we are once again starting the expansion and investment phase with a substantial disadvantage in Germany. After the expensive 5G auction, our infrastructure investments as an industry are actually minus 6.6 billion euros. If this amount had not gone into an unnecessary auction, but into 60,000 mobile communications sites, Germany would have the fastest and most widely available 5G network in Europe within a few years. The Federal Government has it in its hands through its frequency policy and corresponding regulations in the Telecommunications Act. A new allocation practice for mobile phone frequencies away from expensive auctions could release additional investment funds for network expansion. For the first time and quite rightly, the Federal Government has now set up a support programme for uneconomical gaps in supply, the so-called white spots, which supplements ongoing operator initiatives.
There is much debate about centrality vs. decentralisation, agility and core competence in organisations. Will there still be companies in today’s sense of the term in 20 years’ time? What changes do you expect or would you like to see in terms of company organisation and financing?
Basically, a high degree of willingness to change and lifelong learning is required from all those involved, from employees and works councils. This is because the requirements for job profiles are changing ever more rapidly in order to meet the needs of our customers and the market. Applying for a permanent position as before, whose profile remains unchanged for 20 or 30 years, simply no longer works. Here, too, digitisation is creating ever new fields of work and job profiles at ever shorter intervals, which did not exist in the training of the vast majority of employees. At the same time, entire occupational groups are disappearing due to technical innovations. For this reason, we have for some time now been placing a special focus on digital learning opportunities and internal further developments in order to keep our employees and thus the company as a whole up-to-date with the rapid developments. Moreover, labour law must also change: We need more flexibility – for example, in order to be able to act more quickly through retraining and further training and to reorganize as necessary.
Automobile manufacturers are becoming mobility service providers, food producers are becoming lifestyle providers, media houses are becoming data science companies. Where will your industry develop? Will industries – as we know them today – still exist in ten years’ time? What will happen then?
If the Corona pandemic has taught us one thing, it’s that the telecommunications industry is systemically relevant. We made the connection when distance was the top priority. The push for digitalization that Germany and other economies are experiencing was unprecedented. However, rapid change cycles have always been inherent in the telecommunications system. Twenty-five years ago, we offered mobile telephony, then mobile data transmission was added with mobile access to the Internet. In the meantime, services such as TV and video streaming, music and even mobile banking have become a matter of course for us as a provider. The digital networking of millions of all the objects and activities of our everyday lives will massively expand this field once again – whether through tracking & tracing of bicycles, for example, or the to-the-second tracking of a special package. The evolution from telephone provider to communications service provider to digitization partner is already a reality today. We make this digitalization possible – for private customers as well as for companies in particular. In the B2B sector, I expect new forms of cooperation, especially in the area of campus networks, which companies not only have to set up, but also operate and maintain. Topics such as “data security” or cloud-based solutions and “big data” are becoming increasingly important – all on the basis of an infrastructure that is as open to technology as possible. This is because the proven system relevance also means that legislators will be setting an even tighter framework for security requirements in the industry. In addition, hardly any other industry has such a wealth of data as our industry. Every day, we generate 5 billion data points in our network operations and customer management alone. We bear a huge responsibility for protecting this data. At the same time, they offer the potential for us and many other industries to build completely new business models based on the knowledge of this data and generate social benefits.
Today, corporate leaders are being asked from various quarters about the purpose of the company or its specific mission. How do you meet this challenge? What positive or critical lessons have you learned from this? What advice do you give a CEO from another industry on how best to approach this topic?
Our claim is the democratization of high-tech. Our company is successful and also fulfils its social purpose if it enables as many people as possible to participate in digital communication and thus in the achievements of digitisation, thus ultimately enriching their lives. We have recently entered into very intelligent partnerships in the fixed-network area, which enable us as a company to offer our customers fast Internet even in the remotest corner of Germany. No one in this country reaches more people with high-speed solutions – fixed or mobile.
We are now the largest mobile communications provider in Germany – no other competitor connects more people in this country. We occupy top positions in terms of service, range, performance and price.
With the merger of the mobile networks of Telefónica and E-Plus, we have successfully mastered a Herculean task in the previous years. During the restructuring phase we demanded a lot from our customers. During this phase we were not always able to keep our performance promise to the satisfaction of everyone. But we have worked our way out of this “low” – and this is increasingly being noticed and confirmed by independent experts. Major projects of this dimension require courage and staying power in order not to lose sight of the big goal – in our case Germany’s largest and most modern mobile phone network.
This is exactly what my personal advice to managers is based on: Be persistent and have the courage to pursue projects in a sustainable manner if you are convinced of them. Those who only focus on short-term applause will not be successful in the long term.
The so-called stakeholders, especially the (institutional) shareholders, are exercising their ownership rights and obligations much more than just a few years ago. It has therefore long since ceased to be enough to tick off the requirements of a code (“comply-or-explain”). Internationally, the intensive and permanent communication/interaction of stakeholders with corporate management is gaining ground (“apply-and-explain”). What trends do you see here and how do you assess them?
I experience the same. The exchange of information takes place much more frequently and has become more intensive in terms of content. That is a thoroughly positive development. After all, an owner has rights that he should also exercise responsibly. An example: In personal investor meetings, the topics of governance and compliance have played a very important role for some years now. In our telecommunications industry, we are generally dealing with investors who invest for the long term. These investors expect absolute clarity and reliability from the company management, especially in these areas. Over the past two years, the issue of sustainability has become a must-have topic and thus ultimately an admission ticket in discussions with the financial sector and politicians. Without a conclusive, forward-looking strategy in this field, they very quickly fall out of the “relevant set” of these stakeholders. In my opinion, proactive communication is more important than ever here in order to achieve a basis of trust.
#FutureGoodGovernance is currently still comparable to a crystal ball in many areas. Which future aspects of good governance are particularly important to you? What would you wish for if you had three wishes? Where do you see the politicians’ demands? And what responsibilities will companies and their managers have in the future?
First of all, we should make it clear that we are not starting from scratch. We already have very good standards in many areas. That’s why we are all called upon to implement the set standards comprehensively and promptly. Only in this way can we ultimately speak of a real, living standard. Secondly, I would like us to question ourselves with every new regulation we introduce. The key question here is clear: which historical regulations that no longer offer added value should we repeal? Only in this way can we prevent sensible standards from turning into an impenetrable jungle of bureaucracy. And finally – thirdly – we should abandon the idea that we have to regulate everything down to the last detail. In the past, there have always been good and successful examples of voluntary commitments to solve challenges quickly and purposefully. I sometimes have the impression that a great deal of trust has been lost between politicians and companies and that constructive dialogue does not always take place. This is quite different with our social partners. From one day to the next, we moved into the digital world to protect the health of our employees. In doing so, we have taken a very targeted and solution-oriented approach. We should retain this kind of pragmatism and creative will as far as possible. In the digital age, where cycles and speeds are becoming ever faster, we will need it more than ever before.
Thank you very much for the interview!