How To Write A Case Study: Verizon Building A BRIDGE

VERIZON: BUILDING A BRIDGE

Introduction

In September 2011, Verizon was faced with colossal decisions on moving forward as an organization and overcoming new challenges. The organization transformed from a Baby Bell to a market leader during a period of rapid technological changes, market growth, and regulatory amendments. Presently these changes require Verizon to innovate operations, structure, vision, and culture. The decisions made will be the compass for Verizon’s future.

Initial Conditions

The global telecommunications industry has been drastically shifting from “analog, landline, narrowband to digital, wireless, broadband and, more recently, toward smartphone and machine-to-machine” (Kanter 2). This quote highlights
the shift from wireline to wireless, introduction of smartphones, and change in the industries competitive landscape. Additionally, the shift emphasizes the struggle for Verizon in moving from the slower, more bureaucratic, and less customer-centric wireline business to the more flexible, faster, and entrepreneurial wireless business. This struggle is amplified as a result of Seidenberg’s decision to separate the wireline and wireless companies. As Verizon has moved forward it has progressed, changed, and reacted to its changing environment and competitors. Verizon’s reaction to the iPhone release, implementation of the FiOS (fiber-optic services), ecosystem approach, and cultural changes highlight a few accomplishments in the past 3-4 years.

The iPhone Reaction & Success

Verizon’s customer base was deteriorating due to the shift from voice products to wider costumer solutions.
Verizon acknowledged this shift and successfully developed the industry’s first mobile-based distribution system, which allowed users to download games, ringtones, and videos – driving revenue. While historically focused on offering basic telecommunication services, Seidenberg realized the need to venture in adjacent complementary industries including GPS-enabled devices, navigation, games, and music. However, this success was quickly overshadowed by the threat of the Apple iPhone - introduced in June 2007.

In response to this market-changing event Seidenberg explored multiple options but concluded that they internally did not have the competencies to build a competitive device. Instead he championed innovative partnerships with Google and Motorala. Seidenberg implemented policies, Tiger Teams, system alignments, best practices, and accountability structures for all three partners. Verizon successfully overcame historical resistance to partnerships and sharing proprietary information. “In a departure from tradition” this internal cultural change led Verizon to a successful launch of the Droid (Kanter
5).

Innovation & FiOS

In the past 3-4 years the success of Verizon’s wireless technology came at the expense of their wireline business. In response to the declining revenues, Seidenberg built a FiOS network connecting directly to customers’ homes. While originally it was intended to help compete against VoIP companies, he realized an unexpected opportunity to integrate its phone, TV, and Internet services through an interactive platform called FlexView (Kanter 6). In order to implement the idea, Seidenberg was forced to re-evaluate a small portion of Verizon’s organizational structure. He changed the way design teams worked from being in solos to larger, compromising, and connected teams. This was the first step in creating a shared vision between fragmented departments. By 2012 these internal changes led to 16 million households using the new FlexView technology.

The Ecosystem Approach

With a new and shared vision/goal of “beating competitor AT&T by at least two years,” Verizon examined the way innovation was introduced internally (Kanter 7). Realizing their fragmented operations, Richard Lynch, introduced the 4G LTE innovation center as the foundation of meeting their vision. The innovation center would allow Verizon to expand their core competencies from a reliable network to the endless demands of their consumers. Through successful partnerships with what they called “product vendors” and “enablers,” internal knowledge sharing, and collaborations with all sized businesses they facilitated hundreds of new technologies. Verizon successfully leveraged their knowledge gained during the Droid project. Furthermore, Verizon achieved a milestone in developing strong trust with partners leading to their successful partnerships and introduction of the connected home.

A Changing Culture and Structure

As technologies converged the necessity for collaboration between wireline and wireless grew (9 Kanter). Under Seidenberg’s leadership the shift from two disconnected organizations to an integrated or “One Verizon” begun. This occurred through compensation based on overall company performance, simplifying the product development process, rotating staff, monthly leadership meetings, and most importantly vertical restructuring. While these changes were challenging to implement, Seidenberg attempted to overcome them through customer feedback, going on sales calls, and modifying plans – ideas consistent with the Change Wheel.

The difficulty in shifting Verizon’s culture highlights the innately slow, resistant, and bureaucratic culture that still exists in the divided organization. While this segmented organization structure was successful during the early years, the recent environmental changes have demanded a more flexible, quick-paced, and innovative culture. To meet these demands Janet Schijns, a change leader, continued to make drastic cultural changes through empowering teams, defining a clear vision, and creating common goals such as exceptional customer service (Kanter 11). In August 2011, Schijns and Seidenberg made large improvements but acknowledged that the company still had a significant way to go.

Challenges

Although Verizon has made a lot of progress it is evident that there are still many challenges including Wireless’s U.S. perspective, a divided culture, horizontal operations, and duplication of resources across organizational segments. Together this leaves McAdam with a situation that could lead Verizon in either direction – positive or negative.

McAdam is entering an organization that:

Is on the leading edge of innovation on a wide spectrum of products;
Has inimitable partnerships and strong trust with collaborators;
Is a first mover in many markets including interactive home/car technologies;

On the other hand, this same organization must overcome several barriers. As Verizon attempts to go globally with wireless technology it must overcome its lack of international knowledge, divided culture, “American association”, and product cannibalism. Clearly Verizon is moving towards the right direction with their initiatives, but it is not clear if they will be able to adapt their culture to the changing environment.

Recommendations: Moving Forward

Moving forward McAdam will have an uphill battle. While the Credo, vertical integration, innovation department, and new policies have been successful – it may not be enough. To quote McAdam, “’The culture dies very, very hard. It’s going to take a lot more than one class and one employee meeting to get there… A lot of the way we have done business is not effective in this competitive environment’” (Kanter 12). McAdam must continue the previous efforts although challenging. Specifically he should:

Create financial incentives that are tied with department collaboration between wireline and wireless
Continue to rotate employees across units
Continue to provide education sessions on shareholder value, innovation, and collaboration
Share the Credo and persistently explain the vision/goal of the future

While those are some broad recommendations, McAdam should also leverage the expertise of the wireline department when expanding wireless globally.
The Vodafone relationship would help accelerate change and take wireline and wireless globally “through a common set of products and features” (Kanter 12). Vodafone, operating 60% of its business in Europe, is a clear partner with knowledge of the unique regulatory environments in potential global markets. Lastly, McAdam must push forward with vertical integration and a structure that focuses on major customer types, product, and solutions.

It is critical that McAdam implement these recommendations in the scope of Kotter’s Change Model. While past efforts have conveyed goals, communicated a vision for change, and formed coalitions – they have not created enough urgency (Step 1, Appendix A). McAdam must clearly convey the importance of cultural change and implications of failure. By doing so he will develop a sense of urgency around the change and help motivate employee
buy-in.

Conclusion

Together these recommendations provide McAdam with a framework in competing in an exciting but different telecommunications environment. While he faces an uphill battle, Seidenberg has handed him an organization with the potential, tools, and assets to successfully compete domestically and globally.

Appendix A: Kotter’s 8 Step-Change Model for Verizon

1) Create Urgency
2) Form a Powerful Coalition
3) Create a Vision for Change
4) Communicate the Vision
5) Remove Obstacles
6) Create Short-Term Wins
7) Build on the Change
8) Anchor the Changes in Corporate Culture

Citations

Kanter, Rosabeth M., and Matthew Bird. "Transforming Verizon: A Platform for Change." Harvard Business School (2011): n. pag. Web.

"Kotter 's 8-Step Change Model." - Implementing Change Powerfully and Successfully. N.p., n.d. Web. 23 Feb. 2014.