At a speech to the Trans-Tasman Business Circle, Telstra CEO Andy Penn spoke about the importance of responsible business, and how now is the time to think deeply about the role business has in society.
Thank you for that warm welcome and hello everyone. Before I start, I would like to acknowledge Tanya Oziel from the Trans-Tasman Business Circle. Thank you for being our virtual host today.
For many years the Business Circle has been an important forum for the exchange of ideas on key issues for our country, for our region and also for our future. That dialogue has never been more important than it is today.
The last speech I gave in a forum like this was in February, before we understood the full significance of COVID. I was talking on the topic of responsible business in the 2020s and in particular highlighting the point that the “how” business does things is just as important as the “why” we do them.
Sitting here today it seems like a lifetime ago and it is hard to comprehend how much has already happened in the first 6 months of this decade.
And yet everything that has happened has only reinforced my conviction, my conviction that the topics I spoke about at that time are those that must be at the top of our agendas today. The only difference now is that we need to address them with a greater sense of urgency than ever before.
The enforced time we have all experienced at home has made us all a bit more introspective, a bit more contemplative. As business leaders we have had to navigate our organisations through enormous change and challenge, but it has also given us an opportunity to think more deeply – more deeply about the role our businesses play in society, and the responsibility we have to the communities in which we operate.
And let’s be honest there is a lot to think about. The fragility of the world in which we live has been exposed in the space of 6 short months. The devastating bushfires, the necessary restrictions on personal freedoms, real health threats, the impact on the economy and jobs from COVID and the escalating and troubling world tensions – the latter being played out in a cyber world where the scale and significance of the malicious activity being perpetrated is difficult for most people to comprehend.
Even in Melbourne today we are dealing with the consequences of further restrictions following a concerning escalation in a second wave of COVID infections as we move back to stage 3 restrictions.
It is easy in the face of this to become depressed, angry even – a natural emotion given the grieving process we have been experiencing as we come to terms with the fact that our old world has changed.
But if we can see these emotions for what they are, then as leaders I know we can also find the strength to see this time as an opportunity. An opportunity to put the world on a different trajectory. One where we can continue to leverage the benefits of technology innovation that has brought so much advancement, but do so in a kinder, more inclusive way and in a way where we take greater accountability for our impact on others, on society and on the world in which we live.
Today I want to share some reflections from this period, how it has affected me personally and how it has shaped our thinking at Telstra.
I have essentially three observations:
Firstly, I have always been a technology optimist – in other words I believe the benefits of technology advancements outweigh the risks they introduce. What has been fascinating for me is that we have made more progress in the last three months in becoming a digital economy than we had in the previous 5 years. And what this tells me is that previous constraints to our progress were less to do with the technology itself but rather our ability and willingness to adopt it.
Secondly, the obligations we have to our customers should not be defined by the small print of our contracts but by our purpose and values as organisations. I spoke earlier this year about how a greater level of empathy and responsibility is required from companies in understanding their customers’ needs and meeting them fairly. We have seen a fantastic response from corporates in Australia during COVID, particularly large companies in supporting their customers almost as if they have rediscovered the meaning in their purpose.
Thirdly, if there was ever any lingering belief in the Friedman theory that the sole purpose of companies is to focus only on its shareholders, it has been finally put to rest. Community trust in the corporate sector had reached a new low point at the end of the last decade and yet in a short space of time more and more corporates are standing up on important issues. Companies are demonstrating they understand the expectations upon them and our responsibility to the communities in which we operate. Thoughtful companies realise they will only be successful for their shareholders if their customers, employees and communities enjoy success too.
In sharing these reflections today I hope I can connect with some of your thoughts and experiences. So let me turn to the first topic, the digital economy.
The digital economy
So why is this important? We are sitting on the cusp of the fourth industrial revolution. A revolution that is arriving through the convergence of new technologies that will enable the physical world to become infused with the digital. Sensors in everything from wheely bins to traffic lights, from agricultural equipment to militarised drones. Over the next 20 years we are going to see a dramatic increase in automation and robotics in every aspect of our lives.
This is a technology revolution that is taking the concern about computers replacing jobs to a new level. Sparking new debates on such issues as the ethics of using artificial intelligence. At the same time, an increasing volume of data about our every move in life is being captured and this is bringing into question new concerns over our privacy.
We are not going to hold back the tide of technology so the question is how we embrace it ethically and for the value of everyone in our society. How do we use it as a tool to advance Australia’s prosperity?
COVID has accelerated digital adoption for Telstra and our customers interaction with us – something that before COVID was taking years to achieve.
We have seen a fundamental shift in online usage – from customer service support to online shopping to telehealth to home learning and working.
As businesses and as a country we should be looking at how we can consolidate this momentum to make it a permanent trend.
In this regard I believe there are four areas that we can focus on to accelerate our progress even further:
- Firstly, getting the Regulation and Policy settings right to support a digital economy;
- Secondly, investing in infrastructure that enables connectivity to drive the digital economy;
- Thirdly, helping small and medium businesses to realise the benefits of becoming digital;
- And finally, fostering the development of the right technology skills.
From Telstra’s perspective, COVID-19 has also shown us the value of our existing investments through our T22 strategy to transform Telstra for the future. The reasons that we introduced T22 two years ago – a need to rapidly simplify and digitise, to remove customer pain points, to remove legacy systems and processes – have never been more important and have enabled us to respond effectively through COVID.
New core capabilities that we have established as part of our T22 strategy have meant we could fast-track the digitisation and automation of our tools and move more customer enquiries online, removing the need for many customers to call us at all.
Now customers are connecting with us through self-service and online tools such as asynchronous messaging. In fact, before COVID, around 50% of consumers contacted us through digital options, now this is more than 70%. We have also seen almost 4 million customers download the My Telstra app during COVID in a period of just 8 weeks.
One of the negative consequences of COVID however, has been the impact it has had on our workforce capacity. This has been particularly significant in overseas locations such as India and the Philippines which went offline due to strict lockdowns and have still not fully recovered.
While we have managed to move a large amount of this work online and to Australia, we are very conscious of the impact it has had and is still having on some of our customers in trying to contact us – some of you in the audience today may have been affected.
I therefore wanted to apologise for the delays and thank you for your patience.
For us, there is no doubt therefore that this is the right time to also be thinking differently about our customer service in the future. Of the things that we have implemented temporarily to help us through this period, what can we make permanent?
We know that it is critical to continue to invest in accelerating our digital engagement, including messaging. This will give us more capacity for customers who want to call us for more complex support and also for those Australians who are not as comfortable using digital tools.
It will mean that over time we will need a smaller call centre workforce for our consumer and small business customers. In fact our aspiration is that by the end of our T22 program all inbound calls from these customers to us will be answered in Australia.
This in turn will enable our teams in the Philippines and India to continue to support our digital experiences.
I mentioned that another crucial area that will make a difference in becoming a digital economy is in expanding our digital skills as a nation.
As a major employer with significant technology skills, Telstra very much wants to play its part in this and to that end we have established a partnership program with a number of universities developing specific capabilities in STEAM and we will be making a further announcement next week of another significant partnership.
Finally as we do move more rapidly to a digital economy, we need to be cognisant of the growing cyber risk this presents as more and more people do more things online and those with ill-intent take advantage.
You heard the Prime Minister recently raise awareness of the significant, sophisticated and ongoing cyber attacks against Australia including by a state-based actor. We are also seeing significant increases in cyber crime targeting Australians and Australian businesses.
It could not therefore be a more important time for the Government’s 2020 Cyber Security Strategy and I look forward to tabling the report of the Industry Advisory Panel to the Government that I am chairing on this strategy in a couple of weeks.
The report contains 60 recommendations to improve the country’s cyber defences and it is pleasing to see the Government already taking significant action through the announcement of a $1.35bn Cyber Enhanced Situational Awareness package of initiatives, including our own ‘Cleaner Pipes’ initiative announced a few weeks ago.
Redefining our obligations to customers
For Telstra, in addition to helping support our cyber defences, another area of critical importance is the underlying infrastructure for the digital economy – our telecommunications networks.
With the NBN also nearing its completion and as we enter a new era with 5G, there has never been a better time to set a new technology-agnostic vision for telecommunications in Australia particularly regional and rural Australia. A vision with the right policies in place to encourage investment and innovation in these crucially important aspects of our critical national infrastructure, particularly.
We know the important role technology plays in delivering educational benefits and helping people in remote communities.
In 2018 for example we worked with the Federal Government to provide mobile base stations to six remote communities in the APY Lands, located near the South Australian and Northern Territory borders.
This brought not only mobile service to the APY townships and their residents but it also provides a vital communication link for the people who travel to the lands to provide much-needed services to those communities.
Telstra has also worked with the South Australian Government to deliver improved connectivity to eight schools in the APY Lands and enhance teaching and learning experiences.
At the same time however, when we like to think we are doing good things we have to face into the reality that we have also let down some of our customers in Indigenous communities. As you may have heard me talk about in February, some years ago a small number of our partner stores, those operated by third parties under a license agreement, sold mobile devices and plans to customers that ultimately could not afford them or where they may not have been appropriate for their needs.
When we investigated, we found there were instances where our processes had not been followed by some front-line staff and that in some cases, there had been serious misconduct. There were examples where we had not fully understood some of the cultural and customer behaviours unique to these communities. Where we had failed both in the first instance and in our response to complaints, to recognise that many of these customers were vulnerable. Our remediation was based too much on our literal terms and conditions and not on our purpose and values as an organisation.
The learning from this experience is we did not treat these customers fairly. We failed ourselves, not out of intent but we let them down and we failed in my second observation today that the obligations we have to our customers are not defined only by the small print of our contracts but by our purpose and values as organisations.
In this case our purpose and values did not permeate every aspect of our business operations and the standards we set ourselves were not sufficient. This is why I said in February that while I am no lawyer, I agree with Rod Sims’ advocacy of a new consumer standard of fairness. Because when you think about it that’s what responsible business is all about.
Since 2018 we have been implementing a comprehensive program to address the specific issues. Waiving debts, refunding customers, introducing new processes, rolling out training and tools to assist frontline staff in their interactions with vulnerable customers.
The matter is still being investigated by the ACCC so I cannot comment on the specifics any further.
What I can say is that I know that the people that work at Telstra represent our brand, deliver on our purpose, live our values and follow our processes in the overwhelming majority of cases. However, if experience has taught us anything, it is that even when we make decisions and we think we are operating in the best interests of our customers, there can still be unintended consequences and things you miss for too long. Therefore when things do go wrong, which they will, it is important to look to your purpose and values for how to respond. The best lessons come from the toughest experiences and this has been a tough one for us and me personally but, more importantly, a tough one for our customers.
The lessons we have learned though, through this experience, which started with us addressing specific complaints and incidents has led us on a journey of a much broader reflection on what responsible business looks like in the new decade. This takes me to my last observation which is that it is not just in our dealings with our customers where we need to act responsibly but more broadly in the communities in which we operate.
Our role in the community
Big business as a key contributor to the economy, as a major employer, and as a major user of resources has a responsibility to make contributions to the betterment of society. Not just in the goods and services we provide, the jobs we create and the dividends we generate. But also in the way we conduct ourselves.
For Telstra, during COVID, that sense of responsibility has included many things we have done in the interests of our people, customers and the economy. They included suspending job reductions, supporting casual workers, increasing recruitment in Australia, bringing forward capex spending, creating relief programs for small business and consumer customers as we did in the bushfires and providing unlimited data allowances for fixed broadband and mobile customers.
Responsible business also means speaking out on issues that do not sit right against our values. Not on every issue but those that are pertinent to the business we conduct and that impact our customers and our people.
It means being accountable for our own actions.
Climate change is a perfect example of where business should take meaningful action because the business sector is a material contributor to greenhouse emissions. This period of COVID has provided a chance to experience our world as a quieter environment and under clearer skies. If ever there was encouragement for bolder and more significant action on climate it is now.
We announced a significant increase in our response to reducing our impact on the climate earlier this year. As part of that I am very pleased to announce that today we have received formal certification from Climate Active that Telstra is now carbon neutral in all of our operations – well ahead of our initial plan.
We have achieved our carbon neutral status largely by signing agreements with a number of carbon offset organisations. Two of these projects are based in Australia, including a project that uses the knowledge of traditional landowners to reduce greenhouse gases emitted from savannah fires which today make up 3% of Australia’s total emissions.
The other projects are in India where Telstra also has extensive operations.
Our experience has been that it is extremely difficult to purchase carbon offsets from projects located in Australia. This is something that needs to be addressed because what it says is that there are not enough projects contributing to a reduction in greenhouse emissions.
Our climate commitments also include enabling renewable energy generation equivalent to 100% of our consumption by 2025, and to reduce our absolute emissions by 50% by 2030.
Another area of corporate responsibility is in the role business plays in creating and supporting an inclusive and nondiscriminatory society.
I think we have all been rocked by what unfolded in the US with the Black Lives Matter movement and we must not allow ourselves to get caught up in thinking this is only a US-issue.
We witness injustice in Australia every day – at work and in our communities. We must not tolerate it and we must support those that are hurt by it.
I experienced this myself only a week ago when I saw a video post on Instagram from Alfie Gledhill.
Alfie worked on an advertising campaign for us and his photo was featured on a local street ad. He discovered a racial slur scrawled across this ad and as he explained to me his social post was really part his way of dealing with the pain of it.
I rang Alfie to tell him how I thought he deserved so much better, that we were incredibly proud to have worked with him, and that we absolutely stood by him. I also thanked him for his courage in calling out a senseless, cowardly act.
I am proud of Telstra’s track record on inclusion, as founding members of the Male Champions of Change and initiatives such as All Roles Flex, our office workforce in Australia of 25,000 were already working from home 2 days a week on average before COVID.
I am also proud of the extensive work we have done through supporting victims of domestic violence and our reconciliation action plan in Indigenous communities.
As a company that employs tens of thousands and serves millions of Australian customers, how can we hope to do so responsibly other than by reflecting and representing the full human diversity of each of those as individuals.
I know this is not an easy issue to engage on – it comes with millennia of history and as a business leader it is easy to get it wrong. But we must acknowledge the problem, call it out when we see it, and do our bit to find a better solution.
Solutions are built around actions and for Telstra, that has included partnering with Career Trackers to create paid, multi-year internship opportunities for Indigenous university students. So far 48 students have been through the program which we recently extended for another 10 years with an investment of $1.5m, including a guaranteed intake of 20 students every year.
We are also planning to invest more than $5m over the next few years to extend our partnership with First Nations Media Australia to deliver inDigiMob – an indigenous digital literacy program, to roll-out more specific telecommunications literacy programs for indigenous communities and to extend our research through the Australian Digital Inclusion Index to better understand how the drivers of access, affordability and digital ability play out in regional and remote communities.
COVID has created a unique window to change our trajectory.
As we enter the 2020s there has never been a more important time for business to think deeply about its role and place in society.
I have learnt that, as leaders, decisive action drives confidence and our people needed that in the thick of a crisis.
If we are bold now, we will not only bounce back, but we will move forward and build a kinder, more empathetic, more innovative, more inclusive and more prosperous world.
The opportunities before us today are many but if we are going to get the implementation right there is a lot we need to do:
We need to accelerate our trajectory towards a digital economy.
We need to make sure our cyber defences are in place.
We need to make sure we do not leave any customers behind.
We need to stay active and open on issues that impact the communities in which we operate.
But we also need to continue to make tough and necessary decisions about our companies’ futures. For us, our T22 strategy will continue to provide the roadmap to ensure we are a sustainable business for the long term.
We still have a lot of unfinished business to truly transform Telstra and whilst we have paused some of the harder decisions to support our people during COVID, we have to come back to them.
Ultimately, we need to live our purpose and live up to our values every day – that is at the heart of responsible business.
As we continue to work through this extraordinary year and on into the 2020s and what will be an extraordinary new era of technology innovation, we must also never lose sight of the fact that the “how” we do things is just as important as the “why” we do them.