167
-1- STRICTLY CONFIDENTIAL Name: Christopher Geerdts Student no: GRDCHR001 Date: March 5, 2007 Course: EMBA 7 Executive MBA Dissertation Modular Individual Assignment CUSTOMER CENTRIC TRANSFORMATION IN THE TELECOMMUNICATIONS INDUSTRY – THE CASE OF MTN SOUTH AFRICA Presented to The Graduate School of Business University of Cape Town In partial fulfilment of the Executive MBA By Christopher Geerdts For Tom Ryan NOT FOR RELEASE INTO PUBLIC DOMAIN

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Name: Christopher Geerdts

Student no: GRDCHR001

Date: March 5, 2007

Course: EMBA 7

Executive MBA

Dissertation

Modular Individual Assignment

CUSTOMER CENTRIC TRANSFORMATION IN THE

TELECOMMUNICATIONS INDUSTRY – THE CASE OF

MTN SOUTH AFRICA

Presented to

The Graduate School of Business

University of Cape Town

In partial fulfilment of the Executive MBA

By Christopher Geerdts

For

Tom Ryan

NOT FOR RELEASE INTO PUBLIC DOMAIN

UCT GSB
Embargo
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Contents

Contents ............................................................................................................................. 2

1. Declaration................................................................................................................. 9

2. Acknowledgements ................................................................................................. 10

3. List of Abbreviations Used..................................................................................... 11

Abstract............................................................................................................................ 12

1. The End of the Lollipop.......................................................................................... 19

1.1. Heady Growth................................................................................................... 20

1.2. Signs of Change ................................................................................................ 21

1.3. The Rise in Consumer Prominence................................................................... 22

2. Adapting to a New Environment ........................................................................... 25

2.1. Organisational Legacy ...................................................................................... 25

2.2. MTN Response to Changing Markets............................................................... 26

2.2.1. Customer Acquisition ............................................................................... 27

2.2.2. Customer Retention .................................................................................. 28

2.2.3. Growing Revenue per Customer............................................................... 28

2.2.4. Finding New Markets ............................................................................... 29

2.3. Attempts at Transformation .............................................................................. 30

2.3.1. Process Audits........................................................................................... 30

2.3.2. Branding and Marketing Initiatives .......................................................... 31

2.3.3. Customer Management ............................................................................. 31

2.3.4. Restructuring............................................................................................. 33

2.3.5. Customer Services Executive ................................................................... 34

2.3.6. Cost Cutting .............................................................................................. 34

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2.4. The Challenge of Customer-Centric Transformation ....................................... 35

2.5. The Independent Cellular Service Provider – a Unique Challenge .................. 39

2.6. Summary........................................................................................................... 41

3. Customer Centricity – How to Make it Work...................................................... 42

3.1. Research Question ............................................................................................ 47

4. Research Framework.............................................................................................. 48

4.1. Critical Systems Thinking as a Foundation for Customer Centricity............... 49

4.2. Grounded Theory (GT) ..................................................................................... 55

4.2.1. Research Map............................................................................................ 56

4.3. Action Research Learning (ARL)..................................................................... 58

4.4. Triangulation..................................................................................................... 58

5. Data Gathering........................................................................................................ 60

5.1. Literature Review.............................................................................................. 60

5.2. Critical Systems Thinking................................................................................. 60

5.2.1. Viable Systems Diagnosis VSD) .............................................................. 61

5.2.2. Lean Thinking........................................................................................... 62

5.2.3. CMAT™ ................................................................................................... 63

5.2.4. Soft Systems Methodology (SSM) ........................................................... 63

5.2.5. Interactive Planning .................................................................................. 65

5.2.6. Scenario Learning ..................................................................................... 66

5.2.7. Strategic Assumption Surfacing and Testing (SAST) .............................. 66

5.2.8. Critical Systems Heuristics ....................................................................... 67

5.3. Grounded Theory – Data Gathering ................................................................. 67

5.3.1. Literature Review and Sampling .............................................................. 68

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5.3.2. Interviews.................................................................................................. 68

5.3.3. Quantitative Data ...................................................................................... 70

5.4. Action Research Learning................................................................................. 71

5.4.1. Small Wins................................................................................................ 71

5.4.2. Appreciative Inquiry (Research)............................................................... 71

5.5. Triangulation Checklist..................................................................................... 73

6. Literature Review ................................................................................................... 74

6.1. What Customer Centricity Is ............................................................................ 74

6.2. History............................................................................................................... 75

6.3. Introduction to CMAT™ .................................................................................. 79

6.3.1. Systems Thinking in CMAT™................................................................. 79

6.3.2. Customer Management ............................................................................. 80

6.3.3. Customer Management Case Study – Malaysia ....................................... 80

6.4. Lean Thinking................................................................................................... 81

6.4.1. Lean Solutions .......................................................................................... 83

6.4.2. Lean in Service ......................................................................................... 84

6.4.3. Lean in Culture and Management............................................................. 84

6.5. What Customer Centricity is Not...................................................................... 85

6.6. Theoretical Sampling........................................................................................ 87

6.6.1. Customer Complaints Management.......................................................... 87

6.6.2. Service Provider Relationships (Key Account Management Theory)...... 88

6.7. Research on Culture.......................................................................................... 90

6.7.1. Introduction to Culture Sub-Section ......................................................... 90

6.7.2. MTN Global Culture Audit....................................................................... 90

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6.7.3. Aligning Capability to Strategic Intent ..................................................... 91

6.7.4. Alternatives to a Culture Audit ................................................................. 92

6.7.5. Value Based Management ........................................................................ 93

6.7.6. Link Planning Requirements to Environment........................................... 94

6.7.7. Usage of MBTI within MTN .................................................................... 96

7. Systemic, Customer Centric Transformation ...................................................... 98

7.1. Customer Centric Strategic Intent..................................................................... 98

7.2. Appropriateness of Organisational Culture ...................................................... 99

7.3. Lean Thinking................................................................................................. 100

7.4. Operational Efficiency .................................................................................... 101

7.5. Service Provider Coopetition.......................................................................... 101

7.6. Customer Understanding ................................................................................ 102

7.7. Customer Centricity........................................................................................ 103

7.8. Win-win-win-win............................................................................................ 104

8. The Rationale for Arriving at the Answer.......................................................... 105

8.1. Viable Systems Diagnosis............................................................................... 105

8.2. Lean Thinking................................................................................................. 108

8.3. CMAT™ ......................................................................................................... 108

8.4. Grounded Theory............................................................................................ 108

8.5. Literature Survey and Data Gathering ............................................................ 110

8.6. Constructing the Causal Loop Diagram.......................................................... 111

9. Evaluation.............................................................................................................. 118

References...................................................................................................................... 128

Appendix A : Glossary of Variables Used .................................................................. 137

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Appendix B : DEVELOPMENT OF RESEARCH PROBLEM MODEL .............. 141

Appendix C : CMAT™ and Systems Thinking ......................................................... 142

1. Analysis and Planning......................................................................................... 143

2. The Proposition................................................................................................... 143

3. People and Organisation ..................................................................................... 143

4. Customer Information......................................................................................... 144

5. Technology Support............................................................................................ 144

6. Process Management .......................................................................................... 144

7. Acquisition.......................................................................................................... 145

8. Retention ............................................................................................................. 145

9. Efficiency............................................................................................................ 145

10. Penetration ...................................................................................................... 145

11. Measuring the Effect....................................................................................... 146

12. The Customer Experience............................................................................... 146

13. External Environment ..................................................................................... 146

Appendix D : Other Possible Approaches .................................................................. 147

D.1. Customer Value Model ....................................................................................... 147

D.2. Schwaninger’s Organisational Fitness Model..................................................... 147

Appendix E : Formulation of the Mess ....................................................................... 148

E.1. Scenario Learning................................................................................................ 148

E.1.1. Key Uncertainties ......................................................................................... 150

E 1.2. The Plot and Logic ....................................................................................... 151

E 1.3. Four Scenarios .............................................................................................. 152

E 1.4. Standard Scenario Learning Process ............................................................ 154

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E 1.5. Strategy Selection......................................................................................... 154

E.2. Interactive Planning............................................................................................. 155

E.2.1 Systems Analysis (what the organisation is and where it is now)................ 155

E.2.2. Obstruction Analysis (what obstructs organisational development) ............ 156

Appendix F : Cultural Appreciative Inquiry ............................................................. 159

Appendix G : Investigating the Usefulness of the Myers Briggs Type Indicator®. 162

G.1. What the Myers Briggs Type Indicator® (MBTI) Determines .......................... 162

G.2. Role of MBTI in Understanding Management and Management Change ......... 162

G.3. Usefulness of MBTI............................................................................................ 163

Appendix H: Handset Procurement & Soft Systems Methodology ......................... 164

Appendix I : Development of Core Variable from Interview................................... 167

FIGURES

Figure 1: Viable Systems Model of MTN (System in Focus is Shaded).......................... 19

Figure 2 : Rich Picture: MTN and the Need for Transformation ..................................... 26

Figure 3 : Rich Picture - Reseller Business Unit Customer Centricity Situation ............. 36

Figure 4 : Behaviour over time of Customer Centricity ................................................... 43

Figure 5 : Concern Causal Loop Diagram for Customer Centricity................................. 44

Figure 6 : The Lean Improvement Cycle.......................................................................... 82

Figure 7. 2006 Staff Opinion Survey against 2005 and other bencharks ......................... 91

Figure 8 : Causal Loop Diagram of the Requirements for Customer Centricity .............. 98

Figure 9: Viable System Model of MTN South Africa .................................................. 105

Figure 11 : Dissertation Process Followed ..................................................................... 122

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Figure 12 : Inter-Relationship Diagraph based on Drivers and Inhibitors of Customer

Centricity......................................................................................................................... 141

Figure 13 : Inter-Relationship Diagraph based on CMAT™ Variables ......................... 142

Figure 14 : CMAT Causal Loop Diagram based on the Diagraph in Figure 13............. 142

Figure 15 : RBU Business Idea...................................................................................... 149

Figure 16 : Ranking of Key Uncertainties ...................................................................... 150

Figure 17 : Strategy Comparison Against Scenarios ...................................................... 155

Figure 18: Rich Picture of Handset Distribution ............................................................ 165

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1. Declaration

I know that plagiarism is wrong. Plagiarism is to use another’s work and to pretend that it

is one’s own.

I have used the Portable MBA convention for citation and referencing. Each significant

contribution to, and quotation in, this assignment from the work, or works, of other

people has been attributed, and has been cited and referenced.

This assignment is my own work.

I have not allowed, and will not allow, anyone to copy my work with the intention of

passing it off as his or her own work.

Signature:

Christopher Geerdts

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2. Acknowledgements

Anne-Margaret, my spouse, encouraged me to pursue my long-held dreams and complete

this EMBA. She provided personal support, ran our busy household whilst I completed

the modules and disappeared off to my study for so many evenings and weekends. My

children, Andrew, David and Natalie, showed such understanding during the many hours

and days I was not available to spend with them.

I appreciated the enormous wider family effort, with my parents, Patty and David,

tremendously supportive, and especially before some of my big deadlines. Alice, far from

being the proverbial mother-in-law, ensured I always enjoyed a welcome base in Cape

Town. My sister, Penny, and brother-in-law, Dennis, pored over my script to point out

gaps in both my thinking and my typing (although I am responsible for the final content).

It was my brother, Philip, who started me on the road to signing up for my EMBA

Our class (EMBA 7) was really where fun met learning. I have wonderful memories and I

hope we cross paths many times after we’ve banked this course and moved on.

The staff at UCT Graduate School of Business really gave of themselves to enable and

participate in a most wonderful mix of discovery, challenge and painful growth. I can see

why so many alumni return to lecture future classes.

Most of my learning was at the difficult coalface of my work, and I am grateful to my

many colleagues who took an active interest in my progress and also ensured any new

ideas I had were rigorously tested.

My own friends, many of whom had been down similar paths to mine, kept my energy

levels from waning at crucial times along the two years.

My mentor, Andrew Brown, gave me important foundational advice to assist me before

and during the important early modules.

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3. List of Abbreviations Used

ARL Action Research Learning

ARPU Average Revenue per User (per month)

CLD Causal Loop Diagram

CMAT™ Customer Management Assessment Tool

GSM Global Standard for Mobile Communications

(previously : Groupe Speciale Mobile)

GT Grounded Theory

ID Inter-relationship Diagraph

MTN Mobile Telephony Networks (Pty) Ltd.

IP Interactive Planning

RBU Reseller Business Unit (of MTN)

SAST Strategic Assumption Surfacing & Testing

SSM Soft Systems Methodology

VSD Viable Systems Diagnosis

VSM Viable Systems Model

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Abstract

I am Marketing Manager and ‘customer champion’ for the Reseller Business Unit (RBU)

of MTN South Africa, a subsidiary of MTN Group, which operates mobile telephony

(cellular) networks in 21 countries.

The cellular industry, both globally and in South Africa has seen growth many multiples

beyond initial projections. Many operators are protected by national regulators and the

fact that the cellular standard is so entrenched.

Significant changes are now taking place, as the market saturates, leaving opportunities

only in the low-end market, but requiring a low-cost operating model. National regulators

are actively intervening to reduce prices, for instance allowing customers to keep their

existing phone numbers when they wish to change network providers. Convergence is

allowing numerous new entrants into the lucrative broadband data market – both a new

opportunity, and a threat to traditional voice markets - as low cost, voice-over-internet

technology gains prominence.

There is also substantial change in the nature of the consumer. Consumers rapidly

commoditise some products (reducing margins), whilst becoming more brand-driven with

other products. Decision making is increasingly influenced by overall consumer

experience rather than simply product functionality. Consumers are more empowered,

able to access comparative information, the experiences of others and information from

consumer activist groups readily on the Internet. Interestingly, cell phones are actually

precipitating the next wave of change because consumers now have constant access to

information and communication wherever they are.

In my marketing experience, there are four broad ways in which MTN and other

operators can respond to these environmental challenges: 1) acquire customers in more

targeted ways; 2) increase customer retention; 3) grow monthly revenue per user; and 4)

develop new markets. The market trends I have described, response strategies and the

implications of each are shown in this Rich Picture, below:-

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Rich Picture: MTN and the need for Transformation

Growth beyondexpectations

Market slowdown(saturation starting in higher end segments)

Pressure tocut costsSearch for

New marketsTargeted acquisition

Segmentation

Retention focus

Target emerging market

Stimulate revenue-per user growth

Increasing competitionMore demanding customersChanging market characteristics

Changes in Market

Responses toMarket Changes

New types of customer

Org designed for high acquisition,

high growth

Threat to move funds to better

performers

Customer Centric Transformation

(Desired Features)

Adaptation and

Learning

Focus on short

term financials

Service OrientationInnovation

Handle speed

of change and

complexity

Attempted Interventions

Restructuring

Process Audits

ISO 9000 (quality management system)

Marketing and branding

Not sure what to do

Resistance to change – current practices still working

Least Cost Operator initiative

Future marketsChanging nature of

customers

412

3

Diversity

Customer ManagementProgramme

Old mindset

Transformation(Inhibitors)

History

Customer Executive

Local InternationalNeed: complex

Product set

Need: serviceorientation

Need: lower Operating

costs

Need: differen-

tiated value propositions

These responses require a transformation in the business so that it can deal with

complexity and diversity, and develop a learning capability – particularly around

understanding and responding (rapidly) to changing customer values and dealing with the

associated complexities. Each type of response needs a fundamental transformation in the

way MTN currently does business. Of the stakeholders identified and analysed for impact

(shareholders, employees, government, suppliers, customers and activist groups), a

number of requirements will be addressed, but the group deserving most urgent attention

is the customer. Effectively, customer-centric transformation is required. I will later

show how customer centricity drives customer value and in turn shareholder value.

MTN has already commenced with such a customer-centric transformation. The first

high-profile initiative was the ISO 9000 audit which resulted in first-in-industry

accreditation for its network (1997) and call centre (1999). There were improvements in

branding, segmentation and use of customer-satisfaction and mystery shopping metrics

(2003 – 2005). Both sets of initiatives were well executed in a narrow functional sense

but failed to take root across the organisation. More system-wide initiatives included the

introduction of customer centricity audits, using a proprietary assessment tool called

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CMAT™, and a significant restructuring into business units based on broad customer

segmentation. These have not achieved significant discernable transformation from a

customer viewpoint, especially considering the significant investment in each initiative.

Results may take a few years to become discernible.

The introduction of a Customer Centricity Executive in 2006 built on these initiatives and

may spearhead transformation. However at the time of writing (January 2007) the

Executive’s functional unit was resourced by only a single staff member (programme

manager) out of a requested four senior staff, and no other budget for the consultant

expertise, training, pilot projects and minor infrastructure upgrades requested. This is

most likely because another significant organisational initiative is aimed specifically at

cutting costs, and this enjoys higher priority and visibility, especially as MTN finances

ventures in new, more lucrative markets.

The organisation is a product of its history, including an intense focus on acquisition and

fierce battles for market share within an oligopoly market. This was achieved through

rapid network rollout, the building of a strong consumer brand and technical innovations

– with MTN claiming a number of world firsts that are now replicated globally.

A unique aspect of the South African cellular industry is that retail services are provided

by Independent Cellular Service Providers, who ‘own’ the end customer. Whilst this

model was initially effective in driving sales and providing customer choice, it also fuels

ongoing conflict over acquisition, ownership of the customer base and discount structures.

The result is mistrust and misalignment and a discontinuity in the management and

delivery of the overall customer experience.

I have two preliminary models of customer centricity as a departure point – my own

model (Geerdts. 2006a) and a model used in CMAT™. When applied to MTN’s current

situation as I have described it above, these in turn inform a preliminary behaviour-over-

time analysis (below), highlighting important drivers (understanding of customer value,

understanding of shareholder value, organisational capability – to deliver as intended,

learning and adaptation) and inhibitors (competition with the ‘least cost’ initiative,

tension and mistrust with the Channel, inability to deliver’ and inappropriateness of the

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culture) to customer centricity. From these I have developed a model which encapsulates

my concern, as follows:-

Problems withcustomer-facing

processesOperationalInefficiencies

Partner(channel)

conflicts andmistrust

Ambiguity ofStrategic Intention

(competingpurposes -

customer centricityand least cost

operator

O

Problems withOrganisational

Culture

O

Ignorance ofCustomer

CustomerCentricity

OO

This causal-loop diagram postulates how the key inhibitors to customer centricity are

creating vicious cycles. Ambiguity of strategic intention is the leading inhibitor,

especially with regard to the problems it causes with organisational culture. It leads to

problems with customer-facing processes, which in turn leads to operational inefficiency

and hence increased cost. Shareholders react with cost-cutting, which reinforces the cycle.

It also impacts on the collection and integration of customer information, which impacts

on customer value. Ambiguity and a poor culture also feed channel mistrust, impacting

on the quality of co-planning.

If MTN is to thrive in the future, steps must be taken to drive the key transformation to

customer centricity and remove the inhibitors blocking this transformation. This paper

addresses what interventions are required with the following research question:

“What interventions will transform MTN into a customer centric organisation so that it is

better positioned to maximise opportunities in its complex and fast-changing

environment?”

My research framework has four cornerstones. I begin with a motivation for and

overview of Critical Systems Thinking (Jackson, 2003), to explain why I have chosen a

holistic, rather than reductionist approach. The holistic approach is more suited to the

complex and dynamic environment of the organisation. I describe the four major

paradigms which exist within systems thinking (Functionalist, Interpretive, Emancipatory

and Postmodern) and the characteristics of each (respectively: goal seeking and viability,

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exploring stakeholder purposes, ensuring fairness and enhancing diversity) and the

process of selecting those most pertinent to my question (Functionalist and Interpretive).

I show why the second cornerstone, the Grounded Theory approach of Glaser and Strauss

(1967), is best suited to my research requirements, as a predominantly qualitative

approach which facilitates the emergence of theory from the data. I augment this with

Layder’s Research Map (1993) to ensure the range of interaction levels (micro to macro)

is systematically covered. The third cornerstone is Action Research Learning, which I

show to be particularly useful within a business context. The final cornerstone is the

concept of Triangulation as the ‘glue’ which binds together my different research

activities, results and perspectives, as well providing a checklist of whether I have swept

enough perspectives into the framework.

Within this framework, I short-list specific methodologies and tools used to gather data –

systems thinking methodologies, interviews, literature reviews and survey results. I also

show how Grounded Theory dictates both core data gathering and ongoing sampling to

test and support emerging theory.

During my core literature review, I explore the concept of ‘customer centricity’ in terms

of what desirable organisational objectives and attributes it espouses and the practical

issues that are associated with becoming customer centric. I build on Day’s definition of

‘a superior ability to understand, attract and retain valuable customers’ (1998, p 8). I

unpack the key words of ability (to deliver on the intent), customers (future and potential),

understanding (insight into wants, latent needs and behaviours), acquisition and retention

(highlighting the shift towards retention and loyalty) and valuable (increasing value by

careful targeting of customers).

I trace the concept of ‘customer centricity’ back to the University of Cape Town, where

Burgess (2003. p 158) maintains that William Hutt first championed consumers’

sovereignty and the concept of marketing, in 1928. Peter Drucker, however, gained more

recognition as the originator of the concept with his famous 1954 quote, “There is only

one valid definition of business: to create a customer – it is the customer who determines

what a business is” (p 57). He articulated a more holistic view of marketing which later

gave way to a departmentalised view. In the 1960’s, Edmund McCarthy encouraged a

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shift from a production-oriented to marketing-oriented approach which was customer-

oriented, integrated across the company and focused on profit rather than simply sales.

Unfortunately he also popularised the concept of marketing mix (price, product, place

and promotion) which (in its various guises) lent itself to teaching aids, but substituted

for the development for true theory (Grönroos. 1994. p 322). Philip Kotler attempted to

return to an integrated, customer-centric approach. Recently, the popular ‘relationship

marketing’ movement has attempted to focus on customer relationships, and once again

to integrate marketing across the organisation. The combination of the internet, increased

emphasis on brand development and a more empowered consumer are all leading to a

proliferation of new concepts.

MTN’s customer-centric initiatives are based on the model inherent in CMAT™, the

proprietary Customer Management Assessment Tool developed to audit annual progress

and benchmark an organisation against global practice (Woodcock. 2005). The model

looks at how well one has segmented customers (by profitability in terms of acquisition,

retention and growth), proactively designed the customer experience for each segment (at

each point of customer interaction) and planned the supporting people, processes and

technologies. It claims to be a ‘systemic’ model because it looks at important measures

across the organisational system.

Customer centricity is distinct from an inward focus, which looks at financials (usually

short term) and blanket cost cutting. It also differs from a mere preoccupation with the

customer in that it is a disciplined and integrated approach which includes active

prioritisation of customer groups and possible responses so as to optimise profitability.

Some companies (particularly high-technology companies) believe that their own

knowledge is more useful than questioning customers, but this is simplistic, because one

should seek deeper insights from customers than answers to simple product questions.

Customer Centricity begins with Strategic Intent. Management need to decide to pursue

this direction and create the conditions, which includes creating the conditions for an

appropriate culture, transforming relationships with the Service Providers (to embrace the

simultaneous competition and collaboration with them) and implementing Lean Thinking.

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These interventions improve operational efficiency and customer understanding, which in

turn promote customer centricity.

LeanThinking Operational

Efficiency

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

CustomerUnderstanding

CustomerCentricity

Customer centricity is shown to improve acquisition and retention, resulting in better

sales, with lower cost-of-sales. Brand equity can build shareholder value. There are

opportunities to charge a premium. There is also the possibility of producing

‘blockbuster’ products based on real customer insights. However, optimal financial

benefits derive from using customer understanding to determine the profitability (lifetime

value) of different customer segments and differentiating customer experience and spend

on each segment.

What emerges from the model is that an apparent contradiction of goals - customer

centricity against cost cutting – need not be diametrically opposed because carefully

executed customer centricity can improve revenue and efficiencies. The resulting

improvements in performance should provide a reinforcing loop to ensure top

management becomes even more focused in setting the organisation on the path to

increased customer centricity.

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1. The End of the Lollipop

Mobile Telephone Networks South Africa Pty (Ltd) (MTN SA) is a cellular network

operator in South Africa. It is part of the MTN Group, which operates

telecommunications networks in 21 countries. I am Marketing Manager for MTN’s

Reseller Business Unit (RBU), established within MTN SA specifically to focus on third

party companies which re-sell MTN’s telecommunications services. As a R5 billion per

annum channel, the RBU is distinguished from the other business units, which sell

services directly to consumer and corporate end-customers respectively. This

organisational context of the RBU is best described in terms of the viable systems model

recursion levels as follows:-

Figure 1: Viable Systems Model of MTN (System in Focus is Shaded)

Recursion: Level 0

MTN GROUP

Level 1

MTN South Africa

MTN Nigeria

MTN Country

3

MTN Country

..21

Level 3

Traditional Business Channel

New (data) Business Channel

International Business Channel

Marketing and Support

Services

Consumer Business

Unit

Shared Services

Reseller Business

Unit

Corporate Business

Unit

Level 2

Other Telecoms Groups

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I have been designated ‘customer champion’ in the RBU, both an honour and a daunting

task for which the expectation is that I will drive customer-centric change in the business

unit - from prodding the executive and his team, to shaping inputs into strategy and

planning, to influencing staff culture and operational detail in the channels my business

unit serves.

There is an organisational customer centricity transformation forum, headed by a

Customer Services Executive and charged with promoting customer centricity across the

South African operation. I represent the RBU within this programme and also liaise with

the head of the group-wide customer centricity initiative.

1.1. Heady Growth

The cellular (mobile telephony) industry worldwide has enjoyed growth beyond the

imagination of its pioneers. According to a 2005 press release from the GSM Association

(the world body representing GSM operators), there were one billion mobile telephony

subscribers by 2002 (twenty years after the first modern-day cellular phones were

introduced). Incredibly, it took only 30 months to connect the second billion subscribers

by 2005 (GSMA. 2006a).

GSM is the name of the technical standard most commonly used in cellular telephony.

The technology itself is not relevant to this discussion What is relevant is that the growth

is fuelled by a virtuous cycle where the early dominance of this single standard in most

countries enabled national regulators to then standardise on GSM, leading in turn to

technology enhancements and reduced costs which further entrenched the standard and

introduced the benefit of full interoperability between most countries in the world. GSM

now has about 82% market share globally (GSMA. 2005), and in Africa this is higher, at

99.5 % (GSA. 2006).

This growth beyond expectations also occurred in South Africa: Whereas Telkom had in

1992 sized the full South African mobile market at a potential 18 000 subscribers (Gibbs.

2004. p 17), and MTN South Africa’s business case at launch contemplated a maximum

of 500 000 subscribers after 10 years, the actual figure was 10 million, with a group

revenue of R24 billion (Gibbs. 2004. p 6).

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Cheaper handsets are a major driver of growth for lower-income consumers. The GSM

Association coordinated a programme to reduce handset prices which resulted in a sub-

$30 (United States dollar) handset (GSMA. 2006b). Infrastructure vendors are reducing

the capital and operational costs of providing basic coverage to new areas.

The South African government, as is the case with most countries, issues a cellular

licence to a limited number of operators, and the resulting oligopolies have been afforded

a certain level of market protection.

1.2. Signs of Change

Clearly high growth within a protected market cannot continue forever. The most

significant limiter is market saturation. For each country, uptake follows a saturation

curve, where the rapid take-up slows as the potential market becomes highly penetrated.

Europe was the first to introduce GSM, and now has 15 countries, including Sweden,

Italy, Austria and the United Kingdom, showing market penetration of over 100% of the

population (GSMA. 2007). Developing countries are still following a high-growth path:

South Africa is experiencing steady overall growth, but with the reducing number of new

high-income customers supplemented by lower-income customers who yield lower

marginal returns per subscriber.

A second driver of change is convergence of services offered, enabled by wireless

broadband data. This offers new revenue opportunities of wireless access and

multimedia services in a market space already inhabited by fixed-line players (e.g.

Telkom, Cisco) and content players (e.g. Naspers). Wireless broadband also presents

threats in the form of new, licensed market entrants. The result is increasingly complex

service offerings, yielding lower margins. There is less technology standardisation, with

high capital costs and therefore higher risk. Voice-over-data solutions offer low-cost

voice products which erode traditional GSM revenue and margins. Again there are new

entrants offering these services.

A third key limiter is government pressure to reduce tariffs. In 2005 and 2006 there

were hearings by the Regulator, hearings by a Parliamentary Committee and two

colloquia by the Department of Communications. The first concrete action taken by the

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government has been the introduction (in November 2006) of Mobile Number Portability,

which allows customers to keep their cell phone numbers whilst changing their operators.

Such empowerment is intended to give customers more choice and therefore put

downward pressure on pricing and upward pressure on service. The implementation of

this facility is enormously complex and includes the creation by the cellular operators of

a new jointly-operated entity to manage a master database of which subscribers are on

which network.

Two other proposed government initiatives are to force shorter-duration postpaid

contracts (thereby reducing the period for which customers are ‘locked in’) and to reduce

interconnect prices (the prices at which one operator agrees to terminate incoming calls

from another operator). A different initiative is to force all cell phone users to register

their identities and residential addresses (Government Gazette. 2003). Although this

measure is intended for crime prevention, the impact on the operator is to stifle sales

distribution networks in the informal sector, whilst also increasing overall complexity.

1.3. The Rise in Consumer Prominence

There are broader changes in market and consumer dynamics which impact MTN’s

traditional market position. The cellular industry has its unique aspects but it is also

subject to global retail trends. This is because cellular has a strong consumer distribution

footprint ranging from all the main mass retail brands to dozens of small stores and spaza

shops.

In their article on future retailing trends in 2010, Gagnon and Chu (2005) assert that

“today’s market forces are shaping a global consumer marketplace that will look radically

different in 2010, forcing retailers to make profound changes to their practices and

business models to survive.” (ibid. p 13). As the article states, the market forces and

trends referred to are in play today and need a response. The article warns that

“traditional strategies will not be adequate to cope with trends that will push the retail

industry …” and asks “what capabilities will retailers need to remain relevant …? How

should retail executives begin preparing?” (ibid. p 13).

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Gagnon and Chu identify two trends which are central and appear key to understanding

the future of retailing because they would determine the fundamental strategy (what to

become). The first trend is that consumers are increasingly purchasing certain products

based largely on price – commoditisation. These are goods where customers ‘perceive

no unique value’ (ibid. p 16). The only retailers who will survive these trends are those

who can offer lowest-priced goods. Currently these are the larger companies with

efficient processes and economies of scale. A parallel trend is that certain retailers are

able to offer unique value in such a way that consumers are prepared to pay a premium

for the niched or branded product, creating a higher-margin business. The important

point is that the portion of the market which does not pay attention to either brand

development or cost-cutting will shrink as it will lack relevance to any particular

customer grouping or need (ibid. p 16).

The increasing prominence of brand management and development is a core theme of

Cook (2005) who sees brand strategy as integral to corporate and business strategy. The

way that consumers interact with a brand has changed, largely as a result of the Internet.

Watson et al. refer to Über-commerce, “predicated on the characteristics of network

ubiquity, universality, uniqueness, and unison” (2002. p. 333). ‘Ubiquity’ refers to the

imbedding of processors into appliances, vehicles and other devices. ‘Universality’ refers

to interoperability, which to the customer means that devices generally work regardless

of which country and network they are on. ‘Uniqueness’ refers to the tailoring of services

to individual context and requirement, and ‘unison’ to full integration of schedules,

contacts lists and the like.

Cell phones greatly extend the ubiquity concept in terms of coverage and affordability

and ensure that the phenomenon can generalise to a wider number of countries globally.

The changes mentioned by Watson et al. clearly have a significant impact on society, but

will certainly increase the complexity and rate of change of telecommunications.

Evers (2006) reveals a few salient components of this increasing consumer empowerment

and resulting behaviour. The consumer experience was always important, but is

becoming more central to the purchasing decision: “If consumers look for a certain

experience, not a specific product, your competition may be anyone fighting for your

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customers’ experience dollars, pounds or euros. It also means experience expectations

may be set in other industries than your own.” (ibid. Slide 47).

Consumers have better choice now that they have easier access to and can compare

product and pricing information. They can also access the experiences (positive or

otherwise) of other customers and consumer activist groups. Examples in South Africa,

include the general consumer site Hellopeter (www.hellopeter.com) and the anti-Telkom

site Hellkom (www.hellkom.co.za).

If the Internet precipitated the relationship of customers, brand and organisations, the cell

phone will surely feature more prominently in the next wave of change. “The multiple

discontinuous connection points (home phone, work phone, and e-mail) are rapidly being

usurped by the single, always reachable, mobile phone.” (Watson et al. 2002. p. 334).

The deeper implication of this claim is that the mobile phone business is not only

experiencing a changing business context, it is central to the change that is taking place.

“Networks (e.g. phone, Internet, cell phone) are the lubricants of modern enterprise, and

emerging network developments … will refashion the topography of business (Watson et

al. 2002. p 334). Cellular network operators are not simply passively experiencing

environmental changes, they are (consciously or not) part of the transformation.

The cellular industry therefore needs to adapt to a fast-changing market which is

saturating, is significantly more competitive, is extremely complex and is under

unprecedented pricing pressures. The complexity is increased by the strong, two-way

interaction between the industry and its environment. High-end customers, empowered

with information and with choice, are more demanding, whilst low-end customers require

new distribution channels to reach and serve them.

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2. Adapting to a New Environment

Given these rapid and complex changes in the marketplace, and the increasing demands

which result, it is important to understand how MTN has responded and is responding to

its environment and to these market changes. It is also important to understand how the

organisation has transformed itself in order to be better prepared for such change. If these

responses are adequate, then MTN is well equipped for the future, but if they are not,

then further interventions will be necessary and it is important to then understand what

problem areas require intervention. Such an analysis would require a deeper

understanding of MTN’s situation and the key underlying dynamics.

2.1. Organisational Legacy

Market conditions have shaped the type of organisations that cellular companies have

become, with two defining features – high growth, and protected markets.

The high and unexpected market growth in the first 11 years naturally gave rise to a

particular type of organisation. The cellular companies initially geared for high

acquisition and rapid coverage rollout. The sales team and technical department enjoyed

expansionary budgets. The product range was simple, and focused on handset desirability

and price. Product functionality was based on new features offered by infrastructure

providers, and the features were typically introduced by the technical department.

Corporate sales were discount based.

Market duopolies and oligopolies also influenced the type of organisations which have

developed. In these cases, competition is seldom around the core pricing. The focus is on

brand development and innovation. In terms of brand development, marketing spend

amongst operators is high. One sees cellular advertising dominating on television, in

printed media, on billboards, public transport and in most airports. When I visited

Vodafone UK Plc in 2001, I was told by a senior manager that Vodafone’s aim was to

become the number five brand in the United Kingdom, and number ten in the world.

They had recently signed a brand advertising deal with Formula 1 and Ferrari.

Innovation is driven by the intense competition for new customers and the relative youth

of both the companies and their employees. For instance MTN was one of the first

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operators to launch prepaid cellular, which is the single innovation most responsible for

global growth. The platform which was developed by MTN and its network vendor

became the global best selling solution. MTN also provided the first GSM-based vehicle

tracking system globally.

2.2. MTN Response to Changing Markets

As with many other cellular network operators, MTN has recognised the need to respond

to the changing market described, and adopted four generic approaches: acquiring

customers in more targeted ways, increasing customer retention, growing monthly

revenue per user and developing new markets. These are represented graphically in

Figure 2. Although these approaches cover the important elements of a strategy, their

success depends on how well they are executed and whether or not MTN is equipped to

cope with the requirements for each approach to be successful.

Rich Picture: MTN and the need for Transformation

Growth beyondexpectations

Market slowdown(saturation starting in higher end segments)

Pressure tocut costsSearch for

New marketsTargeted acquisition

Segmentation

Retention focus

Target emerging market

Stimulate revenue-per user growth

Increasing competitionMore demanding customersChanging market characteristics

Changes in Market

Responses toMarket Changes

New types of customer

Org designed for high acquisition,

high growth

Threat to move funds to better

performers

Customer Centric Transformation

(Desired Features)

Adaptation and

Learning

Focus on short

term financials

Service OrientationInnovation

Handle speed

of change and

complexity

Attempted Interventions

Restructuring

Process AuditsISO 9000 (quality

management system)

Marketing and branding

Not sure what to do

Resistance to change – current practices still working

Least Cost Operator

initiative

Future marketsChanging nature of

customers

412

3

Diversity

Customer Management

Programme

Old mindset

Transformation(Inhibitors)

History

Customer Executive

Local InternationalNeed: complex

Product set

Need: serviceorientation

Need: lower Operating

costs

Need: differen-tiated value propositions

Figure 2 : Rich Picture: MTN and the Need for Transformation

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I will now discuss these potential responses and then describe MTN actual initiatives (to-

date) in order to determine whether or not they are adequate to meet the new challenges

of the marketplace and to better understand what form an organisation would need to take

in order to respond adequately. I argue that these initiatives have been insufficient for the

new environment and that implementation of any one approach, or combinations of the

four approaches, requires a fundamental internal transformation.

2.2.1. Customer Acquisition

The first response is to develop more sophisticated acquisition programmes. The most

important element is to segment the market (beyond the old, basic “corporate” versus

“consumer” split), and then target each segment with a specific, relevant value

proposition. A new segmentation must find niches ranging from the high value markets –

which are approaching saturation but offer more profitable customers, to the low value

markets – which have high numbers of low-revenue customers. Components of the value

proposition such as price are easily duplicated by competitors, whilst other important

elements, such as customer experience (mentioned in the previous section), are difficult

to conceive, implement and maintain. Creating an emerging market customer proposition

requires the lowering of the operational cost structure and establishment of appropriate

channels.

MTN previously (in 2003) developed a segmentation model, but found it difficult to

implement. It has now developed a second model and is busy developing multiple value

propositions in conjunction with an international consulting firm. The problem with this

development is that it is far from being imbedded into the organisation. Implementing

such a model is complex and has organisation-wide implications. Therefore it requires

strong commitment by leadership and good coordination across the organisation, to

succeed. There is currently no integration between the business units, and no process and

planning alignment beyond those developing the pricing and products. The segmentation

model is not shared with the Service Providers because they are competing for the same

customers and also selling competitors’ products.

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2.2.2. Customer Retention

As any market saturates and customer acquisition becomes more difficult, retention gains

prominence. Customer retention is reputedly less expensive than acquisition (Reichheld.

1996. p 45) (Hope and Hope. 1997. p 111), although it is not cheap. A predictable,

orchestrated and comprehensive customer experience is a sine qua non of customer

loyalty.

MTN has promoted loyalty for its very-high-value customers through a loyalty

programme, where they are offered higher service levels and more frequent handset

upgrades. However, this programme has lacked consistency – one of the very pre-

requisites for engendering loyalty – and is launched and presented differently each year.

There was no emerging evidence that the loyalty programme was increasing retention of

targeted, high-value customers, compared to the comparable base not on the programme.

For the wider customer base, retention has only recently become a highly-visible issue

with the introduction of Mobile Number Portability in November 2006. MTN has not

undertaken an analysis of the financial drivers of retention. A customer experience

programme is planned for 2007, but (as of March 2007) there is no detail within the plan.

Service Providers have their own retention plans. Their concern is not so much with their

customers staying on the MTN network as with their customers staying with them.

Orchestrating a customer experience through independent third parties is difficult, and

particularly so (as I discuss in Section 2.5) when there is mistrust and poor

communication.

2.2.3. Growing Revenue per Customer

As absolute customer numbers level off, the most obvious way to continue growth is to

increase the monthly revenue per customer (this is known in the cellular industry as

ARPU – average revenue per user). Growth is achieved by launching new products, and

finding and promoting new uses for cell phones.

MTN has a tradition of robust product delivery with a number of local and global firsts.

Product development is key to usage stimulation. However in the past few years there

have been very few products that have had a material impact on ARPU and the product

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development process itself has been flawed. In fact, at an MTN planning meeting I

attended on 14 December 2006, this was flagged for urgent attention, with the roadmap

for 2007 described as vague, unrealistic and lacking the endorsement of the business units.

2.2.4. Finding New Markets

A final key response is to find new markets. This can be achieved through innovation,

through developing either new product types or entirely new market segments. In the case

of cellular, it is typically found by acquiring new licences in new countries, particularly

in developing countries, where new licences are still being issued, and there is still low

penetration and hence significant opportunity for growth of traditional cellular services.

MTN has a proud history of innovation which earned it an early reputation in the global

GSM community – especially for its early global short messaging services. It has also

excelled in areas such as vehicle tracking. The most recent significant innovation was

MTN Banking, where the SIM card represents the primary banking interactions

mechanism (rather than an adjunct) with the customer able to actually register a new

account on-line. MTN is still capable of launching market innovations. However these

have limited market impact – they are not the market-changing innovations that were

seen in the past with products such as prepaid.

In terms of finding new geographical markets, MTN is a market leader in the emerging

market – winning 11 licences individually and a further 10 through a company

acquisition. The growth potential of these 21 countries is significant. As a group-level

acquisition, this is outside the scope of this research. This growth does, however, place

MTN SA under even more pressure because its financial metrics lag the group

benchmarks and it cannot compete with other group operations for investment capital.

Failure to compete compromises its ability to fund growth and carries the threat of the

operation being sold even if it appears successful in its own right.

New market opportunities in South Africa itself are most likely to be found in either the

emerging market, or in wireless data and voice convergence. MTN has no clear master-

plan to either explore these opportunities or mitigate new competitive threats.

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2.3. Attempts at Transformation

It is clear from this description of MTN’s performance in terms of the four key responses,

that even though MTN South Africa is growing as a company, part of a world-leading

group, and showing exceptional returns, it is failing to respond adequately to significant

threats in its environment. Many of the environmental changes require a higher level of

customer responsiveness, and the four types of responses in turn require a higher

knowledge of, insight into, and attention to the customer.

Transformation initiatives have clearly not succeeded in terms of the above outcomes. It

is nevertheless important to understand the main ways in which MTN has tried to

transform itself to be better equipped to respond appropriately. One needs to understand

how each initiative has contributed to overall change, so that future interventions can

learn from failed initiatives, and build on what has been successful.

2.3.1. Process Audits

The first explicit performance improvement project was the drive for quality

accreditation. Focusing on two areas which impact the customer – the call centre and the

actual network. MTN became the first cellular operator in Africa (Gibbs. 2004. p 159) to

achieve ISO 9001 (International Standards Organisation) grading for its network (1997)

and ISO 9002 accreditation for its call centre (1999). ISO 9000 standards are

international standards for the auditing and accreditation of quality management systems.

This project was initiated at a time when MTN had grown rapidly and there were

inadequate systems in place to cope with the expansion. ISO introduced much-needed

review of processes and procedures and forced the call centre to review its activities in a

more standardised and less ad-hoc way. It also provided an opportunity for tangible

differentiation in the market and is an expressed requirement by banks of their suppliers.

However, the weekly call centre statistics (November 2006) show that it is still not

uncommon to wait 15 - 30 minutes for an operator when calling the customer care line.

The most recent 9001 network audit report in July 2006 confirmed ongoing accreditation

(SABS. 2006. p 2) but expressed deep concern (ibid. p 3) that “management and

improvement of the system … is not what it should be.” The report expresses concern

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that the documentation is “outdated and irrelevant” (ibid. p 3) and that management no

longer appears to be using the ethos behind this standard as the driving force in the

organisation. Rather than becoming part of the core drive of management, guiding MTN

towards transformation, the initiative was simply an audit exercise which has itself been

sidelined and is in need of attention.

MTN has seen attempts to improve project management, product management and

process mapping, with supporting software, training and external audits of these activities

against ‘best practice’. These actions seldom make a significant difference to the delivery

of customer value. An example of failed attempt to improve values is given in the handset

procurement case study (Appendix H: Handset Procurement ).

2.3.2. Branding and Marketing Initiatives

As stated in Section 2.1, MTN has from the start had a significant brand marketing

budget. A customer satisfaction index was established in 2001. In 2004 a comprehensive

brand strategy for the group was implemented, which improved the brand rating. This

was aligned with brand tracking, mystery shopping, customer satisfaction surveys and

advertising tracking and focus groups. Externally researched indices were also tracked,

such as the South African Satisfaction Index for Telecommunications (Barnhoorn. 2006).

Brand is obviously important in cellular, and MTN needs to spend to ensure its brand is

at least as visible as its main competitors. Market research to track branding is also

important. Mystery shopping is an important component of the management of customer

experience. However, individual scores are level for brand and are declining for customer

satisfaction and for mystery shopping. Initiatives such as brand promotion, product

development and overall customer experience management seem to be disjoint and not

part of a sustained transformation programme.

2.3.3. Customer Management

An audit tool for assessing customer management, known as CMAT™ (Customer

Management Assessment Tool) was introduced in 2003 for execution on a group-wide

drive, sponsored directly by MTN’s Chief Executive Officer, to differentiate specifically

on customer service. The assessment exercise has since expanded into a deeper,

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‘customer centricity’ project known as ‘Customer Management’ which was recently

endorsed by MTN’s Chief Operating Officer as a top priority for Southern Africa.

CMAT™ is described in Appendix C and researched in Section 6.3. The local consultants

undertaking this were introduced into MTN by the Managing Director and have enjoyed

high profile. The score has improved over the years. However the 2006 assessment

scoring revealed that MTN SA had achieved only half of the increment targeted for the

year and was still well below the top quartile benchmark organisations.

The first attempt to use the CMAT™ principles to effect widespread change was a

specific initiative run from the Managing Director’s office in 2004. The plans was to ‘fast

track’ improvements in customer service and move the customer satisfaction index score

from 74% to 90% within the year. The project included a national internal road show on

brand and values. The Call Centre received substantial focus and Customer Services

Representatives were told that they were the most important people in the organisation.

Many of these ‘important’ people have now been transferred into an outsource company,

and customer service is still regularly on the management agenda as a crisis which has

not yet been solved.

The MTN Group has now adopted CMAT™ as its standard measurement tool across its

21 operations (with one or two countries still to enter the programme). A group-level

executive coordinates improvements across operations. An example of such coordination

is encouragement of best practice through appointment of a champion on various aspects

of customer management. Another is to use an intranet to share information. The best

practice model is limited because high-scoring countries are often those with the simplest

operating models. For example, MTN Nigeria has strong control of its distribution chain

and minimal legacy systems and partnerships. It is easier to manage the customer

experience when there are fewer third parties and legacy systems to manage. The higher

score does not imply that the person managing the programme has more experience or

can assist in a more complex market.

At the time of writing there was no evidence that previous programmes have led to

sustained customer service improvements or differentiated MTN from competitors. In

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fact, MTN scores lower than competitors on all the metrics used (and mentioned earlier

in this section).

2.3.4. Restructuring

The business units recently emerged from an extensive restructuring, designed at

considerable expense with inputs from international and local consultants. The goal was

to create a significantly more customer-centric, agile and responsive organisation, which

was positioned for growth, efficiency and competitiveness in an increasingly difficult

environment. New functional units were either business units or shared services.

Although some form of restructuring occurs at least once per year at MTN, the recent

formal structural change was more fundamental. The cost and impact on the organisation

was substantial. Changes commenced in September 2005 and are not yet finalized. Many

individuals have yet to be allocated formal new positions and there are gaps in

responsibilities which have yet to be resolved. Whilst it is difficult to determine whether

the organisation has benefited or not, there is certainly consensus that the significant

expected benefits have not been realised.

The business units were designed to enjoy a high degree of autonomy, to empower them

to translate their focus on sales and the customer into organisational changes. However in

reality the business units are compromised by three factors as follows:-

Firstly, the strongest directives within the organisation remain financial targets. An

example of this is that decisions about monthly sales incentive funding is made by

finance and then issued to the business units without interaction about market conditions.

Secondly, there are strong and influential personalities within the shared service

departments who continue to dictate processes and requirements which conflict with

those of the sales unit. This is well illustrated through a viable systems diagnosis (in

Chapter 8) which shows the autopoeitic nature of these services.

Thirdly, there is still a strong remnant of the old mindset amongst certain individuals. As

an example, the brand review process is specified by brand managers and the business

units must comply. This involves pre-set weekly meetings. In fewer than 50% of the

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cases is it practical to have such a meeting and therefore the review adds little customer

value.

2.3.5. Customer Services Executive

An executive was appointed in October 2006 specifically to champion customer

centricity at MTN South Africa and reporting directly to the Managing Director. This

appointment underpins the commitment of the organisation to becoming customer centric.

It is too early to tell what the outcome of this appointment will be. However, as at the end

of the 2006 financial year, the Customer Service Executive had no approved budget for

the requested staff, the consultancy fees required to assist her with analysis, the funds to

make some of the smaller changes already identified and the costs of facilitating an

organisational forum.

2.3.6. Cost Cutting

A desire to cut costs is generally present in maturing industries, commencing with

discretionary costs and then looking deeper into staff rationalisation and tightened capital

expenditure policies.

Cost-cutting is more visible than customer centricity initiatives because it is easier to

determine and measure targets and the impact on the share price is immediate.

Cellular operators with multi-national presence invariably cut costs by centralising

procurement and standardising on underlying platforms. A well publicised example is the

One Vodafone project, where Vodafone Group Plc announced publicly its plan to save

over ₤ 2.4 billion across its operations in this way (Halford. 2005. Slide 3).

MTN has a group wide initiative called the ‘Least Cost Operator’ initiative. Best practice

is shared between country operations, whilst cost-cutting targets are imposed on each

country operation based on both within-group and across-industry benchmark metrics are

imposed. Targets include both operating and capital costs, since investment analysts track

industry-specific performance metrics based on both of these.

The cost-cutting is regarded as customer centric because it is argued that network

infrastructure capital expenditure efficiency allows one to provide coverage to a wider

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number of communities, and operational cost efficiency allows one to chase emerging

market customers, with a lower monthly spend.

Whilst cost-cutting does put pressure on the organisation to become more efficient, my

experience in our business unit is that it has also led to a far greater focus on financial

results. Much time is spent arguing the numbers and determining how to achieve them or

work around them. Much attention is given to freezing and reducing head count, as well

as how to circumvent restrictions imposed. Customer centricity and cost-cutting compete

for management time and focus. This is inward looking, with little discussion around the

link to customer experience or delivery of value. An example is the outsourcing of staff-

intensive functions (at the same or higher cost than running these in-house) to reduce

head count. Another example is delaying capital expenditure on radio upgrades, resulting

in a poorer customer experience and pushing up coverage complaints.

MTN focuses on margin rather than profit. It determines its required margins and then

determines the outputs needed to achieve those margins are achievable. This point does

not equate to the maximum profit point.

One issue which is vexing to MTN is that commissions to Service Providers constitute a

significant component of the total customer price (over 25%) and these margins are hard

to reduce, being cast in long term contracts.

2.4. The Challenge of Customer-Centric Transformation

It was determined in Chapter 1 that MTN’s environment was changing rapidly, with

significant threats imminent. It then became clear early in this chapter that MTN’s market

response was well intended but simply inadequate, and that management attempts at

customer-centric transformation are not rapid and decisive enough to meet the threats. It

is therefore important to understand more clearly what type of organisation would be best

suited to respond to current and prospective customers in the new environment, the core

of the problem with the organisation in its current state, and what key interventions

would bring about the desired change.

I have developed a Rich Picture in Figure 3 (below) which provides a graphic depiction

of the environment, stakeholders, perspectives, issues and related dynamics. A few of

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these have been described, whilst the remainder will be discussed in the rest of this

section.

Situation - Rich Picture

MTN

Changing Environment

We want more profit and less spend!

We will monitor your

performance closely with our

BSC metricBe more ‘customer centric’

CUSTOMERVALUE

MD’s promotion of CMAT

Com

ple

x &fa

st c

han

gin

g

Now restructured intoBusiness Units

Direction of

TelecomsIn South

Africa

$

MTN Staff

We want to be customer centric but our main

drivers are “MD’s orders”

and KPI’s

New entrantsCompetitor activities

New technologiesDe-regulation

We are also your customer.

Treat us right and also give

us big commissions else we simply sell your competitor’s

products

We want our needs met at the right specs, place,

price (etc)

Our needs are changing

We are all different

ResellerBusiness Unit

Issue: Value proposition not clear

Issue : New structure but old

mindset

Suppliers

Business Processes:

Under review. Vast room for

Improvement. Internal and external

Experiences ‘horrendous’!

We understand markets in

other countriesWe can be part of your

customer centricity planning.

Our agenda is to sell more of

our products to you

Individual staff members

Resellers

End Customers

Senior Management

Currently little longTerm planning

Figure 3 : Rich Picture - Reseller Business Unit Customer Centricity Situation

A detailed stakeholder analysis of MTN was recently completed (Geerdts. 2006c.

Appendix C) to determine areas where MTN fell short in meeting the needs of

stakeholders. In terms of potential and likelihood of impact, the short-list of high scoring

groups were shareholders, employees, government, suppliers, customers, Service

Providers and activist groups. This work is now extended for this research by considering

how stakeholders see MTN (how it is an asset for them), and how they would gain or lose

if MTN were to become more customer centric. The key findings of this analysis are

tabulated in Table 1, below.

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Stakeholder The Assets they see in MTN How they Gain (Lose) from Customer

Centric Transformation

Customers Provider of communications service for personal needs (for example communication, social contact, self-expression, security, business, information, entertainment)

Gain from better value, better service.

New, better ways to meet their needs

Shareholders Financial return on shares purchased

The means to transform a country

Gain from better revenue

(Perceive loss to short term profits)

Managers (employees in senior management)

Source of financial, self-actualisation (and career) and social needs

Source of power

In reality they gain from doing more meaningful work and improving the financial situation of the company.

In terms of perception they may see it as simply more work in an activity of dubious value

Employees Source of financial, self-actualisation (and career) and social needs

Gain from more meaningful work, more successful company

(Old mindset: Perceive loss from the effect of changes)

Government Means to provide universal service & gain political goodwill; tax revenue

Gain from more satisfied customer-voters

Suppliers Sales revenue; reference company Gain if their products were genuinely adding value; gain by showcasing MTN to other networks

(More demands will be placed on them)

Consumer interest groups

Typically want more value and better service at lower cost

Their cause will be promoted if they are representative. (Their relevance will decline as MTN becomes more responsive

Service Providers MTN provides them with underlying service off which they make money and build a customer base

Gain through increased sales.

(Lose if MTN wants a more direct relationship with the customer)

Table 1 : Stakeholder Interests vis-à-vis Customer Centricity

A more detailed analysis of specific stakeholders in Table 2, below, reveals the identified

stakeholders and their understood positions relative to customer centricity. The positions

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are categorised as supportive, nonsupportive, marginal and mixed blessing. The

respective responses (involve, monitor, defend and collaborate) are shown in Table 2:

Supportive/Involve: A few staff within RBU Other channels within RBU Key staff in the RBU Helpdesk Group of high-usage customers with whom I have direct contact IT shared service Ericsson South Africa (supplier)

Mixed Blessing/Collaborate: Staff within RBU Helpdesk Service Provider B Service Provider C Network shared services MD, RBU Executive, Board Members (supports CMAT™ but not necessarily the initiatives proposed in this document) Central Marketing Department

Sta

keh

old

er P

ote

nti

al

for

Co

op

erati

on

->

(in

crea

sin

g)

Marginal/Monitor: Project and Business Optimisation office Suppliers X, Y Service Provider D (may themselves be customer centric but not participating in MTN initiatives)

Nonsupportive/Defend: Key staff within Strategy and Product shared services Service Provider I (work to move at least to Mixed Blessing) Disgruntled customers with whom I have contact Service Provider A Other business units

Stakeholder Potential for Threat -> (increasing)

Table 2 : Response Strategies for Key Stakeholders

Beyond customers, shareholders, and government regulators (whose needs have already

been discussed), a number of significant stakeholders warrant further analysis. These are

consumer activist groups, managers, employees, and suppliers.

Consumer activist groups arose as a reaction to poor service and customer value, and as

MTN becomes customer centric, involvement should shift from reactive interaction with

‘protest’ consumer groups, to proactive interaction with selected ‘special interest’ groups.

However in the shorter term MTN can expect engagement on a frequent basis with

consumer groups as long as increasing consumer expectations go unmet.

Managers’ performance is measured by Balanced Scorecard key performance indicators,

except that they are not ‘balanced’ in the sense that they combine the tangible and

intangible assets into an aligned strategy (Kaplan and Norton. 2000. p 5). They are rather

almost entirely financially-focused, with the CMAT™, customer satisfaction and staff

satisfaction targets included almost as competing priorities. The stringent and competing

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targets create levels of stress which are very evident when interacting with these

managers.

This inherent stress is exacerbated because MTN cannot accurately be described as a

learning or adaptive organisation. This is a reflection on management style and prevailing

culture. I will support this statement with the data I have gathered, in Chapter 8.

Employees (including managers) are undoubtedly important stakeholders who impact

customer experience and the delivery of customer value directly, and especially so in this,

a service industry. It is particularly important to understand what impacts employee

support and empowerment. The recent restructuring and other internal events have had a

demoralizing, disempowering impact on staff.

For many employees at MTN, customer centricity is a very new mindset and there is

much ‘old thinking’ and associated baggage to contend with. It is also a complex concept,

so that someone who offers good personal customer service may not necessarily be

customer centric if their customer contact plan is not related to returns on their activities.

Staff in the shared services functions are still in transition to the new structure. They need

to buy into the customer centricity mindset and plans and also be integrated into planning

and delivery. Since processes are not generally made explicit (let alone documented),

these staff are often not aware of how their contributions ultimately add value.

Many suppliers are multinationals themselves and have organisational knowledge on

customer centricity. They are also in various stages of transition. ‘Equity’ suppliers can

also offer new insights into the local market.

Service Providers have a unique role in this and are therefore discussed in more detail.

2.5. The Independent Cellular Service Provider – a Unique Challenge

The South African service provider model was established by the government regulator

and based on the model in the United Kingdom at the time. Under the model, MTN

operates as a wholesaler of cellular services, and Service Providers retail the services to

end customers. Indeed, Service Providers own the billing relationship and must perform

customer acquisition, credit vetting, bill presentation and primary support. Debt risk is

with the Service Provider.

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The relationship between MTN and the Service Providers has not been easy. In the days

after MTN launched its services, there were a number of Service Providers - 12 at one

stage (Gibbs. 2004. p 45) - and their role was seen as crucial to build up subscriber

numbers. Indeed, they delivered on these numbers and made an important contribution to

the rapid uptake of GSM in South Africa.

Over time the providers have consolidated so that MTN now has only five Service

Providers. MTN Service Provider is the in-house provider, a wholly-owned subsidiary of

MTN Group accounting for sixty percent of postpaid sales. Nashua Mobile, Altech

Autopage Cellular, iTalk Cellular and Orion Telecoms are Independent Cellular Service

Providers who offer services from the three cellular operators as well as broadband

network providers.

As the market has matured, and MTN has taken a more hands-on approach to distribution,

question have arisen about the value the Service Providers add, especially relative to the

high margins they were demanding (in some cases exceeding 25%), over and above the

connection incentives.

The world trend is now towards direct sales channels, as they allow better brand and cost

control. MTN South Africa is the only one of 21 operators in the MTN Group which

distributes through the Service Provider model. In addition, the model is used only for

postpaid customers. Prepaid customers have direct relationships with MTN. One can

argue that if the service provider model were to be replaced by direct sales, at realistic

margins, prices could become more competitive and the customer experience could be

better managed.

However, the Service Providers are both powerful and effective. Nashua Mobile is owned

by the Reunert Group, and Altech Autopage Cellular is owned by Altech. Both parent

companies are in the top-forty index (Alsi 40) of the Johannesburg Stock Exchange.

Their combined subscriber base accounts for forty percent of the postpaid market and

includes some significant corporate accounts and high value customers. Their base

continues to grow well. Independent partners potentially bring diversity to distribution in

terms of target segments, sales techniques and approaches, and brand. It is significant that

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Service Providers are successfully selling cellular services regardless of which operator’s

services they sell, so it is a case of working with them or losing out on their sales.

The tension between MTN and its Service Providers is substantial. It is fuelled by

competition for customer acquisition (with direct channels), competition for customer

ownership and ongoing tension about the commission structure. This has also resulted in

mistrust on both sides and as a consequence there is little mutual sharing of information

and strategic plans. For example, there is no joint planning around product requirements

or product launches. Typically their involvement begins when they are notified (between

1 day and 30 days prior to the event) that a new product will be launched! An information

pack is supplied and training is sometimes provided for sales staff in the main regions.

2.6. Summary

It is now clear that customer centric transformation needs to occur more rapidly than it

has been to date and that certain organisational interventions are required to direct and

expedite the transformation, informed by factors which include the environment,

organisational legacy, stakeholder issues and responses. There needs to be more

understanding of the specific drivers and inhibitors of change as well as the interaction of

these factors. Developing this model will be the focus of the next chapter.

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3. Customer Centricity – How to Make it Work

It is important to develop a hypothetical model showing the inhibitors and drivers of

customer centric transformation for MTN, as well as their interactions. This model will

enable appropriate interventions to be designed, implemented and tested in a learning

cycle. Without this model and approach, interventions will continue to be ad hoc and true

transformation will be compromised.

The outputs from the initial Scenario Learning process described in Appendix E brought

into focus the fundamental need for MTN to transform. Regardless of which scenario was

adopted, the common themes of market saturation, increased competition and complexity,

and the opportunities or options available were similar. Wider reading was undertaken to

verify marketplace trends and to generalise MTN’s experience so as to assist with theory

development: market and regulatory conditions were compared with those of mobile

network operators globally, and market trends were compared with general retail trends.

This analysis reflects in Chapter 1.

These inputs also fed into a ‘mess analysis’. The interactive planning method is

specifically designed for such an analysis, with a Rich Picture and Stakeholder Analysis

being standard tools for this and other methodologies in the interpretive paradigm

(Chapter 4). The exercise is described in Appendix E, with the results of these exercises

covered in Chapters 1 and 2.

The MTN Culture Audit results, shown graphically in Section 6.7.2 reveal significant

problems with MTN’s culture, both across-the-board and with respect to direct, customer

centric indicators.

I examined two models of the drivers of Customer Centricity. The first is a model

developed previously (Geerdts. 2005c. Section B) and reproduced in Appendix D. It

shows two primary loops – the short term operational loop and the longer term innovation

loop. Both of these are learning and adaptation loops. They show the importance of

understanding customer value and understanding shareholder value in driving customer

centricity. This is supported by the second model, which I derived from CMAT™

elements using an inter-relationship diagraph (Appendix C) and building the causal

relationships. It shows the need to develop organisational capability.

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A preliminary behaviour-over-time analysis is shown in Figure 4 (below) and illustrates

the effect of the identified drivers and inhibitors I have identified in this and the previous

chapters.

Behaviour over Time Chart of RBU’s Customer Centricity – Including Force Field Analysis

2007 Time

Organis’nal

Capability

Tension and

Mistrust with

Channel

Time 2010+Time

Level o

f C

usto

me

r C

en

tric

ity

Understanding of

Customer Value

Learning and

Adaptation

Competition with

‘least cost’ initiativeInability to

deliver

Understanding of

Shareholder Value

Inappropriate

Culture

Figure 4 : Behaviour over time of Customer Centricity

In reviewing the four market responses (in Section 2.2), it was clear that MTN was aware

of the need for customer centric transformation. However, the transformation initiatives

undertaken appeared to be sporadic and isolated, with no integration or follow through.

There was no clear underlying strategy. In fact there were examples of when cost-cutting

objectives competed with customer centric requirements. A more specific inhibitor of

customer centricity identified was therefore Ambiguity of Strategic Intention.

Another problem identified was the ability to deliver. Although four market responses

were required, none of these was effectively implemented. Restructuring has not resolved

the delivery issues. Cost cutting has undermined delivery – especially because there is

inadequate understanding of the link between delivery requirements and resource

allocation. Of particular concern were the processes which deliver value to the customer

and this inhibitor is more specifically identified as Problems with Customer-facing

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Processes. These are the problems that fuel consumer activism – especially around

customer complaints.

The causal relationship between these variables is shown in the inter-relationship

diagraph in Appendix B. From these, I obtain the causal loop diagram (CLD) in Figure 5

(below):-

Problems withcustomer-facing

processesOperationalInefficiencies

Partner(channel)

conflicts andmistrust

Ambiguity ofStrategic Intention

(competingpurposes -

customer centricityand least cost

operator

O

Problems withOrganisational

Culture

O

Ignorance ofCustomer

CustomerCentricity

OO

Figure 5 : Concern Causal Loop Diagram for Customer Centricity

This CLD postulates that the key problems to overcome are ambiguity of purpose

(strategic intention), channel conflict (with Service Providers) and inefficiencies with the

current processes. With ambiguity in purpose, the quality of planning will be affected

because customer centric initiatives will be vulnerable to being undermined by short-term,

financial-only concerns. As Schwaninger (2005. p 50) says, the higher strategic levels

need to be functioning effectively to empower the lower (operational) level to function

effectively (also see diagram in Appendix D.2).

The value proposition will not be as relevant (being devised based on inappropriate

criteria) and the delivery will be compromised because implementation may be

‘sabotaged’. An example could be senior management (as previously shown in the Rich

Picture in Figure 3) who are important to the execution of plans but are driven by a

narrow set of indicators, or simply adopt ‘checklists’ to tick off, without focusing on what

actually needs to be done, or by thinking short term and ignoring longer term impacts.

These problems impact shareholder value, which further reinforces the ambiguity of

purpose (after a delay). This behaviour will occur (for instance with shareholders) when

they respond to lower profits by focusing more on cutting costs, rather than increasing

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centricity. The behaviour may not hold under extreme conditions, when they are forced to

reconsider their business model more fundamentally. On the other hand, their focus on

customer centricity would be clearer if profits were shown to go up due to increased

centricity.

Channel conflicts mean that the tension between MTN and the Service Providers, driven

by competition over brand, customer ownership and discounts, leads to mistrust and

reduces the level of co-planning, leading to further inefficiencies, and a compromise to

customer service. Problems with culture lead to mistrust, because employees are not sure,

for example, whether they are supposed to treat Service Providers as competitors or as

allies?

Inefficient processes tend to waste valuable human and other resources and focus on the

wrong objectives and outputs, without having inbuilt mechanisms for improving

themselves, adapting to changing needs. Ignorance of the Customer always leads to

operational inefficiencies because customer needs are not accurately met. If a product or

service is under-specified, then the operation is wasteful because it is producing

something customers do not want. Over-specification, on the other hand, leads to wasted

resources being used to produce functionality or quality which the customer does

specifically want.

In Chapter 2 I addressed employees as stakeholders and the low morale currently

experienced. Staff are experiencing the change and uncertainty of a deep and drawn out

and inconclusive restructuring, with the threats associated with cost cutting and head

count reduction. They are not sure of the direction MTN is taking and subjected to the

impact of different initiatives. Caught in this vicious cycle, employees are faced with

ambiguous intent, inefficient and frustrating processes and conflict with the very partners

with whom they should be working closely. They are not able to enjoy the fulfillment of

knowing they are giving of their best in a leading organisation

The model shows that the current situation, for the reasons mentioned, is not really able

to deliver customer value effectively and that this is already impacting on shareholder

value. As the market and customers change and become more demanding, the inherent

problems will be exacerbated and compromise the very viability of MTN.

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Clearly the model needs to be amended to show plausible intervention which will clarify

purpose and reduce conflicts in the channel, so that the underlying customer-centricity

model can function as intended and improve centricity. Further entry points will also

need to be investigated, to break this cycle. Doing this will create a virtuous cycle where

customer centricity reaps the appropriate benefits so that it is further encouraged.

An important sub-diagram shows the relationship between shareholder value, customer

value and customer centricity.

Customer value is the principal driver of shareholder value, with employee value being

one of the drivers of customer value. I argue the relationship between customer centricity

and shareholder value in Geerdts (2005a. Section E): Customer centricity is the extent to

which one builds and develops one’s business around understanding and delivering on

the needs of customers (delivering customer value accurately and efficiently). By

definition, an organisation which is more customer centric can deliver greater customer

value. Because the organisation is focusing on efficient delivery, shareholder value will

also increase. Customer value will lead to increased sales and potentially improved (or

less compromised) margins, creating shareholder value.

Customer centricity loops back to drive strategic intent. Because it is defined as the

profitable creation of customer value, customer centricity only occurs when shareholder

value increases. Customer centricity therefore has at least a financial impact, and

therefore drives strategic intent. There could possible be other reasons for this driver,

such as management satisfaction or a brand association with customer centricity.

Customer Centricity

Shareholder Value

Customer Value

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3.1. Research Question

If MTN is to thrive in the future, steps must be taken to drive the key transformation to

customer centricity and remove the inhibitors blocking this transformation. This paper

addresses what interventions are required with the following research question:

“What interventions will transform MTN into a customer centric organisation so that it is

better positioned to maximise opportunities in its complex and fast-changing

environment?”

This involves examining and analysing various sources of information and developing a

theory which will allow interventions aimed at transforming MTN into an organisation

able to maximise the benefits for key stakeholders. By answering this question, I will be

able to address the concern described in the causal-loop model in Figure 5 and effect the

customer centric transformation that is vital to the long term viability of MTN.

If these challenges are not met and transformation is either inadequate or too slow, jobs

will be lost, share prices will fall and the supplier ecosystem will be impacted. If

challenges are overcome, the industry will grow and also become more relevant to the

needs of customers. The challenges are many and complex and include challenges

deriving from the stakeholders themselves.

In order to fulfil the ‘customer champion’ role effectively, I will need to define the role

more clearly, understand customer value and shareholder value (and determine a clear

link between the two), develop a clear view on what needs to be done and how, and

thereby understand how to manage the transformation. In doing this, I can draw on

CMAT™, as well as my own management models, and alternative models I encounter.

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4. Research Framework

To steal ideas from one person is plagiarism-to steal from many is research.

- Steven Wright

I will now build a research framework which can answer my research question on

customer centric transformation in such a way that I can build and develop a theory

which contributes to the wider body of theoretical knowledge but also addresses the

unique situation currently being researched. An important requirement is that my

knowledge must be actionable. To be actionable in a management context, knowledge is

best expressed in terms of essential variables and the causal relationships between them.

The causality must be transparent and be testable in a management context. The required

behaviour of these variables must be clear if they are to achieve the intended results

(UCT. 2006c. Slide 9).

I build this framework on four cornerstones – Critical Systems Thinking, Grounded

Theory, Action Research Learning, and Triangulation. In this Chapter I will motivate and

describe each of these, and then show how I used these cornerstones in practice to gather

and test my data.

I first give a motivation for and overview of Critical Systems Thinking (Jackson. 2003),

to explain why I have chosen a holistic, rather than reductionist approach. I describe the

four major paradigms which exist within systems thinking, and the process of selecting

those most pertinent to my question. The second cornerstone is the Grounded Theory

approach of Glaser and Strauss (1967) and I show why it is best suited to my research

requirements, as a predominantly qualitative approach. I augment this with Layder’s

Research Map (1993) to ensure the range of interaction levels (micro to macro) is

systematically covered. The third cornerstone is Action Research Learning (including the

Learning Cycle and Small Wins), which I show to be particularly useful in ongoing

management practice. I use the concept of Triangulation as the ‘glue’ which binds

together my different research activities, results and perspectives.

I describe and motivate the specific methodologies and tools used in accordance with my

framework, to gather and process data: systems thinking methodologies and tools,

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interviews, literature reviews and survey results. I conclude with a ‘triangulation

checklist’ of whether I have swept enough approaches, paradigms and perspectives into

the research.

4.1. Critical Systems Thinking as a Foundation for Customer Centricity

Jackson (2006) shows the benefits of Systems Thinking to handle complexity, change

and diversity – the very problems that prompted this research when other solutions

appear inadequate. He first explains why so many solutions that are sold to managers to

solve such problems have been unsuccessful: “these simple, quick-fix panaceas fail

because they are not holistic or creative enough. They focus on parts of problem

situations rather than the whole, they take little account of the interactions between parts,

and they pander to the notion that there is one best solution that fits all circumstances”

(ibid. p 1). Jackson’s examples of panaceas tried include ‘knowledge management’ and

‘customer relationship management’ (ibid. p 3), concepts which I show in my

documentation review occur frequently in customer centricity literature.

The consequence of looking at parts of the organisation and not the whole is that this

misses the ‘crucial interactions between the parts’ (ibid. p 3). This can lead to unintended

consequences in other parts of the organisation. The overall result may be a slight

improvement or no improvement – it may even be worse than before. In the context of

the cellular industry, it is interesting to note Chapman’s observation (2002. p 20), that

one of the key drivers of increased interaction which is making organisational systems

harder to understand and predict is in fact electronic communications!

Jackson also maintains that these “fads also stifle creativity” (ibid. p 3) by limiting the

choice of available solutions and viewpoints by which to look at the problem.

Jackson goes on to list the benefits of critical systems thinking, and his approach to this

(which he calls ‘creative holism’). Holism refers to the holistic rather than reductionist

approach, and creative refers to the combined and judicious use of multiple paradigms,

perspectives and tools to solve a problem.

Jackson describes holism as follows: “Holism puts the study of wholes before that of the

parts. It does not, therefore, try to break organisations … down into parts in order to

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understand them and intervene in them. It concentrates its attention instead at the

organisational level and on ensuring that the parts are related properly together and are

functioning well to serve the purposes of the whole” (ibid. p 4). He maintains that “as the

world has grown more complex and it proves impossible or counter-productive to try to

break systems down into parts, holism deserves a place as an equal and complementary

partner to reductionism” (ibid. p 4). This complementary position is the one I have also

taken.

The benefits of holism are that it can develop and make use of analogies from other

disciplines. An example of particular relevance for customer centricity is the thinking

about biological organisms in relation to their environments, leading to the concept of

‘open systems’ to help conceptualise organisation-environment relationships (ibid. p 4).

Environmental responsiveness was identified as a key issue in Chapter 1. Another benefit

given (ibid. p 4) relates to process and structure – where holism has the ability to consider

these together, including their interdependence. This benefit may apply to the situation

being researched, where processual and structural changes have both been attempted

(Section 2.3), without clear success.

A third benefit of holism is the self awareness it provides theorists and practitioners in the

sense that they can make explicit their assumptions. The first important assumption is the

boundary decision one makes about what is in the system being studied, and what is out.

There are many different options available. In my example, some texts refer to customer-

centricity (or orientation), whilst others refer to ‘market-orientation'. The boundary

decisions in this case are whether or not to include customers, suppliers, competitors,

distributors and other market forces. Other examples of assumptions are the paradigm

that one is using (I will suggest a few later in this document), the perspectives being used

and which stakeholders are being considered.

I have drawn on Jackson’s work because of his specific contribution in looking at

‘systems of systems’ or Systems Thinking itself taken as a whole. Many authors have

made significant contributions to Systems Thinking. For a chronology of the main

contributions since the 1930’s, organised by ‘traditions’, see Umpleby and Dent (1999. p

103). These and other contributions fall within the high-level framework Jackson has

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suggested form the basis of Critical Systems Thinking. With this approach, the systems

thinking practitioner chooses which of the available systems thinking paradigms is best

suited to a particular problem, and which methodologies, methods and tools within that

paradigm are most appropriate. According to Jackson (2006. p 5-6) the critical element

derives from selecting the approach and making explicit why this approach is most

appropriate. The creative element derives from choosing multiple approaches to solving

the same problem. The last step allows participants to choose from a range of possible

solutions, rather than being restricted in thinking. It also often allows multiple views of

the actual problem, therefore reducing the danger of committing a very significant error,

described by Mitroff as “solving the wrong problem precisely” (1998. p 15).

These benefits go some way to explain why Jackson (2003. p 13) would claim that “the

systems language has proven itself more suitable for getting to grips with real-world

management problems than that of any other single discipline”.

In Table 3 (below) I have collated information from various chapters of Jackson (2003) to

describe his four paradigms. These paradigms are named in the first column. Each

paradigm highlights certain important aspects of a situation and by viewing the same

situation through each lens in turn, one derives different insights which may be obscured

when using the other lenses.

The second column of the table indicates the emphasis of the paradigm, the managerial

ends it lends itself to, and what aspects are highlighted. The third column assists one in

categorising a particular concept, methodology or theory according to the paradigm

within which it was developed.

This table provides a crucial element of my research strategy, because when I am clear

which paradigms best match my research problem, I can focus on authors, methodologies

and tools which relate to that paradigm (details which I provide later in this Chapter).

Para-

digm

(Lens)

Aspects of a situation that are highlighted when viewing it through this lens. (Main emphasis of approach and managerial end it lends itself to)

The primary characteristics a

concept, methodology or theory must

have in order for it to be categorised

as belonging to each paradigm

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Para-

digm

(Lens)

Aspects of a situation that are highlighted when viewing it through this lens. (Main emphasis of approach and managerial end it lends itself to)

The primary characteristics a

concept, methodology or theory must

have in order for it to be categorised as belonging to each paradigm

‘Fu

nct

ion

ali

st’

Improving goal seeking and ensuring viability

“Functioning well” – ranging from optimising to organisational design

Evaluates: Efficiency (of use of resources), efficacy (use of means in realising goals), adaptation and survival

Managers increasing control and eliminating inefficiency and disorder

Aimed at goal seeking, viability, efficiency, adaptation and survival

Helps improve a system by scientific exploration of the parts, their inter-relationship with each other and the environment

Metaphors: machine, organism, brain, flux and transformation

‘In

terp

reti

ve’

Exploring stakeholder purposes and the

actions which derive from how they ‘interpret’

their situations

Understand the different meanings of people, see where they overlap & therefore lead to ‘shared, purposeful activity’ (Jackson. 2003. p 39)

This approach guides managers in developing an appropriate shared corporate culture

Evaluates: Effectiveness (are we achieving what we want to achieve); elegance (of proposals, in the perception of stakeholders)

Can lead to participative involvement in decision-making which gains commitment to these decisions

Seeks to understand who the stakeholders in a social system are, understand their interpretations of the situation and their purposes so as to promote a level of overlap

Metaphors: culture and political system

‘Em

an

cip

ato

ry’

Ensuring Fairness

Aimed at ‘emancipating’ oppressed individuals and groups (both organisations and society)

Highlights any form of discrimination, eg class, status, sex, race, disability, sexual orientation, age

Asks self-critical (ethical) questions about the analysis or intervention and particularly about those affected by it

Evaluates : empowerment (ability of stakeholders to contribute and act) and emancipation (of disadvantaged groups)

Suspicious of authority – tries to reveal forms of power and domination that it sees as being illegitimately employed

Critical of status quo- wants a radical reformation

Metaphors: psychic prison, instruments of domination

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Para-

digm

(Lens)

Aspects of a situation that are highlighted when viewing it through this lens. (Main emphasis of approach and managerial end it lends itself to)

The primary characteristics a

concept, methodology or theory must

have in order for it to be categorised as belonging to each paradigm

‘Po

stm

od

ern

Promoting Diversity in problem resolution

Evaluates:

• Exception: “What otherwise marginalised viewpoints have we managed to bring to the fore?” (Jackson. 2003. p 27). What underlying discourses are dominating and need to be challenged or what dominating systems have to be broken down so that suppressed voices can have their say (ibid. p 27) (This analysis is both more subtle and more radical than in the emancipatory approach (ibid. p 271)

• Emotion : Does the action that is now being proposed feel appropriate and good in the local circumstances in which we are acting (ibid. p27). This is a response to the possibility a situation many be so complex that a ‘grand narrative’ is probably in vain (ibid. pp 257-259), and local action is more feasible

Awareness of the difficulties of the previous 3 lenses, suggesting a deeper critical analysis of the processes of rationalisation and argumentation in society

Looking for creativity and new ways of communicating and approaching this

Seeks diversity: experiment with different modes of pluralism (ibid. p 263) at all levels - in clients, methods, modes of representation and facilitative processes (Jackson. 2003. p 273)

Opposes the ‘modernist’ rationality (of other 3 paradigms) and ‘totalising’ theory - attempts to provide comprehensive explanations of how organisations function. Emphasis on having fun (a carnival metaphor), learn from bringing conflict to the surface

Encourages mixing different perspectives, accepting contradiction, recognising and affirming difference and diversity, taking an open and flexible stance and responding to the characteristics of the moment (ibid. p 261)

Deal with significant complexity, multi-agency settings; look for local solutions rather than universal solutions; deconstruct situations (texts) to determine the underlying dynamics (such as the power-information dynamic) (ibid. p 273)

Asks about knowledge systems dynamics to uncover the underlying ‘formative system’ (ibid. p 265)

Table 3 : Systems Thinking Paradigms

Jackson’s metamodel for critical systems thinking (Jackson. 2006) embraces the range of

systems thinking approaches on two important axes. One axis relates to the range from

unitary (single stakeholder) approaches to pluralistic (multi-stakeholder) approaches. It

also extends to coercive systems, where power differentials and dynamics between

stakeholders are significant. On the other axis, the rows indicate whether the system

being reviewed is simple or complex. A simple system would have a single goal and

consist of few elements, with low interaction between the elements. A complex system

may have multiple or less-defined goals, many elements, and high interaction between

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the elements. Table 4 (below) shows how the paradigms mentioned above relate to each

other within this metamodel, or system of systems thinking (Jackson, 2003, p 24):-

Participants

Unitary Pluralist Coercive

Simple Emancipatory

Paradigm

Syst

ems

Complex

Functionalist

Paradigm

Interpretive

Paradigm Postmodern Paradigm

Table 4 : Classification of System Types

In Figure 5 : Concern Causal Loop Diagram for Customer Centricity (p 44), I hypothesise

what the drivers and inhibitors of customer centricity are, as well as their key interactions.

This initial analysis allows me to determine which paradigms are best suited to my

concern. I have chosen to use more than one paradigm, in keeping with the concept of

creative holism described earlier in this Chapter, ensuring that at any one time I

consciously stay within the selected paradigm. There is inevitably some overlap, however,

that merely reinforces the results. I will now motivate for my choices:-

It was identified that delivery is important to customer centricity and problems with

delivery are an inhibitor. Lack of co-planning, ignorance of the customer and strategic

intent are also included. These all justify analysis within the Functionalist Paradigm,

which addresses some of the important issues raised, of viability, efficiency, efficacy and

control. However, this paradigm is not able to identify or address elements of the problem

relating to culture, mistrust between the intermediary partners and competing

commitments. The Interpretive Paradigm is concerned with alignment of purpose in

multi-stakeholder environments. The Emancipatory Paradigm examines the power

dynamics within a multi-stakeholder environment. An important principle in Critical

Systems Thinking is the use of multiple paradigms. I did not identify aspects of the

problem which call for use of this ‘lens’, but I can benefit from the specific contribution

of this Paradigm as part of the ethical post-evaluation of my intervention (which I

undertake in Chapter 9). This process was iterative, in that I was able to go back and

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correct my research processes based on feedback provided. Given the emphasis of this

analysis on ‘affected parties’, I chose the Customer as the most important stakeholder to

review, although employees and Service Providers were included.

4.2. Grounded Theory (GT)

Grounded Theory (GT) has variously been referred to as a method (Struebert and

Carpenter. 1999. p 1), methodology and philosophy (Strauss. 1994). The key idea

(adapted for my context) is that one asks a research question in a social setting which

involves human interaction. The theory, grounded in the data from the setting, emerges

from a specific process followed (which I will now describe) and explains the significant

variation demonstrated in the data (ibid. 1999. p 1). It is suited for situations such as mine

where: there is a naturalistic (rather than controlled) setting; there is a need for more

detail on the specifics of the problem (a general theory being too oversimplified to be

specific to the case being researched); and the details of the result need to be such that it

can be actionable) (ibid. 1999. p 1).

The focus of GT is on qualitative research. Strauss (1994) recollects that the book he co-

authored with Glaser (1967) was published as a formal alternative to the quantitative,

positivist thinking prevailing at the time (the early 1960’s). It is now one of many

qualitative methodologies, but an important one. It does support the use of quantitative

data insofar as that data supports the research process it proposes (Strauss. 1994).

The naturalistic setting is my organisational environment. The theory is ‘grounded’ in

that setting and the phenomena observed in that setting. The qualitative aspects observed

relate largely to human interactions (practice, behaviours, beliefs and attitudes)(Struebert

& Carpenter. 1999. p 1).

The intention is to develop a partial theory. - a micro theory, in a micro social context

(ibid. p 2). In my case, this theory would provide the basis for acting in a particular

situation – the management intervention required for the customer centric transformation

of MTN. This is as opposed to a grand theory, which is complex and attempts to explain

a broad area within a discipline, or a substantive theory on a particular topic (ibid. p 2).

However, I do intend for my theory to be congruent with such theories, by testing what

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has emerged from my work with what I find in the literature. In doing so, I aim to move

from my ‘working hypothesis’ towards a formal theory.

The theory must explain most of the variation in the data. The theory is evaluated

primarily for its fit, relevance, workability and modifiability (Glaser. 1998. p 18), or

alternatively, its fit, understanding, generality and control (Strauss & Corbin. 1990).

There is less emphasis on proving validity than would be the case for (say) a grand theory,

although I do undertake a post-review of validity in Chapter 9 (Evaluation).

A specific process is used to allow the theory to emerge from the data (Struebert &

Carpenter. 1999. pp 4-8). It requires a tentative but clear initial research question, in order

to ensure focus. It then involves gathering data, then analyzing comments, behaviour and

other inputs for the underlying basic social processes, to develop a first level of coding.

The processes are crucial inputs, they are abstract concepts, rather than simply

descriptions of what has happened (Struebert & Carpenter. 1999. p 2). Similar codes are

then grouped together to develop a second level of coding, and the relationships within

this coding develop a core variable (the variable that explains what drives the variation).

This process is open to the data (rather than based on pre-conceived theories), flexible

and iterative, including refinement of the tentative research question and further research

(sampling or literature review) to test or develop emerging insights (ibid. p 3). In this way,

the theory remains ‘grounded’. Strauss (1994) maintained (even after GT has enjoyed

almost 30 years of growth and refinement) that the essence of the methodology is the

drive towards theorizing through the coding, comparisons (emerging findings against

established theory) and theoretical sampling (finding more samples to test the emerging

theories).

The data is potentially gathered from interviews, field notes, documents, journals,

participation, literature reviews (Struebert & Carpenter. 1999. p 2) and selective literature

sampling (ibid. 1999. p 7). I describe my own data gathering approach in Chapter 5.

4.2.1. Research Map

Layder (1993) provides a useful research map to situate research in social contexts such

as management. This map complements Grounded Theory by ensuring that interactions

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and drivers at all appropriate levels are consciously considered. I have summarised his

map in Table 5 (below). The influence of each level should be noted, as well as the

interactions between the levels.

Research Element Research Focus

CONTEXT Macro social organisation

SETTING Organisational context

SITUATED ACTIVITY Social Activity. Face-to-face activity involving symbolic communication. Focus on emergent meanings, definitions, understandings of the situation as these interact with settings (above) and individuals (below)

HIS

TO

RY

SELF Self identity and individual’s social experience. The unique psychobiography of the individual interacting with the above sectors.

Table 5: Research Map (adapted from Layder. 1993)

My research problem has elements of ‘context’ and of ‘self’: I described in Chapter 1 the

overall context (the elements of MTN’s environment) and my immediate requirement to

determine a way forward, as the manager given the mandate to drive customer centricity

in my business unit. Further data at this level can derive from both my own annotated

experiences and from interviews with stakeholders. For this purpose I chose to interview

MTN staff. I have also been able to access transcripts of other stakeholders (Service

Providers) who have been asked about their experiences with MTN. Although the use of

transcripts limits my ability to interact and to determine non-verbal cues, it allows

respondents to be more frank and open than they may otherwise have been.

Given the level at which my research question is positioned, I expected most of the

learning to derive from my focusing on the organisational ‘setting’ and the ‘situated

activity’. I take this into consideration when detailing the sources I have used in the next

Chapter.

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4.3. Action Research Learning (ARL)

Action Research Learning (ARL) is essentially a problem-solving approach, based on the

three components suggested in the name: research refers to the diagnosis of a problem

and the development of an appropriate organisational theory (Cooperrider & Srivastva.

1987. p 131); action refers to the direct use of the theory to intervene to address the

problem (ibid. p 131) and learning implies the use of a learning cycle (UCT. 2005c. Slide

6)

The actual mechanism is as follows: From the context of one’s situation, one identifies

and defines a problem. One then researches available, relevant data and develops a theory

(or model, or hypothesis) about what the problem is, how to solve it and what the likely

outcome will be. This is tested against evidence derived from the data. One then takes

action based on this theory, and compares the actual result with the result predicted. One

then refines one’s theory based on this difference, and this represents the learning. The

cycle then repeats (UCT. 2005c. Slide 18).

This approach is suited to management because it supports practical intervention based

on sound theory. The theory is continuously adapted as knowledge is gained and as

situations change. The approach is used in other elements of this dissertation – the small

wins (which I discuss in the next paragraph), soft systems theory (which I will discuss

later in this section), lean thinking (which I cover in my literature review in Chapter 6),

and the dissertation as a whole, which I apply to my problem of transformation at MTN.

4.4. Triangulation

A common concept in the qualitative research literature is triangulation. The concept is a

metaphor based on the survey technique of fixing the location of an object by intersecting

the location readings from two reference points (Srivastava & Teo. 2006. p 204). This

can refer to the combination of a qualitative and quantitative approach. Srivastave and

Teo attribute the use of the term and underlying ‘multi-method’ approach to Campbell

and Fiske (1959). A number of authors refer back to Denzin (1970). The thinking is that

the use of different methods reduces the possible error attributed to one specific method.

However, in a recent work, Denzin & Lincoln (2003. p 4 – 6) compare the ‘triangle’

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image with a crystal (multi-faceted), a quilt, montage, a creative performance or the work

of a bricoleur. The underlying idea is more of telling the same story from different points

of view (ibid. p 6). Whereas critical systems thinking uses different paradigms, and

different methodologies within a paradigm, so Denzin’s ‘revised triangulation’ model

encourages a range of research tools, but to widen, rather than narrow the result. Brannen

(2005, p 176) suggests in a more formal way that four outcomes are possible:

corroboration (when the results of different techniques are ‘the same’); elaboration (a

qualitative result exemplifies a qualitative result); complementarity (the results differ, but

can together lead to insights) and contradiction (when the results conflict).

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5. Data Gathering

The most appropriate data gathering and analysis methodologies, methods and tools must

now be selected to best meet the objectives of the research framework. This first requires

a clear understanding of the field of customer centricity and the salient issues in the

literature. Then, I have selected within Critical Systems Thinking the paradigmatic

‘lenses’ to use, and need to now choose the methodologies which best apply to those.

Grounded Theory calls for a qualitative core approach, using a wide range of data

gathering approaches (including quantitative) to test and shape the emerging theory.

Action Research Learning seeks a cycle of interventions in the situation, and analysis of

results.

5.1. Literature Review

My initial literature research was at the tertiary level, in order for me to gain an overview

of the field of ‘customer centricity’ – the history, the key elements and the authors who

appear to be most respected and trusted. This is the basis, for example, for my

introduction to Chapter 6 (p 74) on the history and background of customer centricity. I

show in Chapter 8 how it also informed the formation of the research question. I have

supplemented this with secondary sources to explore and test elements of the core

proposition, as they unfolded. As an example, when ‘culture’ arose as an element, I

brought in additional reading on alignment of culture and capability. I have included

reading of secondary sources specifically to support particular claims.

5.2. Critical Systems Thinking

Proposed methodologies are categorised according to the paradigms from Table 4 with

which they are most closely associated, to give Table 6. Note that a few methodologies

may apply in more than one category.

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Participants

Unitary Pluralist Coercive

Sim

ple

Lean Thinking

CMAT™

Sy

stem

s

Com

ple

x Viable Systems

Diagnosis (VSM)

Soft Systems Methodology

Interactive Planning (with Scenario Learning)

Strategic assumption surfacing and testing

Critical Systems

Heuristics

Table 6 : Classification of Research Methodologies and Tools Used

A well established and powerful methodology within the Functionalist Paradigm is

Viable Systems Diagnosis (Jackson. 2003. p 85). Three core methodologies available

within the Interpretive Paradigm are Interactive Planning (ibid. p 157), Strategic

Assumption Surfacing and Testing (ibid. p 137), and Soft Systems Methodology (ibid. p

181). Critical Systems Heuristics is well established within the Emancipatory Paradigm

(ibid. p 213) because it provides a practical methodology for dealing with essentially

normative content. In the discussion which follows, I need to better understand these, test

whether Lean Thinking should be included as a research approach, and test whether

CMAT™ qualifies as a true, systems thinking tool.

5.2.1. Viable Systems Diagnosis VSD)

Viable Systems Diagnosis (VSD) was developed by Beer as a tool for understanding an

organisation from a cybernetic point of view – particularly with respect to viability

(Espejo and Gill. 2002. p 1). It is based on the premise of the viable systems model

(VSM), that an organisational system is viable if it can address its complex and changing

environment by exhibiting the following important characteristics (ibid. p 2):-

1. Single Loop Learning. This implies that it has the mechanisms to take corrective

action to respond to the environment, or a change in the environment.

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2. Double Loop Learning. This implies that it can anticipate the direction in which

environmental change is going and adapt the organisation itself to prepare for

those changes.

3. Requisite Variety. This implies that the organisation contains enough variety to

detect and effectively respond to the variety of the environment in terms of

different states the environment can assume which are relevant to the organisation.

Alternatively it must be able to attenuate the variety of environmental stimuli or

amplify its responses to compensate adequately.

Viability is achieved (and the three requirements listed above are met) if the organisation

has five key systems functioning – implementation, coordination, control, intelligence

and policy. By mapping out these functions according to the espoused purpose of the

organisation (in this case customer centricity), one can perform the diagnosis and identify

salient problem areas requiring further analysis. The model is best understood when

shown graphically as I have for MTN South Africa (Figure 9, p 105). This is another way

of expressing the goals of customer centric transformation. It is particularly relevant

given the need for a cellular company to target and support an ever-increasing number of

target segments and niche markets.

5.2.2. Lean Thinking

As Toyota Motor Corporation prepares to become the world’s largest vehicle

manufacturer in 2007 (BBC. 2007), through its continuing year-on-year growth, it is

fitting to consider the reasons for their success. There are numerous articles and books

explaining what is known as the Toyota Production System (TPS), the design of which is

attributed mainly to Taichi Ohno (Spear and Bowen. 1999. p 103). The success of the

approach in manufacturing is well known. “Toyota is one of the world’s most storied

companies, drawing the attention of journalists, researchers and executives seeking to

benchmark its famous production system” (Spear. 2004. p 79).

Although Lean is often seen as a technique or set of tools, I concur with Bhasin et al

(2006) that it is a ‘philosophy’. Seddon’s claim (2003. p 22) that it is a systems thinking

approach is supported by a United Kingdom government report (OFDM. 2005. p 17).

This partly explains Bhasin’s conclusion that lean implementations fail because managers

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think of it as a set of techniques rather than a systemic intervention, “a cocktail of factors

are needed for lean success: not only is it necessary to implement most of the technical

tools but an organisation’s culture needs transforming too. Furthermore, the alterations

need to be implemented throughout an organisation’s value chain. Lean has a major

strategic significance, through its implementation procedure, human resource

management implications [and] general approach to the supplier base” (2006. p 1).

Jackson concurs that this is a systems thinking approach (2006b) but one which is limited

in application to unitary situations.

Lean Thinking is explored further in Section 6.4. Two related action research projects are

also introduced in Chapter 8.

5.2.3. CMAT™

I have included this tool because MTN has mandated its use across the 21 countries in

MTN Group and over a number of years. It is clearly relevant to customer centricity and

it is aimed at producing actionable knowledge. The proponents regard it as a ’systems

thinking’ tool. Woodcock and Starkey, for example, claim that “large companies should

look at managing customers in a systemic way. Rather than focusing mostly on cost,

revenue and profit, they should focus on the systemic measures of which profit is a

critical output” (2004. p 4). It is certainly ‘systems-wide’ in that it assesses activities in

all the areas believed to impact on customer centricity. What it does not do is measure the

interactions of the parts. Nor does it abstract to determine an understanding of the system

as a whole. Analysis of the key measurables indicated places it within the Functionalist

Paradigm. My research objective is to explore CMAT™ from available literature,

determine its relevance to the research question and (in that context) analyse the 2005 and

2006 MTN SA assessment results.

5.2.4. Soft Systems Methodology (SSM)

Soft systems methodology falls within the Interpretive Paradigm. Traditional systems

thinking assumed that a system had a single purpose and that it could learn by acquiring

knowledge. In such a ‘hard’ system, natural science was useful for examining causal

relationships. However these two assumptions did not hold with human systems

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(including organisations) where the people or groups involved had their own individual

purposes which affected causality (Checkland and Scholes. 2001. p 2). In these systems

experience seemed a more appropriate concept than knowledge because meaning was

open to personal interpretation (ibid. p 3). Checkland developed a formal methodology

(‘soft’ systems methodology) to deal with such cases.

According to Jackson (2003. p 208), the benefits of SSM are that one can explore

purposes within a diverse group, can begin to resolve a ‘mess’ without having established

clear goals, can open up new solutions and can assist in the design of support systems (by

giving a clear understanding of the activity that the system should be supporting). SSM

has contributed powerful methods (such as ‘rich pictures’) which enrich other

methodologies. It is recommended for use in a team, but can also be used by a manager

as an internalized, conceptual too (ibid. p 208).

SSM is used to ameliorate a ‘mess’ caused essentially by competing (or unclear)

purposes within the group of significant stakeholders involved in a situation. The

objective is for these stakeholders to follow the specified process together to develop a

level of common understanding of the range of likely purposes from the points of view of

these stakeholders.

SSM is a variation of Action Research Learning, and is therefore ideally implemented as

a learning cycle (Checkland & Scholes. 2001. p 3). It begins with specification of a

problem within a situation, develops a theoretical model in which the problem is ‘solved’,

and then aims to implement the solution in the given situation.

Jackson (2003. pp 191-196) describes the suggested methodology, which typically beings

with the creation of a rich picture in which the major perspectives, issues, processes and

other situational information is captured pictorially. The rich picture provides the basis

for a development of a systems model depicting the reality. The group works on the

solution in terms of design of a conceptual model, and then determines how to apply this

solution back in the real world. Purpose is captured in terms of root definitions, where the

system being reviewed is examined from the point of view of each significant stakeholder

in turn. At the core of each definition is a transformation process. The process of

developing root definitions should lead to greater understanding of the purposes, and this

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activity is itself often repeated in a learning cycle before implementation begins

(Checkland & Scholes. 2001. A8).

The application of SSM to a ‘mess’ within the MTN context is described in Appendix H.

5.2.5. Interactive Planning

The relevance of this methodology was that it was “specifically designed to cope with the

‘messes’ that arise from the increased complexity, change and diversity that managers

have to confront.” (Jackson. 2003. p 157). It is aimed at creating an organisation capable

of continuously adapting. It is based on three principles (ibid. pp 161-162): participation

states that participants learn more from engaging in the process of planning itself than

from the end result; continuity emphasises the need for frequent or continuous planning

because plans are always outdated; and holism requires that plans be both coordinated

(with other units at the same level) and integrated (with units at different levels).

The approach consists of five phases (UCT. 2006a. Slide 4), aimed at moving an

organisation from where it is today, towards an idealised future state. The first phase

involves ‘formulation of the mess’. This can make use of a rich picture (as was described

in the previous section on SSM). The key idea is to determine and project current trends

so as to point out the undesired likely situation the organisation will find itself in if it

continues as it is without any interventions. The next phase involves determining an

idealised end state – what has to be transformed in order to achieve this preferred future.

Scenario Learning (discussed in the next sub-section) is ideal for the purpose of

supporting these first two phases. I apply the ‘formulation of the mess’, combined with

Scenario Learning to this Dissertation in Appendix E.

The next phases of interactive planning (ibid. Slides 9-11) are Means Planning

(considering alternative means in terms of efficiency and effectiveness, Resource

Planning (considering the financial, human and other resources required for execution of

the plan) and finally the actual implementation and control (bearing in mind this is an

ongoing iterative, learning process). Small wins are one means of implementation.

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5.2.6. Scenario Learning

Scenario Learning is an ideal complement to interactive planning. It allows a

management team to develop a common understanding about the most likely possible

futures (Fahey and Randall. 1998) and then develop optimal strategies for these various

futures. It is largely a learning process (Illbury & Sunter. 2001. p 42) which enables

participants to engage with and ‘experience’ various possible futures in advance (and

learn from these experiences) so that they are better prepared for events as they do unfold.

Other relevant benefits of Scenario Learning (Schwartz. 1996. p 7) are to challenge

mindsets, surface issues not previously on the agenda, challenge the existing strategy,

identify areas requiring contingency plans)

For this research I have used my own adapted process for Scenario Learning which I used

and refined in developing an ‘emerging market’ model and at an executive breakaway

(Geerdts, 2005c). Using Millett’s distinction (2003. p 19) between intuitive and analytical

scenario planning, the process followed is more ‘intuitive’ because the objective is high

level and concerned with direction rather than detail. Appendix E provides further detail

on the exercise undertaken and result.

The likely futures established were the basis for Chapter 1 and suggested appropriate

responses were the foundation for Chapter 2. I tested attributes of MTN (in its current

state) against those futures and responses to identify areas of concern in Chapter 3. The

scenarios also informed selection of the intervention proposed in Chapter 7 (from a range

of alternatives).

5.2.7. Strategic Assumption Surfacing and Testing (SAST)

Another tool for exploring purposes is SAST, which is used “where differences of

opinion over which strategy to pursue prevent decisive action being taken” (UCT. 2006b.

Slide 1). An example from MTN is whether to pursue a primarily customer centric or

least cost approach. The result from a SAST exercise to treat this difference is given in

Chapter 8.

The principle behind SAST is that each person has limited understanding, but that the

SAST methodology can make constructive use of differences between people to guide an

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organisation into new policy directions. Participation is important to ensure that opposing

viewpoints (and the experience they represent) are integrated as contributions (UCT.

2006b. Slide 4).

The methodology is as follows (Jackson. 2003. pp 142 – 143): Conflicting policies are

first raised in an adversarial manner (backed up with relevant data) so as to encourage a

dialectical debate. Assumptions underlying policy positions are made explicit (surfaced)

and analysed in terms of the importance and certainty of each. During the debate, groups

can modify their assumptions based on new knowledge. Synthesis then involves

agreement on a common set of assumptions, from which new, higher-order policies are

developed.

5.2.8. Critical Systems Heuristics

As shown in Table 6, this methodology is best described within the Emancipatory

Paradigm. It consists of a set of 12 ‘boundary’ questions which assist in assessing the

fairness of an intervention to stakeholders, particularly the parties affected by the

intervention (Jackson, 2003. p 218). The questions can be asked twice (‘What is ?” and

“What ought to be?”). The questions are important, because they add academic rigour to

a discussion on ‘fairness’ by placing it within a formal methodological framework. This

is the means for addressing a normative issue by applying a rational process (ibid. p 218).

The name indicates that it is self-critical, placed within Systems Thinking, and Heuristic

(the process does not provide a ready answer, but helps the questioner to converge on an

improved solution iteratively). I have used this approach to assist in my ethical evaluation

of this dissertation (in Chapter 9) and the set of questions is therefore listed there.

5.3. Grounded Theory – Data Gathering

As discussed in Chapter 4, data gathering techniques are required which allow

observations of the social system, and test emerging theory through theoretical sampling.

Use of techniques within the range of methodologies proposed, support triangulation

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5.3.1. Literature Review and Sampling

The next chapter reviews the literature on customer centricity, followed by specific topics

which represent the literature sampling that was used to test and explore the emerging

theory.

5.3.2. Interviews

I have used five types of interview – self interview, expert interview, commissioned

interviews, open interviews and sampling interviews.

5.3.2.1 Self Interview / Participant Observation

Formalized self-interrogation accessed personal knowledge and experience of MTN.

Executive MBA module assignments provided the basis for this – including position

papers on each of the six modules, organisational context, reflective papers, documented

interventions, specific analyses and action research learning documentation. Position

papers included post-evaluation to guard against or sample issues of personal bias.

5.3.2.2 Open Interviews

Open questions in the initial interviews enabled me as the interviewer to be open to

unanticipated directions that responses took, and to explore these directions I had not

anticipated in my planning. I then included specific questions to ensure that emerging

hypotheses were tested or probed. I requested second interviews where necessary. This

testing of emerging hypotheses is a crucial component of GT (Strauss, 1994). I selected

participants from a cross section of backgrounds: two trade marketers (one new to the

organisation); a programme manager; a financial analyst (working on subscriber

analysis); a new business development manager and a call centre supervisor.

I used the interview guidelines and ethical frameworks suggested by Booth et al (2003. p

87) – informing interviewees of the reason for the interview, and respecting their

anonymity. If I refer to individuals, it is by title.

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5.3.2.3 Expert Interview

Booth et al (2003. p 86) refer to experts as potential references. I have used one expert

whom I believed was close enough to my research question to provide specific advice,

and that was the ‘customer centricity executive’ at MTN.

5.3.2.4 Commissioned Interviews

Within the context of my responsibility as customer champion and the account

management theoretical framework (a literature sample that I describe in Chapter 6, on p

88), I commissioned research in 2006 into the nature of the relationship between MTN

and its Service Providers. I was the owner of the research project (and signed off on the

questions), but consulted with the channel managers, research manager and the project

manager of Markinor (the chosen research company). The key account managers selected

the individuals within their accounts (Service Providers) they deemed most influential

and who have the most contact with MTN (senior executives, sales and operational

managers). Interviews were conducted with all who accepted the invitation. The response

rate was 81% (35 surveys out of 43 respondents surveyed). Questions were shaped within

the same key account management framework (product, process and interaction, and how

MTN helped Service Providers to meet their objectives with their customers). The survey

was qualitative, but used ranking (to establish priorities).

I was able to access the detailed breakdown of responses as well as the actual transcripts

(where permission was given), which enabled me to complement Markinor’s feedback

(2006) with my own detailed analysis.

An area I had identified in Chapter 3, as a problem requiring further exploration was the

relationship (described in Chapter 2) between MTN and the Service Providers. The

breakdown of trust led to difficulty in working together. Having a third party conduct the

survey enabled me to gather data to test the quality of this relationship and to determine

the specific problem areas in a way which would have been impossible had I conducted

these personally.

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5.3.3. Quantitative Data

Organisational culture was identified in Chapter 3 as an inhibitor of customer centricity,

and since it is a complex topic for additional research, I searched for additional primary

and secondary data to support my own observations. Fortunately I could access results

from two existing surveys applied to MTN staff. The first was the result of a Myers

Briggs Type Indicator® instrument which had been applied to management. The second

was the result of a ‘culture audit’ survey.

5.3.3.1 Myers Briggs Type Indicator® (MBTI)

MBTI is a psychometric test which indicates a person’s personality preferences along 4

theoretical polarities (Jessup. 2002). It is used to assist people to understand themselves

and to make more sense of their differences with others and can assist people in better

understanding the concepts of diversity. A fundamental principle is that there are no

better or worse preferences (Jessup. 2002. p 505).

I has found this tool useful when previously employed by a non-profit organisation in

1989 and have since encountered a number of strong adherents and opponents. According

to Jessop (2002. p 503), about three million people take the official version of this

instrument each year, and there is a substantial body of research around its application.

Some regard it as unreliable and the most common reason offered to me is around the

reliability of using the test to determine the specific type (their skeptism supported by

their variability in selecting categories when applying the test). During the literature

survey in the next Chapter, I need to better understand this instrument and its use in

management to help me to better determine the value of the data to which I have access.

5.3.3.2 MTN Culture Audit

MTN performs an annual audit, conducted by an independent company (ISR. 2006) each

year, and benchmarked against their comparative surveys of other companies by industry

and by country. The benchmark includes hundreds of thousands of employees across

dozens of countries. Dimension covered include customer focus, leadership, and values,

amongst others. During the literature survey in the next Chapter, I need to develop

context to help me to better determine the value of this data.

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5.4. Action Research Learning

5.4.1. Small Wins

Small Wins is a concept developed by Weick (1984. p 40) as a technique to effect social

change. The objective is pro-actively to manage a learning cycle process in a controlled

way so as to reinforce both learning and change in a desired wider direction. As Weick

says, “A small win is a concrete, complete, implemented outcome of moderate

importance. By itself, one small win may seem unimportant. A series of wins at small but

significant tasks, however, reveals a pattern that may attract allies, deter opponents, and

lower resistance to subsequent proposals.” (1984. p 40).

This approach can be used by managers to exploit controllable opportunities to produce

results, whilst building their competency. In order to achieve these objectives, the

problem-solving process needs to be subject to certain conditions (UCT. 2005b): It must

be controllable (fall within the authority, capability and capacity of the manager);

opportunistic (really add demonstrable value to the situation and stand-alone (it can add

value directly without being dependent on other outcomes. It must signal strategic intent

and effect movement in a strategic direction, and it must address the situation at a

detailed level.

I conducted three Small Win exercises. The first Small Win related to the use of Lean

Thinking to improve production and delivery of MTN’s community payphones (Geerdts.

2005d). The second and third were two successive cycles of improvement in the MTN

call centre. These related to the use of Lean Thinking adapted for the service industry

(Geerdts. 2006d).

5.4.2. Appreciative Inquiry (Research)

Appreciative Inquiry sees action research problem-solving approaches as limiting

because they invoke unhelpful human responses such as criticism and defensiveness.

Further, by focusing on “closing the deficit gap” (Barge. 2003. p 126) between what is

required and what is now, they limit creativity and innovation (Cooperrider & Srivastva.

1987. p 129). Instead, Appreciative Inquiry focuses on the power of positive emotion,

maintaining that “the foundation for affirmative change is fostering conversation that

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inquires into the life-generating experiences, core values, and moments of excellence in

organisational life” (Barge. 2003. p 124). One means of implementation of Appreciative

Inquiry is the 4D cycle (UCT. 2006d. Slide 1), Discovery (appreciating the best of what

is), Dreaming (envisioning the impact of what might be), Designing (co-constructing the

ideal – what might be) and [Achieving one’s] Destiny (sustaining the process, learning

and becoming empowered).

I used the Appreciative Inquiry cycle as a tool to probe my Marketing Team’s

understanding of MTN’s culture, what they would like to see it becoming and how they

would like to contribute to that change (Geerdts. 2006d).

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5.5. Triangulation Checklist

The use of multiple approaches can occur at many levels, and I conclude this Chapter by

tabulating (Table 7 below) the use of triangulation at various levels as a check of whether

I have used this technique adequately to sweep in enough perspectives and cross-check

for methodological errors or omission of important inputs.

Level Choices

Paradigms Functional, Interpretive, Emancipatory

Research Approaches Qualitative, Quantitative

Grounded Theory (with Research Mapping to

ensure levels)

Action Research Learning

Triangulation

Methodologies and Philosophies Functionalist: Lean Thinking, CMAT

Interpretive: Interactive Planning (including

Scenario Learning), Soft Systems Methodology,

SAST

Small Wins. Appreciative Inquiry

Data Sources Literature review, literature sampling.

Quantitative results from MTN audits

Interviews: self, expert, commissioned, open,

sampling interviews

Table 7 : Checklist of Triangulation at Different Levels

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6. Literature Review

"There is only one valid definition of business: to create a customer. ... It is the

customer who determines what a business is."

The remarkable thing about Peter Drucker’s statement (above) was not its powerful truth

but that it dates back to 1954 (p 37). One would have expected greater changes to have

taken place a full 53 years later!

At its core, customer centricity is about designing business around the customer.

According to Drucker, this is not a strategic decision to make, it is the essence. As

Maucher, the CEO of Nestlé, stressed during a panel discussion in 1996, customer focus

is a necessary precondition for doing business and not something special to strive for

(cited in Brännback. 1999. p. 1).

Within that context, this section draws on the literature to develop a view on customer

centricity, including a history of the development of the concept the benefits of

improving customer centricity; and ideas on how to achieve it. I will show how well

critical systems thinking incorporates the concepts as well as giving guidance on how to

achieve it, and how Lean Thinking is a particularly useful framework for MTN’s

situation. This will pave the way for a more tailored solution to MTN’s concerns in the

next Chapter.

Emerging theory needs to be tested and developed. When this requires literature sampling,

the results of the sample are consolidated into this Chapter for reference.

6.1. What Customer Centricity Is

The most succinct way of describing customer centricity (or ‘being market-driven) is to

choose an existing definition, such as that offered by Day (1998. p 8) and then to unpack

the meaning behind some of the words used:-

“The deeper meaning of being market-driven is a superior ability to understand, attract

and retain valuable customers.”

The key phrases are ‘ability’, ‘customers, ‘understand’, ‘customers’, ‘attract and retain’

and ‘valuable.

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Ability is important because customer centricity remains a mere wish unless the

organisation has the ability to actually deliver. I will show that the difficulty in

developing this capability is one of the primary reasons why customer centricity remains

a management issue. It is the subject of much of the literature and the reason why I

suggest the importance of systems thinking in my research answer.

Customers include both current customers and future customers, including those in

current markets as well as potential, future markets. This broader definition is important

to shift an organisation from the limiting tradition of planning only for current customers

and on current products (Day. 1998. p 6).

Understanding (customers) is the necessary starting point and means more than simply

knowing what customers want and how they behave. There are deeper issues (ibid. p 5),

such as determining latent needs and detecting unhappiness with current products that

may not have been expressed. In addition, it means appreciating the changing values of

customers.

Attracting (customers), as Drucker’s original focus, this goes without saying.

Retaining (customers) is recognition of the increasing emphasis on retention over

acquisition, and the need to understand the drivers of loyalty (ibid. p 9). I have mentioned

this as a key area in which MTN needs to responds.

Valuable (customers). The important issue behind this is knowing which customers to

attract and retain, and which to avoid, based on their economic contribution (ibid. p 8).

6.2. History

Burgess maintains that ‘customer centricity’ began with the William Hutt’s ardent

championing of “consumers’ sovereignty” as far back as 1928 (Burgess. 2003. p 158) and

that Hutt is the ‘father of marketing’.

A number of texts peg the origin of customer centricity on Drucker’s famous quote that I

have used (Brännback. 1999. p 3 and p 10)(Bund. 2006. p 10). However his book’s

contribution goes beyond a simple quote, with three key insights. The first is to view the

business from the perspective of the customer and customer experience (Drucker. 1954. p

39). The second is to view the provision of this experience as a holistic endeavour on the

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part of the organisation (ibid. p 34). The third, associated insight is to regard marketing as

an organisational activity and not the specialised activity of one department (ibid. p 34).

These are holistic, customer-centric insights to which later key authors reviewed did not

appear to contribute significantly.

Brännback (1999. p 3) describes Edmund McCarthy as the next important contributor,

introducing a ‘marketing-oriented’ concept in 1960. His contribution was to promote and

develop the concept of marketing to encourage organisations to shift their thinking from

production-orientation to marketing-orientation. According to Brännback, his concept

had three important elements - customer orientation, integrated company effort and a

profit goal rather than just a sales goal.

McCarthy also popularised the concept of ‘marketing mix’ with the celebrated ‘4-Ps’ of

price, promotion, product and place. The actual concept was introduced by Neil Borden

(Dennis 2004. p 5). McCarthy added conceptual depth and rigour to the marketing

discipline (and had substantial impact in this regard), but some contend that his approach

contributed to reinforcing functional division within organisations (Wikipedia. 2006)

rather than leading to an organisation-wide integrated marketing approach (as McCarthy

intended).

McCarthy’s ‘4-Ps’ model was so successful that it became entrenched for decades. It is

easily taught, and appears in every textbook (Grönroos. 1997. p 321). The concept of

pricing, promotion and distribution have even formed part of the American Marketing

Association’s definition of Marketing since 1985 Grönroos (1994, p 322). As Wikipedia

(2006) points out, McCarthy’s marketing mix list is marketer-centric (from the point of

view of the marketer and not the customer) and manufacturing based (suited more for

selling packaged goods) and alternative lists have been suggested which are customer

centric and appropriate for the service industry. I support the stronger criticism, such as

that supplied by Grönroos (1994, p322) that the concept of a marketing mix is simply a

marketing tool, not an entire approach. He bemoans the fact that it quickly became the

“unchallenged basic theory of marketing, so totally overpowering previous models and

approaches” (p 1). He discussed how other emerging approaches, such as the organic

functionalist approach advocated by Wroe Alderson in 1950 as well as other systems-

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oriented approaches from the 1960’s were not aired. Grönroos’ commentary provides a

useful challenge to the easily-made assumption that because marketing mix is widely

taught, it is the best (or a sufficient) approach to marketing.

Brännback (1999. p 4) lists Philip Kotler as the next influential contributor. He once

again emphasized the need for an integrated approach to marketing (as had all the

previous contributors I have mentioned). He showed how previous approaches had led to

marketers strategising about how to sell products, whereas he proposed starting with

customers and strategising about how to meet their needs.

Grönroos was one of the early proponents of what was called ‘relationship marketing’.

This may sound like a simple change of jargon, but to the adherents, it is a substantial

paradigm shift from the McCarthy-based thinking I have just described. The central

concept is the need to build and manage customer relationships Grönroos (1994, p322).

Marketing is explicitly described as interactive with the customer, rather than a set of

actions performed on the customer.

In this paradigm, the old marketing department concept is seen as problematic in the

sense that it devolves responsibility to the marketing function, rather than ensuring it is

shared across an organisation: “The psychological effect on the rest of the organisation of

a separate marketing department is, in the long run, often devastating to the development

of a customer orientation or market orientation in a firm” (ibid. p 325).

Relationship marketing is seen as more appropriate to today’s environment, which is

more networked, is more service oriented and places a higher premium on retention than

in the past.

The concept of relationship marketing has burgeoned. A helpful review of hundreds of

customer relationship management (CRM) articles was undertaken by Ngai (2005).

These articles appear to cover the comprehensive range of CRM topics, from strategy and

planning through to detailed implementation at the information technology level and

widening the topic range to such areas as e-commerce. Ngai divides the literature into

five broad focus areas (not categories): CRM, Marketing, Sales, Service and Support and

Information Technology/Information Systems (ibid. p. 585). He gives an exhaustive

breakdown of books by topic (ibid. pp. 589 – 590).

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Burgess (2005) and Day both espouse the concept of market orientation, which Burgess

distinguishes (2005. Slide 12) from marketing orientation (a focus on the marketing

function) or customer orientation (a more narrow orientation). He believes that market

orientation concerns a mastery of his three ‘I’s, insight, intent, and interaction. “Insight

calls for a comprehensive understanding of sources of demand, sources of supply and

methods of effective management. It requires an understanding of customers, competitors

and substitutes throughout the value chain. Firms with insight understand the factors that

influence their customers’ behaviours. Intent concerns the development of organisational

competencies that encourage contribution to a constantly changing strategic process of

response to customer and industry trends. It encourages internal communication,

contribution, sustainability, striving, responsibility, belongingness, stewardship, good

citizenship and responsible business ethics. Interaction means an emphasis on external

communications in the supply chain and on demand chain relations. It requires crafting

systems that provide the necessary information to calculate the revenue and cost streams

for every customer, the innovativeness to find new, appropriate, and organic distribution

and logistics solutions, and the ability to build and manage novel alliances to serve

widened markets currently considered to be sub-economic.” (Burgess. 2003. pp 174-175).

The final significant change in marketing emanates from the changes outlined in Chapter

1. Key developments included the rise of the on-line age, increased importance of brand

and consumer empowerment and increased access to information. These have given rise

to an industry of people analyzing and communicating future market trends, new ways to

market and new ways of defining the market which are no longer geo-spatial. For

example, marketing literature views even a narrow topic such as the relationship between

the consumer and handset as a new topic for wider marketing research – examining a new

marketing world where each person has access to a private, permanently-online device,

and where the identity and position of the user is known to the network (Watson. 2002. p.

338). Although the content of these new marketing modes is important, there are too

many trends, modes and fads to track and evaluate, and the basic underlying requirements

for a customer centric organisation, able to understand and respond to market

requirements becomes even more important.

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Although Brännback traces the shift in marketing thinking over time which has been

represented here, from what he calls the ‘production-oriented era’ to a ‘customer-oriented

era’, there still seems to be remarkably little shift in fundamental organisational

behaviour. At least there is some progress since Drucker’s original dictum, 50 years ago.

6.3. Introduction to CMAT™

In the eyes of MTN Senior Management, customer centricity is synonymous with

CMAT™ (Customer Management Assessment tool), an assessment tool developed by

QCi Ltd, a consulting firm based in the United Kingdom, to give a multi-dimensional

‘customer centricity’ score. The same assessment is applied across a wide range of

industries and within industries in different countries. Results are expressed as percentage

scores and as industry percentiles. Other organisations in South Africa using this

assessment tool are Volkswagen South Africa (used in 2003), and Woolworths Holdings

(communication with the respective representatives). MTN uses this to undertake an

annual audit across the Group (21 countries). This enables each country to track its

progress over time, and also to benchmark against other operations in the group. One

reason for its importance is that the annual audit is mandated by the Board. Therefore

there is considerable attention given to the score and concomitant preparation.

I have described the scoring dimensions as described in their website literature (QCi

Assessment Ltd) in Appendix C.

Two foundation which CMAT™ claims, tie in closely with other aspects of this literature

review – systems thinking and customer management and these are explored further.

6.3.1. Systems Thinking in CMAT™

QCi claims that the tool is ‘systemic’ (Woodcock. 2005. p 5). “Large companies should

look at managing customers in a systemic way. Rather than focusing mostly on cost,

revenue and profit, they should focus on the systemic measures of which profit is a

critical output.” (Woodcock. 2005. p 5).

A related concept in CMAT™ is ‘line of sight’ which refers to establishing customer

targets and then aligning the organisation to achieve them, as Woodcock explains, “The

measures start with business performance and then cascade into customer behaviour,

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customer commitment, customer experience, employee engagement and corporate

infrastructure. Only by measuring up and down this line will boards of large companies

be certain that their companies are aligned to deliver excellent customer management and

therefore business performance” (ibid. Introduction to Chapter 5).

6.3.2. Customer Management

Starkey et al (2002. pp 378 - 380) promote the term “customer management” (developed

by QCi Consulting) in preference over other definitions such as “relationship marketing”

for a few reasons, the most immediate being the observation that not all customers want a

‘relationship’. Customer management therefore includes a detailed prior assessment of

how desirable a relationship is in terms value derived from both sides. It is possible that

the customer management concept is unique, partly because of its holistic approach. It

includes all five areas mentioned by Ngai (above) and involves a wide range of activities.

A key exercise proposed is to develop different acquisition, growth and retention

strategies for different customer bands, based on criteria such as their profitability. This

introduces a strong financial underpinning to Customer Management, because this

exercise introduces efficiencies by proactively linking the cost-to-serve of customers to

their revenue contributions.

This latter concept is developed by a number of authors under terms such as customer

Lifetime Value (LTV), the present value of future profits from customers (Schmidt and

Webber. 1998. p 132). Understanding this value is seen as key to maximising one’s

‘customer capital’ (Hope and Hope. 1997. p 111), a change in mindset because looking

after customers (as capital, or as assets with a future value) is then seen as an investment,

rather than an expense (Cannie. 1994. p 13).

6.3.3. Customer Management Case Study – Malaysia

The summarised results of the following, published case study gives a clear overview of

what CMAT™ is looking for in an assessment. An early version of the standard

CMAT™ assessment was used and applied to 34 organisations in the banking, insurance,

oil and automotive industries (Starkey et al. 2002. p 381). The results of Malaysia were

compared with international findings and found to be similar. They showed a general

‘inward focus’ with little understanding of what the value proposition was, how it fared

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against competitors and how well the customer experience matched against the intended

proposition, less so by segment or value band. There is little understanding of a customer

life cycle, minimal understanding of the link between customer churn and the related

value, or reasons for leaving. Few companies use key performance indicators and there is

minimal use of complaints as an opportunity. There is strong use of communications to

build brand and to target customers, but very little follow-through effort. Another finding

of interest was the gap between what top management thought was happening, and what

is actually happening. I compared these with the findings of Woodcock (2005) and found

that many of the shortcomings mentioned above are considered general.

6.4. Lean Thinking

In the book Lean Thinking, Womack and Jones detail the essential elements of the Lean

philosophy which developed from the research of the Toyota Production System.

The traditional Lean approach (Womack, 2003), advocated a systematic set of steps in a

continuous cycle as per Figure 6, below:-

Value

Define value from the

customer’s perspective

Pull

Ensure the flow of

value is pulled by the

customer

Perfection

Define the ideal or

perfect value stream

Value Stream

Define the steps

required to deliver this

value

Flow

Line up the steps to

create swift, even flow

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Figure 6 : The Lean Improvement Cycle

A continuous cycle is envisaged which starts with a clear definition of what value is, but

seen from the perspective of the customer. This is the important step which establishes

the customer centric orientation of this approach. The concept of delivering value is

distinguished from providing a product or a service.

The next step in the process is to define the value stream in terms of steps are required to

deliver the defined value. Each step is evaluated in terms of the objective of delivering

value. Steps which do not add value are said to create waste. Elimination of waste is a

major concern of Lean.

The next step is to line the value-creating steps up so as to create swift, even flow of

value-creation. This is in contrast to batch processing, with stops and starts and

stockpiling of inventory between processes. The process of defining the steps and

aligning them to create flow is known as value stream mapping. It is the subject of books,

such as “Learning to See” (Rother. 2003), which focus on the methods of doing the

mapping, and are designed to help participants to see flow, value and waste. Seeing is

important because it enables all who participate to contribute to ongoing improvements.

A crucial principle of Lean is embodied in the next step of determining pull. The

principle is that the flow of value must be pulled through the system by customer demand.

This is in contrast to the traditional process of pushing of goods into the market. Running

a promotion (for example) is a push process which requires promotional pricing (thus

reducing potential profit), costly stock storage and can potential stock shortage or stock

surplus.

The final step is to define perfection in terms of what an ideal value stream would look

like, as the basis for setting objectives. The cycle is then repeated, leading to an endless,

responsive process of re-defining customer value and improving the value stream.

This cycle creates a simple but effective picture of a customer centric process which is

continuously improving and adapting to its environment, and including a holistic process

of end-to-end mapping of value according to customer requirements.

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6.4.1. Lean Solutions

Womack’s recent book (2005) takes lean thinking further, into the realm of sales and

retail, with a focus on joint-participation by companies and customers into problem

solving (the problem being the selection and purchase process of the customer, followed

by integration of the solution into their lives). Womack (2005. pp 48 – 56) sees the key

problems for customers (in the developed world) as being mobility, information

management, communication, entertainment, shelter, health, financial management and

personal logistics. All but two of these are clearly areas where the cellular industry can

add value. This is particularly relevant as solutions become more complex (e.g.

purchasing, installing and using a wireless data card). The book establishes consumption

principles: “Solve my problem completely, don’t waste my time, provide exactly what I

want, exactly where I want, exactly when I want” (ibid. p 43). It focuses on distribution,

new pricing models and has a section on call centres and their involvement in the

integration part of the cycle. It includes fresh ways to best solve customer problems, with

relevant case studies such as the Xerox call centre.

The key principle is to determine the customer’s problem solving processes and match

the provisioning processes to these as closely as possible.

The key steps in this process were: searching for the products needed; buying and

receiving; installing; integrating; maintaining and repairing; upgrading; and recycling and

replacing.

The challenge of the book is to align one’s business to meeting the customer’s problem

solving requirements – an over-riding customer centric philosophy.

This approach explains why the form Mystery Shopping conducted by MTN at the

moment as part of the branding and marketing initiatives (see Section 2.3.2) has

limitations - it asks questions based on an assumption of what customers want, whereas it

is only truly effective if it can be verified what the actual demands of the customer are

(Seddon. 2003. p 30).

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6.4.2. Lean in Service

Those people (including myself) who saw the benefits of Lean in manufacturing,

experienced difficulty applying the principles to the service industry (of which MTN is a

part).

The difficulty arises because whereas lean manufacturing tries to optimise a narrow set of

production process and reduce variety, lean service tries to accommodate a large number

of processes in a high variety environment which result from the unique requirements of

each customer.

Seddon (2003. pp 113 – 114) offers insights into how this might be achieved. His

recommended improvement cycle is similar to a standard learning cycle. This cycle is

fundamentally ‘customer centric’ in that it begins squarely with customer demand, and

enables the experience of customer requirements to be fed into the organisation.

Seddon (2003. p 25) refers to two key service areas, both of which relate directly to my

own areas of responsibility. The first is customer support (call centres) and the second is

sales.

6.4.3. Lean in Culture and Management

A fundamental precept of lean thinking is continuous improvement. This is imbedded in

the philosophy of the Toyota Production System (Spear and Bowen. 1999. p 97). The

effectiveness of process improvement is dependent on the ‘operating system’ of the

organisation. Toyota’s success, in particular, has been ascribed to the way in which the

improvement philosophy is imbedded into the very fabric of the organisation. Whereas

small wins are possible by following the thinking, substantive wins require changes to

dimensions such as the approach of each employee, the management style, the work

layout and even the types of conversations (Spear and Bowen. 1999. p 104 – 106)

An area where this is particularly important is the working together of different

organisational functional units within the organisation. Lean supply chains think of the

pull of value by the customer, and therefore eliminate or traverse functional units to

create a single, value-adding process flow.

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One insight from Lean Thinking is the shift in thinking from an organisational value

chain to an enterprise value chain (Womack and Jones. 2003. p 275). For MTN this

would imply working with Service Providers to plan end-to-end delivery of value to

customers across the combined MTN/Service Provider interface.

6.5. What Customer Centricity is Not

Day (1998. pp 2-4) gives an excellent idea of three organisational approaches which are

definitely not customer centricity.

The first approach is self-centredness (Day. 1998. p 2). The symptoms are a company

which is bad at capturing and sharing market signals. The sales force is largely in charge

of customer relations and contracts and in a sense have a ‘monopoly’ on customer inputs

which they use to their advantage. The only other insights come from the market research

function. On the other hand, senior managers spend very little time in the field and are

therefore shielded from customer complaints and unaware of changing requirements and

emerging opportunities.

With such companies, competitive advantage typically comes from the company

controlling assets or achieving functional excellence. There is typically, though a lack of

integrating logic to tie the ‘pockets of excellence’ together.

A frequent symptom of inward looking companies is an emphasis on managing short-

term earnings dominates over long-run concerns about erosion of market position or

diminishing technological advantages. Cost cutting is essential for competitiveness, but is

a problem when longer-term customer requirements are sacrificed or when “across-the-

board cost cutting is done without recognition of the long-run consequences for the

customer, or that other costs may rise to compensate for an ill-advised cut.” (Day. 1998.p

3). An example Day gives is when reducing customer service creates more work for the

sales force who then spend too much time solving problems rather than creating business.

An important nuance is the different between sales and customer-centric marketing. Day

(1998. p 3) uses the example of IBM sales teams, who “understood individual customers

and their business needs for the purpose of crafting persuasive sales presentations, but not

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in order to identify emerging requirements for the purpose of helping the other functions

to better understand the customer.”

Day (1998. p 4) calls the second approach which is not customer-centricity, customer

compulsion. He identifies three common problems. Firstly, individuals within the

organisation may go out and get customer information, but the organisation does not have

the disciplines to process them – selecting markets, filtering and prioritising. Secondly,

each initiative may be valuable on its own, but there is no systemic view. The total

offering lacks coherence – may lengthen response times and increase organisational

conflict. Thirdly, there is a mistaken belief that “every customer is worth pursuing and

should be given whatever they want”. The problem with this belief is that it does not

optimise profitability (as I will shown when discussing the REAP model in the CMAT™

discussion on the How To chapter later in this section). Customers also learn to exploit

this response, by playing organisations off against their competition. This puts pressure

on pricing.

The ultimate problem with this approach is that it appears to be customer centric but is

not. Managers feel as though they gave the concept their best shot, but it didn’t work, and

they become disillusioned with the general concept of customer centricity.

The third category of non-customer centric companies is the skeptics. They believe that

they know enough about the market to justify not gaining deeper understanding and that

this approach is warranted in their specific context – believing (for example) that current

business performance indicates their existing approach is working.

A subtle variation on this approach ironically comes from good intentions – the desire to

be at the forefront of innovation. The belief is that customer research does not lead to

these innovations because customers as ‘rear view mirrors’, choosing what they like from

what is already on the market and therefore endorsing safe, bland offerings. Therefore the

investment in time and resources to run focus groups and surveys is not warranted.

Day (1998. p 6) traces the belief to assertions such as those made by Gary Hamel that

customers are unable to envision breakthrough products and services. Day indicates that

evidence has shown problems arising from focus groups and similar research because

customers tend to choose the familiar, customer requirements are often contradictory,

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there is little confidence in subject decision because they are not making decisions with

their own money and because customer are often asked to rate prototypes of new

technologies which are still a bit clunky and clumsy so obviously cannot compare well

with working current technologies.

The reason why this observation is important is because it helps to highlight what

customer centricity actually is. Firstly, it involves developing a much deeper

understanding of the customer than just a response to a product (I have covered this

earlier in this Chapter, under ‘Understanding’ on page 75). Secondly, understanding

needs to include current and prospective customers.

Finally, there are organisation which believe they are technology driven and therefore do

not need to be market driven. They do not see that there needs to be a complementary

approach. For a start, they need to be awake to non-customers who are busy using

emerging, disruptive technologies which will eventually undermine their business.

One element that does not make an organisation customer centric is the rhetoric of its

leadership, even those which believe they are customer centric. “Although slogans may

be useful as reminders … they reflect only the surface meaning of an organisation that is

tightly aligned to its present and prospective markets. To complement my earlier

definition provided by Day (1998. p 8), “The deeper meaning of being market-driven is a

superior ability to understand, attract and retain valuable customers”.

6.6. Theoretical Sampling

The following literature and research results were the results of the theoretic sampling –

obtaining data to test or develop emerging theory.

6.6.1. Customer Complaints Management

Zairi (2000) gives an overview of the importance of complaints management as a tool in

achieving customer service excellence. The benefits are given as a channel for receiving

feedback (and therefore for putting into action improvement plans), a tool for preventing

complacency and harnessing internal competencies, a mechanism for performance

measurement and determining where to allocate resources, a mirror for gauging internal

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performance against competition and benchmarks and a useful general exercise for

customer understanding (ibid. pp 331-332)

Boeing Airlift and Tanker is used as a case study (ibid. p 332). What is relevant is their

setting service standards with their customer (something MTN is currently

contemplating), using teams to respond to complaints, maintaining logs of complaints

and correlating this information with other measures.

National Roads and Motorists Association (Australia) has a set of 14 principles and a

three-level model for complaints handling. The principles including equipping staff to

deal with complaints, measurement, reducing transfers (from one contact person to

another), proper documentation to the customer, prompt and effective responses,

attempting to fix the underlying processes and learning from complaints.

The learnings from the article (ibid. p 333) are to recognise the strategic importance, to

have a systematic approach, to equip people to handle complaints, to introduce

appropriate measurement, and to minimise ‘blame and reprimand’ practices. These are

the learnings that have led me to include this article – how case studies of successful

implementations inevitably allude (consciously or otherwise) to a requirement for a

systemic intervention.

The message for senior managers (ibid. p 334) is to develop a true vision for customer

care, to develop smart information infrastructures, to define clearly what is required, to

develop the correct culture of improvement (not blame), and to manage through a

process-based approach.

6.6.2. Service Provider Relationships (Key Account Management Theory)

Key Account Management is about understanding the customer processes and looking

at integration of the supply chain to “address the concerns of the customer’s

customers” - Millman and Wilson (1999. p 334).

This literature was accessed after determining through initial research the significance of

the Service Provider interface to increased customer centricity.

The RBU relates with its Service Providers primarily through its key account managers.

Millman and Wilson define key account management (KAM) in a way which positions it

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well within my customer centric investigation: “a process of customer management in

business-to-business markets” (1999. p 329). The essential purpose is to enable a

company to have more control over its own destiny and stabilise the interface with

strategic (business) customers.

The authors maintain that “there is widespread acceptance of the need to introduce

processes that facilitate buyer/seller interaction and collaboration, along the way towards

developing a customer-facing organisation” (ibid. p 329). However they also indicate that

defining these processes has been a problem for companies – even those considered

industry leaders.

Critical success factors are listed. The first is the support of senior management. This

demonstrates commitment in the eyes of the account manager as well as the customer.

Account managers must build deep networks into the customer.

The capability to deliver must back the relationship with strong capacity to deliver

solutions (technology and product capability) and understand how to use what is

available to solve problems, but also be open to suggestions from the customers. In areas

where a company has no clear differentiator, working together on problem solving

becomes the differentiator.

The problems can be seen as a hierarchy of product (most frequent – quality, supply,

suitability), process (incorporating value adds into their own transformation processes –

compatibility of inbound logistics with their internal processes) and facilitation (adapting

systems, processes and attitudes) need.

Product is associated with early-KAM stages and often leads to a pre-occupation with

pricing, process is mid-KAM and leads to a focus on cost. A facilitation focus matures

the relationship into partnership and synergy possibilities and shifts the focus to value

and growth (relationship).

KAM is about relationship management more than relationship development. There needs

to be a clear distinction about which customer interaction should be defined by generic

processes to allow customised processes for key customers.

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6.7. Research on Culture

6.7.1. Introduction to Culture Sub-Section

Dooley points out that managers considering ‘culture’ enter a “fuzzy world of purposeful

thought and feeling, action and meaning that shapes what life is like within an

organization but that is very difficult to capture and define” (1997. p 2). Since these are

“holistic, qualitative elements our complex, collective lives” (ibid. p 2), cultural

intervention needs to be part of a systemic change (ibid. p 13). This finding vindicates the

choice of critical systems thinking in addressing cultural issues.

Research on culture yielded a wide range of definitions and understandings. Research

focus was therefore informed by results which were already available and concepts which

emerged from the Grounded Theory process and required exploration. The importance of

culture to Lean Thinking (in particular, the concept of continuous improvement) was

already covered in the respective section.

It is expedient to begin this sub-section with a working definition of ‘culture’ which is

compatible with a systemic approach. A context-specific definition can then evolve from

that in this and the next Chapter. Schein defines culture as “a pattern of shared basic

assumptions that the group learned as it solved its problems of external adaptation and

internal integration, that has worked well enough to be considered valid and, therefore, to

be taught to new members as the correct way to perceive, think, and feel in relation to

these problems. (Schein. 1992. p. 12).

6.7.2. MTN Global Culture Audit

It was disheartening to see the results of MTN’s 2006 annual culture audit, circulated on

2006-12-15. This is the internal audit of the staff ‘satisfaction’. Almost every index has

declined, with the average down from 59% to 54%. This is well lower than the SA

benchmark (across industries) of 66% and below the global norm for telecommunications

companies, of 58%.

I have interpreted these results as a graph (Figure 7, below), which shows the decline

from the 2005 results (first column) to the 2006 results (second column) and compared

with the South African and the global telecommunications sector benchmarks (third and

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fourth columns respectively). All of the dimensions of the survey relate in some way to

customer centricity, but customer focus (the opinion that employees have of the degree to

which there is a focus on the customer) scored 62%, down 4% from 2006, slightly lower

than the global telecommunications norm of 65%, and substantially lower than the SA

norm of 76%.

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Figure 7 : 2006 Staff Opinion Survey against 2005 and other bencharks

The figures are disheartening because of the strong dependence of customer centricity on

the capability and attitudes of employees, especially those who interact with customers

daily.

6.7.3. Aligning Capability to Strategic Intent

ISR (who conducts the MTN Global Culture Audit) sees the importance of culture in

terms of alignment between an organisation’s business strategy and organisation culture.

“Alignment is achieved when the shared beliefs, values, and ways of working within an

organization drive the realization of the strategy’s goals and objectives” (ISR 2006a). The

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culture qualities need to be commensurate with its chosen strategic direction. For

example, if a company is focusing on efficiency in the call centre, the four capabilities

they propose are: involvement (involvement of supervisors and managers in solving

problems); coordination and teamwork; work tools and conditions; and established

priorities (ISR. 2006b). On the other hand, a company wishing to become more customer

centric needs to demonstrate the following capabilities: leadership; knowledge of

customers; looking for better ways to serve customers; strong belief in products and

services quality; career development; performance management; local flexibility and

empowerment; supportive service environment; values (especially customer centric

values) and respect; keeping employees informed and positive working relations (ISR.

2006c).

6.7.4. Alternatives to a Culture Audit

The audit conducted by MTN is useful in confirming that intervention is necessary. In

comparing the current and ideal it can constitute a gap analysis to determine remedial

action. However it does not go far enough in diagnosing the problem or contributing to a

fix. Rather, as Seel (2001) maintains, the act of involving people in the audit is part of the

change process, and a preferred way is to describe culture by “participative inquiry rather

than external diagnosis” (ibid. p 2), the reason being that culture is already and will be an

“emergent result of the conversations and negotiations between the members of an

organisation”.

The approach by Stellerman and Fink (2003) appears to be a combination approach,

using a consultant-based tool to undertake a formal participative diagnostic in three areas.

The approach requires mapping out the current and desired state in the realms of

(cognitive) competence (direction and approach to problem solving), social culture

(communication, involvement and influence) and performance culture (performance,

decisions, initiative and getting results)(ibid. p 7). The assessment of the culture is in

terms of three criteria – fit with the demands of the outside world, how motivated and

satisfied staff are with the culture, and consistency across the organisation. The initial

study allows a normative-level assessment of the causality of certain cultural aspects (ibid.

p 16), followed by a strategic-level linking desired changes into organisational planning,

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followed by an operational plan to communicate and discuss specific interventions (ibid.

p 18).

Seel’s alternative to the ‘consultant expert’ approach, is a set of exercises including the

use of metaphors and drawing up a set of simple rules, based on his interpretation of

complex adaptive systems (Seel. 2001. p 6). His promise is that “as our culture is made

explicit we will inevitably start to change and the more people who are involved in the

process of discovery and description, the faster the change will occur” (ibid. p 10).

This suggested cultural diagnosis exercise was undertaken as an Appreciative Inquiry

cycle with RBU’s marketing team, including selected questions, the exercise of setting

rules, and comparing MTN’s espoused values both with what the Marketing Team

wanted to see (a more customer centric approach), what its actual experience was and

what could be shifted. The results are in Geerdts (2007d), with highlights reproduced in

Appendix F. The process of establishing culture in this way resulted in the development

of a shared model of culture (depicted as a causal-loop diagram) from which direct

interventions were proposed and acted on. This very act was able to shift the actual sub-

culture in the group from a passive mode (experiencing culture) towards a more active

(influencing culture) and involved mode.

6.7.5. Value Based Management

Value-based management sees management achieving its strategic objectives by

managing the culture (values, norms and belief systems) of an organisation.

An example of a company which actively endorses value based management and has

shown tangible benefits is ANZ (the Australia and New Zealand Banking Group), a

financial institution which decided in 1997 to manage primarily with values (Afnan-

Holmes. 2006. Slides 28 – 34). In 2000, a survey showed that the most important value

was cost reduction, followed by profit and then shareholder value. Accountability was

fifth and customer focus was seventh. Customer focus moved to fourth in 2001, second in

2002 and first place in 2003. Accountability also moved up, to third place in 2003. Cost

reduction moved only slightly, down to second place in 2003, but profit moved down to

sixth place, and shareholder value to ninth place. During that period, became one of the

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top five most efficient banks in the world and enjoyed an average compound growth rate

since 1998 of 54% (Barrett. 2005a. p 4).

According to Barrett (2005b. p 1) more companies are becoming values-driven and they

are becoming the most successful. He believes that shared values are increasing the

ability of organisations to act collectively and therefore be effective, increasing the

performance of these organisations. Management can believe that they can influence

values, they can increase employee engagement in these processes and they can impact

organisational performance.

6.7.6. Link Planning Requirements to Environment

Jennings and Disney (2006) indicate that strategic management planning is pervasive,

being used (for example) by 89% of companies sampled in Europe and the USA.

Strategic planning is regarded as having 3 components – formulation, evaluating and

selecting strategic alternatives, and implementation and control.

These three components together serve numerous purposes within an organisation such as

control, communication and stimulation of innovation (Jenning and Disney. 2006. p 599).

What is very interesting are the claimed “associations [which have been established]

between the range of planning processes and a range of environmental and organisational

characteristics”. This is not surprising as planning includes both describing the

environment; organisation and developing a strategy in response.

Table 8 (2006, p 600) is an important framework for positioning a cellular operator,

bearing in mind that the associations between the environment and planning process are

more strongly linked to managers’ perceptions than to objective measures (of complexity

or uncertainty). The shaded cells represent my view on MTN’s current position.

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Characteristic Results

Manager’s Perceptions of the

Organisation’s Environment

More complex More frequent review of plans, shorter horizons, more pervasive planning activity and formality, more flexible, more frequent review, applied to more decision areas, applied to more planning stages, more formal planning

More unstable More flexibility and more planning, more delegation, less formality

More uncertain Requires greater planning activity, comprehensiveness and planning flexibility, less formality, greater delegation of planning, shorter time horizon

Competitiveness Shorter planning horizons and greater involvement of top management to promote ‘anticipation’ of environmental conditions

Organisational Characteristics Diversifying or narrow scope Centralised, top-down Entrepreneurial Intense environmental scanning, flexibility,

participation, more strategic control types Low cost orientation More and more sophisticated planning, control

of internal processes and anticipation of environmental conditions

Complexity of business unit activities (if seeking integration)

Increased scope and formality of planning processes

Core technology. Inflexibility in use or longer implementation cycles

More planning effort and sophistication

Perceived Performance Pressure

Area

Strategic Adaptation/Development Participative process, less focus on financial targets

Short-term financial performance Centralisation of goal-setting, financial emphasis Performance volatility Increased planning formality

Table 8 : Impact of Organisational Context & Management Perception on Planning Culture

The cellular environment is highly competitive, complex and diverse. On the other hand,

MTN is attempting to integrate business units and has a focus on financial performance.

As a result there is a certain ‘schizophrenia’ between wanting to impose centralised,

financially-based controls and wanting to create a more flexible and responsive

organisation.

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6.7.7. Usage of MBTI within MTN

The MBTI test was administered by certified practitioners in 2005 to MTN’s top 181

managers as part of a management course that all managers had to undertake, with the

following results.

The personality type with the highest incidence is known as the “ENTJ” type. There were

42, almost one quarter. According to the MBTI standard documentation, the

characteristics frequently associated with this type are as follows:

“Frank, decisive leaders in activities. Develop and implement comprehensive systems to

solve organisational problems. Good in anything that requires reasoning and intelligent

talk, such as public speaking. Are usually well informed and enjoy adding to their fund of

knowledge” (MBTI documentation).

Another result was that only 19 out of 181 were of the ‘F’ type. The specific polarity is

given as F versus T, or Feeling versus Thinking and is described as follows:-

One of the MBTI polarities is ‘F’ vs ‘T’, or Feeling versus Thinking. People who prefer

Feeling tend to base their decisions primarily on values and on subjective evaluation of

person-centred concerns, whereas people who prefer Thinking tend to base their

decisions on logic and on objective analysis of cause and effect”

It is significant that 89.5% of those in MTN’s management will tend to respond to a

situation based on ‘logic and objective analysis’ and only 10.5% on values and ‘person-

centred concerns’. It certainly flags a potential concern in terms of people-development,

which I will show is an essential component of customer centricity in a service

environment.

I deal with two other polarities within the context of dealing with change.

The first result relates to the polarities. I versus E (or Introvert versus Extravert). People

who prefer Introversion tend to focus on the inner world of ideas and impressions,

whereas people who prefer Extraversion tend to focus on the outer world of people and

things.

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Note that these definitions are different from the standard definitions which link

‘extrovert’ to fun-loving and parties, and ‘introvert’ to shyness. They relate more to

where individuals derive their energy.

People whose preferred type is Introvert are more likely to want to deal with change

through written media (e-mails, reports) and to want to manage the change privately and

at their own pace, whereas Extraverts are more likely to benefit from and engage in

discussion and shared

A third result relates to the polarities and S versus N (or Sensing versus iNtuitive). People

who prefer Sensing tend to focus on the present and on concrete information gained from

their senses whereas people who prefer Intuition trend to focus on the future, with a view

towards patterns and possibilities.”

Sensing people would need to hear about change in terms of the detail and the specific

facts (dates, their new structure, roles and responsibilities) whereas iNtuitive people

would need to know the background to the change and the rationale, the future direction

and the context.

When these are combined, they give insights into how managers might communicate

change. The highest number by far would favour the EN approach – more extrovert and

intuitive, and not necessarily catering for staff with an I or S preference:-

IS 47

IN 39

ES 33

EN 62

Table 9 : How Managers Might Communicate Change

When articulating and communicating the strategic intent of the company in terms of

customer centricity, there needs to be the full range of four communication modes

(discussed under I, E, S and N above) to suit the senders and receivers of the message.

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7. Systemic, Customer Centric Transformation

The best solution is the simplest one, but that which accounts for all the facts

- Occam’s razor

The organisation modeled in Chapter 3 is essentially inward looking – in its strategy,

processes and culture. Drawing on the research presented, and the rationale given in the

next chapter (supporting the choice of variables, and their causal relationships) I will

suggest a systemic transformation towards an outward looking organisation which is

aware of, and adapts to, its environment, and especially its customers. To achieve this,

MTN needs to address the key areas of strategic direction, organisational culture,

improved processes, customer understanding and improved relationships with its Service

Providers. These interventions will improve the framework from which customer

centricity can thrive, creating both customer value and shareholder value in the process.

These interventions are modeled in Figure 8:-

LeanThinking Operational

Efficiency

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

CustomerUnderstanding

CustomerCentricity

Figure 8 : Causal Loop Diagram of the Requirements for Customer Centricity

7.1. Customer Centric Strategic Intent

being market-driven is about having the guidance systems and discipline to make

sound strategic choices and implement them consistently & thoroughly - Day. 1998. p 8

Strategic Intention needs to take the form of an unambiguous commitment to Customer

Centricity, especially insofar as it appears to clash with short term financial goals. The

Strategic Intention needs to be developed in depth. Interactive Planning would assist

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senior management in clarifying purpose, and Scenario Learning would help them to

understand at an experiential level that customer centric transformation makes the most

sense going into the future.

There needs to be strategic intent to create an appropriate organisational culture, to

implement Lean Thinking systemically and to commit 100% to building partner

relationships with high levels of trust.

7.2. Appropriateness of Organisational Culture

In terms of culture, customer orientation needs to be ‘imbedded in the genetic make-up of

the organisation” (Day. 1998. p 9). Management needs to develop an organisation with

seven distinctive capabilities and behaviours (ibid. pp 9 – 10): offering superior solutions

and experiences; focusing on superior customer value (know its target segments well and

focusing obsessively on the things that these customers value most highly); being able to

covert satisfaction into loyalty and retention; excelling at anticipating competitor’s moves

and reaction, being able to take the many early signs and that are already available, and

putting the picture together (channeling its competitive energies into increasing customer

benefits at lower costs); viewing marketing as an investment, not a cost (taking a longer

term view on customers and realising it takes time to move from customer interest to

acquisition to loyalty); and nurturing and leveraging brands as assets (also having a deep

understanding of why the brand provides benefits to customers). The final attribute listed

by Day relates to how customer centric organisations energise and retain employees.

“Employee satisfaction and retention is both an emphasis and an outcome of market

orientation” (ibid. p 9).

Attributes of the culture should start with an absolute passion for the customer and for

centering one’s business around the customer. As MTN is a service organisation, with

many customer touch points, it is essential that staff understand what the brand means

and are able to project a consistent, branded customer interaction.

In addition, a very important component of culture is that it must be one of ongoing

learning, which was shown to be an integral component of the implementation of Lean,

the next topic of this Section. Learning is fundamental to systems thinking as it is the

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very basis for survival in a changing environment. Learning is both a rigorous activity

and a relentless passion for wanting to improve, woven into the fabric of the organisation

(as discussed in Section 6.4.3).

Changing organisational culture is an extremely complex undertaking. A management

commitment to values-based management (discussed in Section 6.7.5) would provide the

basis for change. The interactive diagnosis method (discussed in Section 6.7.4), where the

‘measurement’ becomes part of the diagnosis and part of the change process, is preferred

over the current ‘dipstick’ approach, which gives a measure but does not provide

employees with a real voice or a change to participate in or engage in the change.

7.3. Lean Thinking

At the operational level, there needs to be greater understanding of actual customer

behaviour and wants. This needs to translate into more effective processes which

understand and deliver value seamlessly, efficiently, effectively and consistently, even

when spanning functional units. This topic is covered extensively in Section 6.4. Lean

Thinking can revolutionise the value-delivering processes of an organisation, cutting

horizontally across functions, to understand and deliver on customer value in a way

which continually gains in efficiency. Section 5.2.2 describes the basic cycle and the

additional tools for understanding what needs to be done in the stores and call centres.

The same Section has already stressed that Lean implementation is complex and counter-

intuitive and requires a systemic approach to implementation.

Seddon’s approach of measuring actual customer demand and actual capability of the

system to respond (2003. pp 65 -82) should be used to determine which metrics to use.

MTN is revising its processes to adhere to requirements of ISO 9001 and CMAT™ (see

Appendix C). The need to increase focus on processes is stressed in all of these

approaches, as well as the Balanced Scorecard approach (Kaplan and Norton. 2002),

which MTN also uses. The important difference of Lean Thinking is the way that

responsibility for the processes, and process improvement, is imbedded into the processes

themselves and at the hands of those involved in the processes this is a preferred

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approach to the ISO 9001 attempt to “control work by controlling procedures” and belief

that “design should be separated from process” (Seddon. 2003. p 162).

Another fundamental tenet of Lean is that the value chain should be viewed at an

enterprise, rather than organisational level. This means that the value streams

contemplated for improvement should be seen and designed end-to-end from the

suppliers, through the Service Providers, to the end-customers. The most obvious

example where this could be done is in the handset purchasing process (described in

Appendix H), where the supplier, MTN and the Service Provider need to develop a single

distribution chain (Womack and Jones. 2003. p 275). The active inclusion of the

customer in the process is also important – one then sees the entire process as pre and

post-purchasing ‘problem solving’ by customers (Womack. 2005), aimed at delivering

high levels of service, greater choice, high availability, convenient distribution, good

value for money and easier integration.

7.4. Operational Efficiency

I maintain that operational efficiency is a natural result of a proper lean implementation

and should be a significant driver of the overall cost cutting that becomes possible. There

are bottom-up cost-savings from the elimination of waste as opposed to top-down cost-

cutting drives which I have explained in Chapter 2 are not productive – being what

Hamel refers to as ‘corporate liposuction’.(cited in Lavelle. 2000). As mentioned in

Chapter 6, these costs often simply appear someone else in the organisation.

7.5. Service Provider Coopetition

A significant change needs to take place in the way MTN relates to its Service Providers.

Quality partner relationships are essential for effective co-planning. Co-planning is

effectively moving from an organisational to an enterprise view, where (in this case) two

organisations work together jointly to provide an integrated customer product or service.

It goes without saying that such integration is compromised if there is mistrust if the

quality of the relationships is poor. There will always be channel competition for

customer ownership and brand positioning, and disputes over discounts and payments

(how the pie is shared). Therefore cooperation is always qualified. However the

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breakthrough in customer centricity comes from the understanding that the synergy (with

the proper level of planning) does increase the size of the pie. The integration of partners

into the Lean value streams is an example of where a combined approach can deliver

more value whilst reducing costs for all partners. Shared information is essential for

improved customer understanding, and enterprise-wide planning is essential to overcome

the efficiencies when two organisations do not align their processes.

I have indicated the results of research into what needs to happen for effective key

account management. The key account manager must manage relationships, product (the

value proposition of MTN to its partners) and processes (the continuity of the value

creation stream from MTN, through its partner, to the customer).

7.6. Customer Understanding

Customer understanding is a sine qua non of customer centricity.

A pre-requisite for such understanding is information systems capable of acquiring or

collecting, storing, managing and presenting reliable customer information. This

requirement is the basis for CMAT™’s concept of the ‘customer information plan’

(described in Appendix C) which also specifies that the plan must be driven by the

business requirement.

I have detailed in the customer centric definition (in Section 6.1) how understanding

involves going beyond simply finding out what customers want, to understanding their

underlying behaviours, needs and dissatisfaction with current products and services and

also widening the understanding to include possible future customers, or customers

currently or potentially using products which may become a threat. I also dealt in that

Chapter with the concern that some had that innovation was stifled by dwelling too much

on customers’ current preferences as opposed to their response to future innovations. I

maintain that customer understanding must be in-depth enough to lead to innovation and

an ability to judge to some extent what will and won’t work.

Another important element of customer understanding is the understanding of customer

profitability. This is best covered within in my description of CMAT™ (Appendix C,

sub-sections 6, 7, 8 and 9), which covers their analysis of customer retention; acquisition;

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The Link between Customer Value and Wealth(shareholder value) and its dynamic nature

Broad Social Need

Distinctive Competencies

Value

ErodingChanging and

Moving

Wealth

penetration and efficiency. To recapitulate – the analysis involves value banding one’s

customers (or potential customers) and then defining acquisition, retention, growth and

(possibly) deterrent strategies according to customer value. This leads to definitions of

value propositions for each target group with appropriate cost-to-serve levels depending

on the values of those target groups. The optimal result is both more satisfied customers

and revenue growth.

7.7. Customer Centricity

Although I have provided a text definition of Customer Centricity (in Section 6.1) the

most succinct definition could be shown as a causal diagram (the variable and

relationships are justified in the next chapter):-

Customer centricity occurs when customer value is delivered, but in a way which also

maximises profits (shareholder value). An

important element of customer value is

precisely understanding and adapting to the

changing customer need, because the meeting

of this need is the basis for this value creation,

but value is constantly being eroded by

competitors, new technologies and changing

customer expectations.

CustomerValue

(Enterprise)Shareholder

Value CustomerCentricity

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7.8. Win-win-win-win

The ideal result to strive for in the revised model is an outward looking, customer centric

organisation which represents a win for at least the following stakeholders of MTN –

customers, employees, shareholders and Service Providers. Only a system designed to

satisfy the multiple requirements is likely to achieve longer-term viability.

An important emerging property of the new organisation is that it no longer holds a

diametrically-opposed tension between cost cutting and customer centricity.

As the example of ANZ showed (in the previous chapter), customer centricity (when

correctly applied) has the potential to increase both revenues and efficiencies.

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8. The Rationale for Arriving at the Answer

8.1. Viable Systems Diagnosis

I undertook this diagnosis in line with my Research Framework (Chapter 4), The VSM

below shows the detail of Level 2 in Figure 1 (level 2), and gives a view of MTN South

Africa (see Figure 9 below), showing how the business units work together with support

functions.

EnvironmentCustomers

CompetitorsDistributors

SuppliersP.E.S.T.E.R

MTN South Africa

2 : Coordination:-• Customer centricity is not coordinated !!

• Informal (phone calls, meetings)

• Weekly formal meetings and qtrly reports

• Cross functional teams for projects• MD ad hoc intervention

• Shared functions coordinate (eg project

launch (this should be avoided!)

imp

lem

enta

tion

Co

-ord

inati

on

Network,IT, WebBilling

Shared ServicesManagement

CorporateBU

Corporate BUManagement

ConsumerBU

Consumer BUManagement

ResellerBU

Reseller BUManagement

Corporates

1

OperationalControl

Identity /Policy

3

5

2Audit 3*

Intelligence /Development

4Future

environment

Resellers

Consumers

End

Customers

3 Operational Control:-• KPI (intern), SLA (extern) setting and review

• MD intervention

• Opco formal meetings• Sign-off limits

3* : Audit (Customer value creation):-• Weekly, monthly, quarterly BU reports

• Dashboard (centralised balanced scorecard KPI monitoring): financial targets, customer

(sales, growth, retention, research, market

share, research), internal (transfer price

accounting, staff cultural audit and retention)

(Customer Centricity

Perspective)

BU: Business

Unit

SharedServices

4 Intelligence/Development:-• From Systems 2, 3• Executive Opco meetings

• Specified functions in shared services

• Strategy and Product Dev office

• Business Intelligence

• Research and Customer Insights

• Regulatory

• Senior ‘customer focus’ official planned

5 Identity / Policy:-• From System 4

• Board of Directors (currently reactive)• CEO (financial focus), MD

• Opco (strategy sessions 2x/year)

• No common value proposition

Figure 9: Viable System Model of MTN South Africa

The first level is implementation. This consists of primary, value-adding activities which

are at the core of the business because collectively they fulfill the primary purpose of the

organisation.

This diagnosis shows how the outward manifestations are derived from internal issues.

The business units and shared services units are all involved in implementation. However

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the coordination of these business units has been lacking. There are few processes in

place to achieve this coordination and there has been inadequate natural coordination.

The example of poor coordination of product development was cited in Section 2.3.4.

For example, key value-adding processes for the RBU are handset procurement and

customer support. Handset procurement involves all of the business units, the Service

Providers and shared services (the procurement department and the warehouse). As was

revealed in Appendix H, the functions are separated physically, departmentally and

organisationally and do not communicate as an integrated value chain.

The second level is coordination of the primary sub-units which constitute the

implementation. Problems which could be experienced here are sub-units competing with

each other or operating without awareness of each others’ activities.

The analysis highlights the lack of communication between business units to integrate

value proposition, share competitive intelligence and disseminate internal innovations. At

the moment there is significant distrust, internal competition and miscommunication

between business units.

The control system is the two-way communication between the implementation system

and the meta-level organisation unit (where policy is determined). In MTN’s case this

system is currently weak, due to the replacement of the managing director and the unclear

role that MTN Group plays in managing MTN South Africa’s affairs. There is no

consistency in resource allocation, procedures for communication and accountability – all

functions which should be carried out at this level. Further, management ‘decrees’ tend to

be frequent and unpredictable, rather than “on an exception-only basis” as suggested by

Espejo and Gill (2002. p 4).

The audit (or monitoring) channel is part of this system. At a managers’ meeting on the

afternoon of 2006-12-11 by the managing director specifically to discuss this requirement,

it was (strongly) agreed that current monitoring ability is significantly compromised by

the inability of the internal systems to generate the required basic statistical reporting. In

addition, the business units have not specified exactly what metrics they need to monitor

to understand performance. In the absence of appropriate metrics, the control function

tends to use blunt metrics (especially revenue and costs). The metrics need to be closely

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aligned to the actual strategy and, more importantly, what the customer wants (Seddon.

2003. p 65).

The intelligence system is an important, two-way link to the external environment. On

the one hand it needs to provide the primary activity with information on changing

market conditions, technologies and other environmental factors relating to future

business. On the other hand, it needs to communicate to the outside what the identity of

the organisation is.

In terms of obtaining external information, there is a vast amount of information available.

However there is little coordination of this information. It is received from employees

who have external contact, from the library, the research department, the legal/regulatory

department, the product portfolio managers, the strategy team and others. The

information is used by individuals or departments for their work, with no mechanism for

pooling this information or for tieing it into organisational decision making processes.

In terms of communicating MTN’s identity and key messages externally, this function is

well executed. However I will show later in my cultural analysis that there is a strong

disjoint between what is communicated externally and what exists internally.

The policy system (or identity system) should provide “clarity about the overall direction,

values and purpose of the organisational unit; and to design, at the highest level, the

conditions for organisational effectiveness” (Espejo and Gill. 2002. p 5). Information

should have been highly attenuated in complexity by the time it reaches the (inherently

low variety) policy system. In this respect, Espejo (pp 82 – 89) describes an adaptation

mechanism originally conceived by Beer – where the variety attenuation derives from an

assisted negotiation between the control and intelligence functions (Espejo p 84). In the

case of MTN, there is clearer policy at Level 1 (the desire for MTN to be the world

emerging market leader) but this does not translate to clear policy at Level 2 (the system

in focus). Policy is neither ‘handed down’ from top leadership, nor articulated by the

internal strategy function. There are a few ‘wish lists’ such as for ‘customer centricity’,

‘lean operator’ and ‘penetration of the emerging market’ without clear enough integration

and prioritisation for them to be implemented.

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In summary, Espejo and Gill (2002. p 7) believe that when the five systems are

functioning well, the organisation is “intrinsically adaptable to change. The process of re-

invention then becomes a continuous, spontaneous dynamic of the organisation, rather

than something that is imposed discontinuously from some external source”.

The VSD of MTN shows that the organisation need an intervention in all of the five

essential systems mentioned. In terms of the answer, this would indicate an intervention

in Strategic Intention (Level 5), Customer Understanding (Levels 1 and 4), Processes

(Levels 1, 2 and 3) and Coordination with Service Provider (Level 3).

8.2. Lean Thinking

Lean Thinking suggests that organisation processes need to be developed to understand

customer value and then to design processes to deliver value. These can cut across

functional areas (including other organisations). The prevailing culture needs to be one of

continuous learning and empowerment of staff at the place of work. Lean claims to result

in operational efficiency.

Lean Management believes that processes begin with a clearly defined purpose and are

measured against that purpose.

8.3. CMAT™

A causal-loop diagram was developed (in Appendix C) based on the CMAT™ literature,

and will be referred to when necessary.

8.4. Grounded Theory

The interviews were conducted and the transcripts completed (Geerdts. 2007), coding

completed (Appendix I) and the resulting model is as follows:-

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Quality ofdirection -

managementInternalfocus (shortterm profits

only)

Quality of

information

Processes -

quality of

People and

CultureFocus on

Partners

Need for

Innovation

BeingCustomerFocused

What was immediately evident from all of these exercises was the need for multiple

intervention points. Just as the failure of MTN’s previous customer-centricity initiatives

had system-wide causes, so must there be system-wide interventions. These interventions

must occur at the same time and with cognisance of their interactive effects.

From this core variable it was possible to determine where further information was

required. From the model (above), I did further research on management and direction,

processes and quality, innovation, and people and culture.

The review of ‘management and direction’ yielded an important framework within which

to position my answer - that relating to the levels of work. This is well described in the

diagram by Schwaninger (2005. p. 63. Slide 15) which juxtaposes the Organisational

Fitness (OF) levels alongside the Viable Systems Model as a template for the analysis.

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Schwaninger Organisational Fitness Model 1

Elements of the organisational fitness model are summarised on the right hand side of the

diagram. Schwaninger maintains that the normative management domain (shown at the

top) is a precondition for the strategic domain, which is in turn a precondition for the

operative domain. I therefore conducted my analysis in the same order. A parallel

framework is that developed by Hoebeke (1994) and his use of levels of work.

Customer Centricity is a concept which addresses the long term viability of the

organisation. It therefore needs to be addressed at the Normative Management level of

this model. The first variable in my final model was therefore this normative precondition

‘Customer Centric Strategic Intent’. Decisions in the strategic domain need to be

consistent with the normative domain.

8.5. Literature Survey and Data Gathering

The literature survey and other data are provided in Chapter 6.

The research within the Interpretive Paradigm included the Interactive Planning/Scenario

Learning (Appendix E) and Soft Systems Methodology exercise (Appendix H).

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8.6. Constructing the Causal Loop Diagram

The requirement for the first variable, Customer Centric Strategic Intent, is a requirement

for setting the Identity of the organisation, a direct result of the Viable Systems Diagnosis.

The requirement also arose from the literature review (Chapter 6) and the finding that

strategic intent is crucial to the transformation to customer centricity (Section 6.1).

CMAT™ (Appendix C) requires that the transformation process commences with the

Analysis and Planning phase, which includes the requirement for clear direction, as well

as the People and Organisation component, which requires a clear framework (both

references on page 143).

It was interesting to be present at a minuted meeting on 2006-12-08 (in the auditorium at

MTN’s Johannesburg headquarters) of the Managing Director of MTN South Africa, and

his direct reports (to General Manager level) where the head of Strategy made it clear

during his presentation to all that there was neither a organisational strategy in place, nor

a proposal on what process to follow to achieve a strategy!

Strategic Intent also drives Lean Thinking, because (as stated in the Lean Thinking

section above), processes must each have a purpose and management must determine the

definition of value in the case of each process.

That Strategic Intent drives Organisational Culture is apparent from the core variable

from the interviews. It is corroborated by the Values Management section in the literature

review – that management can and should set a customer centric value system (Section

6.7.5). It was a key finding in the Customer Complaints Management section (6.6.2)

which not only called for greater customer centric awareness, but also a systemic change,

and a move away from a blame culture.

That Organisational Culture also drives Strategic Intent was borne out in the interviews,

by the assertion that management sometimes knows what has to be done, but doesn’t

make a decision. In other words, the culture has to support management in determining

Strategic Intent. This was also borne out by the interview with the Customer Executive,

who felt that it was the culture within management that needed change – the management

team had to set the scene by themselves agreeing to work as a team.

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That Strategic Intent drives Service Provider Coopetition derives from the fact that

Service Providers are competitors as well as being part of the value chain. The level and

nature of collaboration needs to be set by top management as policy and then managed

consistently throughout the organisation, as consistency is an important requirement for

the establishment of trust between organisations.

The follow causal relationships have therefore been established:-

LeanThinking

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

The importance of Culture to Lean Thinking was clearly established in the literature

review (Section 6.4). Lean is all about establishing a culture of waste elimination and

continuous improvement. It is about motivating employees to want to improve and

empowering all staff to hypothesise about improvements and their consequences. As

Seddon stated (2003), it is about a new way of managing, with less emphasis on

‘command and control’ and more on mentoring and empowering. The requirement for a

culture of continuous learning, improvement and adaptation, comes from the readings on

Lean Thinking, and show that Lean can only take root in the correct cultural environment.

This is complemented by systems thinking, where learning and adaptation is imbedded in

the ‘living organism’ metaphor within the functionalist paradigm that I described (for

example in the single loop and double loop learning concepts of the viable systems

model).

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That Culture drives Service Provider Coopetition derives from the fact that it is counter-

intuitive to compete and collaborate. The analysis (Chapter 2) indicated that these

relationships were currently problematic and a change in mindset was required.

The new thinking comes from Lean Thinking and the view of the cross-organisational

value-chain ‘enterprise’, and Lean Thinking also drives Coopetition. As the processes are

improved, and customer value delivered more effectively and efficiently, coopetition will

need to increase as MTN and its Service Providers will need to get ever closer in order to

reduce inefficiencies. In addition, as MTN delivers more value to end customers (who are

also the end customers of the Service Providers, it will boost the trust and goodwill of

Service Providers by creating happier customers.

Channel coopetition could be represented by three discrete variables. In this sub-diagram,

improved coplanning reduces channel competition, which improves relationships,

enabling more effective coplanning in a virtuous cycle.

The results of the interviews with Service Providers reinforced the mistrust. It was

significant that a number of respondents were unwilling to be interviewed initially. This

highlighted the level of distrust that exists. Most were persuaded to participate after some

discussion. It was also significant that a number requested anonymity.

The results indicated that MTN compared favourably with its basic technical and

business processes. However when these went wrong, the resolution response time was

far too long. There was not a strong sense of partnership or equality and there was a

frequent complaint about poor communication. Therefore there is scope to improve the

relationship through Lean (which will improve delivery and improve responsiveness) and

ChannelCompetition

PartnerRelationships

coplanningO O

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through improved Organisational Culture (insofar as it improves the attitude of MTN

staff towards partners, and their ability to communicate).

The following diagram now stands:-

LeanThinking

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

The positive and decisive impact of Lean Thinking on Operational Efficiency is central to

all the literature covered and many examples were given in Section 6.4. Whether this

would apply to MTN’s environment was shown by three action research small wins – one

in the community payphone distribution process (Geerdts. 2005d), and two in the call

centre environment.(Geerdts. 2006b). In each case, the results were as dramatic as those

in the literature Payphone production effectively doubled, using the same resources. The

rollout rate became more predictable and therefore customers could be informed of

delivery dates with more accuracy. This reduced frustration and reduced calls into the call

centre.

Lean Thinking also drives Customer Understanding through a continuous cycle of

obtaining what is of value to the customer, and then delivering on it. Only value in the

eyes of the customer is deemed of worth in the delivery processes. By implementing

Lean, much of the clutter is removed and only the important processes remain. Therefore

there is clearer visibility of the customer and the relationships.

Service Provider Coopetition also drives Customer Understanding. Instead of the current

situation, where MTN and its Service Providers each have access to partial information

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and does not share, the sharing of information will result in a fuller picture of the

customer for both parties. Co-planning will lead to greater insights about customer values

and behaviour by pooling both information and insights.

The following relationships now exist:-

LeanThinking Operational

Efficiency

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

CustomerUnderstanding

Operational efficiency drives customer centricity in the sense that a significant

component of customer centricity is increasing the profitability of the contacts one does

have with customers. Customer understanding increases customer centricity for many

reasons, one being the improved customer value management mentioned in Section 2.3.3

that also being the part of CMAT™ which is emphasized. Operational efficiency means

that no only are margins higher, but lower-revenue customers can also be attracted.

Service Provider Cooperation is also a driver of Customer Centricity because it enables

MTN to engage Service Providers in its own customer centric transformation and it also

enables MTN to get closer to the customer.

LeanThinking Operational

Efficiency

Service ProviderCo-Opetition

CustomerCentric

StrategicIntent

Appropriatenessof Organisational

Culture

CustomerUnderstanding

CustomerCentricity

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The loop is completed because as customer centricity increase, and presuming it has been

deployed correctly, the positive result of the exercise from increased revenue and staff

morale should persuade top management to buy into customer centricity more deeply and

reinforce the intent.

Delivering customer value increases shareholder value by driving sales, loyalty and

growth. When looking at the whole model, customer centricity can be regarded as at very

least the ability to adapt to the market (in which the consumer has an increasingly more

active role) for the purpose of nothing less than long term viability (survival). However

Day (1998. pp 12 - 13) outlines specific payoffs that can be expected from customer

centricity. He qualifies that the evidence for each is not substantive, so they must be seen

as theoretical payoffs: If one follows the logic, an organisation should at least enjoy

superior cost and investment efficiency. For instance by matching spending to revenue

more appropriately by value band, an organisation should be able to save on lower-value

customers (increasing the margin) and spend more on obtaining the high-return

customers (as was explained under the CMAT™ explanation).

Employee satisfaction from doing a better job and enjoying a more positive customer

response should result in better retention, and therefore more retained experience and

lower staff recruitment and training costs.

Companies should be able to charge a price premium if they are able to offer superior

value. Revenue growth should follow such activities. Achieving ‘blockbuster’ products

could also potentially propel one’s business into a strong leadership position

In my answer, I conclude by suggesting that customer centricity and cost cutting need not

be mutually exclusive. The evidence above suggests that customer centricity does

improve all financial indicators, including cost reduction. However in order to increase

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the level of rigour, I conclude with a strategic assumption surfacing and testing exercise

specifically around this issues, as follows in Table 10:-

Least Cost Customer Centric

Drive Share value in short term

Survival – cutting out fat, prepare for bad

times

If going to cut pricing, need to cut cost

Cut costs to increase profit margins

More viable in longer term

More of a ‘lead’ indicator – profit is a lag

indicator, so can’t manage on it.

Spend on appropriate measures and profits

will follow

Strategic Assumption

Essential for viability

Tied to profits

Cost cutting reduces quality

Table 10 : Strategic Assumption Surfacing and Testing Table

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9. Evaluation

This evaluation and reflection follows the Dissertation Rubric to ensure consistency

between the assessments of the student and examiner.

1. Demonstration of a thorough understanding of the area in which the

research has been conducted and integration of the research with the

relevant theoretical issues?

The research framework (Chapter 4) identified the relevant disciplines and investigated

the research disciplines in detail, largely in the areas of management practice, systems

thinking and social research. Data gathering (Chapter 5) investigated the disciplines in

terms of the methodologies with which each is associated. The literature review (Chapter

6) ensure that understanding and relationships were deepened. The initial analysis

(Chapters 1 and 2) involved the practical application of certain disciplines in situation

analysis. The answer in Chapter 7 showed the result of applying the theory to the issues.

2. Demonstration of an understanding of the nature and purpose of the

dissertation?

The context was researched thoroughly, drawing in information taken from various

exercises (scenario planning, interactive planning, small wins, appreciative inquiry,

interviews) and placing that in the context of international research on the global cellular

industry and about the retail industry in general, today and in the future. A table was

included in Chapter 5 to ensure that there was adequate triangulation. Two Rich Pictures

were used to reinforce triangulation of the concern description.

3. Demonstration of a thorough knowledge of the literature that is relevant to

this research?

A thorough review of the core literature on customer centricity was undertaken, using a

range of departure points. Three key content areas examined were marketing, systems

thinking and research methodologies. A large number of authors can be noted, in some

cases to corroborate a viewpoint (e.g. multiple authors promoted customer lifetime

value), and in other cases to widen the viewpoint (e.g. with ‘triangulation’, there was

more than one departure from the established, ‘technical’ description of this).

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A particular issue with social science research (and with qualitative research in particular)

is the wide range of views on this (often both contrary and dogmatic). An example is the

different approaches which Glaser and Strauss adopted towards Grounded Theory, after

they had co-authored their original book. At the level of this Dissertation one needs to

develop and motivate for positions on these issues – with a blend of pragmatism and

rigour. I also discovered that it is often only when probing in more depth, that real

insights emerged. In fact, much of the Executive MBA coursework we had covered only

made sense within the deeper context.

4. Review, selection, development and correct application of an appropriate

research framework, process and techniques?

Engaging in the research process gave an increasingly deep understanding of how the

cycle I had used (Figure 10). This Dissertation represents a number of repeated passed

through the whole cycle, as that became clearer.

However, in another sense, the research process has become less clear. As per my

previous response (above), as one scratches below the surface on social research, one

realises how open it is to personal interpretation and understanding, and how shaped the

articles are by their context. For example, I listed to an interview with Strauss where he

candidly stated that his book on Grounded Theory was intended as a personal rebuttal of

a particular quantitative research adherent. That point had not come through during the

Executive MBA lectures!

Given that breadth as well as ambiguity, I stuck to a path which I considered workable in

addressing my research area, and justified in each case why I had chosen both a paradigm

and a methodology, and in some cases an approach. I contextualised the social research

issues in my personal ambition to improve my management theory and practice.

In terms of validity, I have included in this analysis certain requirements for ‘rigour’

adapted to qualitative social research: internal validity, external validity, reliability,

objectivity and soundness (Foster-Pedley. 2006. Slide 67)

The internal validity of the data derives from the design of the framework, quality of the

methodology and attention to details of the procedure. Triangulation allows for bias in

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one data gathering methodology or method to potentially be determined when using a

different one.

The extent to which decisions and procedures have been made explicit, allows for

scrutiny and therefore auditability. Together with triangulation, this increases credibility

of the findings. The book references, interview transcripts, methods and group outputs

are available, and the analysis (at least) is therefore replicable and confirmable.

The soundness (well-foundedness/goodness and worthwhileness) (Foster-Pedley. 2006.

Slide 67) is closely linked to the ethical evaluation (at the end of this section) - especially

the benefits that this transformation bestows on literally millions of subscribers

External validity is reinforced because the background readings and data collecting

activities undertaken in the development of the problem formulation and development of

the solution were comprehensive. Similarly the detailed construction of the four paradigm

lenses and the inclusion of lesson content were undertaken so as to provide a high level of

detail and aid in providing rich evidence in support of my claims in my Concern.

Objectivity, when addressing such a personal management concern as one’s own work

responsibility, is more difficult to evaluate. This made it important to engage in group

work, to interview the Customer Executive (as an expert in the field, but aware of the

context), to introduce quantitative statistics and to deploy an external agency for part of

the interview work. These factors, as well as providing an auditable trail have introduced

a level of neutrality. They have also made this evaluation important, as an explicit

component of my reflexivity.

4. Demonstration of an independent and critical ability to analyse, interpret

and synthesis material; construct and evaluate arguments; and make and

defend judgements?

The rigour in gathering, analysing and interpreting data in order to ensure validity has

already been covered – triangulation, combination of qualitative and quantitative data,

explicit process and procedures, group work, the use of an expert and assistance with part

of the interview work.

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The process of developing and amending the model based on each framework or tool

used was followed systematically, step by step and with painstaking attention to detail.

Each causal relationship was tested rigorously and with due diligence and in many cases

was corroborated with more than one argument. I applied my mind thoroughly to this

process because the research problem is a genuine one and the consequences of the

outcome to people’s lives and livelihoods are significant. Judgments were backed up,

where possible, with the expressed views of others. Objections were considered and,

where considered significant, rebuttals were used.

The warrants exist at the level of causal relationships, as well as in the entire document,

where there is an over-riding, higher-level sequence of arguments to support my key

proposition – that MTN must undergo customer centric transformation, and that there is a

set of key interventions required to effect this.

5. Demonstration of the independence of the research and presentation in a

satisfactory manner?

The Dissertation has been structured in a logical way, commencing with the

environmental issues and context (Chapter 1) to MTN’s inadequate response (Chapter 2),

and leading to a more detailed concern and research problem (Chapter 3). This required a

detailed research framework (Chapter 4) which resulted in use of specific data gathering

techniques (Chapter 5), a literature survey (Chapter 6) and answer (Chapter 7). The

support was then provided by a rationale for the answer (Chapter 8) and evaluation

(Chapter 9). This is represented graphically in Figure 10, below:-

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Pactical Problem

Research Question

Research ProblemResearch Answer

ActionableKnowledge

Topic

Concern

Situation

Narrowed downto

Incurs Costs in a

Results in aExplains

Motivates

Defines

Finds

Leads to

Helps to solve

Stage 1

Stage 2

The Research ProcessT: Customer Centric Transformation

In Cellular Industry

C: How does MTN transform to

become more customer centric

when pressure is in other direction

S: The days of easy growth are overEnvironment more challenging (regulatory,

competitors, complexity)

Various options – each requires change

Specific issue: service provider partnershipsOverall need: customer centric

transformation

Aware of strong push to cut costs

RQ: “What interventions

will transform the

enterprise to effect a

customer centric transformation?”

RP: What does literature say about customer centric

transformation?

What is critical systems

thinking and what tools does it offer this qn?

How can I develop theory I can use? (Framework)

Dissertation Process Followed

Literature Survey and Theoretical Sampling: Background and overview in literature. Specific topics. Literature sampling. Results

of certain data gathering.

PP: Specific interventions

required to bring about customer centric

transformation

Answer/AK: Attributes of a cust

cent org : culture

(continuous

learning, customer insights)

Lean tools to

improve processes,

with enterprise-wide perspectiveNeeds clear

strategic intent to

workNeeds customer

understanding

(Chapter numbers)

Ch 1-2

Ch 4

Ch 7

Ch 8

Ch 9

Ch 3

Data Gathering Process:

“What methods and tools

will give me the data I

need, within my Research Framework”

Ch 5

Rationale: How did I use the

data to develop an appropriate

theory

Evaluation. Are the

competencies displayed

and was the process

followed

Ch 6

Figure 10 : Dissertation Process Followed

Diagrams and tables have been used where these communicate a point better than a

paragraph, and these have been integrated through expansion of the diagrams in the main

text. For example, two Rich Pictures were used to depict MTN’s situation in different

levels of detail, and the text elaborated on these pictures. A table was used for the

stakeholder analysis, and the text gave more detail on specific stakeholders mentioned. A

graph was developed to compare culture survey results with benchmarks.

6. Critical reflection on and evaluation of the work?

Relevance

The Situation is depicted from a wide range of viewpoints (shareholder, senior manager,

ordinary staff member, RBU team, reseller, customer, Service Provider, myself, supplier)

as well as from a number of perspectives (financial, marketing, technical, traditional,

organisational, personal, collaborative etc) and using a range of tools, including Ackoff’s

mess analysis and viable system diagnosis. This provides a rich and clear background for

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the Concern to be developed. Out of the wide range of possible Concerns arising, the one

chosen is the most key to me in the development of my management practice, as well as

to my organisation because it is a specific responsibility of mine and essential to the long

term viability of the organisation. The organisation does not fully appear to appreciate the

importance to their future and it is my intention to use the outcome of this paper to be

able to better articulate the relevance.

The Concern includes a strong justification as to why it is significant and should warrant

attention. The extreme consequences of not dealing with the Concern are clear from the

causal loop diagram itself – diminishing Customer Centricity, leading to the inability of

the organisation to deal adequately with its environment, and ultimately its demise as

other, more responsive organisations take hold in the market.

Utility

The Answer has focused on addressing the central issue in the Question directly,

providing a model which fully and directly addresses the Question.

The interventions listed in the Answer are plausible because the CLD used in the Answer

establishes the direct links between the Concerns and the Answer. The Question in turn

captures the essence of the CLD in the Concern.

A number of variables are of interest given the strong interaction between different

factors and an organisation. The key drivers selected for the answer represent the most

fundamental core of contributions to the Answer, and are so systemically intertwined that

it is key that they are all included and their relationships to each other are maintained.

The fundamental mechanisms and many other aspects of the Answer can be generalised

in order to provide Utility to situations outside the specific case. The interventions

discussed are easily portable to the other companies in South Africa, especially those

with similar situations outside the organisation but sharing the type of environment - eg

with a complex, rapid changing, regulated but competitive, technology driven, mass

market environment. It would be easily portable to other telecommunications or utility

environments and (to an extent) to other retail environments with strong emerging market

potential and where indirect partners features strongly in the distribution.

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Ethics

This evaluation takes the traditional form (the integrated ethics framework below, and

then includes a critical systems heuristics format appropriate to the subject matter.

The integrated framework of Velasquez (1998. pp 128-129) is a comprehensive guide to

framing ethical questions. It considers the impact of actions in terms of maximisation of

social benefits and minimisation of social injuries, the identification of those who will be

affected and the consistency of actions with their moral rights, the just distribution of

benefits and burdens resulting from proposed actions, and the level of care exhibited. The

findings are summarised in Table 11, using the framework suggested by Fisher (2004. p

55), and looking at stakeholders hierarchically – from a narrow to a broad context.

Utilitarian Examines the new welfare produced for all stakeholders - the greatest good for the greatest number.

Rights Emphasises the rights and duties of stakeholders

Justice Focuses on fair processes and an equitable distribution of the benefits and the burdens imposed by the action or policy on the stakeholders

The Employee Transformation of the company to become more customer centric is essential for company growth and survival. My suggestions will lead to more motivated, fulfilled staff able to realise their potential more closely. Staff who care about delivering customer value will benefit from greater scope to be more proactive and involved

This allows staff the opportunity to take on more responsibility, to become more fully human (by better recognising their integration into a wider society and associated responsibilities). It promotes the ‘rights’ of employees to more fulfilling work, with more attention to the values that are important to them.

Employees neither benefit nor are compromised by this model, but are given the opportunity to participate in building a more customer-centric organisation. Managers are better empowered to respond proactively and to share their knowledge and ability with appropriate staff.

Shareholders Attention to customer centricity will benefit shareholders in the long run. Without this type of intervention, their shares would eventually be meaningless. Investors get maximum benefit when customer value delivery is maximised.

A challenge to shareholders is issued to give up some short term benefits to position the organisation to pursue longer term objectives with benefits for themselves as well as other key stakeholders.

Shareholders are challenged to give up some of their immediate access to wealth in order to pursue longer term organisational (and societal) objectives. The model does not address specific shareholder issues such as black economic empowerment.

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Suppliers and

Partners

(Service Providers)

The model provides benefits to partners who are competitive and customer centric and prepared to work together for transformation. This is necessarily at the expense (to a degree) of those not prepared to change.

The new model gives greater recognition to the rights of smaller partners to a fair deal and an opportunity to access the marketplace.

The enhanced model provides greater fairness to suppliers and partners compared to the previous model.

End Customers End customers benefit when staff are more equipped and empowered to understand and respond to their needs and are more motivated.

The organisation will be able to better service customers (as is their right).

There is increased focus on the requirements of the wider (emerging) market. This provides equitable access without compromising current customers.

Society Society (and key special interest groups within) will be engaged more fully as stakeholders. MTN will proactively contribute to addressing the currently large inequities and social problems.

If variations of this model were used by other companies, the rights of citizens in general would be promoted.

The higher overall penetration targets (including specific targeting of emerging markets) are in line with the expectations of society for fairness and justice. They drive economic growth which benefits all, and facilitate greater personal and community empowerment.

Table 11 : Ethical Analysis

Ethics : Critical Systems Heuristics Analysis

An alternative ethical evaluation was undertaken within the Emancipatory Paradigm,

using the methodology explained in Section 5.2.8. The results are in Table 12, below:-

Who ought to be the client of the model?

The primary client is the end-customer because the initiative strives for greater customer centricity. At the same time clients are both shareholders and partners because a link is seen between customer and other stakeholder value.

In this regard I have made a boundary decision to increase the scope from customer/shareholder to include others in the value chain.

What ought to be the purpose of my model

The purpose of the model ought to be to increase the customer centricity of MTN and partners (the enterprise) so that it can deliver greater value to its stakeholders.

In the model I have adapted my research problem specifically to address this purpose.

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What ought to be the model’s measure of success.

The success should be, and is determined by the degree to which my organisation and its participating partners can transform to become more customer centric (ie able to offer greater customer value whilst also delivering greater shareholder value)

Who ought to be the decision taker

The top managers/selected shareholders in reality are the decision takers as they should be. Staff should have more role in decisions – especially customer facing staff

What resources and constraints of the system ought to be controlled by the decision taker

Each participating organisation controls its own resources and dictates constraints to an extent. Some of the larger partners (especially retailers) have more control than some of the smaller partners

What resources and condi-tions ought to be part of the system’s environment.

Within the framework created by the model the company’s control of these is appropriate as the activities are an extended part of operations

Who ought to be involved as designer

Investors and managers, as they are stewards of these resources, with stakeholders being involved in specific projects which emanate from engagement (although the model does not have a way of stipulating this)

Who should be considered an expert.Playing what role?

The model does not address the use and role of experts in detail, beyond engaging shareholders.

Who ought to be the guarantor

The end customers are ultimately the guarantors as they are able to walk away from the products.

Who ought to be among the witnesses?

The stakeholder analysis indicated a range of stakeholders (who would also be witnesses) but has thus far been cursory. The model does provide for more detailed analysis and tools to determine if witnesses are being omitted that should be a part.

In what ways ought the affected be given the chance of emancipation.

Emancipation is well considered within the emancipatory paradigm which is part of the core of this paper.

On what worldview ought this to be based.

Various worldviews were proposed for different constituencies. The dominant worldview is customer centricity – based on a belief that a business can improve viability and returns by focusing its business and processes around improved customer management.

Table 12 : Critical Systems Heuristics Analysis

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The learning from this Dissertation has well exceeded expectations. It has provided a

context to review-for-meaning a significant volume of diverse but relevant management

material. The process followed has ensured a profound integration of this varied

information, both in relation to itself and to my management context. The focus on rigour

in research has awakened the ‘social researcher’ mindset which I expect to deepen the

reflexive component of my management practice. I have already noticed a heightened

awareness of the need to add robustness and rigour to strategic work documents and

presentations.

The work has provided me with a profound understanding of customer centricity which

in practical terms gives me a significant edge in influencing MTN’s transformation path.

For example, I am able to make a strong, considered case for the introduction of Lean

Thinking into MTN’s procedures and am able to propose specific interventions at the

level of culture. Without such in-depth consideration of the problem, it would potentially

be difficult to sustain such interventions with confidence and momentum.

In terms of contribution to the body of management knowledge, the successful promotion

of Lean Thinking into the service industry is exciting and could potentially have the same

magnitude of impact as previously in the manufacturing industry, increasing efficiencies

whilst also creating more meaningful work for thousands of employees in the service

industry. Showing leadership in the service industry could catalyse the development of

truly customer-centric service or retail organisations in South Africa.

One cannot reflect on the contents of this Dissertation without awakening a deeper sense

of inspiration and commitment to the transformation of MTN and other large

organisations to a greater customer centricity. If humans and organisations must co-exist,

then surely organisations must transform to truly serve humans. If that results in greater

viability and profit – all the better.

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Appendix A : Glossary of Variables Used

Variable Used Sense Reference Why How

Customer

Centricity

Superior ability to understand, attract, retain and grow valuable customers.

The degree to which MTN is oriented to understand, attract and retain valuable customers

Improves viability, enables higher margins, increases revenue efficiency

Clarify strategic intent, work on learning culture, implement lean processes

Customer Value

(customer

perceived value)

The benefit (less costs) that customers perceive they are deriving from consuming a specific product or service (or from having an ongoing relationship with a particular organisation)

The value that customers see themselves as deriving exclusively from using MTN services

The principle way to acquire or retain customers is to offer them value

Ensure the organisation has the ability to understand what value is in the eyes of the customer, and deliver that value

(Enterprise)

Shareholder

Value

Return on shareholder investment, seen as higher share price or as dividends, looking at the shareholders of all the organisations in the value chain

Return on shareholder investment for MTN and for its Service Providers

This is the primary motivation of the shareholders in supporting a specific strategic direction

Customer centric transformation

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Variable Used Sense Reference Why How

Customer Centric

Strategic

Intention

The intention at strategic management level to create a customer centric organisation

The intention by MTN senior management to create a customer centric organisation

Necessary for the survival and growth of the organisation.

Develop a deliberate, focused and resourced plan to transform the organisation to become more customer centric (culture, information, value-stream alignment)

Appropriateness

of

Organisational

Culture

The extent to which the organisation’s culture (norms, values, language, artifacts and rituals, shared attitudes) supports customer centricity

The extent to which MTN’s culture supports customer centricity

Culture determines behaviour, types of information sharing and levels of employee empowerment.

Senior management should align culture to strategic intent, lead by example in displaying appropriate behaviour, communicate what is required

Lean Thinking A philosophy centred on improving delivery of customer value through process management and continuous improvement, and continuous flow of value, based on learnings from Toyota

The use of Lean Thinking in a service environment

Can improve the delivery of value whilst reducing costs

Determine customer value, manage the supporting processes, arrange them to ensure smooth flow and work on perfecting them, in a continuous improvement cycle

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Variable Used Sense Reference Why How

Partner Relationships

The extent to which one works together with one’s partners at the strategic level

Co-planning and sharing of strategic information to ensure a cross-enterprise delivery of value

Provide the level of cooperation needed to deliver a combined value proposition

Co-develop strategies and share information and resources. Built trust and cooperation

Channel

Competition

The level at which distributors compete with each other to own the customer and to maximise their channel discounts

Competition between MTN and its Service Providers regarding who owns the customer (and database) and the discounts offered

Breeds mistrust and hinders the channel organisations’ ability to strategise and work together

(To reduce): both parties agree on the over-riding need to work together to ensure the survival, competitiveness and growth of all parties

Operational

Efficiency

The ratio of outputs of the operation to potential outputs (delivering at full capacity would be 100% efficiency)

The extent to which MTN’s delivery, development and support processes are delivering on their objectives (against what they could be delivering)

Helps to increase the benefit to customers whilst reducing costs

Implement Lean Thinking

Customer

Understanding

The degree to which one understands the needs, behaviour and profitability of customers

The degree to which MTN understands profitability of its customers and (in order of priority) what to offer these customers

Essential for knowing how to acquire and retain profitable customers

Ensure the intention to understand customers is there and the means are created to collect and integrate information

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Variable Used Sense Reference Why How

Co-Planning Two (or more) organisations spanning the same value-stream, planning together to create a common ‘enterprise wide’ strategy

MTN and its Service Providers developing an ‘enterprise wide’ strategy for the distribution of its services

Essential to achieve the level of efficiencies and competitiveness to survive

Agree on the need to work closely together. Hold joint sessions, using appropriate co-planning tools

Coopetition Two organisations that are in competition with one another, also co-planning and cooperating

MTN and its Service Providers competing in the retail channel but also cooperating and co-planning in their respective value chains

It the areas where the organisations rely on each other, this is essential to achieve the level of efficiencies and competitiveness to survive

Engage in cooperation and co-planning (as described above)

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Appendix B : DEVELOPMENT OF RESEARCH PROBLEM MODEL

The following process develops the drivers and inhibitors discussed in Chapter 3 and

including the field force analysis in Figure 4 into a basic systems-based model

hypothesizing the problems with customer Centric transformation at MTN:-

Figure 11 : Inter-Relationship Diagraph based on Drivers and Inhibitors of Customer Centricity

Drivers:

Ambiguity of Strategic Intention

Problems with Organisational Culture

Problems with customer facing processes

Partner channel conflicts and mistrust

Outcomes

Operational Inefficiencies

Customer Centricity

Intermediate:

Ignorance of customer

Problems with Organisational Culture

Ambiguity of Strategic Intention

Partner channel conflicts and mistrust

Ignorance of Customer

Problems with customer facing processes

Customer Centricity

2 in 4 out

1 in 5 out

2 in 4 out

1 in 6 out 5 in 1 out Operational Inefficiencies

3 in 3 out

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Appendix C : CMAT™ and Systems Thinking

CMAT™ is an audit technique and each category of measurements provides ‘levels of’.

It also asserts that these categories are shown by research to be true drivers of customer

centricity. The following process develops these variables into a basic systems-based

model hypothesizing the drivers of Customer Centricity:-

Figure 12 : Inter-Relationship Diagraph based on CMAT™ Variables

Figure 13 : CMAT Causal Loop Diagram based on the Diagraph in Figure 12

Value Prop

Customer Manage-ment Plan

People & Org

Infra- structure

Analysis & Planning

Customer Experience

Measurement

Monitoring of External environment

Customer Centricity

Value Proposition

Customer Management Plan

People & Organisation

Infrastructure

Analysis and Planning

Customer Experience

Measurement

6 in 1 out

1 in 6 out

3 in 4 out

1 in 6 out 1 in 6 out Monitoring of External environment

6 in 1 out

5 in 2 out

5 in 2 out

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I have condensed the description of each variable directly from the audit report given to

MTN at the end of 2005. (Details on CMAT™ are found at the licensor website,

http://www.qci.co.uk, and clicking on CMAT™ Assessment):-

1. Analysis and Planning

This section audits an organisation's Customer Management strategy development and

customer analysis capabilities. It seeks a deep understanding of the nature and value of

existing customers, supported by a robust strategy for managing them and clear plans of

the type of management activity to be implemented for different types of customers. It

includes strategy and business case development, customer value analysis; customer and

prospect segmentation and lifetime value.

2. The Proposition

This section covers the organisation's depth of understanding of the needs that it is

addressing in its customers and its identification of those needs that drive the most

important interactions that it has with its customers. It then covers the way that an overall

value proposition is developed to accurately address these needs (possibly with variations

to reflect different values and types of customer) and then the clarity and differentiation

of the value proposition, and its communication and integration with brand development.

3. People and Organisation

To an extent the staff and channels in a service organisation ARE the value proposition.

This covers the organisational and leadership framework within which Customer

Management sits, the competency development activity of the organisation and the way

that it measures, motivates and rewards its people, the clarity of strategy and quality of

management processes that the organisation has around its outsourcing of Customer

Management functions. It also includes leadership and culture, organisational structure

for Customer Management, competency frameworks, training plans and activity,

measures frameworks, staff recognition and reward, outsourcing strategy and supplier

management.

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4. Customer Information

This covers the way that the organisation builds and then manages its customer

information resources in order to provide more personalised transactions and to improve

segmentation analysis. This will often include a mix of internally generated information

in areas such as transactions and interactions and externally sourced information. The

section looks at the way the information is managed and particularly at the provisions in

place to ensure that it is kept secure and only used within the limitations of privacy

regulation that applies to the organisation. The section also looks at the organisation's

ability to extend its information management activity into the less structured information

that every organisation captures on its customers. Capabilities audited include data feed

management, list management, information planning, data quality standards, privacy

regulation compliance, data security and tacit knowledge management. A customer

information plan is recommended to documentation the intentions and how they related

to the organisational business plan.

5. Technology Support

This covers the ability of the organisation's customer management technology to deploy

its customer information in a way that enables it to be used effectively. It also covers the

constant review processes that are necessary to ensure that the technology deployed is

meeting the needs and expectations of customers. It includes access to the customer

database, exploitation and integration of new technology, , technical architecture and new

technology planning.

6. Process Management

What CMAT™ is assessing overall is essentially the Customer Management processes in

place within the organisation. This section is about the process of managing all these

processes in a co-coordinated way, ensuring that processes are consistent, comprehensive

and continually improving. Specifically, the section covers process documentation,

process checking, continuous improvement and radical change.

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7. Acquisition

This covers the targeting of good quality new or previous customers and management of

the relationship with them from their first expression of interest through to their

conversion to a customer. It includes the management of enquiries and sales leads as,

measures to prevent low value or high risk prospects being converted into customers,

prospect targeting, integration of sales targeting and campaign targeting, enquiry capture

and qualification, sales lead distribution and reporting, sales conversion and winback

activity.

8. Retention

This section covers the earliest retention activity in the form of welcoming right through

to the last attempts to retain customers just before an organisation loses them. It includes

the delivery of core basic service as a means of retaining customers as well as the use of

specifically developed customer retention programmes. It also covers the management of

dissatisfaction in order to reduce customer attrition in this area. It includes customer

welcoming, information capture, building customer understanding, complaint

management, customer exit management and understanding the cost versus benefit of

customers by value band.

9. Efficiency

This section covers the active management of the cost-to-serve of customers throughout

their lifecycle. It includes control of proposition creep, activity-based costing, cost to

serve management and accounting for the cost of poor quality.

10. Penetration

This covers development of greater value from existing customers by cross-selling and

up-selling to large numbers of customers where this is relevant and also the individual

value development of major customers where an organisation has these. It includes use of

lead products, customer development strategies and key account development.

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11. Measuring the Effect

This section covers the measurement of customer management at the most strategic level

and also the (tactical) measurement of individual campaigns, media and channels. It

includes customer management key performance indicators, measures cascade, campaign

effectiveness measurement and channel effectiveness.

12. The Customer Experience

This section covers the mechanisms in place to manage the customer experience, and the

organisation's understanding of customer satisfaction and loyalty. It particularly focuses

on how close staff and managers can get to experiencing their organisation as real

customers. It includes customer experience blueprints, channel consistency, satisfaction

research, mystery shopping and experiencing the organisation.

13. External Environment

This section covers the organisation's collection, analysis and communication of

competitor information and customer management benchmarking. It also covers the

organisation's willingness to share learning with non-competing organisations.

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Appendix D : Other Possible Approaches

D.1. Customer Value Model

D.2. Schwaninger’s Organisational Fitness Model

(Schwaninger. 2005. p 50).

Causal Loop Diagram

(Geerdts. 2006a)(Reproduced) Arrows all indicate “+ “or S drivers unless indicated with a “- “

Each variable refers to a ‘level of’

(create conditions

for)

Customer Value Creation

Alignment of products, services and processes

Financial

Performance

(effic- iency)

Alignment of operations

Change & Complexity in Environment

Responsiveness to value change signals

Responsiveness to specification change signals

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Appendix E : Formulation of the Mess

The objective of this activity was to use Scenario Learning and then Interactive Planning

to hypothesize the practical problem that is producing the concern. The particular

component of Interactive Planning of relevance is called “Formulating the Mess”.

Scenario Learning assists in determining expected future environments .One then

examines the organisation’s current attributes and behaviour within its current

environment and identifies how these relate to threats and opportunities in the expected

future environment.

The value of this Appendix is to provide some of the background working and indicate

the details of the procedure. The following notes explain the contents of this Appendix:-

1. Results of the exercise which contribute to the flow of the Dissertation’s logic and

argument were transferred to the relevant chapter in the body of the Dissertation.

They are merely referenced in this Appendix.

2. The Scenario Learning was completed as a team exercise by RBU Marketing. I used

the outputs from this (in particular the four scenarios) as inputs to the Interactive

Planning. Scenario Learning was compressed into a one-day workshop (on 12 July

2006), using the adapted process developed and tested in Geerdts (2005b). The

objective was to assess RBU readiness for future events. The time frame for the

scenario is the end of 2010 – allowing the MTN-sponsored Soccer World Cup to be

interwoven into at least one Scenario!

3. I completed this Interactive Planning formulation myself as a formal way of

interrogating my own knowledge of the organisation for this Dissertation, although it

has the additional value when completed as a team of sharing meaning.

E.1. Scenario Learning

In Geerdts (2005b) I detail the method for eliciting the context for Scenario Learning

(Rich Picture, Business Idea diagram, PESTLE analysis and ‘rules of the game’ analysis).

The Business Idea diagram is first developed to achieve a common ‘definition’ of the

business which will then be evaluated against the scenarios. The importance of clarifying

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and depicting the distinctive competencies and the key factors is emphasised because

these are particularly subject to scrutiny under the scenarios.

The Rich Picture provides a diagrammatic environment for developing the plots of the

scenarios. The Rich Picture from this analysis, subsequently used in the Interactive

Planning is now Figure 3 in Section 2.6, captures most of the elements of the system.

The relevant results of the environmental (political, economic, social and technical

analysis) exercise provide the basis for Chapter 1, 2 and 3. This includes an analysis of

the strengths, weaknesses, opportunities and threats of the model against the environment.

The ‘rules of the game’ analysis included the regulatory environment as well as the

limitations of the service provider model (both issues covered in Chapter 2), including the

application to the latter of the ‘business rule’ in the spirit of Illbury and Sunter (2001. p

69) - the need to strive for win-win business outcomes.

The Scenario Learning exercise developed on the core value creation streams which are

shown in Figure 14 (below).

Reseller Business UnitBusiness Idea

Supplier InputsValue

TransformationOutputs Customer

NWG

Bill-

ing• Current ability to bill

wholesale or retail

• Standard VAS

• Current packages

• Core radio n/w

services

• Core fixed services

• Financial switching

capability

• Design and Management of Branded User Experience

• Development of Solutions (relevant, flexible, timeous development of new products and pricing)

• Bill Presentation (accurate, clear, timeous)

• Responsive relationships• Knowledge Transfer• Relevant Agreements• Growth and return• Service level performance standards

Reason to prioritise MTN as partner

• Market leading comms services

• Compelling bulk services

Cu

stom

er

inter

face

Su

b

scriber

• Market leading comms services

• Compelling branded experience

Pa

rtner

interfa

ce

• Independent Cellular Service Providers (ICSPs)

• Wireless Data Providers (WDPs)

• Wireless Applications Service Providers (WASPs)

• Prepaid Resellers

• International Carriers ( Roaming )• Underserved Area Licencees (USALs)• Mobile Virtual Network Operators (MVNOs)• Advanced Applications Providers

(AAPs)(Telemetry)

Figure 14 : RBU Business Idea

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E.1.1. Key Uncertainties

In Geerdts (2005b) I give a thorough treatment of how to elicit, agree on and use key

uncertainties, their role in scenarios and understanding different levels of certainty.

The ten key uncertainties chosen are ranked against axes of degree of uncertainty vs

impact and the most important two uncertainties identified (Figure 15):-

Competitor customer

centric focus

HIV/AIDSDirection

Wimax takesoff (>30 share)

R/$ up > 50%

Civil War in Zimbabwe

VoiP growth > 25% P.A.

Impact

Cert

ain

ty

Selection of 2 Key Uncertainties

Boundary of most important uncertainties

4 Scenarios built around 2 major uncertainties,

but capturing 2x outcomes of all 10 variables

HostileTakeover

Regulator strictlegislation

Cell use found to be cancerous

EconomicRecession

- 50 %

Figure 15 : Ranking of Key Uncertainties

The two most important key uncertainties determined were as follows:

1. Whether the South African economy would enjoy growth or recession,

2. Whether or not voice-over-internet would take off (a growth rate of 25% per annum

being considered of consequence). The impact of this is that it cannibalises traditional

voice margins

The two uncertainties, with two outcomes for each, result in four main scenarios. Each

has a different End State, depending on the choice of outcome. The remaining

uncertainties were included in the scenarios, with semi-random outcomes (as shown in

Table 13 below):-

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Variables / Scenarios 1 2 3 4

Economy Growth Recession Growth Recession

Voice over internet protocol growth exceeds 25%

<10% pa <10% pa >25% pa >25% pa

Major Competitor Adopts Customer Centricity Drive

Yes No Yes No

R weakens against US $ (2010 vs 2006)

>50% >50% <20% <20%

Hostile Takeover of MTN Group No Yes Yes No

Regional instability Yes No Yes No

Cell phone use conclusive results out

No finding Cancerous Not cancerous

Cancerous

HIV/Aids Worse Better Better Worse

Regulator clamps down heavily and effectively on network operator pricing

No Yes No Yes

New wireless technology share of new market growth

>30% <10% >30% <10%

Table 13 : Scenario Uncertainty Allocation

E 1.2. The Plot and Logic

The key issue in Scenario Learning is that each of these end state descriptions must be

plausible. For this initial exercise the participants were new to the concept of Scenario

Learning. The distinction between predicting the future and projecting became clear

when it was explained that each end-state scenario must be equally plausible in order to

gain the decision-making benefit.

For this Dissertation, I simply used the above End States as the framework within which

to complete the Interactive Planning desired future state, and the data gathering from the

RBU Marketing Scenario Learning therefore ends at this point.

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E 1.3. Four Scenarios

The four scenarios, based on the four key end-state outcomes, were as follows:-

“Double Check” Scenario: Global confidence in Southern Africa is undermined by

mounting regional instability, with growing land tensions, an uncontrolled HIV/AIDS

pandemic and the outbreak of civil war in Zimbabwe. The Rand slides considerably

against major foreign currencies. The SA economy continues to grow apace during this

period though, with the currency slump driving exports.

The government regulator’s threatened intervention in cellular pricing continues to be

delayed, but the greater threat comes from the popularity of a new wireless standard

which enables new competitors to cover considerable parts of South Africa at far lower

costs. Virgin Mobile begins to ramp up its marketing of its differentiated customer

service, encouraging MTN’s main competitor to takes an aggressive, public customer

centric stance, benefiting from the pilot projects of its holding company with CMAT™ in

Australia and Ireland. These represent a significant new and traditional competitive threat

at once (the ‘double check’ in Chess).

“Chinese Checkers” Scenario: The Rand’s slide to over R11 against the US$ makes

MTN a cheap asset. China Mobile has long been eyeing MTN and in 2009 purchases a

majority stake, partly with a view to maximizing benefits from MTN’s global 2010

Soccer World Cup sponsorship. The acquisition is partly driven by the sharp global

economic slowdown, which affects both Chinese and South African markets. China

Mobile needs to look for new growth opportunities. MTN now loses its ‘proudly South

African’ differentiator. However there benefit from China Mobile in the form of access to

capital, pure economies of scale, purchasing power, supplier partnerships and experience

in many different market types (the potential for a double jump or triple jump in the game

of Checkers, to really extend into new market areas).

Although technologies competing with GSM fail to take hold, researchers unveil new and

convincing evidence linking cell phone use to brain tumours. Consumer activist groups

are quick to capitalise on this to call for stricter legislation labeling handset radiation and

removing cellular base stations. The government regulator holds hearings on this, but also

introduces its tough, long-awaited regulations aimed at reducing cellular pricing.

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“New Boardgame” Scenario: South Africa continue to enjoy strong economic growth, a

stable rand and improved control of its HIV/AIDS pandemic. This is in spite of growing

regional tension, with Zimbabwe degenerating into civil war.

Telefonica purchases a majority stake in MTN Group in order to expand its emerging

market footprint from South America. This enables a rich mix of lessons on what works

in different markets, but also diverts energy internally into aligning cultures. The

competitor responds to Telefonica’s market entry, and takes the opportunity (whilst there

is internal uncertainty within MTN) to take an aggressive, public customer centric stance,

benefiting from the pilot projects of its holding company with CMAT™ in Australia and

Ireland.

The government regulator withdraws punitive legislation on pricing, giving cellular

market a reprieve. Customers respond by making voice-over-internet calls to take

advantage of the lower data call costs. This increased data usage also boosts a competing

data technology, which starts to flourish and provides widespread coverage. High-end

users not only make fewer traditional voice calls, but also start to migrate to the

competing technology. This as extensive international research finally shows reasonably

conclusively that there is no link between cell phone use and brain tumours.

With a new owner, new technologies and behaviours, and increased competition in

‘customer centricity’, a new value proposition is required, and this will need deep

insights into customer needs and behaviours.

“Castle” Scenario: Although the region is stable and the Rand is holding out, the

HIV/AIDS crisis gains prominence as the Zuma government responses prove inadequate

and contribute to South Africa’ slide into a recession. The recession helps MTN by

staving off investment by competitors in new technologies. However it does encourage

cash-strapped individuals and businesses to resort increasingly to cheaper voice calls

using the plentiful voice-over-internet technologies (to MTN’s detriment). Government

introduces legislation aimed at dramatically reducing telecommunications pricing, in a

bid to lower communication costs for business and so attract foreign business. Research

also now conclusively links cell phone use to brain tumours and this fuels increased

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activism over consumer rights (labeling handsets with radiation levels) and

environmental issues (placing of base stations).

E 1.4. Standard Scenario Learning Process

The adapted Scenario Learning process (Geerdts. 2005b) details the need to create a plot

which shows the logical steps and cause-effect sequence between the present and the end

state, using the stakeholders, issues and external factors from the Rich Picture as players

and objects in the plot. The end state and intermediate steps must be plausible. This is

important because it highlights pre-cursors to an event. Awareness of these sensitises

decision-makers to assist ongoing decision making.

E 1.5. Strategy Selection

The strategic fit of the business needs to be assessed against each scenario and a strategy

formulated which best suits to a scenario. Interactive Planning provides tools for detailing

this planning. The Dissertation itself provides an alternative strategy formulation

component (Chapters 4 through to 8). However, scenarios are important in determining

the final choice (Chapter 8) and evaluating this choice (Chapter 9).

Each strategy is tested against the following criteria: cost-benefit, cultural fit, strategic fit

and robustness of the model in dealing with each of the other scenarios. Figure 16 shows

how this can be depicted.

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Figure 16 : Strategy Comparison Against Scenarios

In this example Strategy D would be selected and then ‘tweaked’ with components of the

alternative strategies, and in some cases used to hedge against different possible

outcomes. The final strategy would be Strategy D’ (D – improved). Current strategy is

then compared with Strategy E.

Evaluation is important because it gives the team greater confidence in this process to

ensure future buy-in and helps them to be more aware of their learning. It is important to

complete the workshop with at least a comparison of the original and revised plans, to

highlight the changes made (the learnings).

In this case, the key learning was the elevation in the relative importance of customer

centricity activities relative to planning around revenues and costs.

E.2. Interactive Planning

E.2.1 Systems Analysis (what the organisation is and where it is now)

The Rich Picture from this analysis, now Figure 3 in Section 2.6 (on page 41), captures

most of the elements of the system and most of analysis of the Rich Picture has also been

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transferred into Chapter 1 and 2 – the core elements being an organisation that is used to

a high-growth, seller’s market but is now in a new environment of fewer ‘easy pickings’

and more intensive competition, complexity and change. The major players in the system

are included in the picture and discussed in Chapter 2.

Gagnon’s view of retail in 2010 (2005) gives an additional scenario of what could happen

in the external environment and indicates that the market is already pulling in two

directions – the low-cost and the niche/branded markets, with reducing ‘middle ground’.

E.2.2. Obstruction Analysis (what obstructs organisational development)

As detailed in the previous analysis, the organisation is continuing as it is without a

profound consideration for the need to change.

The Stakeholder Analysis is a principle tool in this analysis. Table 1 : Stakeholder

Interests vis-à-vis Customer Centricity and Table 2 : Response Strategies for Key

Stakeholders. This work has been transferred to Section 2.4.

One of the key obstructions is the simultaneous chasing of financial goals (cost cutting

and reduced investment) at the same time as trying to introduce customer-centric

programmes (any change requires investment and incurs costs, and more so if the change

required is substantial).

The method of change is also in question: the concept of taking a single consulting firm’s

toolkit and mandating that it should be used without the visible and ongoing commitment

of the leadership.

E.2.3. Reference Projections (what will happen if there are no major changes in the

organisation’s behaviour) and Reference Scenario (A comprehensive picture of the

future state of the organisation if there are no significant changes in what it is doing

or how it is doing it, in its environment)

As now included in the main document, declining competitiveness and the reduced

market size will lead to cost-cutting, layoffs of staff and layoffs in the entire eco-system

of the supplier industry. The company will try to change more quickly, but it will be too

late to avoid much of the damage and it will battle to do the ‘surgery’ that it requires

whilst remaining effective. It will lose market share (which is not easily regained) and

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will have to cut costs to stay competitive, losing margins (if it has not increased

efficiencies sufficiently) and losing value which is also not easily regained. The

government regulator will exacerbate MTN’s problems by intervening to cut prices and

improve access to the market by new players.

The market will become increasingly biased towards lower costs (still requiring value but

not prepared to pay more than the cheapest supplier’s price) and suppliers will become

specialists at low-cost production. The other bias will be towards unique, branded or

niche goods which will attract a premium but require thorough market understanding.

Since MTN is not geared up for either, it will face a shrinking market.

Change will be attempted but (at current rates) will be too slow to have a significant

enough effect and value will be lost.

The uncertainties are represented in the four scenarios. In all cases, the current growth

rates of 17% p.a. will level off as the market nears saturation (See Chapter 1). If there is

an economic downswing (Scenarios 2, 4), the rate of leveling will be exacerbated.

Competitors will vie more strongly for current and new customers. These include Virgin

Mobile, which differentiates on its ability to win away customers and retain them. If the

main competitor moves strongly to adopt a customer-centric approach (Scenario 2, 4),

then MTN is vulnerable to loss of higher value customers.

The Scenarios highlight loss to other technologies (Wimax) and cannibalization from

voice-over-internet. These will erode MTN’s margins unless alternatives are found or

new value streams created.

A hostile takeover by one of the large international players is likely, especially if value is

being eroded through poor planning. In such a case, without a customer centric approach,

MTN is vulnerable to further cost cutting and restructuring

In addition, the RBU mode of interaction with resellers is in transition from a reasonably

straightforward and traditional, homogeneous model involving a narrow product set, to a

more complex model, as shown in Table 14 (below).

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Market

Type

Description of resellers and

products/solutions

Market Profitability and Maturity End-Customer

Relationship

Opportunity

Tra

dit

ion

al

Classic, primarily voice packages sold through Service Providers (Nashua, Autopage etc).

Very significant revenue, good margins.

New (emerging market) subscribers at reducing average spend.

Data, content and applications revenue small but growing (at lower margins) and significant upside

Fully branded products and services to consumers and corporates.

Ad

van

ced

Data

Enterprise solutions sold through Internet Service Providers

Telemetry sold through security or fleet management companies.

Reasonable revenue from an established base. Growing with good upside. Tight margins.

Ranges from co-offered solutions to white label.

Carr

ier-

to-c

arr

ier Virtual network operators offer

their own branded, end-customer solutions (potentially based on any underlying network service)

Not yet developed. Potential high volume, lower margin sales

Minimal

Table 14 : Increasing Product Complexity

Descending the table one finds more complex solutions and commercial models, less

chartered territory and less direct relationship with the end customer. The table is

simplified since real partners do not fit easily into boxes, especially with increasing

complexity driven by internationalisation, and convergence in the telecommunications,

broadcasting and computer industries. Relationship models are also complex - resellers

may be at once customers, competitors or joint venture partners. Since the RBU has no

direct sales force it can potentially use partners to move quickly into a new business and

therefore create a new role within MTN in developing new business and markets.

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Appendix F : Cultural Appreciative Inquiry

An Appreciated Inquiry was conducted as per the Research Methodology described in

Section 5.4.2. The results are detailed (Geerdts. 2006d), with key elements of the exercise

repeated below.

The first step of this inquiry (the outputs of the first meeting held) is tabled below

because it also provides context to the exercise.

Potential for improvement of ‘people and organisation’ factors (culture) was identified by

the team (based on the model derived from CMAT™), as shown in the analysis of the

model, below:-

We are trying to create an empowering and facilitating environment for

us to best achieve our objectives (including the effective delivery of

the value proposition to customers)

What are we trying to achieve? What is our purpose for this improvement? How does it relate to our values/ mission/ vision?This is a new team with a chance to create something exciting in this

space.

What is the scope of the opportunity?Included – people, learning and culture components relating to the

marketing team of the business unit and its experience of the ‘cultural’

context.

Day-to-day, operational, issues.

What 's included? What 's excluded?There were several possible next steps from the CVP development

(SW#1). The one selected was to work on the human resource

components of the model (shown in a later slide). Since the model

was first developed, and with the starting of a new team, this

component has gained prominence.

What is the opportunity for improvement we are considering? Why was this chosen?We are trying to create an empowering and facilitating environment for

us to best achieve our objectives (including the effective delivery of

the value proposition to customers)

What are we trying to achieve? What is our purpose for this improvement? How does it relate to our values/ mission/ vision?This is a new team with a chance to create something exciting in this

space.

What is the scope of the opportunity?Included – people, learning and culture components relating to the

marketing team of the business unit and its experience of the ‘cultural’

context.

Day-to-day, operational, issues.

What 's included? What 's excluded?There were several possible next steps from the CVP development

(SW#1). The one selected was to work on the human resource

components of the model (shown in a later slide). Since the model

was first developed, and with the starting of a new team, this

component has gained prominence.

What is the opportunity for improvement we are considering? Why was this chosen?

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Desired Desired Desired Desired I mprovement forI mprovement forI mprovement forI mprovement forof Customer Cent r icit y of Customer Cent r icit y of Customer Cent r icit y of Customer Cent r icit y ???? People People People People &&&& OrgOrgOrgOrg

Value Prop

Customer Manage-ment Plan

People & Org

Infra- structure

Analysis & Planning

Customer Experience

Measurement

Monitoring of External environment

Customer Centricity

We agreed on this second driver to tackle.

Debate whether the value prop should drive ‘people and org’ directly?Value proposition (this was started in SW#1

Customer management and experience – longer term exercise

Customer centricity – this was the desired outcome

By the third meeting, the team had developed a model (with required interventions as

numbered) as follows:-

(5)DEVELOPVISION

(5)DEVELOPVISION

RISKTAKING

RISKRISK

TAKINGTAKING

VISIONFOCUS

VISIONFOCUS

PASSIONATEINSPIRATION

PASSIONATEINSPIRATION

PERFORMANCEORIENTATION

PERFORMANCEORIENTATION

CONTINUOUSIMPROVEMEMT

CONTINUOUSIMPROVEMEMT

INTEGRITYINTEGRITY

(2)Product

Continuousprocesses

(2)Product

Continuousprocesses

(3)

DepartmentalProcess

(3)Departmental

Process

(4)Reseller

SatisfactionIndex

(4)Reseller

SatisfactionIndex

+ CHANGES(Big changes)

+ CHANGES(Big changes)

Bureaucracy Bureaucracy Bureaucracy

TEAM SPIRIT

TEAM TEAM

SPIRITSPIRIT

CUSTOMER

IS KINGCUSTOMER

IS KING

(1)Quick Wins

(1)

Quick Wins

+

-

+

+

+

- -

Meeting #3 : Interventions Numbered

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At the fourth meeting, Seel’s concept of capturing complexity within a short list of rules

was used (as per the Figure below):-

Meet ing # 4: Ground Rules Meet ing # 4: Ground Rules Meet ing # 4: Ground Rules Meet ing # 4: Ground Rules ????Long List , Short ListLong List , Short ListLong List , Short ListLong List , Short List

‘Long’ List of Ground ‘Rules• Communicate Effectively

• Develop clear procedures• Have a road map• Prioritise activities• Empower each other• Coach each other

• Mentor each other• Treat each other with respect• Acknowledge good work• Share knowledge and contacts• Move out of comfort zone (self

challenge)• Try new things• Be wide awake, aware, mindful• Network• See internal customers• Build external relationships• Be strong on deadlines and

commitments• Have an agenda for meetings• Be punctual

Short List (Design underlying chaos)

1. Try new things

2. Network (and communicate)

3. Respect and support each other

4. Build effective

processes

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Appendix G : Investigating the Usefulness of the Myers Briggs

Type Indicator®

G.1. What the Myers Briggs Type Indicator® (MBTI) Determines

MBTI is a psychometric test which indicates a person’s personality preferences along 4

theoretical polarities (Jessup. 2002). It is used to assist people to understand themselves

and to make more sense of their differences with others and can assist people in better

understanding the concepts of diversity. A fundamental principle is that there are no

better or worse preferences (Jessup. 2002. p 505).

The first polarity indicates whether a person has a focus and gains energy from the inner

world of ideas or the external environment (and people). It is easy to see at a basic level

how this would impact one’s work and management style. The next polarity determines

how a person gathers information (either directly from the five senses and focusing on the

present or through derived patterns and a bigger picture, focusing on the future). Again

the application to the world of work is clear, for example when dealing with facts, or with

strategic development). The third polarity deals with decision-making, with one polarity

relying more heavily on logic and the other basing decisions on values. The final polarity

relates to how one uses the previous two and the effective result is that one preference is

for making decisions and keeping to them, with the other being to gather more

information and postponing decisions.

The combination of four preferences results in sixteen possible personality types.

Individuals can learn about themselves in terms of these final categories, taking each of

the polarities in turn, or looking at pairs of polarities. In addition there is a concept of

dominance (Jessup. 2002. pp 505 – 506) which help a person to understand which one

polarity (out of the second and third categories) is dominant, which one is auxiliary, and

which one emerges in times of stress.

G.2. Role of MBTI in Understanding Management and Management Change

Jessup (2002). pp 502 – 511) looks at the MBTI preferences of employees and their

responses to organisational change. She provides general suggestions. For example, she

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suggests that during change, people should be allowed to work with their dominant

functions. As an example, internally-focused people will want to work through change at

their own pace and having time alone, whereas externally-focused people may prefer a

group process, and express their feelings. One personality type prefers being given ‘the

bigger picture’ around a change (the rationale and vision) whereas another will be more

comfortable when given detail. Jessup also claim (2002. p 506) that a team will

contribute more to change if all four dominant functions are present. Jessup also suggests

that problem solving is enhanced by encouraging this diversity, as well as by helping

people to understand their own development needs (usually growing the areas where they

are less familiar). She draws attention to the ‘inferior function’ that people resort to under

the type of stress that change can bring about. She advises awareness of personality

differences in both planned and unplanned change (p 510).

Jennings (2006. p 598) studied the link between the MBTI preferences of managers and

their strategic management styles. He reinforced the above information, although

indicated that the context (the type of planning required, as already tabulated above) was

more important than the style as a determinant.

G.3. Usefulness of MBTI

The usefulness of MBTI depends on its relevance and validity. There are questions about

the validity of the test (personal discussions over time) which relate to the difficulty of

scoring individuals from different cultures or in different life stages. Trompenaar’s

(2007) is more critical, he believes that the underlying assumption that polarities are

irreconcilable opposites is itself flawed.

These issues need to be compared against the objectives when using the tool. Since my

objective is to gain potential insights and surface issues requiring further research, I

propose using the test to illustrate diversity of preference and to show the predominance

of certain types in my business environment. I believe MBTI is appropriate for these

objectives whereas under more stringent conditions it may not be.

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Appendix H: Handset Procurement & Soft Systems Methodology

It is common cause, backed up by both personal observation during store visits and MTN

research over the year, that the availability and pricing of specific handsets is a key driver

of customer acquisition. Customers frequently enter a shop with the intention of

purchasing a specific handset and select a particular network based on the availability and

pricing of that handset. It therefore stands to reason that supply chain management is

extremely important – offering the right handset at a competitive price and with high

availability.

At the start of 2006, the procurement process for Service Providers was a cause for

concern. Each Service Provider would make a forecast to MTN’s procurement division

which would then order from the supplier based on the aggregated forecasts but adjusted

up or down to what seemed like a ‘reasonable’ number. The delivery time and costs

would then be relayed back to the Service Provider but would be adjusted depending on

availability and exchange rates. Once the units arrived, they were allocated to Service

Providers on a pro rata basis. If Procurement had under-ordered against forecast, each

Service Provider would get fewer than ordered and availability in retail outlets might

suffer. If Procurement had over-ordered, or Service Providers decided to take fewer than

they had forecast, the warehouse ended up with potentially obsolete stock.

Since Service Provider often ended up with less stock than ordered, they tended to over-

forecast to compensate. Procurement in turn would anticipate over-forecasting, and

attenuate the orders. When this resulted in Service Providers obtaining too little stock, the

vicious cycle repeated. This is a similar problem to that mentioned by Seddon (2003. p

182), citing Senge (1993), in which executives simulate the roles of producer, wholesaler

and retailer in a retail distribution simulation game developed by MIT, called “The Beer

Game”. Time delays in the ordering and fulfillment lead to distribution becoming

unstable when the players fail to work together because they do not view the three

functions as part of a single-enterprise system.

During early 2006, RBU highlighted the need to improve the process for procuring and

distributing handsets as a priority, because it affected the end-customer experience, and

was inefficient.

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RBU suggested an improved, direct-ordering system but could not get Procurement’s

agreement to implement the system. In spite of the significant impact on revenue, costs

and the customer experience and after a year of discussions, project management and

inter-departmental workshops, there were only minimal changes

This examples shows how a large organisation can understand a customer requirement

and even understand the impact on its own sales and yet not be able to effect the

necessary transformation. The problem appeared to be one of interpretation of the system

and its purpose. The pluralistic approach of soft-systems methodology (as discussed in

Section 5.2.4) was deployed to develop a common understanding of the purposes of the

various parties (handset suppliers, Procurement, RBU and Service Providers). The

following analysis was undertaken by RBU Marketing in July 2006.

The process typically begins with the unstructured form of the problem (the narrative

above). The problem is explored in more detail, often through a Rich Picture, as in Figure

17 (below).

Figure 17: Rich Picture of Handset Distribution

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The next step is to create root definitions, which define the transformation process in

terms of each of the main stakeholders, as below:-

Clients

Customers

Actors Transformation Worldview Owner Environment

Retail customers

Retailer, Service Provider, MTN, handset vendor

Ensure handset required by customer is available in store

If the right handset is available at the best price, I will take out a contract

Service Provider

Retail

International vendors

Few vendors dominate

Service Provider

Handset vendors; RBU; warehouse; procurement; retailer; customer

Purchasing and ordering process

Want handsets at short notice at the cheapest price in reliable quantities

Procure-ment

Customers primarily attracted by handsets

Tough competition to offer the right deals.

RBU Procurement

Service Provider

Link up MTN with the Service Provider

It’s an important, back-end process which needs to ‘just work’

RBU Caught between Service Provider (wanting best deal) and the warehouse (wanting committed orders)

MTN Management

Warehouse Provide handset service

Have to reduce costs and obsolete stock

Ware-house

Pressure to acquire handsets and cut costs

Table 15 : CATWOE Analysis of Handset Procurement

A root definition can be built from each of the rows of the table. This process can be

iterative, as the process of analysis gives deeper analysis.

The next step is to develop a functional model of the system designed to perform the

function as defined, and then to provide amendments. In this case there was not a high

enough level of trust between RBU and Procurement to undertake this exercise together.

Rather, the analysis was undertaken by RBU to determine how to understand and

approach Procurement and represent the Service Providers. The functional model showed

that certain requirements were not being met by the system, namely early indications of

pricing and availability, higher levels of transparency and a mechanism to understand the

link between pricing and the foreign exchange rate.

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Appendix I : Development of Core Variable from Interview

The following top-line categories were derived from the concepts (level 2 coding) and

analysed according to which variables were drivers and which outcomes.

Quality ofdirection -

management

Internalfocus (shortterm profits

only)

Quality of

information

Processes -

quality of

People and

Culture

Focus on

Partners

Need for

Innovation

BeingCustomerFocused

7 O : 0 I

2 O : 5 I

6 O : 1 I

0 O : 7 I

2 O : 5 I .

2 O : 5 I ,

5 O : 2 I6 O : 1 I.

From this the core variable was developed:-

Quality ofdirection -

managementInternalfocus (shortterm profits

only)

Quality of

information

Processes -

quality of

People and

CultureFocus on

Partners

Need for

Innovation

BeingCustomerFocused