* A version of this article was published in the Australian Financial Review on 17 July 2018.
Telstra’s latest predicament exemplifies what is Australia’s problem of failing customer stewardship in infrastructure.
Like a world cup own goal, team Telstra is scrambling to make up lost time by seeking to fix stubborn old problems. The quest to simplify Telstra in one fell swoop is a sign that long-term, steady and consistent customer stewardship of our big institutions is becoming very difficult, but not impossible.
Telstra typifies all the challenges of infrastructure. It has huge upfront investments, big focus on engineering and technology that defines its long term legacies yet these characteristics also make it hard to respond to customers and bring about change when needed – hence stewardship by customers.
The good news is that some Australian infrastructure firms are making the change in mindset and practice to get better at customer stewardship – rich in data, technology and innovation: driven by responsible people accountable for their actions.
These firms have gone beyond the basic compliance mentality of ‘ticking the box’ evident in so many annual reports where the reader can only be hopeful but not assured the right thing is being done.
Customer stewardship is an opportunity for infrastructure investors, owners, operators and policymakers to expand their toolkit of solutions for the nation’s problems from a pretty obvious starting place, the customer.
That means a determination to deliver good long-term outcomes, based on substantive relationships, where reciprocity strengthens performance and participation with stakeholders comes first.
This reflects a realisation among CEOs that not all our economic and social challenges can be addressed through reducing costs, lifting prices or through more funding.
Examples of customer stewardship are not abundant, but there is a growing cohort of spirited exemplars making their mark. Like Port of Brisbane with its storm water treatment in Lockyer Valley is helping redress silt build up down stream and avoiding expensive and disruptive dredging of channels. This is benefiting a multitude of stakeholders, including its private owners.
Unfortunately the social licence to own and operate infrastructure by the private sector is drifting into troubled water and must be corrected. Already there have been calls to renationalise Telstra. While that may seem absurd, nationalisation of broadband assets is exactly what has happened with NBN and UK is in the midst of maelstrom on similar issues.
A lack of connectedness of decision makers in Telstra to the anguish customers often face in dealing with their service provider has persisted across the decade.
While transparency is usually an enabler of managerial accountability to long-term outcomes, in the case of Telstra the sheer complexity and effort to understand the labyrinth by managers inside and outside has aided and abetted half hearted remedies to customer service and corporate misadventure.
Telstra appears to have finally self-medicated with a new business model splitting off its legacy physical assets into InfraCo. This reflects what customers have understood for a long time, that Telstra has reached a tipping point where benefits of size and scope of operations no longer justify the cost of underperformance.
Institutional investors can help buttress an enduring customer led, market based stewardship for infrastructure. That is where responsible owners are active in managing their assets to the shifting needs of customers, and are front footed in reimaging infrastructure to adapt and perform to higher standards of service and innovation over the long term.
While many investors are attracted to the infrastructure asset class because it is typically a safe haven from volatility and with inflation adjusted returns, it is important that they closely engage customers and community to ensure services are timely, scaled and feasible.
A plethora of challenges confront investors, owners and operators of infrastructure. On the one hand, pressure to payout dividends especially to retired security holders dependant on their investment to meet living costs has never been more acute, and on the other immense pressure to reinvest in assets and networks in response to climate, technology and social change. Public trust is delicately balanced as to how investors navigate these challenges.
Australia needs a stronger ambition to an infrastructure future where customers, asset owners and operators exchange information, understand needs and preferences and are motivated to meet them in a way that lifts the entire system. This simple process of stewardship underpinned by respect and humility to the customer and the community from which they come has been lost, as infrastructure gets bigger and more complex.
Customer stewardship is a means to a very important end, rebuilding trust. Integrity demonstrated through consistent behaviour towards the customer (and community) will be a big step forward. Too often communication with customers is not targeted, timely, clear or helpful and dressed with over-promise served on a platter of poor delivery.
Telstra along with the whole infrastructure sector must commit to being a beacon for exemplary customer stewardship. Its time to bring the customer and community in from the cold, and when they do not only will shareholders and customers be better off, so will Australia.