The Interview
Nick Read was appointed to the role of chief executive of Vodafone UK in May 2006. He joined Vodafone in 2001 after a career which had seen him in senior financial roles in a number of large organisations.
IT is 25 years since Vodafone was granted the first mobile telephone licence to operate in the UK, a landmark which, according to UK chief executive Nick Read, sums up the Newbury company’s “unique history”.
The first voice call was made by comedian Ernie Wise in 1985, and within eight years the company had a million customers. By 1994 the first commercial text messages had been introduced, while the company’s data services cover everything from mobile internet to e-mail and mobile broadband. “Now we’re saying we want to be famous for that as well, and link the industries,” he said.
“Having been with the business for six years, you really feel that it’s in the DNA of the business – innovation, being first, pushing the boundaries, and it’s amazing to think that whether you take the UK or the Group, the UK now has over 18 million customers, £5bn turn-over, 10,000 employees, it’s a major big-infrastructure player; part of the infrastructure of the UK. On a global basis, we’re in 67 countries, with a turn-over over $30bn.
“What’s exciting is that it’s rapid growth in the UK, rapid growth abroad – to think that we’re the 24th largest company worldwide on market capitalisation, it’s pretty amazing in such a short period of time.”
Did he think that the future lay with broadband provision, rather than just the mobile phone network for which Vodafone is most closely associated? “I think Vodafone’s got very strong credibility in reliability and network performance and call completion,” he said. “We are renowned for the quality of our network, and it’s a great bedrock. People want to be able to make calls, want to be able to send texts, want to know that it’s completed, want to know that you’re going to get coverage, and people come to us for that.
“It’s probably why we have 46 per cent market share of businesses as opposed to consumers, double any other mobile operator, and 70 per cent of Government business, NHS etc, and we are very proud of that position.”
Customers now expect to be able access mobile communications anywhere, and Vodafone’s next challenge will be to meet that expectation. “We invested in 3G ahead of anyone else, we focussed on the quality of the 3G experience,” he said. “Our ‘other data’ business is now running at close to £400m.” There are currently 100,000 new mobile broadband customers per month, of whom Vodafone is claiming a 40 per cent share. “We see that as the next wave, and we’re starting to see that really explode. What we say is ‘we want Vodafone to be famous for data’. If you want to take your internet experience on the move, you come to Vodafone.”
Mr Read said that Vodafone’s focus was less on acquiring new customers, and more about generating the maximum revenue growth, based on people’s need to have an array of mobile devices in everyday life. The mobile phone, he pointed out, now sat with the wallet and car keys in the category of items which people have with them at all times. With a bigger array of applications being accessed through that mobile phone, that, in turn would provide more opportunities for revenue growth. Convergent technology and ‘total solutions’ will do the same, in the current Vodafone strategy.
Having been awarded the Daily Telegraph’s ‘Top Brand of Brands’ award, Mr Read reflected on what it was about the Vodafone brand that made it so successful. “I think we pride ourselves on reliability, resilience, coverage, the core essentials of a good experience including great customer service. What we’ve added on top of that is a dynamic innovation aspect. It’s a fast-moving, ‘trendy’ industry, and I think we’ve brought that to life with our ads, saying ‘these are not just frvilolous things, these are essential to you to make the most of any moment you have’.”
The UK market, said Mr Read, is the most competitive in Europe, with huge choice for the consumer, “What I love about that is that every day, I wake up and day ‘we’ve got to do better than everyone else’. That creates a dynamic feel in the office.”
With 4,500 employees in West Berkshire, Vodafone is by far the biggest company in the area. “Newbury is part of the DNA of our company, it’s a very important centre, it’s part of our character,” said Mr Read. “When you talk about responsibility to the area I totally agree. Whether it’s our green policy on transportation – 40 per cent of employees who come to our Newbury locations come via our green policy – sharing cars, using our bus services or taking up incentives not to bring a car in, while the second component is around the charitable work. We have £1m a year that we contribute to charitable causes, whether directly to charities or matching employees’ efforts. We’ve just agreed to amalgamate our UK Foundation with the Group Foundation, and I’m on that foundation, to make sure that we can do bigger, bolder and more active things in the area.
“When we moved onto this campus, we demonstrated as part of our submission that we effectively generated £100m worth of economic activity in the area a year. We want to continue to grow that,” he said, calling Newbury “the heartland of our business”.
Asked about coming challenges, Mr Read said that with an economy that was undoubtedly slowing, there would be an effect on consumer spending. “But as I explained, the mobile phone is now critical to people’s lives, so we’re seeing no slowdown on people’s usage of the mobile phone. But it does become more value-driven – ‘I want more for my money’.
“I believe in marketing yourself as a company more actively when times are tougher. The stronger companies win out in tougher conditions. I see that as an opportunity for growth.”
There have been tough decisions. Vodafone made 400 staff redundant from Newbury a few months ago. Can the area expect to see any more job cuts in the foreseeable future? “To set a context to the job losses, they were predominantly in management levels,” said Mr Read. “We made it clear at the time of the announcement that we were creating jobs in call centres, and creating jobs on the high street, in our retail stores. So we were investing in growth. We continue to invest in departments like online, and digital and dataspace etc. I took a view on the business and just felt that we were top heavy. Just as it’s important to be fast, dynamic and able to make quick decisions, it’s important to have your management structure like that as well. It was a one-off exercise to get us fit and healthy for the next three years of expansion, to make sure we’ve got the right resources in the right place. I see it as, we adjusted our operating model to make us more dynamic and quicker at decision-making. We de-layered the organisation so that the communication from me to a store manager goes though fewer levels and is quicker, and we stayed close to our customers. Otherwise it all becomes too much of an ivory tower, and suddenly, you become too remote and not understanding the needs of the customers. My view is that we’ve structured ourselves to be right for growth going forward.”
On the flooding that hit the campus last July, he said: “The response of the team was just fantastic. We didn’t miss a heartbeat, operationally. The customer saw no impact whatsoever. I would imagine that if you had a very fixed environment, that would have been a problem. Because we have a mobile environment, we could get more people on a different floor, or they worked from home, or they were in the canteen, and so we just re-purposed areas, to get the density in there, and basically it wasn’t an issue for us at all.
“There was a lot of heavy lifting, but we took the opportunity to re-model the offices and to get into a more flexible way of working, which we were rolling out anyway. We just said ‘OK, we’ll start with the floors that were flooded’.
“Althouth to be honest, it was pretty traumatic on the day! I was here on the day, we did a conference. I had all our senior management, our top 100, and I was updating them on the quarter’s results, and I had a guest speaker – a futurologist! He was just talking about how the biggest impact to our business and our world would be climate change. And the skies opened up…
“We are a key infrastructure player, we take crisis management really seriously. We work closely with the Government on terrorist issues, behind the scenes. Therefore within our DNA, we have a rapid response to those type of situations.”
When the Apple iPhone was launched in the UK, it was with an exclusive licence to O2, Vodafone's arch rival. Was Mr Read disappointed?“We get lots of business development opportunities. And how you have to view them is, it’s got to be right for the partner, and it’s got to be right for us, in terms of the economics and how it’s going to work, the customer experience, etc. When we first engaged, it wasn’t right for us. You’ve probably noticed we’ve now agreed with Apple to put the iPhone into 10 of our countries. The conditions were a ‘win-win’ for both parties, it was the right formula going forward. It was a point in time, we’ve got some good space as two companies going forward.”
What is his single proudest achievement as Vodafone UK chief executive? “When I came into the role of CEO, I felt that Vodafone had slightly lost its way in terms of being a leader in its marketplace. And so I re-purposed our strategy towards winning in the market.
“We invested in marketing, and changed our brand position, invested in retail and expanded, we’ve invested in our products and services, like mobile broadband. We put more innovation back in, and we put more of a winning spirit back in, and more ‘let’s go!’ – all those things that made the company great in the last 25 years.”
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