Inside the mind of BT CEO Gavin Patterson

24 July 2017 -

What’s it like to lead an iconic company through a period of dramatic change? How does one of Britain’s most influential CEOs approach the day-to-day task of management? And what’s his strategy for coping with the inevitable setbacks?

Interview by Ann Francke

To understand the pressures, priorities and demands that swirl around the modern CEO, CMI’s chief executive, Ann Francke, and Professional Manager arranged to meet BT’s Gavin Patterson at the telecoms giant’s London offices. Roll the tape...

Change

Since you’ve been CEO, you’ve built upon a business and cultural transformation. What, for you, have been the main elements?

We are part way through a transformation across the business as a whole. We’ve taken the business from one that was seen as backward-looking to one that’s increasingly seen as looking to the future: investing in fibre and next-gen networks; investing in media through sports rights; and beginning to think about mobile again through the acquisition of EE.

So it’s a journey and it’s only partly done, but at its heart it’s about creating a forward- looking BT.

Culture

How important has cultural transformation been in that business transformation?

In many ways, culture is the true source of competitive advantage in any company. It’s more important than the physical assets, IP and technology – particularly in our industry, because all of those give you a temporary source of competitive advantage but ultimately can be copied.

To turn us into a truly world-class company, culture is the key. When we’ve got it right, you’ll be able to take any individual out of the overall company, but it will still feel the same. Yes, it’s built on strong characters, but ultimately there’s no one individual who defines it; it’s much bigger than that.

How would you describe BT’s culture?

It is a work in progress. At its heart, [BT’s culture] has a strong sense of social purpose, wanting to play a role in society and being embedded right in the fabric of society, particularly in the UK. That’s one of things that makes it quite difficult.

There is a desire to serve, that is part of what people do here. Can we more consistently deliver? Of course, but that ability to think like a customer is one of the areas we’re trying to work on.

Gone are the days when you started in the company, did your apprenticeship, and then effectively didn’t learn – you just did that job for the next 40 or 50 years. The culture we’re trying to make is one that is trying to learn, to adapt.

Everybody who joins the company now will go through many different careers, regardless of whether they join at 16 or later in their career. That focus around self-development and willingness to take on new roles is key to a 21st-century career.

Trust

CMI research shows a trust gap between senior leadership and middle management. How do you ensure BT’s culture and vision – using the power of communications to make a better world – are brought to life throughout the company, especially in middle management?

At a fundamental level, by having a purpose, a vision, a strategy that is in everyday language
and that can be communicated, understood and remembered by everybody in the company.

Great strategy is about few, good choices and simple language that allows people to make decisions on a day-to-day basis. Having a strategy, communicating it consistently and having it on one visual is key for all stakeholders – internal and external.

Having a purpose right at the centre – why are we here besides making money for shareholders; what are we trying to do in the world? If it’s only about the money, you don’t get people’s best work. Putting the purpose front and centre is key and then it’s about communication, having a cadence, a pattern throughout the year that allows [the strategy] to cascade throughout the business.

I communicate directly with all levels of the organisation. We do monthly podcasts, and tens of thousands of people download them. Twice a year we do live video to everybody in the organisation.

In many ways, it’s about constant repetition, using every single opportunity to draw communication back to the strategy and take feedback to make sure that it is being properly understood.

Purpose

Do you measure how well you and your managers deliver against your purpose, in terms both of financial outputs and behaviours?

Yes, in many different ways. We run an employee engagement survey, ‘Your Say’, two times a year; questions about purpose, strategic understanding and pride are very much part of the things that we track through the business. This ensures that we can see that colleagues across the business not only understand but also believe in what we’re saying.

And then, ultimately, in terms of how we pay people and the variable part of their compensation, a significant chunk is based on not just financial measures but also social and customer measures.

Setbacks

Every leader has setbacks. The BT Italia situation was one. What’s your view about how to bounce back from a situation like that?

You’re absolutely right. If you’re a CEO for a number of years, it’s highly unusual not to
come across a setback on the way. One of the things you have to accept is that you may inherit a business with many good things, but there’ll always be things you have to clean up
that don’t relate to things you did yourself.

That’s life. You have to step forward and take it for the company and be an agent of change, ultimately.

In terms of resilience, to really function at the highest level as a CEO, you have to have balance in your life. You have to recognise that just working more and more hours doesn’t necessarily bring a better result. You have to ensure you’re mentally, physically and emotionally fit.

Relationships outside of work are key. You need to make sure everything is in equilibrium. That’s key to resilience.

Gender

In what ways are you a role model for the women in your organisation, and what do you do to encourage other men to be role models?

[Laughs.] Am I a role model? It’s for others to judge. What I try to do is manage my day and live my life in a way that is relevant to both men and women. [It’s about] recognising that those of us with children all want to be good parents and raise flourishing children – ensuring that, when you need time off to go to things that are part of that, you can manage life accordingly.

I try to be an exemplar to both men and women because, ultimately, if you’ve got a happy life at home, you’ll perform better at work.

[In terms of gender balance,] I haven’t come across an organisation that has got this absolutely correct. It’s an important issue at BT, so I would say it’s a work in progress for us.

Nobody, in my experience, now questions the importance of getting gender balance right at the top and at all levels of the organisation – you get a better result in terms of the quality of thinking and the quality of execution.

[It’s about] ensuring that those career pathways are very clear throughout the business and the right support is put in place to ensure that women can see that actually it is possible to get through – particularly in line roles, when often the pathway to the C-suite is most challenging.

We’ve done a number of things to try to remove unconscious bias. We’ve got unconscious bias training through the company, and we support a gender-equality network.

Ann, I’ll be perfectly honest with you – I’m not satisfied with the progress we’re making. I feel that we’re doing a number of the right things, but it’s taking too long to get to the outcome that we really need to flourish as a really great company.

Do you think that the requirement to report on gender pay rates will help to drive change?

It will help expose companies where there’s a really significant difference, no question, but in itself I don’t think it will make the difference. It needs to go much deeper than that: we need to create a pipeline that demonstrates to women that actually they will be supported; that they don’t need to change who they are; that you can deliver results and be an effective leader in many different ways.

Great leaders come in many different forms. Great leadership does not tilt by gender.

Long term vs short term

You’ve come from a marketing background, which is unusual in the FTSE 100, and this has allowed you to be more customer-centric. Do you feel that British business generally should be more customer-centric, with less focus on short-term financials?

I don’t know any CEO who doesn’t feel that focusing on longer-term, sustainable metrics around business would be a better thing.

Why doesn’t it happen? The quarterly reporting cycle. The challenge always is to make sure you don’t do things on a quarterly basis that you wouldn’t do on an annual or multi-year basis.

It’s a balance. The shareholders own the company and they want to understand you’re making progress against your strategy and you can show that on a quarterly basis.

When you get it right, it’s part of a pattern; you make sure that the machine on a quarterly basis does not distract you from doing the right things over the long term. But great businesses are based ultimately on really having a strong relationship with your customers: your customers really valuing what you do, feeling as though it’s critical and important to their lives; that they’re getting good value for money; that they are proud about the brand and the company itself.

That’s what we’re striving to do. We’ve got more to do to get there, but that’s the type of business we want to be.

Openreach

You separated off Openreach and said that leaves it free to develop its own culture. To what degree do you think that culture will change?

We should keep it in context. [Openreach] continues to be a wholly owned subsidiary of the BT Group; we will consolidate it within the BT Group balance sheet and reporting. We will continue to set the budgets and, ultimately, have the final say on the key appointments, including the Openreach board.

They’ll have more independence. Through the Openreach board, it’ll be enshrined that they must serve all internal and external customers in an equivalent manner and really focus on investment in service.

The culture will still stem from the BT values, ultimately – personal, simple and brilliant.

There will undoubtedly be some aspects of the [Openreach] culture that will be different but, at its heart, it’ll need to come through to those values. That’s good for customers, it’ll be good for shareholders, and it’ll be good for people who work here.

Apprenticeships

BT has long had huge numbers of apprentices. What’s your view on the Apprenticeship Levy? Is it a tax? Is channelling even more money into skills a good thing?

If I look at it for the country as a whole, if it’s properly directed and focused on accredited learning and development, I think it will be a good thing.

Creating career pathways for 16- to 18-year-olds – that’s got to be a good way forwards. University isn’t for everybody. By creating more accredited learning for those years, that’ll ensure employers help people develop as individuals and build skills – this, ultimately, is something they’ll have to do throughout their lives.

So, if it’s well managed, I think it’ll be a good thing.

Negotiations

The Openreach negotiation took two years. Then there were the sports rights deals. You have a reputation for being a pretty good negotiator. What’s your top tip?

Always be prepared to walk away! [Laughs.] It’s finding the point of indifference. By that, I mean ensuring you’ve always got more than one outcome that you can live with. You may have a favoured one – and your aim is to get that at a certain price – but ultimately there will be a point where the difference between that and one or more alternatives is zero.

If you’re able to do that, it means you can go into any negotiation knowing you can live with any of the outcomes. It’s up to you to try to get something better than that, but it gives you confidence that you’ll never be in a complete cul de sac.

Leadership

Any final views on management and leadership?

Leadership, ultimately, is the key to making change happen. It’s the most difficult of attributes to find – especially finding people who’ve consistently been able to show it over time and, crucially, have learned to evolve their leadership style during their career.

Yes, you can be born with certain characteristics, but you must be prepared to work on, develop and hone them over time – to acknowledge where you’ve got blind spots and areas that need development.

Ultimately, you should see leadership as an attribute that needs constant nourishing, in order for it to be an effective skill.