It’s not easy when your company is a distant third in any industry. In fact, many experts believe you have to be in the top two spots — Coke and Pepsi, UPS and FedEx, Home Depot and Lowe’s — to flourish over the long haul.
It’s also not easy when you have to write off the entire value of a blockbuster merger. Even by today’s Great Recession standards, a $30 billion write-down is a big blemish on your books.
But Sprint Nextel CEO Dan Hesse has had to deal with both challenges since taking the reins two years ago.
With 48 million cellphone customers, Sprint has a mountain to climb to make up ground against Verizon (91 million) and AT&T (85 million). And Hesse has to try to do that even though Sprint is not in the financial position to spend billions of dollars on ad campaigns like his two major rivals have.
Still, given the tough hand he’s been dealt, Hesse seems to have a well-defined strategy he’s in the process of executing.
I talked to Hesse, 56, last week when he was in town to speak at a health care IT conference.
Hesse was not leading Sprint when it acquired Nextel in 2005. But, in hindsight, he acknowledged it would have been better if the deal had not been forged. Most of the company’s customer losses have been on the Nextel side of the business, with millions of consumers abandoning Nextel’s push-to-talk technology each year.
Improving customer satisfaction, as well as Sprint’s brand image and cash flow, is Hesse’s mantra. To do that, he said it’s critical to clearly communicate those priorities with the troops.
“People will do, and items will improve, if it’s what the CEO checks on,” Hesse said.
So every Monday, he meets with 15 top execs to go over the telling numbers on each priority. Unlike many CEOs, Hesse does not have a chief operating officer, so he climbs into the figures himself — not too taxing for an MIT grad.
“I’m not a 50,000-foot CEO,” Hesse said. “I’m often referred to as a player-coach.”
The player-coach, even one with an MIT and Cornell pedigree, stresses simplicity when trying to improve customer satisfaction and the bottom line.
For example, a $99 “Simply Everything” plan covering all cellphone expenses substantially reduced customer inquiries to call centers. So did investing in the network to reduce dropped calls. Fewer complaints meant 30 call centers could be closed, which cut costs and built up cash flow.
Sprint has bet more than $8 billion on a much-advertised 4G network, which Hesse touts as transmitting more data at much faster speeds than his competitors. He said his company has a considerable head start on its rivals — currently operating in the 3G realm — and needs to make the most out of it before they build out their own faster networks.
Since wireless is a fast-growing industry in both consumer and business segments, Hesse does not believe he has to overtake the top two, which is unlikely anyway.
“I believe being No. 3 is fine, but we need to be a strong No. 3,” Hesse said.
That should be a little easier now that some of the heavy Nextel lifting is behind him.
Next Tuesday: AT&T Mobility CEO Ralph de la Vega.
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