Digital on the inside: Vodafone

Digitalize. Digitalize. Digitalize. At the end of 2014, the mantra echoing in the offices of the HR Director at Vodafone Italia was becoming an urgent call to action. After years of serious crises for the Group – and the entire telecommunications sector (TLC) - Vodafone management had set clearly-defined goals for the company’s comeback: stop the losses and launch the recovery by driving a radical digital transformation.

More and more Vodafone customers are Millennials who started using the internet almost constantly, and demanding a fast, continuous connection for their mobile devices. With the exponential increase in smartphone ownership and the expanding ecosystem of mobile apps, it was unavoidable that the offering had to shift from voice to data packages. Lastly, menacing new competitors were appearing on the horizon, companies with no infrastructure that utilized the internet to provide services, contents, applications and rich media (Messenger, Vibe and WhatsApp).

To satisfy customers who are becoming more and more demanding in terms of service quality and speed, and to ride the wave of technological transformation by seizing on all the opportunities that come with it, investing in infrastructure alone is not enough. Instead Vodafone had to actively engage its HR department and enact decisive intervention on training employees, upgrading digital competencies and developing a new, faster, and more agile work culture.

For Vodafone and its HR function, the year 2015 represented a turning point. To deal with an extremely complex situation, the year before the company had drawn up a six-point strategic plan that accentuated the question of digitalization and a customer-centric approach.

Even before this, to facilitate the streamlining of internal processes, a number of initiatives had been taken: reorganization of certain key functions, training for line managers, the extension of smart working and flexible seating (expedited by the move to Vodafone Village in Lorenteggio, the new company headquarters designed for this purpose), and finally the implementation of goal-oriented leadership systems.

The head of HR at Vodafone played an essential role in the managing digitalization rollout, working across all corporate functions and identifying a development strategy and a program for implementing the actions needed get people on board during the entire process.

Thanks to a brainstorming workshop with all the key divisions and functions, the company ultimately defined a “digital culture according to Vodafone.” This not only involved technology-based interventions but impacted behaviors and processes more broadly.

Subsequently, we designed and administered two assessment surveys on the horizontal and vertical competencies of Vodafone personnel. The aim of the first questionnaire, which we sent to all 6,658 Vodafone employees, was to test the general level of digital culture in the company, focusing on four competencies: digital awareness, that is, knowledge of future trends in the digital world as well as in consumer behaviors; design thinking, the ability to design new products and services; data-based reasoning, the ability to process huge quantities of data; and a hacker attitude, the tendency to be a risktaker.

What emerged from this questionnaire is that most employees have an average competency level in design thinking and digital attitude. Digital awareness was high in half of the sample, even though nearly 10% of employees still showed low levels of this essential competency. As for data-based reasoning, 25% of respondents scored low, a percentage that is far too high for a company that wants to fully exploit the potentialities of big data to serve its customers.

Next, we compiled a second questionnaire to measure the digital competencies of certain specific corporate functions: HR, Online and Social Media, Brand & Advertising, Marketing, IT, Commercial Operation Strategy, Product and Service Development.

Then we compared the skills revealed by the 132-question survey to the desired skills, pinpointing the gaps to fill for each individual. Specifically, we identified four macro competencies in the digital sphere: digital product management, i.e. the ability to design and realize user-centered products and services; digital relationship management, the ability to establish continuative interaction with people, exploiting all the potentialities of both digital and analogical channels; data science, the ability to process huge sets of data; technology application, the ability to apply technologies and innovative tools to build new business solutions.

The questionnaire, which was completed by 658 employees, revealed medium-high levels of digital product management and digital relationship management, contrasted by low levels of data science and technology application.

To Vodafone’s credit, in the months that followed, the company made major investments in training their employees, succeeding in filling the gaps that emerged from the study, partially or entirely. Economic performance in 2016 and 2017 shows that the interventions inverted the almost decade-long negative trend. In 2016, the EBITDA changed direction, rising by 3.1%; in 2017 revenues ticked up by 2.3% and the EBITDA rose by 10.6%.

• Investing in personnel skills to build stronger customer relationships is a strategy that can pay off – even in the short term – both in economic performance and relationships within the company.
• Digitalization of various corporate functions has to take off from a base that is shared by the entire company, and a common definition of corporate culture.
• A company that is aware of the speed of technological developments has the natural ability to absorb additional evolutions, gaining a major competitive advantage over its competitors.