What is Wrong with Telstra and New Boss Andy Penn - Hires Stephen Elop yes worst CEO of all time - as strategy guy. This is catastrophically boneheaded move

Telstra of Australia has not been the poster boy of excellence in telecoms. But last year they hired a new CEO, a guy outside of telecoms, Andy Penn a British-born insurance exec. And somehow Andy Penn's incompetence is that gigantic, that he didn't bother to read up on Stephen Elop background - worst CEO of all time - and has just hired the failed Canadian ex Microsoft guy best known for destroying Nokia's handset business in under 3 years as its short-lived previous CEO. 

The choices made by a CEO tell us a lot about the mindset and thinking of the CEO. Stephen Elop took a growing, market-dominating, highly profitable company which had just broken company-records for global sales, revenues and profits, and wrecked that in record time. Elop's short duration at Nokia saw not just the fastest collapse in telecoms history, worse collapse than Palm or Siemens or Blackberry - Stephen Elop personally caused the fastest collapse of any Fortune 500 sized global giant leading its own industry of ANY INDUSTRY that has ever been. Yes. Elop at Nokia was worse a disaster than when Coca Cola launched New Coke. Elop was worse for Nokia than what the Exxon Valdez oil spill did for the oil giant or what the global brakes manufacturing problem was for Toyota. When the math is done, the disaster Elop achieved in his short tenure at Nokia will be worse than what the damage was now done at Volkswagen with its cheating of its emissions with its diesel engines. Yes. THAT level of disaster. Elop was literally worse than New Coke or worse than Exxon Valdez or worse than Toyota Brakes. And yes, Elop was fired as CEO and the division he destroyed was sold for scrap value to Microsoft where the total value of the investment has already been written off and the ten Billion dollar remnantes of Elop's crown project is essentially dead. And obviously Microsoft also fired Elop from the job of trying to run a mobile business for them, only it didn't take Microsoft 3 years go notice how incompetent Elop is, they fired him in 11 months.

Am I being too harsh on Elop? He was regularly listed in 'worst CEO' lists. What moron CEO hires such a guy as the strategy guy? Andy Penn? Are you seriously trying to replicate what Elop achieved at Nokia? To take one of the 200 largest companies on the planet, with one of the 100 best profits in the world, and turn that into three years of losses so bad, that the main business of the company has to be sold, for pennies on the dollar? So lets review Stephen Elop. A management STRATEGY rule is not to try the destructive 'Osborne Effect'. You should know this Andy Penn, you were 19 years old when fellow Brit tech pioneer Adam Osborne destroyed his company. You must have studied the Osborne Effect when you studied at Kingston University and again when you studied at Harvard. It is a classic 'do not ever try this again' type of strategic blunder that will bankrupt you company. This moron Stephen Elop you just hired - as your STRATEGY boss - is so clueless, he ran the Osborne Effect TWICE on Nokia. First for the switch from Symbian to Windows Phone ie his Lumia phones; then again when he announced the 'new Lumia' onto Windows 8, which would not be compatible with his current and shortly-to-be-sold Lumia phones that ran with Windows Phone 7.5 and 7.8. Both times the Osborne Effect functioned EXACTLY as the theory predicted, Nokia existing smartphone sales collapsed. This was an unforced error purely of strategy. It was one not in any way forced upon Stephen Elop, it was one he did totally on his own 'brainpower' and against the advice internally and externally of advisors. And yes, it helped destroy the mightly powerful Nokia smartphone business that had been growing MORE THAN APPLE just before Elop launched this moronic move.

Maybe that was just a brain fart, a once-off mistake by a new CEO. You do remember the Ratner Effect, Andy  Penn, don't you? Ratners was another famous British company you witnessed collapsing when you still lived in the UK. In 1991 British jewelry chain CEO, Gerald Ratner gave his infamous speech, which badmouthed his own products calling his jewelry crap. As we learned in subsequent management history, it is a STRATEGY blunder, if the CEO calls his own products crap, because the customers will believe him. And so nobody since Ratner has tried this. Not until Strategy 'genius' Stephen Elop with his infamous Burning Platforms memo - the most destructive management memo of all time (a memo full of errors that Elop himself had since repeatedly corrected, a memo Elop himself admitted that it did damage Nokia sales, and a memo for which Elop was REPRIMANDED by the Nokia Board). In the memo Nokia CEO Stephen Elop called Nokia's phones, smart and dumb, as crap. And what happened? He collapsed not just Nokia's smartphone business but also its dumbphone business. The Nokia handset division (dumb and smart phones) had never once reported a loss, not one quarter, in its history up to that point. It was reporting strongly GROWING profits the very previous quarters. It was the only major handset maker of both dumb and smart phones that reported a profit EVERY QUARTER of the global economic crash of 2008-2009. But the moment Elop made his Ratner Effect statement through his idiotic memo, Nokia sales collapsed both at dumbphones and smartphones after which the handset division plunged into losses. Record-setting losses for any handset maker globally. That is your 'strategy guy' Andy. He took not only the lesson from Adam Osborne - don't ever do this again - and did it twice. He also took the lesson from Gerald Ratner - don't ever do this again - and yes. That too - Elop not only did that Ratner effect once - he did THAT TWICE AS WELL. Elop also badmouthed his brand new Nokia N9 MeeGo smartphone and its OS. Yes, Elop the 'strategy genius' also did Ratner Effect twice.

So Elop was refusing to sell the hottest Nokia phone ever, the N9 with MeeGo, in most countries including your country of birth, Andy, in Britain - where the N9 won the D&AD industry award for best design (considered the Oscars of design as the ultimate design award globally). It beat the Apple iPad for industrial design !!! and 'strategy' sense suggested to Elop he should not sell it there? That phone, the N9 was regularly considered as good as, or better than the iPhone and its operating system, MeeGo was the only one on the planet considered as good as - or by some better - than the iOS on the iPhone. The OS was miles better than Symbian and far far FAR better than that dog called Windows Phone that Elop preferred. Oh, and you in Australia didn't get to buy the N9 but your cousins across the sea, in New Zealand did. Again, because idiot Elop somehow felt that Australia was too big a market to bother to sell the N9 even though Australian reviewers LOVED the phone. But yes, when the N9 got its public reception - and for the first time Nokia' share price jumped since the Burning Platforms memo - on that day Elop went and said - there will never be another MeeGo device sold after this N9. Even though Nokia was developing FIVE handsets for MeeGo and the OS was winning praise the world over. But again, Elop wanted to do another Ratner. And again, both of these were UNFORCED errors that caused only damage to Nokia.

Do I need to go on. Andy Penn? Your boy Stephen Elop had his 'strategy' genius idea to abandon naming and lettering on Nokia phones and go to a confusing numbering scheme instead which had no rhyme or reason whatsoever. It was going not just against worldwide marketing trends - it was EXPLICITLY against the MARKETING STRATEGY guy's plan who came from Coca Cola. Which do you you trust on smart marketing? The bullying monopolistic technology push of Microsoft lies and deceit, or Coca Cola? So Andy Penn, is this Stephen Elop a strategy genius. Ask him what happened to the numbering plan, when the whole world of marketing laughed at Nokia and in four months they reversed that idiotic idea and went back to names such as Lumia, Asha and Pureview. Your man is a moron. When I compared Elop to the writings of his favorite Strategy guru (Sun Tzu and the Art of War, which Elop claimed was his fave strategy book) I found that of in a period of 20 months, Elop had committed 19 Strategy MISTAKES - that each went AGAINST the explicit strategy book he claims is his guide. Not once, not once even by accident, did Elop manage to do what Sun Tzu taught in his book.

I could go on but there is no point. The record is clear. From the day Stephen Elop was hired, to the day he was removed from office as CEO, the Nokia global revenues fell 40% while the industry doubled in size. Nokia corporate profits collapsed 92% in that period (and the profits were then made by the NETWORKING division which Elop didn't bother to mess with). Nokia's smartphone market share collapsed 90%. Nokia's share price fell by more than 60%. Nokia's global Fortune 500 rank fell from 120th to 274th. Nokia's Interbrand ranking fell from 8th to 57th. Nokia's credit rating fell from AA+ to Junk by all three credit rating agencies. There is nobody worse in corporate governance than Stephen Elop and what the Financial Times calculated was that the damage done by Elop to Nokia shareholder value was comparable to the fraud committed by Bernie Madoff.

So Andy Penn. That is your boy Stephen Elop regularly called the worst CEO of all time - in any industry. And you somehow missed all this? You want this idiot's advice on you STRATEGY? How Goddamned Incompetent ARE YOU Andy Penn? How much do you intend to destroy Telstra if this is the level of incompetence you want to hire? How can Telstra shareholders TRUST you Andy Penn if you hire the most incompetent strategy guy the mobile industry has ever witnessed, as your strategy guy? FIRE THAT MORON NOW !!! You are a disgrace Andy Penn. Your company Telstra is now on our shit list on this blog, we will study every 'strategy move' by you. And we will count the days until you fire that moron like Nokia fired him from the position of CEO and then Microsoft fired him from the job of trying to make that mobile business work there at Microsoft. Shame on you Andy Penn. You are incompetent for hiring this moron. I warn all Telstra shareholders to beware, this is a disaster brewing there in your company. Nothing good has ever come out of Stephen Elop's 'strategies'.

So if you wanted to see the short pictures-version of how Nokia was destroyed by Elop. Yes, shown in pictures, you don't need to read 30,000 words. That version is here.

But if you want to read how totally inept in STRATEGY this guy is, I also did a total comparison of Stephen Elop actual strategies, compared to what he claims is his strategy book, Sun Tzu's The Art of War. That blog article is 30,000 words looking at every detail of how much Elop is incompetent at strategy even when compared to his favorite strategy author.

Comments

[jslon]

And don't forget that after the biggest shareholder values destruction Elop pocketed a 25mUSD personal bonus for selling Nokia mobile phones to Microsoft

[Filippo]

So microsoft is planning to buy telstra? Does internet work in Australia? Unbelievable ...

[new_guy]

Probably Elop's wife's cousin works there and asked a favor. lol

[E.Casais]

The big issue is what Elop's attributions will be.

In a staff role, damage will be limited -- mainly harassing people with Powerpoint slides, strategy papers and business development proposals.

If, on the other hand, he has actual executive power, then all bets are off -- even below CEO, he could derail sane strategies or impose fancy roadmaps.

It all depends on what the following sentence in the official press release covers:

"The Technology, Innovation and Strategy portfolio brings together aligned lines of business including the Chief Technology Office, Chief Scientist, Telstra Software Group and Corporate Strategy with strong links into product development functions."

But in the end, hiring Elop demonstrates quite some level of obtuseness.

[RickO]

If E_slop tries to destroy Telstra, I will keep you all informed of the progress. Ps. The beautiful Nokia N9 was readily available in Australia. I have 2 still working as backups.

[Correctionsforyou]

This the 1st time when I agree 100% with Tommi. I do another 100% and it is with that weasel called Trash whos family as emigrants with the hooker business and ended to marriage with the KGB emigrants from the USSR with children. That is why that bozo is soo goodiegoodie with the Putan.

[Correctionsforyou]

So sorry about spelling and grammars... You know what I mean..
And Tommi has to get used to the idea that next Apple is going to India (100 000 000 sold second year after 22/3/2016 and my resources says that they do not want to sell Samsung.. Apple ;). )

[Correctionsforyou]

It is Fantastic! That this website is so optimized for the mobile experience!

[Correctionsforyou]

He is not going to move his ass from the WAP experience?

[Correctionsforyou]

We must remember to send him an SMS!

[Wayne Borean]

The biggest Horror Movie of the year!

Return of the Manchurian CEO

In theatres now!

[Tomi T Ahonen]

Hi everybody

Its like it was 2011 again. Stephen Elop the gift that keeps on giving. He's like a bad penny you can't get rid of. Boy did that feel nasty writing this short blog and reminded of how bad it was then at Nokia re-living some of those astonishing moves by Elop.

Yeah. Weird by Telstra. Lets see how many months Elop survives before they toss him out on his sorry ass.

Tomi Ahonen :-)

[Oibur]

It is really hard to believe that a company like Telstra can hire someone with Elop's background whilst being aware of Elop's disastrous past.

[Correctionsforyou]

"

The biggest Horror Movie of the year!
Return of the Manchurian CEO
In theatres now!"

B-rated Trumpf movie.

[Ronin8317]

Telstra's mobile network just suffered 2 major outage within a month. All Telstra mobile phone lost the ability to connect for a hours : no voice, no SMS, no data. The first time they said it's due to 'human error', the second time they just said 'we have no idea'. This is a company that have retrenched pretty much all their engineers, so nobody in house have any technical knowledge anymore. This is a company that have outsourced their critical network infrastructure function to India. I'm sure they can claw back from money when their contractor stuff up, but that's no good when they're going to lose customers. Telstra current charges more because they're regarded as a premium service, continual outage will see the premium disappear.

Enter Stephen Elop. Whatever he proposes, there will be nobody to oppose him, regardless of how ridiculous his idea turns out to be.

[Ronin8317]

Telstra is currently the biggest telco in Australia, and with all the regulatory constraint that goes with it. I can't see Microsoft wanting to run a telco.
Telstra's alwats have a dream to become a technology company instead of a telco, which is kind of hard when they got rid of their entire R&D department, so it's now trying to 'buy expertise' to become a cloud service company. So far, they ate simply not competitive in both pricing and reliability against Amazon. Hiring Elop may be the CEO's attempt to get some techinical knowledge from Microsoft. They're sadly mistaken because Elop knows nothing about cloud and services. He is just a living example of how the corporate world keeps putting idiots in charge of once successful companies.

[Winter]

@Ronin
"so it's now trying to 'buy expertise' to become a cloud service company. "

Which aligns it with MS. MS are also desperately trying to become a Cloud & Services company. Makes sense then.

[zlutor]

Unbelievable this guys is seriously considered for any important position in any company...

Except! Nokia had really tricky plan how to get rid of mobile phone business and that was perfectly executed by its CEO back then... :D:D:D:D:D

Not to mention all companies - except M$, where it is almost impossible to damage something lethal due cash reserves of the company - were sold/merged under tenure of SE...

[Fabio Correa]

Off-topic: Microsoft breaks its Windows 10 Mobile upgrade promise

http://www.theverge.com/2016/3/20/11271306/microsoft-windows-10-mobile-upgrade-list

[Earendil Star]

THT Elop is no longer necessarily a MS man. His liaison was with Baldmer, not Nadella, who sacked him.
Yet he is a mercenary, and will do what he is told to do. As he did with Macromedia. And just as he did as Nokia CEO: a MS Trojan horse, injected there to pursue MS covert agenda. This is why his zero knowledge or experience in mobile did not count when he was made Nokia CEO: his reliability in executing outside orders and in preparing the company for liquidation is what really counted.
Regardless of what (fake exNokians but in reality) current MS astroturfers say.
So the question here is: who wants Elop -still mr nobody in mobile- to do what at Telstra? Is there someone aiming at liquidating Telstra? Or to overhaul it?
While we wait for an answer over the next few months, let's have a laugh with this dated but still priceless piece on Elop by the Verge: http://www.theverge.com/2015/6/17/8796465/grand-theft-elop