It would be no exaggeration to say that life as I had known it ended on Wednesday, May 3, 2006. Tuesday, May 2 had been a great day: I had driven to the Waikato to speak at the New Zealand Large Herds (dairy) conference and decided on the spur of the moment to go to see Bella Mia, a race horse which I owned in a partnership syndicate with the Todds. I was having trouble finding their house, so I called Caroline Todd on her mobile and she met me in the middle of a deserted Cambridge road. We had a quick chinwag and then I was off to speak at the conference. I shared the platform with John Palmer, professional director, probably best known for chairing Air New Zealand, and Andrew Ferrier, Fonterra chief executive, and I answered a range of questions on leadership, integrity and resilience. Little did I know how soon I was to be tested on all of these.
I drove back to Auckland that night and flew to Australia on the Wednesday morning for a two-day board meeting and the quarterly profit announcement on Friday. When I landed, there was a message on my phone from Chris Woodwiss who was already in the Sydney office, saying that Mark Verbiest, Telecom’s group general counsel, was walking around with a very furrowed brow and needed to speak to me urgently.
I called Mark as I got into the car travelling from the airport to the office. Mark was always a pleasure to work with — calm, considered, a lawyer with sound commercial judgement. On this day, though, he was deeply concerned. He said that we had a copy of a paper from David Cunliffe to Helen Clark asking permission to take through either Cabinet or Cabinet policy committee a series of proposals with relation to telecommunications regulation, which from our perspective were really bad. The paper had come to us through Peter Garty, Telecom financial controller, who had been given it by a friend from a Johnsonville cycling club who was a messenger at Parliament. Peter had briefly glanced at the cover of the document late at night, looked at it again first thing in the morning, and realising its significance immediately went to David Knight, a Telecom senior lawyer, who straight away alerted Mark Verbiest, who was himself flying to Australia for the board meeting.
I couldn’t understand it, because just that Monday, May 1, as part of our ongoing dialogue, I had been on a teleconference with David at his request to discuss our proposal for working with the government to accelerate the roll-out of broadband. This Cabinet paper was dated the previous week, before that teleconference. Several other people, including Mark Verbiest, had been on that teleconference call also.
We were shocked about the contents and tone of the paper, which recommended unbundling, naked DSL (a DSL service provided without the need for the customer to purchase telephone services) and a form of separation for Telecom; either accounting separation, operational separation between retail, network and wholesale, or full structural separation, i.e. creating two completely separate companies. But more immediately we were concerned about the fact that we even had the paper. On the way into the city, I discussed with Mark whether we had a legal disclosure obligation. (Companies listed on the sharemarket are subject to disclosure rules, so that at all times that the market is trading, people who might wish to buy or sell Telecom shares are fully informed of any materially significant information that would impact on the share price.) We concluded that we might well have a disclosure issue, but that it depended on the status of the paper.
As soon as I arrived at the Sydney office I met with Mark and Marko Bogoievski, who was also there for the board meeting on Wednesday and Thursday and the profit announcement on Friday. We rang Pip Greenwood of Russell McVeagh to get an external legal opinion. Her view was that if the paper represented government’s intended policy we would have an immediate disclosure issue and that we urgently needed to ascertain the status of the paper.
Roderick was also already at the Sydney office and we talked to him immediately. We decided that I would call David Cunliffe and attempt to ascertain the paper’s status. John Goulter, my head of communications, then called the Prime Minister’s chief of staff, Heather Simpson, to tell her that I was trying to get hold of David. I also rang Maarten Wevers, head of the PM’s department, who wasn’t available to speak to me and never returned my call.
We also discussed the issue with the board. One board member’s view was that we should just give the paper back to the government. Mark Verbiest patiently explained that this would not have absolved us of the disclosure issue.
Heather Simpson then rang John Goulter back, very agitated, saying if we were going to act like this, how could anyone trust us, and that there wasn’t a disclosure issue. We decided then that I would call and leave a message on Helen Clark’s mobile phone, making it clear that we were not trying to create a problem or embarrass the government in any way, but that we had a legal obligation to meet.
Just before 3pm Australian time David Cunliffe returned my call and said he was about to hold a press conference in which he would be releasing the results of the stocktake, not saying anything directly about the policy paper. Our worst fears were then realised: they were serious about a very interventionist package. We knew this would send the Telecom share price crashing because no one expected the government to change course so suddenly from a light-handed regulatory framework to such an interventionist one.
It was a terrible afternoon, dashing in and out of the board meeting. At one stage a board member described it as a hiccup and said that the meeting must continue! That night I could barely stand to go to the board cocktail function with senior Australian staff. At one point a board member said to me, ‘Theresa, I know you feel terrible about this, but it was 90 per cent inevitable. The defining event was this government being re-elected for a third term.’
The board meeting carried on the following day, although I was reeling from the shock of what was happening. On the Friday morning Marko and I fronted the analysts and the media at our quarterly financial results announcement. One fund manager sat in the front row and immediately asked who was accountable in terms of board and management. They were angry about the share price fall following the government’s announcement, and also that we’d failed to get a deal done for Telecom’s Australian business. I felt I did pretty well dealing with the analysts and my team thought so too, but some media wrote that I seemed rattled. It would have been hard not to be. On Monday, May 1, the share price was $5.66. By Friday, May 5, it had fallen to $4.64. The government’s hostility was almost palpable. An Australian business journalist called me to ask me why the government hated us so much. Why indeed? Even today, a few years later, I still find what amounted to a government assault on a private company like that staggering.
The irony was that Roderick and I had regularly discussed Telstra Australia and its CEO, Sol Trujillo’s, aggressive approach towards the Australian government, which looked to be working for a while, and had concluded that no good could come of it. Here we were taking great care never to criticise government policy or indeed the government at all — although Roderick and I were both often given the platform to do just that — joining organisations they asked us to (in Roderick’s case, chair of the Te Papa Museum Board and in my case the Growth and Innovation Advisory Board) and, most importantly of all, genuinely trying to find a way to work together over broadband. In the end, if you look at where Telecom and Telstra are today, it made no difference.
One of the lessons, of course, is that in a regulated sector you can never put a full stop to regulation, which can sometimes lurch in unexpected directions. Marko and I had dinner that night in Sydney, still trying to make sense of things. At that point Marko was still relatively upbeat — he thought it was a puzzle that would have a solution and was definitely up for the challenge of trying to figure it out.
When I came back to New Zealand the next day, the media that greeted me was awful. The Dominion-Post had a horrible front-page photo of me and the Herald stories were nasty.
The focus in those first few days was the leaking of the Cabinet paper. The climate was so whipped up it seemed that everyone assumed Telecom had done something unethical to obtain the document. Throughout this time, politicians were attacking Peter Garty in Parliament. All we could do was tell our story to the State Services Commission, which was conducting an inquiry into how it had happened. Peter Garty was very distressed during this period, as anyone in his position would be, stressed by the journalists camping on the doorstep of his home, upset for his friend who had inappropriately given him the document, upset for himself and his family. I had a great deal of compassion for him. There may have been a few among us who would have had the presence of mind to not have accepted that envelope in the first place, but I think that most people would have taken a document from a friend and opened it. Of course, then the damage was done and taking it to a lawyer was the right course of action.
I rang Trisha McEwan over the weekend and we agreed on the need to get the executive team in one place as soon as possible. Mark Ratcliffe couldn’t come to Auckland for family reasons, but Trisha, Marko, Mark Verbiest, Chris Woodwiss and I flew to Auckland and together with my general manager – consumer Kevin Kenrick, the team met in Simon Moutter’s office to talk about how we felt about the situation and what we should do. At that stage Simon was in quite a bad way — he felt very upset about what had happened and very down about his sense of purpose and belief in the business.
Marko still saw it as an intellectual challenge. Kevin and Mark Ratcliffe in particular were definitely up for taking on the new environment, so we asked them to lead the renewal project, because we knew we would have to start reconfiguring the company to deal with the contents of the announcement.
I felt like we were being attacked on all fronts. The following Monday afternoon, John Goulter came to see me in my office to say that media commentator Russell Brown had posted something on his website from an analysts’ day back in March, about telecommunications companies’ marketing confusing customers. I had talked about the need to simplify Telecom’s pricing structures, and acknowledged that telecommunications pricing, being confusing as it often was, had contributed to keeping telco margins high. I very explicitly pointed out that this was not good enough and that we wanted to be much simpler and clearer in pricing. I put this in the context of a broader set of comments about Telecom’s need to do a better job connecting with customers. All this was posted on the Telecom website at the time of the presentation and if anyone from the government had even noticed any of the comments they certainly made no response about it any time between March and the May move against Telecom. I had met David Cunliffe twice in late March after the briefing and he certainly didn’t raise it with me. Some media played it up as an example of Telecom in general and its CEO in particular being very un-customer-focused. In fact, I was trying to make the very opposite point, which a few commentators picked up on, but their voices were drowned out in the barrage of negative sentiment. Now, this got new traction in the media over the next couple of days and the Prime Minister was drawn into the debate, saying she thought my comments were inappropriate.
I was very upset about being criticised for being straight up. I was pointing out that telcos all around the world have complex pricing models and saying that we were committed to changing that. I was making a frank observation about the current situation and the need for change, which was instead interpreted as endorsing that approach.
I could have chosen to go to the media and defend myself but there’s no way that any interview I gave would have stuck to that topic — it would have got onto the broader issue of government intervention. By now it was obvious that telecommunications regulation was intended to be part of the upcoming budget and the leak had left a rather large hole for the government to deal with. As we were still formulating our overall response, if I went to the media at all I’d have to talk about the government’s moves. However, I regret to this day that I didn’t defend myself, because the whole analysts’ day speech as it was on our website made it clear what I was talking about in a way that one sentence taken out of context can never do. I found it shocking, though, that honest comments could be so criticised, so maligned, in an age where honesty is held to be one of the highest virtues of anyone holding public office.
On the Wednesday night, Roderick and I talked about the need to do something to break out of the barrage of negative media and start conveying some positive messages. There was a board meeting that Thursday afternoon, but I didn’t even know about it until I rang a board member, only to be told by his office that he was in a Telecom board meeting! While it was not surprising that the board was meeting to discuss the crisis engulfing the company, meeting without me could only mean one thing — they were discussing me, among other things. Still in a form of shock and almost shaking, late that afternoon I went upstairs to Roderick’s office, at his request. I was worried that I was going to be fired and had already determined I wasn’t going to go quietly. Instead, Roderick wanted to discuss a media release the board wanted to put out the next day about how the company was moving forward. Physically, I almost couldn’t deal with coming down from being so charged with adrenaline.
As I went back to my office Mark Verbiest called to see if I was okay and I was so upset and incoherent I could barely speak to him. Concerned, he came back to the office — it was after 7pm by then and everyone had left for the night. When he came into my office I collapsed and he held me up and stopped me falling to the floor.
I went from there to Margaret Doucas’s house, where she cooked me dinner and I gradually pulled myself together. I knew I had to, because of all the media I would be facing the next day when we issued the press release. I had asked Mark Ratcliffe and Kevin Kenrick to join me for the media session, following advice Kevin Roberts had given me: using a rugby analogy, he said it’s much harder to take down the entire All Black team than to take down the captain.
What I gleaned later was that the board did indeed discuss my leadership of the company. They would have been well aware I had the strong support of the executive team and the wider company, and that I would never quit at the company’s darkest hour. They clearly determined that stability was the most pressing need, alongside starting to regroup.
Between Wednesday, May 3, the day the Minister of Communications held his press conference, and Friday, May 5, Telecom’s shares fell 90c, which equated to $1.8 billion being wiped from the market value of New Zealand’s largest listed company. Leaving aside the way that it came to light, the actual contents of the government package were worse than the market expected because structural separation was put in the frame. Investors realised what we realised: at the very least the company would have to spend millions putting any new structure in place — a telco is not just a network in the ground, it’s all the layers of IT systems and support that go with it. Telecom would be completely distracted from competing in the market during this time, and when separation was achieved it would be completely bound up in rules about what it could and couldn’t do. In particular analysts were concerned that structural separation might lead to the government imposing a regulated rate of return on the network business.
A select committee was asked to look at both operational and structural separation, with officials from the Ministry of Economic Development working on the options. That was the biggest problem with overseas investors: unbundling and naked DSL looked like regular telecommunications policies, but this particular government’s preparedness to go further than that without giving those policies a chance to deliver was very unsettling.
Once we were over the initial media shock, I realised that the next set of problems would come from investors, so Marko and I arranged to meet with investors in Auckland, Wellington and Sydney over the next 10 days. Those meetings were very difficult and took place amid media speculation about the security of my tenure. The executive team itself was still in shock and so was I.
The share price fall following the government announcement told us the market expected our profits to be lower, at least in the short term. We believed the best course of action was to embrace the new regime and to clearly win because customers chose Telecom on a level playing field. We also thought it was an important part of the new order that the Telecommunications Commissioner be front and centre, otherwise we could end up with a complete mess, i.e. trying to achieve commercial outcomes when our wholesale customers all wanted different things. We wanted a strong Telecommunications Commissioner who could send a clear ruling that everyone had to abide by. In that regard it was unhelpful that the Prime Minister came out and overtly criticised Douglas Webb. And on top of everything else, on Monday, May 1, the Commerce Commission had recommended regulation of the mobile business, which created yet more uncertainty.
Roderick made it clear that the management team and I had the full backing of the board to see the company through the coming changes. He also indicated that he would soon make an announcement about when he would retire as chairman. Shortly after this, he announced that he would retire in June.
At the time, it was reported that he’d been planning to finish as chairman for some time but his decision was precipitated by the government’s plans, and I think that was a fair reading of the situation. For over two years Roderick had been concerned to put in place a clear succession for both himself as chairman and me as CEO, and in the months prior to May he had been actively mulling over leading a slightly more balanced life and scaling back his corporate commitments. Telecom and the ANZ were the two boards from which he decided to retire.
Roderick had led the recruitment process of two new directors back in early 2004, with the idea that either one of them could step up to being chairman within a couple of years. At the board meeting on June 1, 2006 Wayne Boyd was elected chairman.
When Roderick left it was the end of an era. Very few people would have taken a risk on appointing a 37-year-old woman to run New Zealand’s largest publicly listed company. I never stopped appreciating Roderick for that. And Roderick was very good at the ‘mechanics’ of being a chairman — running a good meeting, focusing a board on the important topics, getting to the essence of an issue. For someone who holds strong views about pretty much everything, he is a surprisingly good listener.
Nevertheless we had a complex relationship — it was never the straightforward ‘mentor–mentee’ relationship it was often portrayed to be. While we could, and did, discuss pretty much anything in private in an open and constructive way, in more public settings we sometimes both wanted to lead the parade, which meant I often had to bite my tongue, something I didn’t find easy to do. There were times of real tension between us, especially towards the end of our time working together. On the whole though, it was a relationship characterised by support, mutual respect and genuine affection.
When Wayne Boyd was announced as chairman he was immediately asked about me. We’d always got on extremely well and I saw no difficulties in working with him as chairman but he didn’t give me quite the endorsement I expected, saying only that he had confidence in the management team and avoiding making any direct reference to me at all. I think he spent the first few weeks of June widely taking soundings on my leadership before we settled into a comfortable pattern of working together, and I continued to feel very much under pressure throughout this period.
The report of the State Services Commission on the investigation into disclosure of the classified telecommunications stocktake was completed on May 16. It found that the Cabinet document had been deliberately taken from the Department of the Prime Minister and Cabinet by a messenger employed by the department and given to Peter Garty; that Peter Garty and ultimately Telecom were the passive recipients of the document, having taken no action to seek it or to encourage the messenger to provide it. They determined that having received and viewed the document, Peter Garty was immediately compromised, and that neither Peter Garty nor Telecom was at any fault in the acquisition of the document.
The two weeks between the leak and the publication of the result of the investigation were agonising. We knew that this is what had occurred from our own internal investigation, but it would have been inappropriate to say anything given that State Services was looking into it. The publicly aired assertion that we had the option of quietly handing the paper back was ridiculous. We were not a political party; we were a public company subject to all the legal requirements of disclosure for directors and senior executives. We desperately didn’t want to have to disclose, but we had no choice if it was confirmed that the paper was actually government policy. Who could have foreseen that a messenger who had never previously done anything like this would have, out of some misguided notion of friendship, delivered a copy to a good mate who worked at Telecom? But ultimately, of course, it was just a sideshow. The leak simply precipitated what the government had intended to announce as part of their budget package.
On Wednesday, May 24, I had a TUANZ presentation that I had agreed to many months prior. I knew there would be a very unsympathetic, perhaps hostile, audience but I did not want to back out or find an excuse not to present. I was fortunate to have two close girlfriends come around for dinner the night before to help me compose myself.
After David Cunliffe dropped his bombshell, the pressure on me remained intense all through June, particularly as the share price kept falling. All told, $3 billion was wiped off the value of Telecom following the announcement of the government’s decision to regulate. It was still uncertain just what form that regulation would take, except it was obviously going to be bad for the company’s profits.
The market is unsentimental. It looks at the company’s cashflow and its likelihood of maintaining or increasing its profits into the future. It doesn’t really concern itself with the context or the other stakeholders’ perspectives; it votes with its feet and that’s what investors were doing. There was no compelling reason to buy Telecom shares while there was so much regulatory uncertainty.
This was mainly to do with what form of separation would be required, and also the Commerce Commission’s recommendation to regulate mobile on top of everything else. Not surprisingly there were some people who didn’t want to see me stay: fund managers who were angry that they’d lost value in their portfolios, and competitors who saw it as a good opportunity to destabilise Telecom and its management team. Most of these people weren’t named in the media articles, of course. It’s easy to say what you like hiding behind a cloak of anonymity. But there were supporters, too. For example Bruce Sheppard, chairman of the New Zealand Shareholders Association, said in his colloquial way with regard to Roderick leaving that it would be dangerous to throw out the crew as well as the captain. There were also some fund managers who were prepared to be quoted as saying that making a lot of changes to board and management at that time would be entirely the wrong thing to do.
I also had support from a surprising source: Paul Budde, an Australian telecommunications analyst who’d long been an opponent of Telecom, said my leaving would be a real pity: ‘She’s a great talent in communications, it would really not be a wise thing for New Zealand to do.’27 Nobody was more surprised to read that from him than me.
I was 44 before it happened, but now I became the Gattung daughter needing the most parental support. My three sisters all had children and my mother was always available to assist them in their times of need. Mum and I had always had a good relationship and as she liked travelling, we often went on short holidays together. She particularly liked coming to Queenstown with me and going to Sydney. We never discussed anything much about work when I was marching on in my career; when someone asked her once what I did, she said, ‘Well, I don’t really know, but she spends a lot of time in meetings.’
Within a few days of the crisis breaking in May 2006, she was very concerned for me and came down to stay with me and cook for and generally look after me. I can remember being with her in the kitchen of my apartment reading the morning paper the day there was an editorial calling for me to go. I was glad she was there to support me, even though she felt powerless.
In their pursuit of yet more copy, newspapers went beyond the normal suspects of fund managers and telco commentators to also seek comment from headhunters. There was the ‘for’ camp, saying how highly regarded I was, the less enamoured camp and the ‘anti’ camp.
One journalist in particular went for me during June: Peter Nowak, a Canadian at that stage living in New Zealand and working as a journalist for the Herald. I didn’t understand the source of his hostility, except perhaps the analogy that if the dragon was being slain, how could you be sure it was dead if the dragon handler was still there? But if the dragon was slain and the maiden was saved, what was the maiden? More investment in broadband?
David Cunliffe’s cabinet policy paper had estimated there would be an extra $2 billion invested in broadband in New Zealand over five years from players other than Telecom, as a result of the new regulations related to fixed-line telecommunications services. Since that time (2006) little of that non-Telecom fixed-line investment has occurred — a small amount related to unbundling, principally by Vodafone and Orcon, and some fibre investment by the likes of FX Networks — but it would add up to tens of millions, not even hundreds. No one beyond Telecom has invested serious cash. Indeed, in August 2009 Telecom New Zealand’s biggest competitor in the fixed-line area, TelstraClear, told the market that they had invested less in capital expenditure that financial year, i.e. between July 2008 and June 2009, than the previous one!
Did Cunliffe really believe there would be an extra $2 billion of non-Telecom investment arising from the proposed changes? It seems hard to fathom. David is a highly intelligent person and we had spent hours poring over the economics of broadband with him.
Interestingly, in a speech to the Korea, Australia and New Zealand Broadband Summit in June 2008 in Seoul, South Korea, Cunliffe noted that offering competing facilities-based services over the existing infrastructure (i.e. unbundling) was only going to take things so far. New Zealand also needed increased investment in that infrastructure, ‘beginning with shortening loops in order to make fibre to the premise a viable prospect for the future’. How about that? The very thing we had offered more than two years previously!
During this time we had publicly said that we would do our best to make the new regime work. We sent Mark Ratcliffe, Bruce Parkes and Trisha McEwan to the UK to look at British Telecom to see how it had responded to similar pressure. BT was the one and only other telco in the world to have undergone operational separation, in September 2005, following months of negotiation with Ofcom, the UK telecommunications regulator. We also attempted to set up working parties to coordinate the technical standards, details and implementation plans for competitors to access Telecom’s network even though the legislation itself was some time away from being passed.
This was a very difficult period for us. Everyone from the board down was desperate to get out of the glare of the negative media spotlight, to try to get some stability and certainty back. Incredibly, we still had no idea what the government wanted us to deliver to avoid a draconian form of separation. This played pivotally into the hands of our competitors, who had no incentive to cooperate or invest. By playing this game they could perpetuate the view of Telecom as a villain, and while the government took every opportunity to heap praise on the BT model, in reality the paint job was barely dry on the vans for its new, separated Openreach network division. Sometimes it seemed as though it was presented as if it was already clear that operational separation was the ultimate answer to the complex issues of markets and regulations in telecommunications, when really only one company in the world had gone down that path and then only very recently, too recently for any conclusions to be drawn other than the jury was still out.
On Tuesday, June 13, Wayne, the executive team and I gathered in Auckland to discuss the way forward in terms of the need to move to operational separation. I felt good at the beginning of that meeting, as we were starting to put together a concrete plan to work within the new order. I have been asked since whether we ever contemplated the equivalent of civil disobedience (i.e. just not obeying the government’s recommendations) and the answer is no; we never considered something that would so obviously have been a disaster for our customers. We saw ourselves as a business serving customers — we didn’t see ourselves as an institution with a separate life like, say, a political party with an ideological agenda.
However, part-way through that meeting John Goulter sent me an email saying The Independent was going with a story the next day saying that my relationship with Helen Clark was at an all-time low, which plunged me down again. I thought we had turned the corner and now there was going to be another unhelpful media piece. I regathered my composure in the meeting because I could hardly sit there for the next few hours and be passive, worried about my own issues. I had to be the leader, and I was.
Sure enough, it was the front-page Independent story on June 14,28 quoting unnamed Labour Party insiders saying that there had been a breakdown in my relationship with the government and that it had become deeply personal for Helen Clark. Obviously at this point Helen wasn’t calling me for chats as she had once done, but things never got personal between us and I was disappointed that her office didn’t do more to play down that story. (The same insider opined in this piece that Telecom had had the option of quietly handing the policy paper back but chose to embarrass the government by not exercising that option. As I’ve said previously, Telecom had no option of quietly handing the paper back. Unfortunately, once it was passed to us we had no alternative but to ascertain its status and the rest, as they say, is history.)
Although Helen Clark and I were never really close, we had always got on well and we had quite a few points of connection. We were both strong feminists who understood how much harder it was for women than men to get to the top of their respective fields and stay there, and we respected each other for that. We also met at several women’s events, such as the launch of the Auckland YWCA mentoring programme for women at which we were both guest speakers, and her parents lived at Waihi Beach, where John and I had had a beach house for many years. The truth of the matter from my perspective was that we were never as close as some people believed at certain times, but nor did we fall out in the way that was later reported.
Over that week we tried to get a telecommunications industry working group proposal off the ground and had a frustrating few days trying to get support for it. It seemed like certain competitors had an agenda to keep us stuck where we were.
I went back to Sydney on June 19 but everything had changed. The executive team dinner wasn’t the same. We were no longer a committed bunch with shared hopes and optimism for the future — or at least that’s not how I felt. Previously there had always been such a buzz just being together. Now we were all quieter, each person reflecting on the tectonic shift that had taken place and what it might mean for them.
The following week Wayne Boyd and I met with TUANZ to make it clear that we were trying to move forward. On the Tuesday afternoon, after a board meeting in the morning, Wayne and I did a media briefing together, saying that we were proposing voluntary operational separation. I then presented the proposal at the annual telecommunications summit, taking the stage after David Cunliffe had spoken, and I realised that he was very lukewarm about the idea.
One good thing that happened around this time was an afternoon tea Wayne and I had with Tony Boyd from the Australian Financial Review in Sydney. Tony could see we genuinely had a good relationship and that there wasn’t any tension between us. After that the media speculation about my imminent departure quietened down for a while.
In late July Wayne and I also met with David Cunliffe and Michael Cullen to try to agree on a process of engaging in a transparent way to achieve operational separation. I left the meeting feeling that Michael was in support of this approach but that David was more reserved.
The following week was the August earnings announcement, and we had positioned that day to be a full presentation of our strategies. Marko had sent a great email detailing what it needed to cover and we fronted with the whole team: me, Marko, Kevin, Simon, Mark Ratcliffe and Wayne, with media packing the room to the gunwales. By the end of that week I thought I’d done as well as anyone could have done in the situation we found ourselves in.
The following week I started doing performance reviews of the senior team and I spoke at the Telecom sales conference in Auckland. I shared a little of my personal anguish over the preceding couple of months and received a fantastic response from the sales team. At drinks that evening the staff were just so wonderful and supportive.
It was undoubtedly one of the worst periods of my life to date. You read critical commentary about other people in the media all the time, but you have no idea how it feels until it happens to you, or how quickly and unfairly the media can demonise people. It really penetrated me to my core.
May and June had been the hardest two months but I had been feeling terribly burdened since February, caught between what a leader needs to do to support others and my own need for support, with no one to go home to at night to discuss things with or to share what was going on. Normally a very optimistic person — in fact, a journalist once wrote that I could be mistaken for an author of self-help books — I was by this time starting to get very weary.
The person to whom I regularly turned for advice and counsel over this period was Kevin Roberts. It was impossible to turn to anybody within my immediate circle, consumed as they all were by the developing situation and what it meant for them. Kevin had been personally involved with the Telecom account, including working with my executive team and myself, so I knew he had a good understanding of the issues. He always had a great perspective on how to think about shareholders, customers and staff interactions and dynamics.
I’ll always be grateful for the support he gave me during this period, both professionally and personally. Kevin is so busy, normally he can be difficult to reach — if you leave a message on his mobile he’ll probably get back to you three days later, from a different part of the world! During this time, for long periods he left his mobile on so that he could return my calls as soon as I rang.
I believe the board supported me at this time because they could see that I had the support of the company and also because they believed that changing the chief executive at the same time as the chairman would create an impression, or certainly add to the impression, of a company in crisis.
One thing I began to do immediately was showcase the rest of the Telecom executive team as much as possible, based on Kevin Roberts’s All Blacks analogy. At the August profit results Wayne and I fronted up not just with Marko as CFO but also with Kevin Kenrick, head of consumer; Simon Moutter, head of business; Mark Ratcliffe, CIO; and Matt Crockett, the new general manager – wholesale. This did help to defuse commentary about me.
In a poll of chief executives of small and large companies taken after the government telecommunications policy changes were announced, most respondents agreed with the likely outcome of the new regulation (i.e. more competition) but around half raised concerns about the method. Comments included, ‘While I agree with the outcome the method used was unfortunate’, ‘The local loop needed freeing up but not in the way it was done’ and ‘The government was right to act but the way they acted was inappropriate’.29
Policy emerges from popular opinion and popular will. There is no doubt the New Zealand government had popular opinion and popular will on its side. But popular opinion doesn’t arise in a vacuum. It had been hugely shaped by the commentary.