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Vodafone's Chris Gent Plans 10 Years Ago 12/11/10

Introduction

In the year 2000 Sir Chris Gent sat on top of one of the most powerful companies in the world at the height of the dotcom boom. Everything he had touched had turned to gold and Vodafone was riding high as the wave of euphoria swept telecoms. In a matter of months that gold would turn to dust as the bust swept through destroying investments and prompting the greatest corporate write down in history.

But for now all was well and Sir Chris could contemplate his kingdom with satisfaction and anticipation. His take on the world is fascinating.

David Hill 2010

Vodafone: Post-Acquisition: The Challenge of Brand Migration

Vodafone has been transformed from a predominantly UK-based company into the largest mobile phone company and one of the largest companies (by market capitalization) in the world through a series of substantial acquisitions. This has raised important aspects of branding and marketing described here by chief executive, Sir Christopher Gent.

The strategic context

When I became chief executive of Vodafone in 1997, we were already established as the market leader in the UK and had some presence overseas, notably in Australia and some minority stakes in other markets. We had relationships with overseas cellular phone operators in order to provide access for our customers in those countries. However, in general the global market for mobile telephony was organized on largely national lines (like the fixed-wire market). But there were signs that this was changing and I commissioned a strategic review to assess the international market.

To become a true global player needed major moves and this is the strategic context of the two large acquisitions undertaken by Vodafone in the space of less than a year. The first acquisition was AirTouch, a significant cellular phone operator on the west coast of the US with the added benefit of a number of stakes in mobile phone companies in Europe. This was an agreed deal, albeit in the face of stiff competition from Bell Atlantic on the east coast of the US. Subsequently we combined with bell Atlantic and the wireless interests of GTE to create the leading operator in the US with over 23 million customers, a single digital technical standard and a presence in forty-nine out of the fifty markets. This gave the combined entity a nationally branded offering to retain and win the highest spending customers through a pan-US presence.

Soon after the completion of this transaction, Hutchinson Whampoa, the owner of Orange, a major UK competitor with some presence in other markets, sold its shareholding to Mannesmann, a German conglomerate, with interests in both fixed-wire and cellular phones. More importantly, Mannesmann had been a partner with AirTouch for some years and the two companies had shareholdings in mobile phone companies elsewhere in Europe. We simply could not stand back and allow our European infrastructure to be taken over by a competitor, but more importantly our work on synergies gave us, and ultimately our shareholders, the confidence to press on with the first contested hid in German history. This is not the place to dwell in detail on that battle but eventually we prevailed and in early 2000 took control of Mannesmann. However it was clear that as around 70 per cent of Mannesmann's share-holders were outside Germany and 40 per cent were also Vodafone shareholders their acceptance of an all-paper share offer was an endorsement of our global strategy.

Implementing a single brand

We reached the conclusion that we should move forward with a single global brand. Further work on the potential synergies in marketing revealed that significant savings could be achieved. Even if these were not delivered completely, the sums involved were sufficiently large to prevent any serious discussion of maintaining the status quo. The company operates in an international, technology-based market and perceptions of technology brands are enhanced if they are believed to be multinational. Consumers have an instinctive grasp of the benefits of scale in technology. Our customers are highly mobile and use our product all over the world for both business and leisure purposes. There remained the challenge of how to transfer the equity from the local brands to the global brand.

The decision was also made that the brand should be Vodafone. Inevitably, the act of compressing many months of work and a huge volume of market research might make this sound a clear-cut decision: while it was clearly my preference and that of my colleagues in corporate management, we believed it wrong to impose it unilaterally. There was some consideration of a totally new brand name or the adoption of one of the existing brands in the portfolio. However, since Vodafone was well established in the UK and a number of other markets, accounting for over 20 per cent of revenues, it seemed wasteful to invest in creating and promoting a new brand name in the absence of any significant negatives and with some positive factors mentioned above.

In any event, we clearly had to devise a transition strategy since we could not build Rome/Vodafone in a day. Again we used Springpoint to assist us, particularly in developing the final brand positioning and the design architecture of the transitional approach. We set up a steering group with representatives from a number of different countries and the corporate centre. We wanted to tap into the local entrepreneurial spirit and creativity. I believe that much damage can be done by forcing through this sort of change in an imperialistic way. We are aiming for an organizational structure that will facilitate local execution within an agreed framework in a timely fashion — without the need for a costly central bureaucracy to control everything. At the same time we put in place structures and mechanisms to stimulate the realization of some of the benefits of the enlarged Group — cross-fertilization of ideas, exchange of best practice, generation of new products and services, career development and opportunities for secondment to other markets or to the corporate centre.

As our brand positioning developed, we consciously sought to take some common values that exist across all the brands in our portfolio and some values that are salient only in some countries. In particular, although Vodafone is strongest in the

 UK and, of course, our corporate headquarters are based there, we wanted to avoid falling into the trap of imposing a British brand based on our British values. Vodafone in the future must be seen as a true global brand, with no home territory, yet clearly in touch with local cultures in the markets where it operates. We have deliberately set up our headquarters of our European marketing operation in Dusseldorf, a continual reminder that we are building a global, not a British brand. The brand will need to capture the hearts and minds of our customers and our employees. We must not be seen as an everyday commodity but as a truly inspirational brand.

The core positioning is that Vodafone enables people to get more out of life. We see this in two ways:

• as fulfilling — opening up more possibilities so you can do more of what you want to do
• as empowering — giving you control so you can live your life the way you want to and connect with the communities that are important to you.

 

As I write this in late 2000, the new positioning and the transitional branding identity are poised for introduction early next year. We now have operations in twenty-five countries, across five continents, serving 65 million customers. We still have places in the world where we would like to he, notably in South-East Asia and Latin America.

I am confident that we will he able to make Vodafone a powerful global consumer brand with high levels of awareness and strong emotional values in a short space of time. I am also excited by the prospect of enabling the brand to be an inspirational symbol for the dynamism and enthusiasm of our workforce worldwide.

Sir Chris Gent,2000