Lessons from seven years at the front line
Ed Petter reflects on his seven year tenure at BT Group as he moves to Haleon as chief corporate affairs office
Shortly after Ed Petter arrived as group corporate affairs director at BT in November 2016, he noticed that the company seemed to be constantly issuing press releases. How many had been sent over the previous 12 months, he asked. The answer came back: 378.
The reason for such over-communication soon became clear. The communications department had become siloed across the business. A third of its people were based in the central group function, a third were embedded into business units and did not report into comms, while the remaining third worked in random locations with various objectives.
The first thing Petter did was to bring all these communicators together into one single team. ‘Getting the team right and the structure right is still the first and most important step you can make,’ he explains. ‘You cannot do anything else unless you get that in the right shape. You need to focus on that as early as you can.
‘I felt that, given the scale of what we had to do and the scale of the business, we had to have a unity of purpose, and the best way of doing that was to have a single team. Now we have people embedded within the business units, absolutely servicing them, but they are part of a single, united, unified team at the centre.’
To come into a business and start restructuring almost immediately means it is essential that the role comes with such autonomy. ‘I wouldn’t even take a job if I didn’t get a sense that I would be given permission to shape it how I wanted, or to hire the people that I thought were the right people,’ he adds.
Sending out 378 press releases inevitably meant there was a lack of clarity about BT’s strategy – both internally and externally. Petter believed that the team needed to focus on just two or three core areas, on which it could communicate in a systematic way, that would convince stakeholders – including 25 million customers, unions, 130,000 employees, consumer groups, regulators, and the UK’s biggest private pension scheme – that BT was changing.
‘It is political campaigning to a degree,’ he explains. ‘You have to get bored of what you are saying before people have probably heard it. You have to be really consistent.’
And one of the key audiences he had to persuade that BT was changing was the political one. Petter arrived at a time when there was very little political support for the telecoms group.
With a stated commitment to build its dividend by ten per cent a year, BT was perceived as looking after its shareholders rather than its wider responsibilities, such as investing in its networks and customer service. Such was the level of dissatisfaction that the industry regulator was even looking at breaking up the company.
And, as Petter discovered in his first month in the role, BT was receiving around 600 letters every month from MPs complaining about the service their constituents received from the company. It was highly unlikely that any MP with a mailbag overflowing with BT grumbles would feel favourably towards it.
‘If you are probably the biggest contributor to their mailbox of any company, it is very hard for MPs to stand behind you and support your calls for tax changes or policy changes. Why would they?’ he asks. The letters created the ‘perception that BT doesn’t really care about its customers and reinforced the sense that it’s a monopoly type business that needed to be broken up’.
What followed was, as Petter describes, ‘a slightly uncomfortable board meeting’ just months after he arrived at BT, in which he presented sentiment data related to the political and regulatory worlds indicating that the business needed to make significant changes in both its investment strategy and how it treated customers or it would not be allowed to continue in its current form.
It was a difficult message to deliver because, in effect, it was telling the board that the strategy that they had put in place and overseen for seven or eight years was just not working. ‘They had been through a new death experience in the sense of almost being forcibly broken up – Openreach, which builds the fibre, was almost separated from the business – and we just about stopped that,’ he recalls.
And yet today, as we chat just days before Petter leaves BT to join consumer health company Haleon as chief corporate affairs officer, after a well-earned rest, he can attribute recent tax changes that are worth about £1 billion to the business to the actions prompted by that difficult board meeting.
He also believes that ‘fixing the political regulatory environment’ paved the way for long-term investment in the business that will guarantee BT – or EE as it is likely to be rebranded – will survive for decades to come. ‘Getting the corporate affairs strategy right influenced the business strategy to set up the long term,’ adds Petter.
The biggest factor in this turnaround was undoubtedly tackling customer service. When Philip Jansen was appointed as chief executive of BT in February 2019, one of his first actions was to create a £200 million fund to improve customer service. Call centres were relocated from India to the UK.
‘Trust at its most fundamental level resides in customer service,’ explains Petter. ‘Are you an easy business to work with? Do you muck me around? Are you easy to contact and deal with? The quality-of-service impacts how customers feel about us. If you can limit the noise that comes out of your business from a customer service point of view, and you’re seen to be delivering, you get permission to have conversations about policy changes or tax changes.’
Trust at its most fundamental level resides in customer service. Are you an easy business to work with? Do you muck me around? Are you easy to contact and deal with?
The company also spent a lot of time convincing political stakeholders that BT’s interests were aligned with those of the UK. ‘When BT builds, it is building for both itself and the country, and we’ve been able to persuade people of that. The government now trusts us to do the right thing, which is why we, along with others, will be beneficiaries of changes [announced in last year’s Autumn Statement] that ensure we get tax benefits for investing.’
Petter admits that the role he anticipated at BT was different from the reality. ‘I was quite wide-eyed about the political and regulatory challenges we had. I got hired because there was a feeling that the sentiment in that space was too negative and needed to be reset, and I needed to think about how to address that,’ he says. ‘But the thing that happened three months after joining, which nobody could predict, was the big fraud in our Italian business.’
An initial £145 million write-off for ‘inappropriate management behaviour’ at BT Italia, was swiftly upgraded to £530 million amid allegations of embezzlement and false accounting, knocking 20 per cent off the share price in one day. ‘My boss who hired me [Gavin Paterson] never quite recovered from that. It wasn’t his fault, but it happened on his watch,’ explains Petter. ‘It ultimately led [to his departure] a year later, which I hadn’t predicted.’
On reflection, though, he concedes that the crisis accelerated the role of senior counsellor and advisor for him. Working around the clock for 36 hours as they [Petter and Paterson] disclosed the issue to the market ‘created a bond of trust as you go through the fire with somebody, and, while I wouldn’t wish it on anybody, it put me in a different space. Rather than somebody who’d come in to run a function and be part of an executive team, by nature you become bonded with the chief executive.’
It has also proved to be the basis of his relationship with Jansen. ‘I don’t bother him. I take a load of stuff away from him and inform him of certain things. We have a basic system. A text message means it’s largely for information – he doesn’t need to respond immediately although sometimes it might mean Are you happy with how I plan to handle this?’ A phone call means I need you now, and he’s extremely responsive,’ he explains.
‘That’s a privilege of the job. How lucky to be in a role where what you do does matter to course of the business.’
But Petter would also admit that there is a delicate balancing act at play here. ‘You must remind yourself what name is on the contract you have signed. It is the organisation, not the individual. If I just built a relationship with the chief executive, I would have got offside with the chairman.
We have a basic system. A text message means it’s largely for information. A phone call means I need you now
‘I learned in this role that the relationship with the chairman and the board is something that you do need to cultivate and make part of your internal stakeholder mindset. These are often experienced people with a great insight into what you do. They care about our function, sometimes more than the executive, because it is their job to think three or five years out. They can be real allies in difficult conversations.
‘But you’ve also got to find that narrow route between feeling like you’re providing great advice to all parties and being the person that all parties will pick up the phone to share their frustrations.’
Petter agrees that his seven-year stint at BT has not been without its challenges. He has worked with two chief executives, three chairmen and seven Secretaries of State.
‘It makes the job harder when you have that level of political instability. And then like all businesses, we rolled into Covid where suddenly the country was completely reliant on what we did to be able to live, work and survive. It all depended on our networks, which performed pretty well considering,’ says Petter.
‘We weren’t a business that was peripheral to the way that life ran, we were central to it. We were connecting Nightingale Hospitals and supporting the NHS; there was a lot of work we did with the NHS which was mission critical to some degree. But you come out of that and start to breathe…’
Petter recalls an Exco meeting at the beginning of 2022 when there was palpable relief that the worst of Covid was in the past and that it was time to look forward. ‘And then Russia-Ukraine happened, and we had energy spikes and cost of living pressures that we are still rolling through,’ he says.
‘And most recently, though there hasn’t been a direct impact, we’ve had Israel-Gaza where, quite understandably, employees have felt unsettled. It’s a time of greater uncertainty for the macropolitical, geopolitical background. The job of a chief executive of a big, listed company over the past five years has got to be as tough a five years as people experienced post-war.’
BT directly felt these geopolitical pressures when, in November 2022, it was served with formal notices by the UK government to strip equipment provided by China-based Huawei from its networks. BT had used Huawei equipment for more than 15 years, with the support of the British government security services, but growing political pressures between the US and China finally forced the UK government to act.
The job of a chief executive of a big, listed company over the past five years has got to be as tough a five years as people experienced post-war.
‘The integrated supply chain is not a given anymore. We are all thinking harder about our supply chains and where we source things from. I am sure lots of businesses like BT are having to scenario plan around more disruption to the world,’ he adds. ‘Corporate affairs directors will be really important in helping their businesses think through some of the implications.’
Petter admits that the threat to its relationship with Huawei had perhaps not been fully appreciated by BT, as the UK consensus was that the issue would blow over, until he visited Washington. Not one person he met thought the position would hold. ‘It’s one of the few things that have consensus in American politics. Republicans and Democrats were agreed that the economic and technological threat of China had to be stopped in some way,’ he explains.
On his return, Petter wrote a note to both Jansen and former chairman Jan du Plessis that the views he heard in Washington were at odds with those expressed within the UK government. ‘The lesson I took from this was to get out of your home market, if you can, and get an external perspective elsewhere,’ he adds. ‘Make sure you get different voices, third party advisors, but also go and talk to people. It’s very easy to fall into a home market consensus.’
Over the past seven years, Petter has also been working for a business impacted by a once-in-a-generation shift in technology. The 100-year-old copper network on which the business was built, and which served the nation’s landlines, is increasingly unreliable. Indeed, he’s become adept at reading weather maps as heavy storms or flooding are bad for copper networks, leading to communications being cut off for communities – with the resultant crises plans being enacted.
Fibre is the future. Where the Victorians once installed a copper network, BT is now laying a future-proof fibre network with 5G connectivity that technologists estimate will underpin the country for at least 50 years. The network will also support additional services, such as ultra-high-speed connections for gamers or security products.
Get out of your home market, if you can, and get an external perspective elsewhere. It’s very easy to fall into a home market consensus
‘We are investing about £15 billion in a fibre network [to power 25 million homes] that takes around eight to nine years to build and, on which, we won’t get our money back until about year 18 or 19,’ he explains. ‘It’s the reason our share price has been squeezed because we’re investing about 130 per cent of depreciation. But Philip [Jansen] was quite sanguine about the fact that his tenure was never going to see the share price benefit of that.’
Yet one of Jansen’s earliest initiatives also comes into play here. His investment in customer service – calls are now answered within, on average, 36 seconds – meant that, when BT upped its prices last year, leading to an increase in bills of more than 14 per cent, there was less pushback than expected. Much of the messaging to explain the increase – reflecting CPI plus 3.9 per cent – focused on the need to fund investment in the networks to provide the service that customers now demand.
Subsequently, the price hike was achieved without any political backlash, adding £250 million to the bottom line. ‘The hardest job is to convince people that there is an investment required to move sentiment – that spending £200 million on customer service will create the space to do other things,’ explains Petter.
Jansen’s departure after five years in the hot seat seemed a perfect time for Petter to seek a new opportunity. ‘It’s been a great time to be here because you are at a company that is having to reinvent itself, and I’ve loved it in many ways, but it feels like a proper tour of duty,’ he explains. ‘It will also be good for the company to get somebody new with a different perspective and a different way of thinking.’
Haleon, the FTSE 100 consumer health company spun out of GSK in July 2022, which Petter joined as chief corporate affairs officer on 4 January, represents both a new challenge and a new marketplace for him, but his initial actions will mirror those three key steps he took at BT. Not for him waiting for the much lauded 100 days.
‘The most important is the team I am inheriting. Have we got the right people in the right places? Have we got the right structure? And have we got cohesiveness across a team that stretches from China to North America and down?’ Petter explains. ‘If you don’t get the basic building blocks of creating a high performing team right, then you won’t be able to do anything else.’
The next step is to build and develop trusted relationships in the right places, from the chief executive to the rest of the executive team to the board, which is chaired by former Tesco chief executive Sir Dave Lewis. ‘He really does understand our world and has a strong view about it, which I think will actually be helpful over time.’
And the final step is to create a proactive platform that demonstrates the value that corporate affairs can add to the business. ‘I think it will be essential to build a cohesive strategy that shows that this function – corporate affairs – is not just defensively valuable but can proactively articulate and identify where the value opportunity is going to be, and then campaign in those spaces,’ he says.
Here’s to the start of another successful innings.