David Tudehope, co-founder and CEO at Macquarie Telecom Group, says a completely transparent and brutally honest approach to customer service has been critical to its industry-leading net promoter scores and award-winning customer experience.
David Tudehope, co-founder and CEO at Macquarie Telecom Group, started the business alongside his brother Aidan Tudehope (currently the Managing Director, Government & Hosting Group at Macquarie Telecom Group) in 1992 with their personal savings. He has since guided the company’s development from a provider of voice services to a fully integrated carrier and highly successful ASX listed company specialising in cloud services, cyber security, telecommunications and data centres.
Mr Tudehope graduated from UNSW Business School with a Bachelor of Commerce in 1990 and is currently a member of the UNSW Business Advisory Council. He recently spoke to UNSW Business School’s Frederik Anseel, Professor of Management and Associate Dean Research, about Macquarie Telecom Group’s approach to creating an exceptional customer experience, managing business growth through challenging times and innovation in the competitive and fast-moving world of cyber security.
Creating an exceptional customer experience
Customer service is at the heart of Macquarie Telecom Group’s business model and commercial success. Both the company and Mr Tudehope have won multiple awards for their customer service and leading Net Promoter Scores (NPS) – a commonly used metric for measuring how likely an organisation’s customers are to recommend a product or service to others based on their own experience.
With a world-leading NPS of +71, Mr Tudehope said the customer experience is a critical driver of growth in Macquarie Telecom Group. “Our business is built around a why, our purpose, which is to make a difference in markets that are underserved and overcharged,” said Mr Tudehope. Macquarie Telecom Group’s customers include a wide range of small, mid-sized and large businesses and the company offers a range of services to meet the growing needs of global “hyperscalers”, private cloud, enterprise and government customers. The last segment is particularly important for Macquarie Telecom Group, which helps many federal and state government agencies meet their cyber security and data sovereignty requirements.
In recognition of Macquarie Telecom Group’s focus on customer experience, Mr Tudehope was awarded CEO of the Year at the World Communication Awards while Macquarie Telecom Group was also awarded the Best Customer Experience of the Year. Today, Macquarie Telecom Group has the highest NPS of any ASX-listed company and this is reflected in its share price growth. Over the past three years this has risen 83 per cent (versus an overall decline of 18 per cent across other telcos) and the company delivered its sixth consecutive year of profitable growth in its most recent FY20 results.
Reflecting on Macquarie Telecom Group’s growth, Mr Tudehope wishes he had adopted NPS sooner. “It took a couple of years for us to adopt it fully,” he said. There were a number of important steps and ideas in this process – one of them being “complete transparency” which Mr Tudehope says is “one of the bits of magic in our success with the Net Promoter Score”.
Customer experience is at the centre of decision-making in Macquarie Telecom Group, from product releases and staff hiring profiles, through to staff incentives and even critical infrastructure spend (such as Macquarie Telecom Group’s recent $100 million investment into sovereign government and enterprise data centres in Australia). The business’ customer experience program (known as the Heartbeat program internally) encourages Macquarie’s entire team to delight customers and literally do the opposite of industry counterparts in an industry historically known for poor customer service.
Prof. Anseel reflected on Mr Tudehope’s approach and said Macquarie Telecom Group’s application of NPS is strategically focused. “I think there are some very powerful lessons here because a lot of companies are using the Net Promoter Score. But it’s sometimes not as tightly linked to purpose, and then it’s not as tightly linked to what you do in terms of feedback and transparency – and a lot of companies now talk about feedback and transparency,” said Prof. Anseel. “But what you do is really, really thorough.”
Innovation is a constant focus for Macquarie Telecom Group, and Mr Tudehope said this has been inspired in part by research in organisational behaviour. “We think a lot about the challenges of innovating constantly; we’re personally a big fan of Michael Tushman’s research in this space around innovating through change. Our model is to look globally for what trends are likely to impact the industry in Australia,” explained Mr Tudehope.
“Finding your way through that … is actually quite challenging, particularly for some of our businesses in cloud and cyber security – things move there in months, maybe a year at a time. So you don’t want to miss a trend, and if you do you’ve only got a few months to pick up on it and adapt… the importance of adapting is so critical,” he said.
Macquarie Telecom Group has adopted a number of processes to adapt to these changes. Every six months, for example, Mr Tudehope’s team selects one or two significant trends and conducts “innovation study exercises” which involve a cross-functional project with six to ten people across the organisation. “We focus deeply on that trend; we visit the leading vendors behind the technology. We visit businesses like ours that don’t compete with us overseas. We talk to consultants, and we just go deep. And for a few weeks, we eat, sleep and live that trend. We only find that by that level of immersion, do we get the true insights,” said Mr Tudehope.
In assessing these major market trends, Mr Tudehope said there are a number of key developments in cyber security. But he warned that it is increasingly important for businesses to see the “magic is in cyber security operations” – and not in fancy hardware and software which organisations sometimes too willingly splurge on in the hope of defending against cyberattacks.
“Our businesses put their energy into not creating a new firewall or some new software or hardware, but rather developing sophisticated operational procedures and growing our cyber security professional talent internally. And we think that is more important than the latest device. It’s like a mousetrap: it’s one thing to buy the fastest mousetrap with the best spring, but if you don’t replace the cheese for a year, if there’s a dead mouse in it from six months ago, there are no mice that are going to walk through that mousetrap. And if they do, nothing’s going to happen,” he said.
“Mousetrap maintenance is far more important than what most corporates, and sometimes government – especially state government – think about, which is this capital purchase, and the consulting firm that’s going to install it,” he said.
Managing growth through challenging times
Prof. Anseel also observed that many start-ups and the entrepreneurs behind them often struggle to manage growth. “There are obstacles when growing the company,” said Prof. Anseel, who observed that as start-ups grow they often encounter structural problems, bureaucracy, red tape, and other internal and external challenges.
Mr Tudehope spoke about his experience in starting Macquarie Telecom Group and sustaining growth over the past 28 years. “In those days, there were very few early-stage funding options at all,” he said. As a result, the business had to be very cost-aware, have a good credit standing, and be very focused on customer quality right from the beginning. “We’re very focused on cash collections cost management. So that really gave us an anchor point that helped us, right the way through our journey for the past 28 years,” he said.
This approach has worked very well for the business, which recently surpassed the $1 billion market capitalisation milestone, cementing its place amongst Australia’s biggest homegrown technology companies. According to Mr Tudehope, the company’s performance through 2020 is evidence that it has focused on the right strategic and operational priorities over the years.
“We’ve invested in certain things like data centres, cloud computing and cyber security. That actually accelerated in 2020… this really has brought the future closer, and really validated some of our investments,” said Mr Tudehope, who noted Macquarie Telecom Group’s experience was probably very different to many other businesses in 2020.
“When I’ve talked to business people who go on their own journeys, I think people tend to focus on the very early stage. But the journey in the middle I think, is the one we found the most challenging but probably the one less talked about,” he added.