Fail better: what BT learnt from hitting a brick wall

When telecoms engineers working for BT’s newly branded subsidiary Openreach first visited customers to carry out repairs or install services, they ran into an unexpected obstacle. Doors were slammed in their faces.

Under strict orders from regulator Ofcom to improve access for rival telecoms providers, BT had separated its wholesale division operationally in 2006 (it has since had to go further). To underline its independence, BT had ordered Openreach staff not to refer to the better-known parent.

“It impacts everything we do!” one engineer complained. “All the time people ask us ‘What is Openreach?’ We never had these problems with BT, because they trust BT and just let us in. Now, with Openreach, sometimes people won’t see us at all.”

When they referred up to divisional managers, the front-line staff were told to persist. Memos, induction programmes and team meetings reinforced the point. The watchdog would punish any hint that Openreach was not a separate subsidiary, the company feared. The divisional managers’ managers backed up the message. In fact, they boasted the door-slamming showed Openreach was truly independent. The chief executive sent a message to all staff that they were doing the right thing.

Meanwhile, with every setback, the backlog of work built up, service deteriorated, complaints multiplied and Openreach’s reputation went from invisible to execrable. Eventually, the whole project ground to a halt.

That was when interesting things started to happen.

“Sometimes when you hit a wall and you can’t move, you have finally got the time to think,” says Paula Jarzabkowski of Cass Business School, co-author of a newly published paper based on two years embedded at BT. (She is careful to refer to BT and Openreach only as the anonymous “TelCo” and “AccessCo”.) The study’s findings have relevance for any organisation that has ever found itself constrained by compliance, regulation, intransigent strategy-setting, or public opprobrium.

As I wrote last week, when a crazy strategy comes down from on high, sometimes you have to “manage up” to relieve pressure on your team. At Openreach, though, this was hard. Ofcom’s mandate was inflexible and based on a Catch-22: the strategy would be judged successful if completed to schedule having met all 236 Ofcom undertakings; but the strategy could not be completed without breaching the deadlines and conditions.

Frustration — and hilarity — ensued. Prof Jarzabkowski and fellow researchers wrote another study about how “TelCo” and “AccessCo” met the insuperable paradoxes with dark humour. It was hard not to laugh when, for instance, calls to a freephone number for complaints — including one from the office of a well-known television personality who was moving house — were accidentally routed direct to the manager struggling to implement one of the Openreach programmes. Or when, in a Kafka-esque twist, managers won some wiggle-room from Ofcom, only to find that an internal BT committee set up to police the undertakings refused to let them push through the concessions.

Entrepreneurs celebrate Samuel Beckett’s maxim “Try again. Fail again. Fail better.” After much reflection, BT, too, started to fail towards success. Hitting the brick wall prompted creative thinking about alternative approaches that would still observe the spirit of the overall mandate.

Sometimes, as large projects unfold, they achieve a madcap momentum that can only be stopped by a crisis. Witness Crossrail, the London train line that is running way over schedule and budget, after managers clung to unrealistic expectations. If managers programmed in earlier some of the reflection that happens when such strategies hit the buffers, a crash could be avoided. Similarly, if executives had picked up the small signals of problems with the Openreach plan — those slamming doors — they could have appealed for flexibility and perhaps avoided the criticism, and the fines, that resulted.

Another factor was important in stopping BT from untangling its strategic bind more quickly: its paranoid fear of the political and reputational consequences of failure.

Nobody loves incumbents. It is easy to attack them as bureaucratic, complacent, devious, or all three. Some of that criticism is richly deserved. I have taken a few swipes at BT myself. But Prof Jarbazkowski, who seems well aware of the risk of capture by the subject of her study, has managed the impossible. She has made me feel more than a smidgin of sympathy for the managers in the belly of the BT beast. “We just didn’t see this group as sneaky people, trying hard to get around the regulation,” she told me. “We saw people trying almost too hard to show they were reformed characters.”

andrew.hill@ft.com

Twitter: @andrewtghill