Profile in Leadership: Skate to Where the Puck is Going
Daniel Hesse, MBA '77
By Merrill Douglas
Before Daniel Hesse took on the top post at Sprint Nextel Corp., he turned the job down. Who could blame him? He liked his position running Embarq, a telecommunications firm spun off from Sprint in 2006. And Sprint was in rough shape, losing wireless subscribers by the hundreds of thousands, thanks to network problems and poor customer service. It was losing money, too.
But living in Kansas City, Hesse knew how much that city depended on Sprint, and how badly the community would suffer if its largest private sector employer failed. He considers corporate leadership a vocation. "I don't think there's any role in the world today that impacts more lives and livelihoods than running a business," he says.
So in December 2007, Hesse became chief executive officer of the nation's third-largest wireless carrier. "I did it because I thought I could make a difference," he says.
Sprint isn't out of trouble yet; for example, it came in last in the latest J.D. Power and Associates' wireless customer satisfaction survey. But people who know him agree that if anyone can put Sprint back on track, Hesse is the one.
"Dan is very competitive. Losing is not an option," says Steve Elfman, president of network operations and wholesale at Sprint, who also worked under Hesse at AT&T Wireless and Terabeam.
"He's an excellent strategic thinker," says Gus Blanchard, Hesse's boss at AT&T during the 1980s and still a personal friend. "He has a terrific ability to look at a complex situation dispassionately, break it down into manageable components, and then decide the right things that need to be done."
Hesse put that ability to work as soon as he arrived at Sprint. He knew what the company needed: big improvements in customer experience, brand identity, and financial performance. But he didn't bring a to-do list. "If you want to be successful, don't come in with preconceived notions for your agenda," he says. "Come in and ask questions and learn."
Hesse's knack for scoping out new terrain comes from long experience. He's spent his career tackling widely varied jobs, including 14 assignments in 23 years at AT&T. "The first thing I do is get my hands dirty," he says. "I conduct a lot of operational reviews, discussions with people who report to me, and people who report to them." At Sprint, he sought out the company's most creative minds and put them on a brainstorming team. As plans started to gel, he used written messages and Webcasts for frequent updates to the entire employee base.
Most importantly, Hesse says, he devised a compensation scheme that rewards employees for achieving corporate goals. "That's what really speaks to people — what they get paid for."
Under his program, as customer service and financial performance improve, bonuses increase. The same set of metrics and the same formula apply to every employee, from Hesse to the people on the front lines. "If I get 120 percent, the clerk gets 120 percent. If I get 74 percent, they get 74 percent," he says.
Sprint made strides in 2008. It launched "Simply Everything," the first all-you-can-eat wireless service to include both voice and data. It introduced the Samsung Instinct, a high-end voice and data device positioned to compete against Apple's iPhone. It rebranded itself "The Now Network," appealing to the public's desire for instant gratification. It started "Ready Now," an in-store program that teaches customers to use their increasingly sophisticated wireless devices. In October, Sprint launched the nation's first fourth-generation wireless network, a mobile broadband data service called XOHM, with initial coverage in Baltimore.
Sprint is building its future on data, Hesse told a packed room in Sage Hall on October 3, when he visited the Johnson School as a Park Leadership Speaker. Voice accounts for 80 percent of revenues and profits in the wireless industry today, he said. But data will drive growth in the future, and that's where Sprint is taking aim.
It's the same strategy that hockey champion Wayne Gretzky used, Hesse explained. "What made him so good is that he skated to where the puck was going to be, not to where the puck was."
If Hesse is right about the future of wireless data, it won't be the first time he's helped reshape the wireless industry. As president and CEO of AT&T Wireless Services in the late 1990s, he sparked a revolution when he introduced Digital One Rate, the first wireless plan to charge subscribers the same rate no matter where they were or how far they called.
Before then, cellular roaming and long-distance charges were so complex, customers never knew what to expect when their bills arrived. "As a result, people didn't take their cell phones with them," Hesse told the crowd at the Park lecture. In airports in the mid-'90s, travelers waited their turns in long lines behind banks of pay phones. In hotels, they used phone cards to place calls from their rooms. "Digital One Rate put an end to all that. It took all that revenue and put it into the wireless world."
Hesse says he innovates because he refuses to accept the status quo. He's lived by that principle his whole career. As an MBA student at Cornell, he talked his way into a summer internship at AT&T, even though that company recruited interns only from Harvard and the Wharton School. "I just don't take no for an answer," he says.
He's made innovation one of the main cultural imperatives at Sprint. But even more important is another imperative: "Do it now." He insists that his people make decisions quickly, based on the data at hand.
"What I will never accept as an answer is, 'I need more time to gather information,' he says. "I've seen analysis paralysis so much in my career, it drives me crazy." The wireless industry changes so fast, the data you gather today will be useless in a month, he says. "It's all about speed, risk-taking, innovation, and using your instincts — your gut."
To encourage innovation, Hesse makes a point of celebrating the occasional failure. "If everything is working, you're not pushing the envelope," he says. A diver who attempts the hardest dives is bound to belly flop once in a while. It's no different in business.
If innovators are athletes, Hesse is a player-coach. He knows how to push a team to do its best, Elfman says. "He'll get on the floor and play, and help you with strategy and tactics, and then he'll back away. He puts a lot of trust in the team that he assembles."
Hesse never wanted to be the kind of coach who sits in a stadium box, calling plays down to the field. Executives who spend their entire careers at company headquarters are "clueless," he says. He prefers to spend his time where the action is. "I get my hands dirty because, if I understand the business, I can ask the right questions."
For the team running a project, having the CEO jump in can be intimidating, Hesse concedes. But his involvement is a compliment, he tells employees. "If you see me walk into a room, just think, 'Wow, what I'm doing is important, because it's where Dan spends his time.'"
Hesse brings out the best in the people who work with him, says Daniel Alcazar, consumer marketing officer at Embarq, who served there under Hesse as head of branding, communications, and community relations. "It's the notion of being very clear on what we're going to do, not being willing to accept failure, and presenting it in such a way that it gets people excited."
A plain speaker, Hesse communicates as effectively with rank-and-file employees as with executives, Alcazar says. At Embarq, people loved that Hesse visited company locations without an entourage and spoke without PowerPoint slides. "Here he was, just him, on stage or at a table with them, saying, 'Let's go. What's on your mind?' And then, 'Here's my thinking,' in return."
Hesse inspires intense loyalty among the people who work for him because he treats them as he would want to be treated by a boss, Blanchard says. "He gives people room to run. They are encouraged to come up with good ideas and go try them out and make something happen."
Some of his former professors at Cornell probably are shocked by Hesse's success, he jokes. One of his pastimes in grad school was working for the business school's student newspaper. "I wrote the column on the bars in town," he says. "I was not the model student."
Things have changed: today, Hesse's work ethic is legend. But he's also still having fun. "The industry I've picked is so interesting," he says. Wherever he goes, he carries a collection of the latest wireless devices, which he loves showing off. And he gets a thrill from seeing a risk turn out well. "When you're right — you took a chance and you innovated, and it works — it is so cool," he says. "You're changing an industry."
The Leader's Role in Building the Brand
Park Leadership Series Speaker Daniel Hesse, MBA '77, CEO of Sprint Nextel Corp. Hesse spoke on "The Leader's Role in Building the Brand" at Sage Hall on Oct. 2, 2008. View the video or download the podcast
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