Verizon VZ has shown solid leadership for decades, first in telecom, then expanding to wireless and Internet. But over the past decade the company has been struggling to show growth, leaving some to ask whether the best way forward is with a new CEO.
Growth in the wireless industry is more like a staircase with landings than a consistent upward ramp. Spikes and plateaus are typically driven by the forward momentum of each successive generation of technology — e.g., analog to digital, 2G to 3G to 4G.
Today 5G is on the launching pad. But this time things are different.
The growth opportunities are larger and more expansive than ever before — because wireless, with faster speeds and lower latency, can significantly impact other segments’ transformations, like automotive and healthcare. But Verizon does not seem to be fully in-synch with this new growth wave.
A decade’s worth of change in the executive suite helps tell the story.
After CEO Ivan Seidenberg retired in 2011, Verizon started to struggle to find growth. CEO Lowell McAdam tried several moves over several years (including acquiring AOL and Yahoo), but could not turn things around. He was replaced by Hans Vestberg, who is the current CEO. To be sure, when Vestberg took over, the company was struggling, so there was hope. But things don’t seem to be getting any better.
Verizon today has a strong brand, a strong network — it’s a strong company! But it is also the most expensive player in a competitive arena. And the company is not the leader when it comes to new and innovative thinking in marketing, technology offerings and services.
Risk and Reward
If, in business, companies can be sorted into leaders and followers, then Verizon may fall into the second category. Leaders get the scars, yes, but they also drive the industry and the market. Followers take on less risk, but otherwise they … follow.
Verizon has always been a follower. They have been successful. But they don’t take chances. They market themselves as a leader in quality and innovation. But they don’t really influence the industry’s direction. They reap the rewards from the work others have done.
As much as I admire Verizon, today they need a real kick in the butt to jump start their growth. It has been far too long. Verizon has failed to show real, sustainable growth for a decade. And that’s the responsibility of the CEO.
Recently, we do see them making some changes. For example, they have just juggled their service fee options giving customers greater choice. But the reaction in the analyst and media community was mixed. But will it work?, they ask.
The problem as I see it is this: Seeking creative solutions to spark growth is laudable but changing pricing plans without offering users a noticeable advantage simply will not do it.
Verizon needs to stake out a bold, new position — similar to what T-Mobile TMUS did a decade ago, when CEO John Legere brought them from also-ran (they’d missed the 2G opportunity) to pacesetter.
Currently, the end user sees Verizon as the highest priced alternative among all the wireless and wire line competitors. That was always their strategy: Pay the most, get the best.
But in today’s weak economy, that position isn’t a winner. Verizon needs to be seen as energetic, affordable, influential and a leader, rather than tired, expensive and late to the party. Seen in this light, it’s not surprising that the company is losing market share to wireless competitors like T-Mobile and AT&T.
They are even losing customers to MVNO resellers like Xfinity Mobile CMCSA , Spectrum Mobile CHTR , Optimum OPTL , Cricket, Visible, TracFone, Pure Talk and others — all growing.
That’s why I believe this year is a make-or-break time for current CEO Hans Vestberg. And the clock is ticking.