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Global Networks

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Global NETWORKS The Vodafone Ericsson Journey to Globalization and the Inception of a Requisite Organization Christopher J. Ibbott

Christopher J. Ibbott 2007 Softcover reprint of the hardcover 1st edition 2007 978-0-230-55117-6 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published in 2007 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-36206-6 ISBN 978-0-230-59783-9 (ebook) DOI 10.1057/9780230597839 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 16 15 14 13 12 11 10 09 08 07

To my wife Trudie and daughters Lucy and Katie

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vii Contents List of Figures Abbreviations Acknowledgements x xi xiii 1 Introduction 1 Globalization 1 Globalization and Organization 2 Transformation 3 Horizontal and Virtual Organizational Relationships 4 Vodafone in the Wireless Telecommunication Industry 6 Virtual Global Organization Models 9 Strategic Interorganizational Relationships 12 Organizational Culture and Leadership 15 The Messages 17 2 The Birth and Growth of Vodafone and Wireless Telecoms 20 From Racal to Vodafone 20 Telefonaktiebolaget LM Ericsson 24 Merger and Acquisitions 26 Creation of the Global Brand 29 Manchester United, Cricket, and Ferrari 30 Move to the Next-Generation 3G Technology 31 The Telecom Industry Introduction of the Reverse eauction 36 Vodafone to March 31, 2006 37 3 The Journey to a Global Network Starting Positions: How It All Began 39 Vodafone 39 Ericsson 40 The Commencement of the Journey Toward a Global Network 42 Summary of the Inaugural Global Forum and Outcomes 48 Maastricht, Holland 50 Athens, Greece 50 Amsterdam, Holland 51

viii CONTENTS Nynashamn, Sweden 53 Copenhagen, Denmark 55 Cairo, Egypt 55 Sydney, Australia 56 Lisbon, Portugal 58 Bucharest, Romania 59 erelationship 60 The Invisible Organization 68 Persuasion and Leadership 70 Leading Change 75 The Emergent Global Network Culture and Requisite Organization 77 The Ensuing Emergent Requisite Organizational Model 83 Summary 85 4 Adapting the Requisite Organizational Model 88 Moving the Requisite Global Organization On 88 OpCos and Lead OpCos 90 Organizational Transformation 95 Multiple Global Suppliers and Adapting the Requisite Organizational Model 96 Communities and Social Networks 97 Communities and Trust: The Invisible Organization 100 Formalization and Governance 103 Engaging the International Suppliers Globally 106 The Complexity of Interests and the Variation Across OpCos 109 The Creation and Implementation of Network Infrastructure Reverse eauctions 112 The Actual Benefits of Globalization to Vodafone, to the Suppliers, and to the OpCos 114 5 Resetting the Social Capital 117 The Accumulated Social Capital 117 Transformational Change 119 One Vodafone 120 Senior Management May Not Like What It Cannot Formalize 133 Ineffective or Globally Inexperienced Management May Tend Toward Control 134 Cooperation Versus Competition Always Involves Tension 143 Centralization May Be Driven by Stereotypical Experience and a Conformist Culture 145 Yet More Unfinished Vodafone Business Perhaps? 147 6 Building Global Relationships 150 Managing Distance and Time 150 Control, Management, and Leadership 151

CONTENTS ix Organizational and Interorganizational Structure 153 Change and Leadership 154 The Performing Invisible Organization 156 Experiential Learning 158 Management and Leadership Development 159 The Benefits of Age and Experience 163 Culture and Stereotypes 165 7 Conclusions 168 Going Global Is a Transformational Journey 168 Going Global Means Going Beyond International 172 Going Global Means Working Together 177 Going Global Involves Getting People Going 180 Inception of a Requisite Organization 183 Postscript 190 Notes 192 Index 203

x List of Figures 3.1 The Vodafone-Ericsson interorganizational relationships prior to globalization project 41 3.2a Composition of participants in and locations of the global forum meetings 45 3.2b Composition of participants in and locations of erelationship working group meetings 63 3.3 erelationship screenshot 67 3.4 The intra- and interorganizational relationship model: the invisible and/or requisite organization 84 4.1 Lead OpCo intra- and interorganizational relationships model 92 4.2 Multiple global supplier Lead OpCo organizational model 98 4.3 Governance structure 104 5.1 One Vodafone network interfunction relationship 127 5.2 Changes in network interfunction relationships 128 5.3 Global SCM relationships changes in distribution of functions and governance before and after April 1, 2005 130 5.4 One Vodafone SCM functional change 131 7.1 Global networks: journey to globalization and a requisite organization 185

xi Abbreviations Allocentric AMPS ARPU BSC BT CFO CMO CTO eauctions ECB Emptoris ERA F1 FCC GA G-NW G-NW-SCM GPA GPB GPRS GRM GSCM GSM GT&Cs HQ HR HSPA ICT INTP ION IOS IS means one s interest and attention centered on other persons (Webster s Third New International Dictionary), the importance of focusing on others being the insight of game theory Advanced Mobile Phone System, the US analogue standard specification developed by Bell Labs [AT&T] Average Revenue Per User Base Station Controller British Telecom chief financial officer chief marketing officer chief technology officer reverse (web-based) electronic auctions English Cricket Board refers to the company Emptoris, Inc. of 200 Wheeler Road, Burlington, MA 01803, USA Ericsson Radio Systems AB Formula One Federal Communications Commission Global Agreement Global Network Technology Global Network Supply Chain Management Global Purchasing Agreement Global Price Book General Packet Radio Service global review meeting global supply chain management Global System for Mobile Service, digital Global Terms and Conditions headquarters human resources high-speed packet access Information and Communications Technologies Integrated Network and Technology Plan interorganizational network interorganizational system information system

xii ITTM Council KPI Lead OpCos LEOS LOI MHz MSC NMT OpCos RAN RFI RFQ SCM Council SRA TACS Terminals TOA UMTS (3G) UTRAN VO WAP ABBREVIATIONS IT and Technology Management Council Key Performance Indicator Lead Operating Companies Low Earth Orbiting Satellite Letter Of Intent megahertz Mobile Switching Center Nordic Mobile Telephone network, the standard developed by the Nordic Telecom Administration operating companies Radio Access Network Request for Information Request for Quotation Supply Chain Management Council Svenska Radio Aktiebolaget Total Access Communication System, the British analogue mobile telephone standard, based on the US AMPS system telecom industry language for mobile devices or phones transnational organizational architectures Universal Mobile Telecommunications System UMTS Terrestrial Radio Access Network virtual organization Wireless Access Protocol

xiii Acknowledgements I would like to acknowledge and thank Vodafone Group Plc for their sponsorship and support of my continued pursuits in learning and development. The unique experiential learning experience of a formative transformational business on its intra- and interorganizational journey to globalization presented herein is an outcome of such learning and development, and is now presented as a learning contribution for others in business practice and academia. A special thanks to those many former colleagues and those friends from the Vodafone world with whom my team and I had the privilege to interact for about eight years. Without their personal involvement, goodwill, innovation, and their collective commitment to success, the positive globalizing economic synergy outcomes for Vodafone and its mobile network infrastructure supplier partners would not have been possible. A special note of thanks too to Telefonaktiebolaget LM Ericsson, their management, and all those whose foresight and complementary contributions added formative value to this unique and telecom-industry-led globalization project; many of them also remain personal friends today. With the early formative learning of the Vodafone Ericsson globalization experience, the ensuing development similarly engaged many additional committed contributors in each of the companies, namely, Nokia, Nortel, and Siemens, as they were then known. Owing to industry consolidation we now have the formation of Nokia Siemens Networks, and the UMTS business of Nortel becoming a part of Alcatel Lucent. Professor Bob O Keefe, Head of the School of Management at the University of Surrey in the United Kingdom, has spent many hours guiding me with the content and creating a rational structure through which to communicate the experience and the ensuing messages for learning. Bob was the first supervisor for my original doctoral research and remains a valued friend. Finally, to my family, my wife Trudie and our daughters Lucy and Katie, a special note of thanks for their support and tolerance of my continued pursuits in learning and excellence.