WEBVTT 1 00:00:00.280 --> 00:00:01.140 Good afternoon, Richard. 2 00:00:01.140 --> 00:00:03.670 Thank you for finding the time to speak to us today 3 00:00:03.670 --> 00:00:05.100 and share with us the learnings 4 00:00:05.100 --> 00:00:07.370 of running large transformations. 5 00:00:07.370 --> 00:00:09.760 Delighted, Deepak, very happy to help. 6 00:00:09.760 --> 00:00:11.950 line:15% As you think about this whole transformation, 7 00:00:11.950 --> 00:00:14.170 line:15% what were the two or three key challenges 8 00:00:14.170 --> 00:00:16.900 line:15% Centrica was facing as you thought about 9 00:00:16.900 --> 00:00:18.960 launching this large-scale transformation? 10 00:00:18.960 --> 00:00:20.630 line:15% So you had government intervention 11 00:00:20.630 --> 00:00:22.000 line:15% and regulatory intervention, 12 00:00:22.000 --> 00:00:24.190 line:15% the Competitions Market Authority, 13 00:00:24.190 --> 00:00:26.930 line:15% all looking and questioning the amount of price 14 00:00:26.930 --> 00:00:29.630 or the prices that the customers were being charged 15 00:00:29.630 --> 00:00:31.720 and asking whether it was a fair 16 00:00:31.720 --> 00:00:33.690 and properly competitive market. 17 00:00:33.690 --> 00:00:36.040 The second set of drivers, really, were around 18 00:00:36.040 --> 00:00:39.410 this evolution to, what we refer to as digital. 19 00:00:39.410 --> 00:00:42.821 So, our customer base was forever experiencing 20 00:00:42.821 --> 00:00:45.880 a better and better digital experience across 21 00:00:45.880 --> 00:00:48.380 the banks and the telcos 22 00:00:48.380 --> 00:00:50.500 and the other parts of the service sector. 23 00:00:50.500 --> 00:00:53.300 But the energy companies were still, really, I think, 24 00:00:53.300 --> 00:00:56.240 stuck, as in the sort of what I'd describe as, 25 00:00:56.240 --> 00:00:58.470 the fat utility space, 26 00:00:58.470 --> 00:01:00.810 and hadn't moved to give the customers 27 00:01:00.810 --> 00:01:03.870 the sort of experience they were getting elsewhere. 28 00:01:03.870 --> 00:01:07.250 So, we had two real sorts of bit of pressure. 29 00:01:07.250 --> 00:01:10.940 Centrica is UK's largest oil and gas supplier, 30 00:01:10.940 --> 00:01:12.930 has a diverse set of businesses 31 00:01:12.930 --> 00:01:15.637 from lighting lamps in the centre of the city 32 00:01:15.637 --> 00:01:18.760 to energy storage, to connected home. 33 00:01:18.760 --> 00:01:21.330 As you think about large-scale transformation, 34 00:01:21.330 --> 00:01:24.840 what are the key peculiarities that you need to handle? 35 00:01:24.840 --> 00:01:28.550 So, the first big question is, what problem is it 36 00:01:28.550 --> 00:01:31.900 you're trying to fix within which strategic framework? 37 00:01:31.900 --> 00:01:35.221 So, when I joined Centrica in 2016, 38 00:01:35.221 --> 00:01:38.470 the strategy was very clear. 39 00:01:38.470 --> 00:01:40.900 You know, competitive in the energy market in the UK, 40 00:01:40.900 --> 00:01:43.330 competitive in the US energy market. 41 00:01:43.330 --> 00:01:46.270 But really seeing energy as being a future commodity 42 00:01:46.270 --> 00:01:48.930 and therefore more and more commoditized, 43 00:01:48.930 --> 00:01:51.570 so, the shift into being a services business. 44 00:01:51.570 --> 00:01:54.070 Therefore, you sort of found yourself at the heart of, 45 00:01:54.070 --> 00:01:56.560 this is now really about customer experience, 46 00:01:56.560 --> 00:01:59.230 because an energy and production business 47 00:01:59.230 --> 00:02:01.300 is a B to B business and therefore, 48 00:02:01.300 --> 00:02:03.530 we were starting to focus much, much more 49 00:02:03.530 --> 00:02:05.030 on the B to C business. 50 00:02:05.030 --> 00:02:08.210 What we had worked out was that in order to transform, 51 00:02:08.210 --> 00:02:10.840 you had to work out the transform from, to, 52 00:02:10.840 --> 00:02:12.620 right across the spectrum 53 00:02:12.620 --> 00:02:14.750 of people, process and tools. 54 00:02:14.750 --> 00:02:16.310 What were we really trying to be? 55 00:02:16.310 --> 00:02:17.700 It was very easy to say we want to be 56 00:02:17.700 --> 00:02:19.190 an energy services solutions company. 57 00:02:19.190 --> 00:02:20.780 But what did that really mean? 58 00:02:20.780 --> 00:02:23.595 So, when you're kicking off a transformation of this size, 59 00:02:23.595 --> 00:02:27.730 there are just hundreds of questions to answer 60 00:02:27.730 --> 00:02:31.430 as well as working out how you transform away from 61 00:02:31.430 --> 00:02:34.290 those things that you no longer want to be. 62 00:02:34.290 --> 00:02:36.315 Was there anything during this journey 63 00:02:36.315 --> 00:02:38.440 that was a surprise to you, 64 00:02:38.440 --> 00:02:41.600 the good or the bad, that then made you rethink 65 00:02:41.600 --> 00:02:44.180 the journey that you were taking? 66 00:02:44.180 --> 00:02:48.230 I think this, for me, was more about relearning lessons. 67 00:02:48.230 --> 00:02:51.370 So, I think like most of my colleagues, out there, 68 00:02:51.370 --> 00:02:53.215 who do transformation 69 00:02:53.215 --> 00:02:56.550 and (mumbles) large-scale complex changes, 70 00:02:56.550 --> 00:02:58.337 you're constantly relearning 71 00:02:58.337 --> 00:03:02.090 that whole point about having a unity of purpose, 72 00:03:02.090 --> 00:03:05.750 that single common end state that everybody lines up to. 73 00:03:05.750 --> 00:03:08.890 And I would say that I, consistently, have relearned that. 74 00:03:08.890 --> 00:03:11.160 Every time I think I've got everybody lined up 75 00:03:11.160 --> 00:03:12.764 and we're all heading in the same direction, 76 00:03:12.764 --> 00:03:16.760 I discover somebody is just starting to wander off. 77 00:03:16.760 --> 00:03:18.975 I have to go and collect them and bring them back 78 00:03:18.975 --> 00:03:23.380 to make sure that we're holding to that unity of purpose. 79 00:03:23.380 --> 00:03:24.750 So Richard, we talked about 80 00:03:24.750 --> 00:03:26.830 this whole starting of the transformation, 81 00:03:26.830 --> 00:03:28.210 so now that you are somewhere 82 00:03:28.210 --> 00:03:30.190 in the middle of the transformation, 83 00:03:30.190 --> 00:03:33.340 how has the transformation helped you compete better 84 00:03:33.340 --> 00:03:36.860 with the smaller, nimbler competitors in the market? 85 00:03:36.860 --> 00:03:41.085 We have delivered £395 million worth of 86 00:03:41.085 --> 00:03:43.810 efficiency savings over the last three years, 87 00:03:43.810 --> 00:03:46.450 which I think is quite significant. 88 00:03:46.450 --> 00:03:49.620 But we've also, in driving our digital journeys 89 00:03:49.620 --> 00:03:51.760 and the effort to move customers online, 90 00:03:51.760 --> 00:03:54.650 we started the process, we're taking about 91 00:03:54.650 --> 00:03:56.530 28 million voice calls a year, 92 00:03:56.530 --> 00:03:59.420 we were still very much an analogue style business. 93 00:03:59.420 --> 00:04:04.420 As of October 2019, we've removed six million phone calls 94 00:04:04.450 --> 00:04:09.280 from our service estate and we have more than doubled 95 00:04:09.280 --> 00:04:11.570 the number of digital online interactions. 96 00:04:11.570 --> 00:04:14.090 Most of our customers first interaction with us 97 00:04:14.090 --> 00:04:15.820 is online or digital web chat. 98 00:04:15.820 --> 00:04:18.820 So, we've shifted the customer experience. 99 00:04:18.820 --> 00:04:21.740 We're one of only two of the big six, right now, 100 00:04:21.740 --> 00:04:22.830 that is profitable. 101 00:04:22.830 --> 00:04:25.100 So, now if you go to the price comparison website, 102 00:04:25.100 --> 00:04:28.110 when I first joined the business we couldn't get on there 103 00:04:28.110 --> 00:04:31.010 at a price that made us any margin, 104 00:04:31.010 --> 00:04:33.360 now, we're operating at about number five 105 00:04:33.360 --> 00:04:35.640 on the price comparison website, 106 00:04:35.640 --> 00:04:39.200 and probably the top brand, but at number five. 107 00:04:39.200 --> 00:04:41.490 So, we're able to compete at price 108 00:04:41.490 --> 00:04:43.950 and with the quality and the brand 109 00:04:43.950 --> 00:04:45.170 of our service on offering. 110 00:04:45.170 --> 00:04:47.800 So, it's enabled us, really, to stay relevant 111 00:04:47.800 --> 00:04:49.120 and up to date. 112 00:04:49.120 --> 00:04:51.040 But we've another 18 months to go, 113 00:04:51.040 --> 00:04:52.755 so of course, we're into the hard yards now. 114 00:04:52.755 --> 00:04:56.000 And I'm convinced that we can be as good as 115 00:04:56.000 --> 00:04:58.190 the new (mumbles) of the market, 116 00:04:58.190 --> 00:04:59.823 in every department. 117 00:05:00.684 --> 00:05:04.530 And still offer a fantastic customer experience. 118 00:05:04.530 --> 00:05:06.727 So, Richard, as you think about this transformation 119 00:05:06.727 --> 00:05:09.530 and sharing the learnings to others, 120 00:05:09.530 --> 00:05:12.990 what are the key learnings that you would like to share 121 00:05:12.990 --> 00:05:16.215 if another large complex organisation, similar to yours, 122 00:05:16.215 --> 00:05:18.360 were to undertake this journey? 123 00:05:18.360 --> 00:05:21.920 Firstly, having a really clear change narrative, 124 00:05:21.920 --> 00:05:24.130 understanding what and why you're changing 125 00:05:24.130 --> 00:05:26.650 in such a way as you can bring the workforce with you. 126 00:05:26.650 --> 00:05:29.910 We have a very competitive market 127 00:05:29.910 --> 00:05:31.780 with government regulation 128 00:05:31.780 --> 00:05:33.500 and a requirement to stay relevant 129 00:05:33.500 --> 00:05:35.630 and a desire to move into services. 130 00:05:35.630 --> 00:05:38.310 So, a lot of the commercial drives were there. 131 00:05:38.310 --> 00:05:40.400 But, of course, in moving into digital 132 00:05:40.400 --> 00:05:43.800 and taking loads of calls out of the system, 133 00:05:43.800 --> 00:05:47.320 we were going to lose a load of our colleagues, on the way. 134 00:05:47.320 --> 00:05:51.000 And, so, we needed to ensure that our change narrative 135 00:05:51.000 --> 00:05:52.727 was well-understood across the business. 136 00:05:52.727 --> 00:05:54.067 And what was interesting for me, 137 00:05:54.067 --> 00:05:58.360 and this was actually, our employees are also customers, 138 00:05:58.360 --> 00:06:00.610 not just of us, but of everybody else, 139 00:06:00.610 --> 00:06:03.120 so, of course, they were waiting for us 140 00:06:03.120 --> 00:06:06.060 to say, "We need to shift digitally." 141 00:06:06.060 --> 00:06:07.740 'Cause they, almost, couldn't understand 142 00:06:07.740 --> 00:06:09.290 why we hadn't already gone. 143 00:06:09.290 --> 00:06:11.820 I also had to think about capability. 144 00:06:11.820 --> 00:06:14.750 So, one of the other big learnings for me, in this, 145 00:06:14.750 --> 00:06:18.450 was understanding the capability of the organisation, 146 00:06:18.450 --> 00:06:21.140 not just to be, in our case the digital player 147 00:06:21.140 --> 00:06:22.150 we wanted to be. 148 00:06:22.150 --> 00:06:23.470 Did we have those skills, 149 00:06:23.470 --> 00:06:25.380 where are we going to learn them from 150 00:06:25.380 --> 00:06:27.950 and can we therefore build those things 151 00:06:27.950 --> 00:06:28.783 that we're setting out to. 152 00:06:28.783 --> 00:06:30.599 And in one or two cases, we've discovered, 153 00:06:30.599 --> 00:06:33.530 that we've actually bitten off more than we can chew. 154 00:06:33.530 --> 00:06:35.969 That we've set out on a couples of programmes 155 00:06:35.969 --> 00:06:39.800 that are very hard for us to build 156 00:06:39.800 --> 00:06:42.870 and then, subsequently, to consume. 157 00:06:42.870 --> 00:06:44.050 And that would be the next point, 158 00:06:44.050 --> 00:06:47.370 about the ability to consume the change. 159 00:06:47.370 --> 00:06:50.170 So, you can very quickly build a muscle 160 00:06:50.170 --> 00:06:51.580 that says, "We're going to change." 161 00:06:51.580 --> 00:06:52.960 And you build a strong team 162 00:06:52.960 --> 00:06:55.300 and a great set of programme directors 163 00:06:55.300 --> 00:06:58.080 and project managers that are able to build the projects. 164 00:06:58.080 --> 00:07:02.090 The problem then comes when you actually 165 00:07:02.090 --> 00:07:04.470 have too much going on in the business to be able 166 00:07:04.470 --> 00:07:07.070 to consume the change and embed it. 167 00:07:07.070 --> 00:07:09.580 So, therefore the benefits, whether they're in pounds 168 00:07:09.580 --> 00:07:12.070 or processes or people or MPS, 169 00:07:12.070 --> 00:07:14.160 don't get realised 'cause you're struggling 170 00:07:14.160 --> 00:07:16.440 to consume the change you've built. 171 00:07:16.440 --> 00:07:19.760 So, there were a whole pile of lessons in that space 172 00:07:19.760 --> 00:07:22.370 that meant that we had to be really clear on our plan, 173 00:07:22.370 --> 00:07:24.140 really clear on our investments, 174 00:07:24.140 --> 00:07:25.590 really strong control. 175 00:07:25.590 --> 00:07:27.310 Everybody hates governance, 176 00:07:27.310 --> 00:07:29.450 but actually it's that medicine 177 00:07:29.450 --> 00:07:30.930 that you really need to take 178 00:07:30.930 --> 00:07:33.680 to make sure that the programmes all land. 179 00:07:33.680 --> 00:07:34.620 So, Richard, you were saying 180 00:07:34.620 --> 00:07:37.070 that the transformation journey is still ongoing 181 00:07:37.070 --> 00:07:39.720 and there's still about 18 to 24 months of transformation 182 00:07:39.720 --> 00:07:40.870 still left to go. 183 00:07:40.870 --> 00:07:42.480 So, what is still left undone? 184 00:07:42.480 --> 00:07:45.440 The biggest element is the digital shift, Deepak. 185 00:07:45.440 --> 00:07:47.830 So, I like that phrase 186 00:07:47.830 --> 00:07:49.470 and I'm not sure where I've stolen it from. 187 00:07:49.470 --> 00:07:51.680 But, "Build it and they will come." 188 00:07:51.680 --> 00:07:54.050 One of the things that you discover with our customer base 189 00:07:54.050 --> 00:07:55.378 and everybody's customer base is, 190 00:07:55.378 --> 00:07:58.570 you can build all these online journeys 191 00:07:58.570 --> 00:08:00.450 and implement web chat 192 00:08:00.450 --> 00:08:03.130 and, you know, SMSs and all the rest of it, 193 00:08:03.130 --> 00:08:06.560 but if your customers are used to calling you 194 00:08:06.560 --> 00:08:09.280 then it takes quite a lot of effort 195 00:08:09.280 --> 00:08:11.720 to shift the customers over 196 00:08:11.720 --> 00:08:13.990 onto this new infrastructure that you've built 197 00:08:13.990 --> 00:08:16.120 and make the customer experience, 198 00:08:16.120 --> 00:08:18.560 the wonderful customer experience, it needs to be. 199 00:08:18.560 --> 00:08:20.290 So, the bit that we've still got to do 200 00:08:20.290 --> 00:08:21.600 is that digital shift. 201 00:08:21.600 --> 00:08:23.110 Our customers are moving, 202 00:08:23.110 --> 00:08:26.330 our MPS scores in those customer journeys are improving. 203 00:08:26.330 --> 00:08:28.740 There's a bit of me wondering, when we're gonna declare 204 00:08:28.740 --> 00:08:30.990 that the transformation's complete 205 00:08:30.990 --> 00:08:33.930 because, of course, the customer is king 206 00:08:33.930 --> 00:08:35.370 and keeps wanting more 207 00:08:35.370 --> 00:08:37.300 and wants this more seamless journey. 208 00:08:37.300 --> 00:08:39.090 Richard, thank you, for finding time 209 00:08:39.090 --> 00:08:40.860 to share all these learnings with us. 210 00:08:40.860 --> 00:08:42.880 My pleasure, it's been a great partnership 211 00:08:42.880 --> 00:08:44.930 and I think it'll continue for some time.