Rogers CEO Joe NataleChristopher Katsarov/The Globe and Mail
There's something reassuring about Joe Natale.
He's the family man who annoys his daughters by singing Bruce Springsteen lyrics badly.
He's the guy everyone knew from his days at Telus Corp., where he had a knack for making customers happy and saving money at the same time.
Above all, he's an unflashy Canadian who doesn't go out of his way to seek attention or bowl you over with charisma. And that's exactly what Rogers Communications Inc. wanted in a new chief executive officer, the fourth in its history.
In 2013, Nadir Mohamed, the man who'd taken over after Ted Rogers's death in 2008, stepped down unexpectedly with no heir apparent in sight. Then, for nearly three years, the company was run by Guy Laurence, a domineering Brit who enjoyed the limelight, could be seen courtside at Toronto Raptors games, and arranged for all-staff meetings at the Rogers Centre baseball stadium so that he could speak directly from a stage to thousands of employees.
Now, the company has replaced Mr. Laurence with a very different man. And Mr. Natale is acutely aware that his predecessor's style and tactics got him into trouble with the Rogers family and, ultimately, helped to get him fired.
There is stagecraft at work for an hour-long interview with The Globe and Mail, Mr. Natale's first sit-down with a reporter since taking over in April. Surrounded by images of Ted Rogers – a framed photo here, an oil portrait there, a copy of an authorized biography on the shelf – and seated in an airy 10th-floor boardroom named after the late company founder, Mr. Natale speaks of his mission to connect customers with loved ones, not just hawk cellphones and internet plans.
He recounts carefully crafted family anecdotes. There's that one about the ice storm when he wondered how to save all the food in the fridge while his three daughters worried about the WiFi going down, for example. And he's quick to reference "the spirit of Ted," later saying that's what persuaded him to join the company after a two-year absence from the telecom industry.
"The most exciting part of coming to Rogers was the opportunity to build on Ted's legacy and help to write that next chapter," he says. Mr. Natale, 53, spent more than a decade in senior roles at Telus Corp., including a year as CEO of the Rogers rival, before leaving in 2015, but says now, "In a short period of time, this place has become my home."
He's polite and thoughtful. He talks about creating "memorable moments" for customers, but he himself can be hard to know. He doesn't have a Ted Rogers "story," though he shared several meals with the colourful founder before his death. "Not a specific story – more just a general feeling of sheer admiration for the courage and entrepreneurialism that he exhibited."
After co-founding his own management consulting company at 26, then selling it to KPMG and joining that firm, Mr. Natale, an electrical engineer by training, eventually landed at Telus, where he took on a number of high-profile roles.
With his reputation for steady competence and his tendency to rely on corporate clichés, Mr. Natale also stands in contrast to the company's namesake. Ted Rogers, the entrepreneur known at times for flashes of temper who took delight in big stunts and risks, was driven by an obsessive determination to carve the Rogers name into the bedrock of Canadian communications and media. Now, almost nine years to the day since he passed away of congestive heart failure on Dec. 2, 2008, his empire looks secure.
His heirs control the company through a voting trust that owns 91 per cent of the voting shares and its stock is soaring. Its operational results are better than they've been in years. Rogers is signing up more new wireless customers than its biggest rivals, it has a plan for a sophisticated new internet protocol television (IPTV) platform set to roll out next year and, in the meantime, its high-speed internet product is helping it fend off a growing threat to its residential business as BCE Inc. builds fibreoptic service directly to customers' doors.
Yet, Mr. Natale was hired for a reason. Rogers has momentum, sure, but the board picked him to extract more profit from a company dragged down at times by a still-bloated management structure afflicted by lack of accountability and saddled by some bad decisions. It's not a turnaround situation, but expectations are high for the new CEO, who was named to the job in October, 2016, but unable to start for half a year due to his non-compete agreement with Telus.
For months, he observed Rogers from close by – he and his wife, Melissa Martin, and their youngest daughter, still in high school, recently relocated from Oakville to Rosedale, a 10-minute walk from the Rogers headquarters. Once he was finally on the job, he quickly made some tough calls and is now working to install a professional class of leaders to take Rogers into the future.
"Too many organizations want to do everything, invest in everything, try everything," Mr. Natale says. "In an organization like ours that has an incredibly entrepreneurial culture, I don't want to dampen that innovation. [But] at the same time, we have to make the right bets."
Mr. Natale was one of the key architects of Telus's customer-first strategy, which the company implemented almost a decade ago and has led to consistently low levels of wireless subscriber turnover, known as churn. Keeping customers on board is a critical factor in managing costs, which Mr. Natale knows well.
"What's successful in one place won't necessarily make you successful somewhere else. You have to adapt to what's unique and specific in that environment," he says of his background with Telus.
But he's already imported a few of his techniques from his former company. Sources say he has introduced a new measurement to track customer satisfaction, known as likelihood to recommend, which is based on the idea that the only thing that matters is whether a client would tell a friend or loved one to use your service. Mr. Natale also promotes his belief that problems should be fixed in one call, another tactic he championed at Telus.
"In this past quarter, our call volumes went down just over 10 per cent and on top of that our first-call resolution has gone up 5 per cent," he says. "That's the math I'm after."
Mr. Natale also determined that a "reset" of the company's enterprise division was in order and sources say he began cutting jobs and investment related to some of the more complex product lines at that unit. This, along with other cost cutting at the company, is partly in support of an effort to funnel capital to invest in wireless amid signs Rogers needs to catch up with Telus and BCE, which share a network and have been pouring money into infrastructure and newer technologies.
By August, Mr. Natale laid out his three-year strategy for the board of directors, which approved his vision after a series of late-summer meetings. He has six priorities, including improving customer experience, investing in networks and fostering a strong corporate culture along with social responsibility.
Perhaps his signature priority is to "drive profitable growth" in Rogers's core businesses, which he sees as wireless, the connected home and a media business anchored in sports ownership. He's fond of the Toronto Blue Jays and the National Hockey League rights and also believes in "fiercely local" broadcast content, particularly radio stations. (Rogers's magazine-publishing business, which is struggling amid industry-wide advertising declines, is "a challenge," he acknowledges.)
The idea of increasing profit while also pursuing growth isn't exactly novel. "The strategies in our industry are all relatively similar to some extent," Mr. Natale says, so, "It really is about execution."
And that happens to be what he's known for.
"When Joe was at Telus, he was engaged in cost containment by bringing churn down, and that naturally boosted margins," Scotia Capital analyst Jeff Fan says. "I think he's a strong operator. He knows the key performance indicators that drive value for shareholders and I think he's very focused on those."
Getting "back to basics"
One of the first places at Rogers where Mr. Natale turned that focus was its enterprise services division. It's a relatively small part of the business – Rogers Business Services, which sells data-centre and fibreoptic connectivity services, accounted for less than 3 per cent of total revenue in 2016 (although that publicly reported sector is only part of the broader enterprise unit). But it's one with as-yet untapped potential.
Rogers has historically lagged its telephone-company rivals in serving business clients and the company has been trying to change that for years now. Mr. Laurence, who was let go in October, 2016, made growth at the enterprise unit a key priority of his tenure. He installed former Cisco Systems Canada Co. head Nitin Kawale to run the division and they had ambitious goals to sell more sophisticated products and take advantage of the company's role as underdog.
The fact that Rogers does not have to protect legacy lines of business, such as large business land-line deployments, means that if it could undercut its competitors and steal customers, it would both grow its own revenue and take a bite out of the healthy margins and cash flow BCE and Telus enjoy on those businesses.
Rogers launched a range of cloud-based networking products intended to replace outdated IT and communications services, as well as a range of cybersecurity solutions. But the more sophisticated products were also more complicated to market and sell and sources say they did not gain much traction.
Instead, to hit ambitious growth targets, Mr. Kawale's division relied heavily on sales of wireless services to enterprise customers, which has underpinned the majority of the revenue increases. Much of this came not from large corporate accounts – where the employer pays for workers' devices and service – but from employee purchase plans (EPPs), where individuals pay for the service but receive a discount based on a rate Rogers negotiated for their employer.
The increasing reliance on wireless at the enterprise division created internal tensions at Rogers as executives at the consumer division felt it was undercutting their business and leading to lower-revenue customers.
By the time Mr. Natale took over, it was clear the enterprise strategy wasn't working. Mr. Kawale, whose departure was announced in May, was the first casualty of a shift in direction. Sources say that in the months after his exit, waves of layoffs followed, beginning with a round of cuts at the vice-president level, followed by directors and so on, down to less-senior employees, as entire teams supporting certain products were let go. Capital was pulled from many initiatives, although Unison – a wireless service to replace the office land line that has proven popular with small businesses – was apparently spared.
The new Rogers CEO – whose first role at Telus in 2003 was leading its enterprise solutions division – argues that with just 15 per cent of Canada's $16.4-billion enterprise market, "there's a big opportunity there."
"I think our enterprise business has been historically too focused on revenue and not focused enough on profitability. We're looking to get back to basics and build strength in the sales force," Mr. Natale says, adding that means deciding as a team what "critical priorities" to focus on. "That, by definition, means there are things we will not do or stop doing."
"It's about having products that are easier to sell, easier for our customers to buy and easier to serve and support, that fundamentally meet the needs of our customer in enriching and enabling their business."
Wireless services remain an important part of the enterprise business, he says, and while he wouldn't comment specifically on plans to pare back discounts for EPP accounts, he allows, "Where there have been circumstances of contracts that have been sold with very little profit, it warrants a review. It warrants a discussion."
Meanwhile, the company has started earmarking more money for its wireless networks amid signs it has fallen behind, with recent third-party tests showing BCE and Telus now beat Rogers on download speeds and other network-quality indicators.
Ultimately, Mr. Natale's biggest challenge might be solving some of Rogers's perennial problems: figuring out how to fix nagging customer-service issues and wrangling the unwieldy bureaucracy that takes root when a company grows to 26,000 workers, about half on the front line dealing with clients and the others in office roles. At almost 60 years old, the company has many employees who have been there for decades, some of whom have built mini-centres of power or who have developed friendships with members of the Rogers family, and who don't appreciate being challenged.
To tackle that, Mr. Natale says, "You have to set the bar very high around what's important in the culture … My goal is to set an environment for that high-performance culture that's rooted in a meritocracy, that's rooted in straight talk and transparency, in providing a compelling vision of the future, in diversity and openness, opportunity for all, and is a place where people can thrive."
He sees the job as "an opportunity to set Rogers up for the next generation," and he's not talking about the Rogers family. "I feel my greatest responsibility is to set the table for the people who come afterwards. I've said very clearly that one of my goals is to create a management team with strong talents and succession so the next CEO of Rogers comes from within the organization. And so the next leadership-team succession candidates come from inside the organization."
For now, he's still building his own leadership team. He hired Dean Prevost, the onetime president of MTS Allstream, to run the enterprise business unit. Mr. Natale says Rogers is within days of naming a new chief technology officer to replace Bob Berner, a 32-year Rogers veteran, who retired at the end of the summer.
He still doesn't have a permanent candidate to replace Dirk Woessner, the well-regarded president of Rogers's most important division, the consumer business unit, which includes the vast majority of cable, wireless and internet sales. Mr. Woessner announced in July that he will return to his native Germany to take over as CEO of Deutsche Telekom AG's German operation early next year. Mr. Natale says Phil Hartling, who has been with Rogers for more than a decade, will fill the vacant role on an interim basis.
But it seems Edward Rogers and Melinda Rogers, who are the most involved with the company out of Ted Rogers's four adult children, will not resume formal operational roles, as they had before Mr. Laurence's tenure. Removing them from those positions was seen as one of the first moves that set Mr. Laurence up for a rocky relationship with the Rogers family. Mr. Natale is diplomatic when asked about the siblings, praising them both as excellent and supportive members of the board of directors, but suggests he's got a strong management team without them. "We'll continue to build that talent as we go forward, and it's the right management team for the business."
One of his first moves as CEO was to restructure the business units, eliminating a separate division that Mr. Laurence had created to handle customer service. Responsibility for customer experience is now meant to permeate every division and factor into every employee's job.
He sends regular companywide e-mails with customer-service horror stories (along with some accounts of successful subscriber experiences). "Because a problem is a treasure," he says. "It's an opportunity to solve something and that's part of the cultural imperative too."
"When it hasn't gone well, we go back and decode it and say 'if we'd only done these three things differently, we'd have a very different outcome, so let's go fix those three things once and for all,'" Mr. Natale says, adding "There are not three or four big things – there are literally hundreds or thousands of little things we have to fix and that's the mindset we have to have. Therefore, it's a team sport. It's not something I'm going to do on my own."
Fixing such pervasive, systemwide problems is a daunting task and others have failed before him. But the powers that be at Rogers are convinced they have – finally – found the right man for the job. "Everyone likes him," says a source close to the board. "He's smart. He knows what has to be done."