Posted by Dan Caruso
May 13, 2010
Posted by Dan Caruso
March 30, 2010
Yesterday, Telecom Ramblings did a post on ( EBITDA-Capital ) / Revenue. The question being raised is whether this is a good metric for overall financial performance. IMO, the short answer is NO.
I wrote a series of posts on Value Creation some time back. Unfortunately, the financial metric that matters most is a bit more complex than ( EBITDA-Capital ) / Revenue. You cannot sidestep the Value Creation equation.
Take three companies, all of which have a ( EBITDA-Capital ) / Revenue of 25%.
1. Company A might be knowingly passing up good NPV projects because it desires to generate cash. Why? Perhaps they have a debt maturity issue. Perhaps they desire to pay cash dividends. Perhaps they are “dressing themselves up to be sold”.
2. Company B might be doing this because their business is in the maturity phase. Revenue might be stagnant or perhaps in decline. Milking the business is the only way to extract cash flow (and thereby create value) for their stakeholders.
3. Company C might be pursuing at a double digit rate. Perhaps they are funding all the good NPV opportunities they see, so investing more isn’t an option. However, despite their impressive 25% OCF margin, they are growing as well. Obviously they are creating more value than those two businesses above.
I could name a telecom company in each of the categories above.
Take three other companies, all of which have a ( EBITDA-Capital ) / Revenue of 0% (or perhaps even negative)
1. Company A might be funding bad NPV projects. Why? Perhaps they don’t know it. Perhaps they are too enamored with revenue growth, and are hiding behind an inappropriately large capital program.
2. Company B might have no choice. Their business is struggling and they are trying to fix it. Management might be doing a good job, but their backs are up against the wall.
3. Company C might be growing at a double digit rate, and doing so on the backs of strong NPV opportunities. Sure their OCF might be zero or negative, but their business is growing in value at a pace that far exceeds the discretionary expenditures.
This is why I focus on the Value Creation approach. It ties growth and enterprise value together with Operating Cash Flow. Make sense?
Posted by Dan Caruso
March 19, 2010
I am typically somewhat skeptical of overly structured communication programs in favor of the theory developed in the early days of Hewlett Packard (and later popularized by management guru Tom Peters) termed “Management by Walking Around”. The idea behind the style is that by spending the majority of time with employees, customers, and suppliers, management will have a solid grounding from which viable strategic direction can be set. However, there are two practical difficulties with this approach. First, as working managers with our own deliverables, we can’t spend our whole day speaking with our constituents (employees, customers and suppliers) – as much as we might like to. Second, “walking around” is problematic when many of the constituents are in different geographies.
So, I like the idea of the 9-9-9 sessions. It provides an opportunity to speak with managers that we don’t generally bump into in the hallway and has given me insight into some very real and specific challenges. While I have only held a handful of sessions so far, below are some of the common themes arising to date.
1) ZEN does a great job of communicating appropriately and employees have a good understanding of the strategy and what they need to do to create value
2) zColo has had some de-integration / integration challenges (to be expected), but is actually more cohesive and focused than I would have hoped given its short history as a stand-alone business
3) ZB is very customer focused (this came across consistently from each conversation)
4) All of the businesses (ZB, zColo and ZEN) have process challenges that need to be addressed (provisioning, network inventory, data management, etc)
5) We (Dan / Ken) need to do more Zayo Group communication
I hope to continue these sessions and through these conversations encourage an ongoing dialogue with employees that will help me understand our specific challenges. With a better understanding of these challenges, I can better support our operational management and allocate resources to where it provides the most value.
Posted by Dan Caruso
March 18, 2010
I’ve had several 9-9-9 Sessions. Here are a few interesting comments that came up:
1) ZB is very good at big project implementations. Very impressive how the broad team comes together to focus on these. However, ZB needs to improve on the smaller, more routine orders. (ZB)
2) ZEN regions are confident they will be able to create value through local strategies that leverage fiber assets (ZEN)
3) It would be helpful to have a Roadmap for on-boarding new employees. (ZEN)
4) One of the challenges is to eliminate job security fears that employees feel when we do additional acquisitions: “Am I going to lose my job when we consolidate?” (ZB) (See my perspective below)
5) Some ex-Fibernet customers do not know who their ZB Account Executive is. They should reach out to all customers. (From zCOLO, though comment about ZB)
6) A year ago, staffing and communications was a problem. However, we have made significant progress in both areas. (ZB) (Dan editorial—this comment almost certainly doesn’t apply to many areas within Zayo)
7) Optronics inventory is well understood. However, fiber inventory isn’t. We are good at seeing routes on a map, but haven’t captured reliable data on where we can splice into the fiber or excess fiber capacity. (ZB)
Several people cited the confidence and respect they had in their specific management teams. Most people expressed satisfaction in what they are doing, and they feel Zayo offers a good long term fit for them. Some people were complimentary of the work environment, citing “open and honest culture”. Other people warned about certain aspects of the culture—with the need for management to foster more open and respectful communications. Likewise, some people feel like they are empowered to get their job done, while others feel stifled by the need to participate in too many lengthy meetings.
On the job security question, I suggested that this is best handled through direct conversations with lines of management. Many people have little to fear—and it would behoove their line of management to communicate this. Others might not be able to get the reassurance they might be looking for—I caution management against giving their employees a false sense of security. Zayo Group is growing organically—and I expect this to continue. This is a positive fact that helps job security. However, the fiber-based telecom industry will consolidate—and jobs in certain areas of telecom will reduce. This might be discomforting, but it is a reality that all telecom professionals should consider.
The sampling is very limited at this point, so I caution against over-reacting to the positives or the negatives.
Posted by Dan Caruso
March 17, 2010
Blame Suzy Welch. She wrote a book on “10-10-10: A Life-Transforming Idea”. Her meaning—though different—is interesting. I’m not sure why it took a whole book (instead of a blog post) to describe it. Maybe because her idea is Life-Transforming. Or maybe because her husband’s name is Jack Welch.
In any case, I decided it best to change the name of my sessions to 9-9-9. What am I going to do with the 3 extra minutes? Last week, I wrote a blog post describing the “10-10-10 Sessions” . Ken desGarennes, Zayo’s CFO, and I are having sessions with senior team members to learn more about the inner-workings of Zayo. Thanks to the suggestions of one of our readers, I am also going to tweak the format.
The new agenda will have 3 nine-minute sections, where the first section is titled, “You and Your Role at Zayo.”
1. “You and Your Role at Zayo”
2. “Constructive feedback to Help Me do My Job Better”
3. “What Questions are on Your Mind?”
During “You and Your Role at Zayo”, we will cover:
The “Constructive Feedback” segment is meant to entice you to share your suggestions and ideas. These can include what Zayo does well…what we need to improve…and what opportunities we are missing.
“What Questions are on Your Mind?” is your opportunity to ask questions. Don’t be shy.
Posted by Dan Caruso
March 12, 2010
On Monday, I announced that Zayo Group will begin a new employee communications program. The program is likely to have four components:
Over the past three days, I summarized the first three. Today I will cover Bear Chat.
For those of you who would be disappointed if I didn’t come up with a sarcastic line about the name, Bear Chat comes from combining the Bear (my affectionate nickname) with Chat (as in Chat Room). Very creative, don’t you think?
The format probably will require some experimentation. It is likely to be ad hoc sessions about twice a month, where I set aside an hour to hang out in a chat room. These might not be planned in advance…it might be announced a few hours in advance. We might blast an email and anyone who has time and desire to hop into the room would be able to. Given the format, we might need to limit attendance. This will be the experimental part of the Communications Plan, but if Kate Geosselin can hold a chat session, I suspect I can as well. I have no idea if Kate ever held one, nor have I ever watched her show. I do follow her via TMZ’ web site.
Employee Communications is extraordinarily important. Remember, it is more important for the hosts of these sessions to listen and learn than it is for them to talk and educate. I encourage all Zayo leaders to step up their communications. Please feel free to piggyback on any of the formats above—or invent your own. If you use the 10-10-10 format, please respect that it is trademarked, copyrighted, and patented. Royalty checks should be sent to www.bearonbusiness.com.
Posted by Dan Caruso
March 11, 2010
zTube will be launched on an internal Zayo Social Network (and perhaps some will find their way to Bear-on-Business). zTube will feature 3-5 minute clips on topics that might interest Zayo employees. Examples of topics are:
For those of you who are common-sense challenged, the zTube name comes from combining the Z from Zayo with the Tube from YouTube. :)
Once we get this going, I will encourage employees from throughout the company to submit business-pertinent video clips to post to the site.
Posted by Dan Caruso
March 10, 2010
I will repeat my opening from yesterday. Employee Communications is extremely important. The flow of information should be two-way…with the senior team making sure it is doing at least as much listening and learning as they are talking and explaining.
Yesterday I introduced 10-10-10 Sessions. The 10-10-10 format might be unique. The next part of the Communications Plan will be round table sessions. My guess is many of you participated in this format in the past. It is straight-forward. We will invite 8 – 10 people to participate. Either Ken or I will host the session. We will talk about whatever the group wants to discuss.
For those of you who are geometry-challenged, the Round Table title comes from the notion that many of these sessions take place at a table that is round. :) At the risk of confusing our astute team, many of our sessions will take place via conference call or, perhaps, a rectangular table.
I will also repeat my closing from yesterday. Team success and Great Culture are every employee’s responsibility. The round table sessions will give many of you the opportunity to provide valuable feedback and perspective. Please be candid and constructive with us.
Posted by Dan Caruso
March 9, 2010
Employee Communications is extremely important. The flow of information should be two-way…with the senior team making sure it is doing at least as much listening and learning as they are talking and explaining.
As part of Zayo Group’s Communications Plan, we are rolling out 10-10-10 Sessions. You might be interested in the origin and history of the 10-10-10 format. If so, I will provide it here: I made it up. So, please bear (no pun intended) with me if we need to modify.
10-10-10 is a one-on-one session. Senior team members will be invited to participate. If you are invited and are uncomfortable participating, please let us know. The sessions will be either with me or with our CFO, Ken desGarennes. We spend 30 minutes, spending 10 minutes each on the following topics:
• “What are your career objectives and how can Zayo better help you meet them”
• “What constructive feedback do you have re: Zayo? That is, what do we do well that we should do more of…and what do we need to improve? And what opportunities are we missing?
• “What questions do you have for Dan or Ken?”
For those of you who are math-challenged, the 10-10-10 title comes from 10 minutes on each of the three areas. 
Team success and Great Culture are every employee’s responsibility. These sessions will give many of you the opportunity to provide valuable feedback and perspective. Please be candid and constructive with us.
Posted by Dan Caruso
March 8, 2010
In the Employee Surveys, a message we hear consistently is that employees crave more communication and information. I, too, crave more communication and information. So let’s kill two birds with one stone.
Over the next few weeks Zayo Group will begin a new employee communications program. The program is likely to have four components:
We will describe each of these over the next few blog posts.
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