Posted by Dan Caruso
February 22, 2008
Zayo Group is a roll-up of fiber-based telecom companies. We began (sort of) in late 2006. We researched every telecom company that had a fiber-based network. We contacted nearly all of them. We met with over half. We were impressed with some of the day-to-day operations. In other cases, we were simply perplexed. In any case, we were privy to the inner-workings of lots of the telecom boom survivors.
In some of the impressive situations, we observed a strong focus on preserving revenue. These teams either learned from the meltdown or, perhaps, they weren’t the ones guilty of ignoring their embedded base during the boom.
Some situations were so-so.
However, we also encountered companies that didn’t pay sufficient attention to disconnects. In a few cases, they didn’t even attempt to tabulate how much revenue was churning.
Somewhat humorous were those situations where management teams insist their churn is low; yet, when pressed to provide evidence, they admit or discover they don’t actually track disconnects. ”But if we did track them,” they often persist, “You’d see how low they are.” Really?
I’ve even heard, “We don’t track disconnects because they are low.” If there was a such thing as a ‘double really?’, I’d use it here.
Another situation we encountered is companies that had the data to support their claim of low churn. The data, however, was flawed. That is, the data was incomplete and/or inaccurate.
Weak processes were often the culprit. Disconnects were happening–they just weren’t captured in those reports whose purpose was to tabulate disconnects. Obviously, this isn’t a good outcome. It happens frequently, as rigorous capturing of disconnects takes discipline, focus and tight processes.
Worse, though, are situations where management’s intent is questionable. Management, at times, becomes too enamored with their desire to show that disconnects are impressively low. That is, they don’t understand that the purpose of tracking disconnects is to provide a complete and accurate picture, regardless of whether the results are good or bad. Tracking must be the actual score of the game–not the desired score. The highest responsibility is for the reports to be thorough, accurate and objective. If the results are not good, address the problem; don’t blur the data.
This sugarcoat tendency happens in various areas of business reporting–but it is likely more prevalent in the area of disconnects than in most other areas. Why? First, ascertaining disconnects and validating reporting is tedious. Second, it is highly unlikely the auditors, board of directors, shareholders or even CEO will tune into reporting methodology until problems become pronounced. By the time the problem is big, it is usually too late. The company now is in crisis mode.
The first-order problem in crisis mode is what to do about the high disconnects and shrinking revenue. Once in crisis mode, the fact that inaccurate reporting contributed to the problem is, frankly, a secondary concern. Ironically, executives that thrive in crisis situations are in their element at this point, even if it was these same executives who caused the crisis by taking their eye off the ball.
Does your company track disconnects? Are the processes tight? Is the reporting accurate? Does your company use the data to measure its effectiveness in minimizing disconnects? If not, what will you do about it?
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