(2013 Top 10 Story) New Maxis CEO will have to deal with aggressive board

(Originally published May 21, 2013)
Our fourth most popular story of the year took a look at the challenges the incoming new Maxis CEO Johan Dennelind was going to face. A fomer CEO of Maxis rival DiGi, it was widely believed that he was being brought in to rejuvenate the Maxis culture which had become staid, risk-averse and siloed.
 
But we will never know how he would have fared as a week after our article came out, Maxis announced that due to a personal situation, Dennelind was not taking up the position.
 
Amazingly, Maxis then went ahead and appointed yet another ex-DiGi CEO to the post – this time, Morten Lundal. It has only been three months since Lundal took over the hot seat and it is too early to tell how effective his changes will be. Coincidentally, DNA will be speaking to Lundal this morning (Feb 21) on a variety of issues, and yes, we will be asking how his experience has been in dealing with the Maxis board. – Karamjit Singh

  • Handling an ‘aggressive’ board will be key to his tenure, say observers
  • Risk averse company culture needs to be reversed by younger, digital savvy CEO

(2013 Top 10 Story) New Maxis CEO will have to deal with aggressive boardWHAT kind of changes can the market expect from Johan Dennelind, the charismatic incoming chief executive officer of Maxis Bhd?

According to a number of industry people Digital News Asia (DNA) spoke to, that will really depend on the type of changes that the shareholders of Maxis want him to make.
 
And make no mistake, the Maxis board is unlike any that Dennelind would have worked for in the past. [Dennelind was with competitor DiGi Telecommunications for six years from 2004 to May 2010, becoming CEO in April, 2008.] [Corrected to reflect right date as CEO]
 
“I would term them as an aggressive board,” said a Maxis executive speaking to DNA on condition of anonymity.
 
“And, the more insecure they get, the more involved they get,” observed the executive of the board, which has even been known to reject festive season ads that it felt were inappropriate.
 
“This will be in stark contrast to Dennelind’s experience with the Telenor and Vodafone boards which do not get in your way but just manage your performance,” noted a telco executive who has worked with Maxis in the past.
 
Indeed, managing the Maxis board is seen by industry players as a key challenge Dennelind will face and could well define how his performance as CEO will be judged.
 
“They don’t interfere to the point that you cannot make decisions, but Dennelind’s big challenge is to manage them and get them, pardon the pun, ‘on board,’ if he wants to do anything radical or different,” said the telco executive.
 
Principally when talking about board members, Ralph Marshall is the name that everyone mentions. The long-time trusted lieutenant of T. Ananda Krishna, the majority shareholder of Maxis, may be listed as a non-executive director but he and Ananda are said to have gradually become more involved in key strategic decision-making at Maxis.
 
Some of this involvement has bordered on interference. The most cited example is when the Hotlink Bagus prepaid A&P (advertising and promotion) campaign was abruptly pulled by Maxis at the insistence of no less a personage than Ananda, who apparently felt it cheapened the premium positioning of the Maxis brand.
 
“It was not meant to be a brand but somehow Ananda felt it had an adverse impact on the Maxis and Hotlink brands,” said the Maxis executive, who points out that as a product, Bagus and its pre-paid offerings still exists.
 
The driver for this active involvement of the board, according to analysts and telco observers DNA spoke to, has been the anaemic revenue growth that Maxis has experienced.
 
It recorded a revenue of RM8.96 billion in its financial year ended Dec 31 2012, a 1.9% growth from the RM8.80 billion in 2011 which itself was a 1% drop from the 2010 revenue of RM8.87 billion.
 
[RM1 = US$0.34]
 
Behind the revenue growth lies a sense that perhaps the culture of Maxis itself needs to be changed.
 
“That’s why they could have brought in a younger more digital-savvy guy to shake things up. After all, the business itself is going digital,” observed the Maxis executive.
 
Shareholder challenges are one thing but there is also the mid-level management, many who have been with Maxis for more than 10 years and keep the company moving forward.
 
“Getting them on board his agenda will be Dennelind’s key challenge,” noted the Maxis executive.
 
Risk-averse culture

Yet, sensitive to the nuanced changes in the Maxis culture over the past few years, this cadre of capable executives has become more cautious over the years, and of course, the Bagus incident has not exactly encouraged risk-taking and bold ideas.

Another Maxis executive DNA spoke to agrees that, "people are scared to make decisions and the dynamic environment of the past seems to be missing. Things do require a bit of a shake-up," he agrees but adds that for this to happen, the new CEO "will need autonomy."
 
Indeed an industry observer told DNA that Maxis staffers are risk-averse due to the involvement of people at the top. The other thing with running with bold ideas is that in the short term it will hit your earnings, and as a result there is a fear to improvise and make big changes.
 
This has not been lost on its competitors either. “They seem to have gotten bureaucratic and don’t have a team-oriented culture – the various business lines do not work together too well,” said a telco executive from a competitor.
 
Kelvin Goh, the regional telecoms analyst with CIMB Investment Bank, concurred with views on the bureaucratic nature of Maxis.
 
“They are very hierarchical as opposed to DiGi, which is more empowered. You can see this when you send them questions. Maxis needs more time and seem to have a lot of layers of approvals, while you get your responses back from DiGi pretty quickly,” he said.
 
Goh also noted that Maxis revenue growth has been “unexciting” over the years although management has declared its intent to drive a 5% increase in revenue for 2013, which he thinks may be doable, “as its low base works in its favour.”
 
Meanwhile, the Maxis board is said to be well aware of this safe culture that is taking hold, and thus the appointment of Dennelind to rejuvenate the company.
 
The traits that Dennelind has that everyone talks about are his strong people skills and ability to foster a collective and innovative team spirit in the organisations he has led.
 
Famous in DiGi, where he was CEO for six years to 2010, for his relaxed attitude (he used to call his secretary ‘sayang’ or Malay for ‘love’) and flat organisational structure where decisions could be made fast and with minimum fuss, the Maxis board must be hoping some of that rubs off on its culture.
 
Indeed, in his statement on leaving DiGi in 2010, Dennelind paid tribute to the staff at the company, describing them as “some of the most talented, driven employees in Malaysia with an experienced and capable management team.”
 
A former DiGi executive described Dennelind as, “the kind of CEO who is very much in touch with the business, gets to know the staff and understands what they want.”
 
His question is, “Can they [Maxis mid management] adapt to him?” If they do and rally behind him and everyone is united, “the shareholders will be happy because this will have a bottom-line impact,” said the former DiGi executive.
 
What’s clear is that Dennelind, who officially starts at Maxis in July, will have his hands full running the largest cellular company in Malaysia. One also wonders what tone he will set immediately. Will he arrive on that first day in a suit with the obligatory green Maxis tie or will he be dressed casual? Who will adapt to whom first?
 
Related Stories:
 
Maxis claims solid results with 1.9% revenue growth in competitive environment
 
Good synergies in Astro-Maxis IPTV pact: Analyst
 
 
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