Facing Reality A Tough One For Sprint
A recent Business Week article discussed the many challenging problems of Sprint Nextel, a distant #3 player in the U.S. wireless market, significantly behind AT&T and Verizon, and losing customers virtually every month.
Sprint is the only vendor of the three offering an unlimited usage plan, and thus faces the costs and network capacity issues related to it. It is either courageous marketing or a sign of desperation. A Bloomberg analyst commented, “They need the subscribers. Unlimited is their only hook.”
- In October of 2011, Sprint launched the iPhone; last to do so among the big three vendors. This is a four-year deal requiring Sprint to buy at least $15.5billion worth of the devices. That’s roughly 30.5 million phones. In the first quarter of 2012, when Sprint had the big iPhone marketing push, they activated 1.5 million units, well short of its goal. Simple math suggests a possible financial catastrophe.
- While AT&T and Verizon are well along in upgrading their networks to 4G services (faster access to multimedia and video), Sprint has upgraded only 600 of 12,000 towers, and not all those upgraded have full 4G capabilities. Obviously, this is a very labor and capital intensive task for Sprint. Net, their network is inferior and catching up is a ways off.
- Another key challenge for Sprint is that as it rolls out 4G, it doesn’t have enough spectrum to be competitive. Spectrum refers to slices of radio waves that carriers purchase and use to transmit data. The problem is that with everything else they are doing, they don’t have enough money to adequately invest in spectrum, resulting in further challenges in improving their weaker network.
- Lastly, for years, Sprint has invested in Clearwire, a company trying to build a wireless network based on WiMax technology, versus LTE technology used in the networks of AT&T and Verizon, and what Sprint is currently rolling out to try to remain competitive. When they started making those investments, it looked like WiMax might emerge as the standard, but the big players have abandoned it. WiMax is now described as the Betamax of the industry. Sprint’s position is that it will try to make the two work alongside each other.
Stepping back, for Sprint to tackle all of these challenges at once simply does not look realistic. Why is it so hard for people to make objective assessments of their situation and adjust and prioritize accordingly?
Here are some key reasons:
- Pride – Their ego will not allow them to objectively assess their plans. In the case of Sprint, they need to set priorities and develop a plan they can afford and can be realistically executed (you would think fixing the network would take top priority).
- Desperation Fogs Rationality – Sprint definitely has its back to the wall. In such situations, panic can set in, and unrealistic actions often occur.
- Critics Clam Up – Often an unrealistic plan is not confronted by direct reports or advisors because they fear the boss driving it will criticize or get rid of them.
So what do strong leaders do to avoid getting into situations where they are pursuing unrealistic plans?
- Encourage Direct Repots and Advisors to Criticize and Be Objective – Make it clear that pointing out the downside is highly valued, and acknowledge it publically when a direct report points out risks and vulnerabilities so people know its expected behavior.
- Encourage Optimistic, Pessimistic and Best Guess Assessments – All proposals needs to be evaluated these three ways, and actively debated. This encourages active discussion of what it realistic.
- Get an Independent Opinion – Before pressing the button on the final plan, try explaining it to an objective third party that you are confident does not fear you and will be totally objective (e.g., a seasoned employee who has not been involved in the process and is notorious for being strong willed and smart).
Best of luck to Sprint, but I am skeptical. Facing reality is harder than it sounds.