Strategy is shaped and constrained by company culture, and a company's culture will negate a strategy if they are not complementary. We examine how TELUS Health has created and maintained an effective culture that has helped to deliver employee and customer engagement, and business results. How does it do it, and what should others learn?
Creating a healthy culture is a key component of success in any organisation. It is particularly important – and challenging – where a company is building a new business operating in a new industry that combines people steeped in an existing cultures. This was the case for TELUS Health in Canada, so we spoke to its then CEO to understand the approach it took.
Three components of ‘Culture’
Whenever we ask our clients what the biggest problem they face is, there’s an excellent chance they will say ‘changing the culture’.
Yet it’s a bit of a coverall statement: what exactly do they mean?
It’s often a bit of a mish-mash of processes, organisation, behaviours and incentives: ‘the way we do things around here’.
Some of this is formalised, through organisation, line-management, how projects are managed and so on. Other aspects are softer – how companies expect people to behave when they are at work: how much autonomy do they have, can they work from home, etc.
To put some structure to this catch-all idea, it can be useful to think about three fundamental components of culture:
- Shared purpose: what are we all trying to achieve?
- Common values: what do we believe we need to be like to get there?
- Processes and behaviours: how do we do things round here?
Looking at these definitions makes it clear why change needs to be led from the top, and why culture change is so challenging.
It needs to be led from the top because you cannot have a credible common purpose that conflicts with what the leadership says it wants, what it values, or how the organisation acts.
Even if you have clear direction from the top, it’s still hard to change because:
- Most of your organisation will start from a position of ‘this is how we previously learned to be – and now you’re asking us to be different from that?’
- Culture essentially means a set of behaviours or characteristics that have been socialised, and thereby enmeshed in a complex human web of habits and expectations.
According to Paul Lepage, President of TELUS Health, “culture eats why for breakfast”, paraphrasing the quote “culture eats strategy for breakfast” in a fascinating conversation we had recently.
What Paul meant was that one of the key drivers to creating a great culture is to ensure that your team is truly engaged with your organisation’s meaning or purpose, or ‘why are we doing this?’ beyond making money.
In the case of TELUS Health, this is ‘delivering better healthcare outcomes’, and in Paul’s case at least, this idea comes over very strongly in every interaction I have had with him.
Author’s note: I was talking to Paul because I am fascinated by the role that culture plays in business success. I have known some of the team at TELUS Health for several years, and I am always struck by the quality and consistency of their culture across all the people I have met at TELUS. Andrew Collinson, Partner and Research Director, STL Partners.
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TELUS and TELUS Health: consistent internal and external KPIs
There is a notable consistency between TELUS’ results on internal measures of employee engagement, customer opinion, and commercial performance.
- Employee engagement: TELUS’ overall employee engagement score consistently ranks within the top quartile and has risen steadily in recent years. TELUS was also named as one of Canada’s Top 100 Employers and Achiever’s 50 Most Engaged Workplaces in 2017.
- Customer recommendation: TELUS’ customers have given it improving ‘Likelihood to recommend’ scores since 2011.
- Market valuation: TELUS’ share price has also grown steadily from 2011.
Figure: TELUS’ share price has also steadily grown
Source: Google Finance, STL Partners
Is this a coincidence, or is there a link between these results? And if it is not a coincidence, how has it achieved this, and what can others learn?
TELUS and TELUS Health
STL Partners has worked closely with TELUS and TELUS Health over the last few years, analysing the healthcare division’s progress in TELUS Health: Innovation leader case study. We’ve participated in its Healthcare Summits in Toronto and come to know several of its executives over the years. The following is a brief introduction to TELUS Health from our 2017 report.
Why TELUS got into healthcare: a viable growth opportunity
Starting in 2005, led by the CEO Darren Entwistle, TELUS executives came to a consensus that just focusing on connectivity would not be enough to sustain long term revenue growth for telecoms companies in Canada, so the telco began a search into adjacent areas where it felt there were strong synergies with its core assets and capabilities. TELUS initially considered options in many sectors with similar business environments to telecoms – i.e. high fixed costs, capex intensive, highly regulated – including financial services, healthcare and energy (mining, oil).
In contrast with other telcos in Canada and globally, TELUS made a conscious decision not to focus on entertainment, anticipating that regulatory moves to democratise access to content would gradually erode the differentiating value of exclusive rights.
By 2007, health had emerged as TELUS’ preferred option for a ‘content play’, supported by four key factors which remain crucial to TELUS’ ongoing commitment to the healthcare sector, nearly a decade later. These are:
- Strong correlation with TELUS’ socially responsible brand. TELUS has always prioritised social responsibility as a core company value, consistently being recognised by Canadian, North American and global organisations for its commitment to sustainability and philanthropy. For example, in 2010, the Association for Fundraising Professionals’ named it the most outstanding philanthropic corporation in the world. Thus, investing into the healthcare, with the aim of improving efficiency and health outcomes through digitisation of the sector, closely aligns with TELUS’ core values.
- Healthcare’s low digital base. Healthcare was and remains one of the least digitised sectors both in Canada and globally. This is due to a number of factors, including the complexity and fragmented nature of healthcare systems, the difficulty of identifying the right payer model for digital solutions, and cultural resistance among healthcare workers who are already stretched for time and resources.
- Personal commitment from Darren Entwistle, TELUS’ CEO since he joined the company in 2000. Based on personal experiences with the flaws in the Canadian healthcare system, Darren Entwistle forged his conviction that there was a business case for TELUS to drive adoption of digital health records and other ehealth solutions that could help minimise such errors, which was crucial in winning and maintaining shareholders’ support for investment into health IT.
- Healthcare is a growing sector. An ageing population means that the burden on Canada’s healthcare system has and will continue to grow for the foreseeable future. As people live longer, the demands on the healthcare system are also shifting from acute care to chronic care. For example, data from the OECD and the Canadian Institute for Health Information show that the rate of chronic disease among patients over 65 years old is double that of those aged 45-64. Meanwhile, funding is not increasing at the same rate as demand, convincing TELUS of the need for the type of digital disruption that has occurred in many other sectors.
That all four of TELUS’ reasons for investing in healthcare remain equally relevant in 2017/18 as in 2007 is key to its unwavering commitment to the sector. Darren Entwistle refers to healthcare as a ‘generational investment’, saying that over the long term, TELUS may shift into a healthcare company that offers telecoms services, rather than the other way around.
TELUS Health: On leadership and culture
To get insight for this report, I spoke at length with Paul Lepage, President-TELUS Health and Payment Solutions at TELUS, on the recommendation of his colleagues, who’d told me that ‘culture’ was of deep importance to Paul. He has been instrumental in setting up TELUS Health, and holds joint responsibility for TELUS Health on the international markets with Dave Sharma, President, TELUS Partner Solutions and Senior Vice-president, Business Solutions Sales. Paul runs the operation on the ground in Canada, while Dave spearheads partnerships and international activity.
I also requested additional support material from TELUS Health, which is included in the Appendix of this report.
This report would not have been possible without their kind collaboration and openness. Nonetheless, its contents represent the opinion of STL Partners, and were not sponsored or commissioned by TELUS.
- Executive Summary: For telcos and others wanting to change culture
- Three components of ‘Culture’
- Culture eats ‘why’ for breakfast
- TELUS and TELUS Health: consistent internal and external KPIs
- Why TELUS got into healthcare: a viable growth opportunity
- TELUS Health: On leadership and culture
- Culture = Purpose and process
- Culture creates a yardstick for performance
- The importance of a compelling ‘why?’
- Fair Process
- Diversity and talent
- Measuring culture and results
- Communicating, listening and reflecting is at least 50% of the job
- Recruitment, partnerships and culture
- The ‘why?’ must be genuine
- Conclusions: TELUS Health – A consistent and compelling culture
- Appendix: Prepared by TELUS Health External Communications
- TELUS’ share price has increased steadily
- Why is ‘why?’ important?
- TELUS’ ‘Fair process’