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How T-Mobile’s culture powered it to become the world’s most valuable telecom company

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How T-Mobile’s culture powered it to become the world’s most valuable telecom company

On this episode of Fortune’s Leadership Next podcast, host Diane Brady talks to Mike Sievert, president and CEO of T-Mobile. They discuss the role of middle managers and, most importantly, what people in that role shouldn’t do; how AI will zap wireless interference in the future (and what trees have to do with it); and the value of a great hobby.

Listen to the episode or read the transcript below.


Transcript

Diane Brady: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing roles of business leadership and how CEOs are navigating this change.

Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Diane Brady. 

Most of us don’t exactly love our cell phone carriers, and T-Mobile has capitalized on that by calling itself the “un-carrier.” It was the underdog that gave you cheaper rates, more flexibility, no locked in contracts. Well, that underdog mentality and more has propelled it into being the world’s largest telecommunications company at this point. I spoke with CEO Mike Sievert about how he’s done it, how he’s trying to maintain that culture amid a new crop of disruptors, and what’s next on the innovation front that delights him and by extension, should delight us. Take a listen.

[Interview starts.]

Mike, you are president and CEO of T-Mobile. You’re also host of T-Mobile Sidekicks Conversations and I feel like I have to start there because, you know, it’s intimidating to interview the interviewer. So let me ask what what have you learned from that exercise? Because you’re now in your second year, aren’t you?

Mike Sievert: Yeah, well, first I and thank you for having me on. Back at you on being intimidated by interviewing with the interviewer. You know, Sidekicks has been a lot of fun for us. We’ve met with all kinds of athletes and business leaders and thought leaders and just get a chance to give them a voice for the T-Mobile community who follows us, and it’s been a lot of fun for me. We named it after the first smartphone, the T-Mobile Sidekick. And we actually have a pub here in our headquarters called Sidekicks and a lot of the episodes are filmed here.

Brady: With beer. I think the beer has since disappeared in the last few episodes I’ve seen, but that looked like a lot of fun when you were basically sitting, sitting in a pub, having a good conversation with all these folks.

Sievert: Now I’m going to tell you that the beer is actually, a lot of times it’s one of those what do you call it? It’s after the golfer, the Arnold Palmer, where it’s a lemonade…

Brady: You are not drinking on the job. And I will make that clear. Clear to everybody.

Sievert: …and iced tea.

Brady: So, I’m glad you joined us. I do want to start with just pivoting a little off Sidekicks. You’ve talked about what it means to be a great listener. Let’s look at it in the context of being a CEO before we get into what’s been happening at T-Mobile. Tell me a little bit about what you think the qualities are to be a great leader since you’ve now been in the role for four years essentially?

Sievert: For me, this job is about being a steward of our company’s incredible culture. You know, if you think about it, I mean, this is an industry where it’s a team sport. I have scaled competitors who are some of the richest companies in the world. They have national networks like we have. They have brands people have heard of, like we have. And so you have these scaled operators all going at it. And the thing that allows us quarter after quarter after quarter to outperform everyone and outgrow them is our culture. You know, and so ultimately, as the leader, that’s my job to build that, to perpetuate it, to foster it, to jealously defend it and guard it when it gets challenged. That’s the fundamental most important part of the job.

Brady: So it’s been more than a decade since I’ve seen those un-carrier ads. That’s really the way I think of T-Mobile. I know you just had a terrific quarter in terms of customer acquisitions and such. Have you pivoted at all? Like, is it still the same brand promise because there’s so many cheap competitors out there? I don’t have to name all the names. What attracts people right now?

Sievert: It really is the same story. I mean, the un-carrier is about doing more for you and asking less of you. What’s changed over the past four years is that in addition to being that superior value that the un-carrier has always represented, we also, for the first time, have the best product, the best network. And that’s never been true in the 35-year history of this industry. No one has ever been able to simultaneously offer the best prices or the best value, the most customer-centric policies, and the best network at the same time. And that’s a breakthrough for us. And so now we have this, challenge of, first of all, convincing the public that that’s true. And second of all, you know, making sure to attract people against both of these vectors with this customer-loving team.

Brady: Can you first convince me that it’s true? When you say you’ve got the best network, it feels a little bit like world’s best coffee. What are the ingredient of the best network? Is that just a factual…

Sievert: It’s America’s tastiest network.

Brady: Yeah, well, you’re on the Starbucks board. You know about tasty, so. But what does it mean?

Sievert: No, no, it’s a great question. I mean, we measure it a few different ways. Essentially, all the networks reach most people, you know, 98% of the population. And so it’s really about the quality of that signal where we all reach. T-Mobile on average right now, nationwide is nearly triple the speed and capacity of our benchmark competitors. Not 10% better or 20% better, but nearly triple the speed and capacity. And that’s because we leapfrogged everyone in the 5G revolution and got out in front by realizing that 5G would be built on mid-band spectrum and the rest of the industry had to scramble to try to catch up. They’re a few years behind us and they will be for quite some time.

Brady: Mike, those are fighting [words], I feel like I should have a rap battle with you and the CEO of AT&T or Verizon, but that’s to be to be continued. You know, one thing I found really interesting in reading up a little bit about some of the things you’ve done recently is just things like the stock buybacks, the dividend. It feels like maybe T-Mobile’s at a different stage of maturity and development at this point. I mean, take us back a little bit to what prompted you to make that decision.

Sievert: Well, we are a larger scaled operation now, finally delivering on the promises that our patient investors went along with for many, many years. You know, you think about when this un-carrier journey started, we were a $6 billion market cap company, rapidly declining, you know, negative year-over-year growth, negative cash flows, really struggling, a distant number four in the U.S. Today, we’re the world’s most valuable telecommunications company of any kind at something like $220 billion in market cap. And we’re producing an enormous amount of cash flow. And so we can do both. You might say, well, is this company out of ideas on what they can do with their cash? Absolutely not. In fact, we’ve been announcing the most rapid-fire series of partnerships and acquisitions and new initiatives ever in our history this year, while simultaneously announcing our first ever dividend and executing against a stock buyback. And what that means is just that the business model is performing so well that we can do both.

Brady: So what are some of the ideas that personally excite you?

Sievert: Well, one of the things is that we’re expanding what the company offers. You know, we’re using this relationship that we have, these years that we’ve invested in a network and a team and distribution and data and capabilities to expand our offerings. And so these last few announcements that we’ve made have been about plunging the company into adjacencies like fiber to the home. You know, already with 5G, we are the nation’s fifth largest home broadband provider, kind of amazing to think about, and by far the most rapidly growing one. More growth than all the other major providers combined each quarter for the last year and a half. But now we’re going to plunge into fiber and really complement what we offer. Arguably, fixed wireless 5G broadband is about value for a certain segment, maybe single digits of the whole market, but fiber is about quality. Nothing can touch the simultaneous upload and download speeds of fiber to the home and now we’ll be in both pieces of the business.

Brady: You’ll be ubiquitous. You know, I notice that you are on the Starbucks board and that’s a relatively new thing earlier this year. What made you decide to join a board now? What’s that done for you?

Sievert: Well, I had previously rolled off a board in Canada called Shaw Communications due to a merger. And for me, having a leg in another company where I can learn by sitting on the other side of the table, I think helps me be a better CEO. And so I try to have something like that going on so I’m not too insular in my thinking here. I’ve got this wider lens. You can get that by partnerships and by attending certain meetings, but really sitting in a boardroom allows you to widen your view and maybe challenge some of our conventional wisdom around here. Helps me just do my job better.

Brady: You have a lot of different, I mean, obviously you [have], literally a 30,000 foot view, you’re a pilot. I feel like I should, it’s curious, if I’m board member Mike talking to CEO Mike, I could see board member Mike saying, look, do we want our CEO flying seaplanes?

Sievert: Yeah. You know, it’s never come up here, but you have to ask yourself, like, why would a board member say that? Just think about, think it through like…

Brady: Humorless. He would never…

Sievert: They might challenge the idea that if you’re a pilot, you run some risk. What is it, some 1% or less, far under 1% risk of suddenly losing your CEO? But on the other hand, if you bring it up and prohibit it, you have a 100% chance of suddenly losing your CEO. So why would you ever, why would you ever do that?

Brady: That’s true. We must have happy CEOs. You know, I can’t also let it pass, being Canadian that in addition to Shaw, you were also you lived in Canada, did you not? With Rogers Communications. Can I, can I just…

Sievert: I previously served the Rogers board many years ago and then served the Shaw board up until last year. And of course, those two just merged. But the separation in my service was many years.

Brady: Well, much as I love T-Mobile, I have to say, when you get to Canada, that’s the one carrier that notices if you spend too long. So good for you, I suppose. But do you, just out of curiosity, do you notice any difference between the cultures?

Sievert: Well, I love, no matter where I travel around the world, I tend to compare the business culture to the American culture. And I’ll I’ll pit it against anyone I, you know, maybe I’m a patriot, but I love the glass-half full optimism, the smart risk orientation of the American business culture. And we try to make sure that we are exemplars of that at T-Mobile. I mean, you talked earlier about this company growing up. You know, we were a small, scrappy, entrepreneurial, fast-growing company at one point. And you know what? Today we are a large, scrappy, fast-growing entrepreneurial company. It’s really important that we retain all of those attributes that got us here in the first place. The factors of success are different, but the underpinnings of who we are, that’s not something I’m interested in changing.

Brady: It’s interesting how you say stay scrappy when you’re small. I notice that you are also an investor and you’ve been for quite some time an investor, an entrepreneur. Is that important, do you think, for the culture at T-Mobile as well?

Sievert: I want people to have a risk orientation, be willing to step up, speak out, raise their hand, run to the hard problem, and what happens in a really big company is sometimes what people do is they put their head down and stay out of trouble. Just stay out of trouble. Let everything fly by and just hang on to that base salary. That is a mindset that you can’t let creep in to a company. And so culturally what we try and do is make sure that our values are what we recruit around, they’re what we reward around, they’re what we promote people and celebrate around. And it starts with this idea of loving our customers, going the extra mile. And it also has, we have this mantra called “We won’t stop” in our values. And what that means is it’s kind of like a not satisfied, never satiated, never quite happy with where we are, like always striving, kind of mindset. And we celebrate the people that exhibit those traits in our culture because that’s who we are and it’s a mindset that got us to this present success.

Brady: But let me go back a second to you as an investor, an entrepreneur, because I think that’s actually really interesting and I’m sure it does exercise a different muscle for you. Is that you just tell me a little bit about that? Yeah, I know you’re also somebody who’s been very active in the Seattle community. But tell me what, when you get out there yourself and be an entrepreneur or talk to entrepreneurs, it just seems very linked to having an entrepreneurial culture.

Sievert: Absolutely, and, you know, for me, having some small business in my background I think is helpful as a CEO to have the kind of passion around the topics we were just talking about. Now I will caveat, I’m not actively a startup investor, so I’m really focused 100% on what I’m doing here and it takes a lot of time to do that well.

Brady: All right.

Sievert: So I did that more in my past, but one company I started, Switchbox Labs, we sold that to Lenovo. You know, as an example, there’s a number of other smaller businesses that I’ve served. And they have some common traits and they’re things we’ve talked about, you know, thinking big about and in a discontinuous way about solving problems that others aren’t solving, being willing to take smart risks, calculated, thoughtful risks, being able to articulate a story. You think about storytelling. I’ll tell you what, the startups that get funded are the ones that have a great story. And, you know, this essential art of storytelling in business is a commonality between whether it’s the startup community or whether it’s every person’s job at a place like T-Mobile is fundamentally to understand what’s going on underneath the numbers, underneath the PowerPoint and be able to articulate a clear and compelling story about the path forward and about how that translates into thoughtful, calculated risk taking.

[Music starts.]

Brady: Inequality in the health care system is one of the toughest and most critical issues to address. I read a Deloitte report recently showing that mental health inequities alone, if left unaddressed, could lead to staggering excess costs. But we also have a staggering opportunity to address it. We spoke with Jason Girzadas, the CEO of Deloitte, US, which is the longtime sponsor of this podcast. Here’s what he had to say.

Jason Girzadas: We actually believe that the health equity cost to society could rise by up to a trillion dollars by 2040. So this is an economic issue for all businesses. The role of business is to recognize that health equity impacts the workforces of every single business, and it’s needing to be on the CEO agenda and board agendas for all organizations. In our country your zip code can determine your health status, and that’s problematic if you think about the drain on worker productivity, the cost to businesses in terms of the health and well-being of their workforces. Making this a priority from the standpoint of looking at what actions you can take through your organization around health and benefits, as well as how it pertains specifically to the products and services and also the types of partners that organizations team with to address health equity issues broadly. There are resources to look at. The Deloitte Health Equity Institute, which has pro bono data and analytical tools to leverage that are accessible to all organizations to start on this journey of making health equity not just a societal concern, but actually a business priority.

[Music ends.]

Brady: You know, I noticed that you were COO, which is a title that only about a third of Fortune 500 companies have. How was that helpful for you as you were coming into this role? You were very much the executor, I suppose, is one of the ways people look at that role. Was it helpful?

Sievert: Well, both that role and the chief marketing officer role I had before were sort of artifacts of John Legere, my predecessor, his pretty unique approach to leadership. And one of the things that he did was allow me a very wide purview as kind of the number two person in the company throughout that entire journey, and we had a long and thoughtful succession. And so unlike a lot of people that step into a CEO role like I did four and a half years ago, I saw it coming for years and was prepared for that by building a career inside the company the entire time, kind of as the number two person, originally as the marketer and then as the marketer and operations leader. And so that helped me step into the role, I would say seamlessly, except that I stepped into the role on the day we merged with Sprint and created an entire different future for ourselves. And three weeks into the pandemic when we sent everybody home. So it was, it was expected, but nothing about my first couple of years were as I expected.

Brady: Yes. No, seamless might not be the right word. Was there anything in particular you learned from John? I mean, he’s an iconic figure himself. What did you learn from working with him?

Sievert: Yeah, learned and learned. You know, one of the things that’s special about our culture is that what we try to do is listen deeply to and empower the frontline employee, the people who are closest to the customer. Now, companies all over the world say that. What John taught me is how to do it authentically and in a real way, and it was just naturally. He came into this company right away in 2012 and and he said, “It’s not like that we don’t have the answers. The answers are staring at us in the face. No one is listening to these people.” And that, you know, that’s something that I’ll take with me throughout the rest of my career.

Brady: Can you distill any of that into a playbook? I mean, when you talk about inclusive culture, when you talk about sort of empowering the front-line workers, would there be any advice you would give to other people listening to this as to how you do it? I always think part of the beauty of a playbook is you can replicate it at scale and you’re certainly a company that has scale at this point. Any advice on that front?

Sievert: One of the factors you’ve really got to watch is preventing middle management from getting in the way of it. And, you know, again, this is something that we’ve been perfecting first, you know, with John and then in the past few years, and you can never get it right. But you got to remember, like the first fallacy of management is the name. Managers aren’t here to manage things. Managers are here to change things and to inspire people and to provide opportunities and to get barriers out of the way. And what happens in a big company is that people wind up becoming a barrier to the front lines ideas really getting implemented for a variety of different reasons. And so part of the playbook is to figure out how to prevent that. For example, when people are experiencing pain points at T-Mobile, it’s not allowed for middle management to say, “Oh, you can’t run that up the flagpole. You know, you’ve got to talk to only me about that. I will run it up the flagpole for you.” Any manager that believes that they are a barrier to information flow to the ultimate decision makers is failing to do their job at our company and everybody knows it. And, you know, once in a while we have to remind ourselves of that and there will be people trying to control information and they don’t get to continue leading here because people who are experiencing pain points or want to talk about customer pain points or something that’s not right about the employment experience and they want to run that to who they perceive as the decision maker, that should be a friction-free communication process. And one thing that’s some protection for our business, relative to say our competitors, is that you can’t just wake up tomorrow morning if you’re a leader of a company like ours and decide to implement that. Like it’s you have to have for years promote and recruit managers that believe that deeply in their DNA, that believe their job is to empower the people underneath them. You have to celebrate those things when you see it over a period of years to create a culture. And that’s what we’ve been doing for a long time, and it makes us very different and you can see it in our performance.

Brady: Well, one difference, I think, is the fact that you acknowledge the value of the middle manager. I mean, in the last year or two we’ve seen Tesla, Meta, we don’t have to talk about the specific companies, but really when they talk about eliminating jobs, they go after that middle layer as if the middle manager has no real role to play and just represents fat, you know, bureaucracy. To you, obviously, you see a real value in that type of person.

Sievert: Yeah, it’s managing change. You know, for example, I believe that starting with myself, management isn’t necessary to deliver results if all you want are last year’s results. I’m not kidding you. I honestly think if I stepped aside right now and no one replaced me, our company would be just fine if delivering last year’s results was good enough.

Brady: Okay, I’m from the committee and I’m here to tell you that’s not the case. No, I’m kidding.

Sievert: What I’m here to do is to change the trajectory. And for each of my managers who are leaders, what their job to do within their remit is to change the trajectory, to figure out what’s happening that ought to be improved and to get the barriers to improvement out of the way in their area of remit. And so like I said, managers, we have, I have four pieces of my people agenda in this company. And one of them is we want leaders, not managers. That’s what I envision for middle management is leadership and leadership means figuring out how to lift people up and how to get the barriers to real and meaningful change out of the way in whatever your area of remit is.

Brady: Does it matter to you? I want to go into the future, but just before we move on, how many direct reports do you have or does that do you measure by that? Do you think there’s an optimal number?

Sievert: I don’t. And I have had a number of different answers over my years of leading here. Right now I have 12. I think it’s about right for where we are. I have had more at some points, kind of looking at a really flat org, and I have had less. But yeah, we have an SLT (senior leadership team) who reports to me, either directly or indirectly, of 12 people.

Brady: Okay, so let’s move into what the risks and opportunities are going forward. Let’s start with the landscape. It’s been a pretty volatile market. You’ve actually done well, so you know, kudos to you for that. When you look at the landscape right now, you’re very much also the opportunity to be that canary in the coal mine because you see customer behavior. Anything on your radar you’d put on ours?

Sievert: Well, one thing I will say is, I don’t know, if we’re as much of a canary as some people give us credit for because our product…

Brady: I take it back.

Sievert: …is essential in people’s lives. You know, and so like, you’re going to see people ease off on much more discretionary categories before they ease off here. And so, you know, for example, in our most recent quarter, our bad debt rate, which is better than anybody else’s in the industry, was just 1.4%. That’s at pre-pandemic levels. So people are paying their wireless bills and that’s a good thing. We have the luxury of being in a category that’s really important. That being said, we see people slowing down their purchases of smartphones. And so what used to be like a once every year and a half thing is for a lot of people, more like a once every three years thing. That’s partly because the prices of smartphones have risen a lot and partly because they work so well now and partly because the networks are performing so well that, you know, your phone takes advantage of those things.

Brady: Yeah, it’s true.

Sievert: At T-Mobile we actually see people self-selecting up our rate card. And so with flat pricing, more people are buying, our most popular offers are some of our, quote, higher end offers because, you know, they want more of what we have to offer. You know, they they see more value in it. They get more benefits from it. So that’s a really nice development for our business.

Brady: Well and that free Netflix, there’s so much to watch. You need all that bandwidth.

Sievert: Absolutely.

Brady: When you look around the corner, we’ve not talked about AI, I think that sometimes we over index on that as the only innovation, what excites you? What are you looking to do next?

Sievert: Well, I do think, you know, I hate to take it there since you set it up that, hey…

Brady: Is this a softball? Should I…?

Sievert: And every company in the world is asking themselves how they’re not going to miss the moment on AI. I think for us, what’s really important is that we think about it not just about all of the conventional, oh, could we use AI bots to help us with our customer service? Of course we’re focused on those things, but we’re starting to reimagine the future of networks themselves. And, again, we used the 5G discontinuous innovation to go from last place to the world’s most successful company of our kind. We think there’s a chance to architect the next big leapfrog together with a set of industry partners around what an AI-informed AI-enabled networking architecture could look like in the future. So our heads are down really thinking that through because the future is very, very exciting as it relates to the networks ability to give you more and more performance. I mean, ultimately extracting more and more capacity and performance out of a finite set of airwaves is what allows us to continue. That’s the essential fuel of our growth, giving people their insatiable demand for the Internet, wherever they go.

Brady: Mike, what exactly do you mean by an AI-enabled network? What does that actually look like in terms of what we see and feel and experience?

Sievert: Well, think about it this way. We go through our lives minute by minute, expecting our cell phone to connect us with ultimate high capacity at all times. But the world around us is actually changing and so if you’re going down the street and a giant tanker truck goes by between you and the tower, an AI-enabled network will understand that that’s happening and find in real time second by second, a different way to get you the connection that you need. It’s a long-established thing in this in this industry that, believe it or not, this is true for all the providers worldwide. When the trees’ leaves come out in the spring, it changes the radio propagation and we have to make manual changes to how we operate the network in the spring and in the fall when the leaves come and go. These are the kinds of things that sort of represent that, in a world that’s constantly in motion and customers that are constantly in motion, a smarter and smarter network will be able to get you the massive capacity that you need, that insatiable connection that we all want to the Internet in real time, better and better.

Brady: And I picture when you talk about that, I picture a deviceless future in a way, you know, going to some of those movies where you see somebody simply point at the wall and good things happen. Is that a future where T-Mobile can also be dominant?

Sievert: Well, the networks will certainly enable it. And it’s going to be up to the ecosystem to figure out how to take advantage of all this capacity. But one of the things that is emerging is the ability for uplinks and downlinks to both be incredibly robust and to handle massive amounts of capacity. And so, yeah, it’s possible that you could go through the world and have a piece of technology with you that helps you perceive in real time in three dimensions the entire world around you and to aid your perception of it. Now, for me, what I would like is when people walk up to me, I would like my AI to whisper in my ear their name and how we know each other so I don’t embarrass myself. I would like that a lot.

Brady: There’s an app for that. I guarantee it. Last question. And obviously anything else you want to add, but I’m curious where do you get the greatest joy in your life? And you can’t say your partner and kids, but in general you do a lot of different things. What do you find sustains you, energizes you, and excites you through the day?

Sievert: Well, I live in the Pacific Northwest in Seattle, so I love being outside. And that can involve hitting the mountains, hitting the water. We talked earlier about aviation and I made my joke about it’s a pretty essential part of my life. And so I like to be up in the air. One of the things a great hobby should do in my mind is kind of transport you in this case, I guess literally, but metaphorically transport us from the all the concerns of our everyday life. You know, I’m not thinking about cell phone plans or careers or politics or anything else when I’m flying an airplane. I’m thinking about how to do that safely and effectively. And I love that about a hobby. It blocks everything out just for a few minutes so you can live in the moment. To me, that’s really important.

Brady: That’s why they call it flow right? So yeah, yeah, so, so listen, thank you so much. It’s great to talk to you, Mike. I look forward to continuing the conversation.

Sievert: Thanks, Diane. Thanks for the opportunity.

Brady: Leadership Next is edited by Nicole Vergalla. Our audio engineer is Natasha Ortiz. Our producer is Mason Cohn and our executive producer is Hallie Steiner. Our theme is by Jason Snell. Leadership Next is a production of Fortune Media

Leadership Next episodes are produced by Fortune‘s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes

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