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Leading Shareholder Value at Verizon
In 2011,while preparing to take the reins at Verizon from its longtime leader Ivan Seidenberg, incoming Chairman and CEO Lowell McAdam considered the challenges facing his company as he began to establish his top priorities. One priority was for the company to build a business as good as its networks.
“It was perfectly clear to me that Ivan had assembled an amazing set of assets — the best wireless, fiber-optic and global IP networks of anybody in our industry,” McAdam said. “But our record of value creation hadn’t matched that level of excellence. It was incumbent upon me and my leadership team to fully exploit the potential of those assets to drive long-term shareholder value.”

McAdam met with Chief Administrative Officer Marc Reed and Chief Financial Officer Fran Shammo to determine the best way to drive shareholder value. For Reed, “the only way to truly transform the company was to engage the entire senior leadership team in the value-creation process.”

To do that Verizon partnered with Duke CE to design and develop a customized program around the core tenets of shareholder value. During a period of two months, the design team conducted extensive interviews with Verizon executives and analyzed 10 years of financial data to develop a clear strategic imperative based on the need to improve shareholder value. From this research, the team developed a two-day course called Leading for Shareholder Value.

In addition to strategic content and facilitation from Duke’s external faculty, the program’s success hinged on the involvement of Verizon’s C-suite executives as leaders teaching leaders. McAdam signaled his commitment to the program by leading the first session, which focused on institutional and cultural barriers to driving shareholder value, as well as the wrap-up segment of every class.

By participating in every class, McAdam was able to communicate to all senior leaders his views on the need to eliminate Verizon’s silo mentality to better leverage the company’s assets. He also tapped Shammo to lead an hour-long segment called “What’s Getting in Our Way?” Several top Verizon leaders participated in an executive panel to engage teams in enterprise read-outs on the systemic challenges facing Verizon.

McAdam made attendance mandatory. Between February and July of 2011, 10 sessions accommodated Verizon’s entire senior team of 300-plus individuals. Every attendee was required to submit an individual accountability plan listing the actions he or she intended to pursue to create shareholder value. These plans were digitized into yearbooks and provided to Verizon’s top business and functional leaders for review and follow-up.

Verizon is driving the accountability for shareholder value deeper into the management team by deploying a Leading for Shareholder Value course to more than 2,000 director-level employees. In partnership with Duke CE and business strategy company BTS, a blended architecture was developed with deeper experiential learning through customized simulation.
• As a result of the program, several improvements are under way at Verizon:
• Revising the executive compensation plan to further drive shareholder value performance.
• Developing a new capital budgeting and allocation process.
• Designing a new Voice of the Customer and Voice of the Shareholder measurement process.
• Creating a new organization — Operational Excellence and Process Transformation — to drive focus on improving Verizon processes and shareholder value.

“Everyone thinks building shareholder value is the finance guy’s job,” Shammo said. “It’s not … it’s everybody’s job. By getting our whole team pulling in the same direction, this Leading for Shareholder Value program really has the potential to be a game-changer for Verizon.”

Magda N. Yrizarry is chief diversity officer and vice president, talent management for Verizon Communications. She can be reached at editor@CLOmedia.com.