January 20, 2014
SoftBank CEO Masayoshi Son wants to make it clear he won't be a hands-off investor in Sprint, and more employees might be shown the door -- or choose to find it on their own -- as he restructures the carrier to become more sales-driven.
In an internal memo obtained by Light Reading, a Sprint Corp. (NYSE: S) executive warned employees about changes due to be implemented during the coming months. The letter asks employees to stay focused on their work, support internal clients and colleagues, and remain frugal and cost conscious.
As we have all heard from [CEO Dan Hesse], our company will evolve into what can be best described as a sales-driven organizational company model. For this reason, some modifications need to be made to the current organizational structure and you will soon start to hear more about how and in what areas these changes will take place.
Hesse might be delivering the news, but the vision is clearly coming from Masayoshi Son, the driving force behind SoftBank Corp. 's acquisition of Sprint. (See Softbank Closes on Sprint Acquisition.)
He recently called on employees to join forces with "our Japanese unit and work as a single entity," and wrote in a post on the Nikkei Asian Review that he didn't want to repeat mistakes he made when running US companies Comdex and Ziff Davis, where he let American executives run those companies at their discretion.
That previous strategy was "based on my belief that Japanese owners should not interfere too much with the U.S. executives' business management," he wrote. "That belief was wrong."
Son said that by leaving American executives to their own devices he was acting as an investor and not a leader. His new plan to be hands-on means he has to sometimes yell at Sprint executives. As an example, he said he learned in a recent meeting that Sprint's advertising was not cost effective. Cue the yelling.
"This made me quite angry," he said. "Sprint spends a large amount of money on advertising every year, but its effects have been almost negligible. I directed the Sprint executives to terminate all existing contracts with the company's advertising agencies. We will shortly start from scratch on advertising, with new agents also making proposals."
The SoftBank boss clearly has big changes in mind for the struggling carrier, and that's already included big cuts. Sprint has had several rounds of layoffs related to the SoftBank takeover and also following Sprint's acquisition of Clearwire. Son said he plans to adopt the aggressive approach he did when he took over the Japanese arm of Vodafone Group plc (NYSE: VOD), which he called a "sinking ship" when he took over. (See Sprint Lays Off 800 Customer Service Reps and Sprint Axes More Clearwire Employees.)
As such, he admits he's also running the risk of forcing managers and employees to quit. At Vodafone, a third of executives left within six months. Sprint CEO Hesse, however, won't be among them as he's now on a five-year contract cycle with the company that won't come up for review before 2018. (See Sprint CEO Hesse to Stay On Through 2018.)
Son didn't go as far as to comment on the two biggest rumors circulating around Sprint -- that Softbank is planning to merge Sprint with T-Mobile US Inc. , as well as move its headquarters to California. But he made it clear Sprint will be seeing a lot more of him and the top-level Softbank execs, regardless of cultural and language barriers, as they work to reverse Sprint's status as a loser in the US. (See Report: SoftBank Preps $19B Bid for T-Mobile and Sprint: Heading to California?.)
"In the past, I would probably have told Japanese executives at SoftBank to focus on Japanese operations if their English was not at a high level," Son said. "Not anymore."
— Sarah Reedy, Senior Editor, Light Reading
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