Case Study

Deutsche Telekom: A transformation journey (B)

5 pages
April 2011
Reference: IMD-3-2151

This is a classic transformation case, made more complex by the fact that it involves a huge organization and that it is led by a youthful company insider, René Obermann. The two-part case study covers the period between 2006 and 2010. The case starts in late 2006, shortly after Obermann was promoted to replace Kai-Uwe Ricke at Deutsche Telekom (DT), one of the standard bearers of the German economy. When he took over as chief executive, the former state-owned telecom monopoly was in bad shape. Having long been one of the dominant players in Europe, DT’s share price had collapsed in just a few years, as had its grip over its home market. Shortly before Obermann was appointed, DT’s share of new broadband customers in Germany – its traditional stronghold – fell to below 10 percent. And with its 260,000 strong workforce, DT’s labor costs compared to sales were up to twice as high as those of its main European rivals. Still living on past glories, the company was heavily siloed and bloated. While its structure was not suited to the new market realities, few employees felt a strong need for anything more than incremental change. Yet many analysts foresaw either bankruptcy or break-up for DT within a matter of three or four years. Under Obermann’s leadership, DT underwent a dramatic transformation, regaining its dominant position in the large domestic market within three years – but it remained too early to declare a fully fledged turnaround.

Learning Objective

The cases covers three key themes: 1) The advantages and disadvantages of a strong organizational culture. 2) The process of organizational transformation and the challenge of building on success. 3) Some of the psychological challenges of leadership. Case-A describes Deutsche Telekom’s competitive challenges prior to René Obermann’s appointment as CEO. It gives a few background details on the new CEO and describes some of the key moves he made during his first two years at the helm – and his success in stabilizing DT Case-B covers the second phase of DT’s recovery and the continued drive to create a single integrated company, to overcome resistance and to encourage new behaviors.

Keywords
Organizational Culture, Corporate Culture, Leading Change, Transformation, Authenticity, Top Management Team, Vision, Alignment, Customer Orientation
Settings
Deutsche Telekom
2006-2010
Type
Field Research
Copyright
© 2011
Available Languages
English
Related material
Teaching note, Video
Case clearing houses
IMD case studies are distributed through case clearing houses. In order to browse the collection and purchase copies please visit the links below.

The Case Centre

Cranfield University

Wharley End Beds MK43 0JR, UK
Tel +44 (0)1234 750903
Email [email protected]

Harvard Business School Publishing

60 Harvard Way, Boston MA 02163, USA
Tel (800) 545-7685 Tel (617)-783-7600
Fax (617) 783-7666
Email [email protected]

Asia Pacific Case Center

NUCB Business School

1-3-1 Nishiki Naka
Nagoya Aichi, Japan 460-0003
Tel +81 52 20 38 111
Email [email protected]

Contact

Research Information & Knowledge Hub for additional information on IMD publications

2011 EFMD AWARD WINNER (Responsible Leadership)
Looking for something specific?
IMD's faculty and research teams publish articles, case studies, books and reports on a wide range of topics