The days of the traditional telco are dying. Today’s leaders know that they need to abandon timeworn industry playbooks and instead organize themselves to embrace new, agile ways of working that can deliver real value now. Facing industry consolidation, pressure to find new sources of revenue, and growing expectations for technology and AI, they’re aiming to become faster and leaner customer-centric tech organizations.
McKinsey research has shown that across industries, organizations conducting agile transformations were three times more likely than those that had not to become top-quartile performers. More and more telcos are adopting agile operating models as they organize to create value in a volatile business environment.
To understand what it takes to make an agile transition work, we spoke to executives at six telcos that have been on their agile journeys for two to five years: Cogeco, Entel, Magyar Telekom, Masmovil, Safaricom, and Tesco Mobile. We asked them why they embraced agile, what they wanted to accomplish, and how they successfully adopted agile ways of working. In this article, we dig deep into their experiences, which offer helpful lessons for other telcos and companies launching their own operating model makeovers.
Why: Delivering on strategy and purpose
The executives we interviewed shared that they pursued agile transformations primarily to support their company’s strategic agenda and purpose. For example, leaders at Safaricom, Kenya’s largest telco, concluded that the company could not transition from a classic telco to a purpose-led tech organization “unless we were able to iterate fast and work collaboratively rather than in silos, which is what was happening,” said CFO Dilip Pal. Cogeco, a Canadian media and telecommunications leader, adopted agile to better integrate its US and Canadian functions to become “bigger, yet more nimble,” said Nancy Audette, chief growth officer.
Top leadership at both companies translated their strategic ambitions into explicit goals that drove the transformation. These included a mix of direct business goals, such as enrolling more customers into a loyalty program, and operational objectives. Five common operating model ambitions stood out:
- Customers. Telcos primarily pursue agile operating models to help them become more customer-centric—to ensure that employees focus on products and customer experience rather than internal processes and coordination. Organizations have found that an agile operating model can help them improve customer satisfaction scores, reduce churn, boost brand perception, and improve service interactions, among other results. “The main benefit of being agile is that you understand yourself much better as a member of a community whose purpose is serving customers,” said Zoltán Pereszlényi, chief commercial officer at Magyar Telekom, a Hungarian subsidiary of Deutsche Telekom.
- Collaboration. Achieving seamless collaboration across multiple functions is key to everything from simplifying product offerings to deploying AI safely. Adán Recuero, now director of organizational transformation at MasOrange, helped lead a full agile transformation at Masmovil (which later launched a joint venture with Orange Spain to form MasOrange). “IT was working with IT and business with business—and this was not working,” he told us. “We decided this was one of the first things to shift, and we knew we could not do it little by little. We needed a big bang.”
- Speed and efficiency. Telco executives have sought operating models that enable them to establish a unified set of priorities and quickly mobilize resources. In other words, they want to maximize the number of “doers” and minimize roles focused on coordination and project management. “We were slow, and we could not afford to be, because the market was moving really fast,” said Matías del Campo, B2C vice president at Entel Chile, a South American telco. “We said, ‘OK, we can’t be the dinosaur in the room anymore.’”
- Employee engagement. Focusing more deeply on customers and collaboration has also helped telcos improve employee engagement and the ability to attract and retain talent. “At the end of the day, we can achieve success by enabling our colleagues to communicate with each other. I believe that agile is the massive catalyst in that,” said Pereszlényi of Magyar Telekom.
- Becoming future proof. Companies that are siloed, slow moving, and lack the right talent risk falling even further behind as agentic AI and other technologies emerge in the next few years. “The essence of what agile brought to us is a way to accelerate that impact,” said Linda Gillespie, chief HR officer at Cogeco. “The thing I most admire about this company is that community connection, that spirit of our people. The unlock that agile has given is allowing us to realize that.”
What: Organizing to value across the company
Our interviews revealed a pattern across all six companies: They made deep transformations across four core elements—structure, workflows, culture, and talent—in parallel. Although some companies tried to limit their changes to one element, such as adopting agile workflows and culture without altering structure, eventually, they needed to touch all parts of the operating model to create impact.
Each company reorganized to fit its needs rather than simply following a scripted framework. Still, many common features emerged. To build a company fully geared to deliver value, each company shifted from a legacy of functional silos, complex processes, and unproductive busywork to a team-based, goal-oriented model (Exhibit 1).
“Teams come together and co-create their response to desired business outcomes,” said Matthew McBride, chief transformation officer at Tesco Mobile. “They have the right skills in their squads to deliver, and colleagues have the opportunity every week to connect and share with their leaders what they have delivered.”
Let’s take a deeper look at what the companies did to unlock value in four core elements across their organizations.
1. Structure shaped by strategy
In designing their structure, the telcos started by focusing on value creation and outcomes instead of evaluating all departments, titles, roles, and complexities of their legacy organizations. Before Cogeco aligned its US and Canadian operations into a single team, said Audette, “We were very, very heavy on top and we had such a hard time moving fast. After we aligned the US and Canadian operations, we wanted to focus the organization on our priorities and what we wanted to deliver instead of rebuilding the old functional structure.”
For a telco with multiple products in multiple segments, creating value can be complex. In some parts of the company, such as a retail shop or the finance organization, the answer is clear and often aligns with the functional setup. But when it comes to marketing, data, engineering, and similar areas, the functional angle falls short. Telcos often reassemble these parts of the organization dealing with products and processes into value-oriented cross-functional units (Exhibit 2).
In this structure, for example, some units focus on segments (such as attracting, growing, and keeping customers), others on products (such as customer, commercial, and technical performance), and still others on common journeys (such as billing or omnichannel experiences) or providing platforms and services to the business.
Each unit, in turn, is set up according to its scope and priorities. Many adopt a cross-functional team structure, where the units, sometimes called “tribes” by early pioneers such as ING, Spark New Zealand, and Spotify, are further broken into cross-functional “squads”—teams of five to ten people responsible for parts of the overall mission. For example, a telco’s broadband unit can contain an onboarding squad staffed with customer journey experts, service designers, data analysts, software engineers, testers, and architects. This squad is responsible for getting customers activated smoothly and measures its success through customer, commercial, and technical metrics. The HR unit might combine business partnering, talent acquisition, analytics, and generalist roles into small end-to-end servicing teams, thus eliminating internal handovers and disconnects.
Overall, the company’s performance becomes the sum of the performance of all the units and the teams within them. Senior leaders should empower these teams with end-to-end responsibilities to deliver quantifiable business results. “Because the teams are cross functional, they’re able to do that without all of the friction that you would have between functional areas,” said Gillespie of Cogeco.
However, strong long-term performance does not depend solely on fluid cross-functional teams—it also requires improved functional excellence. A common approach to address this is the formation of “chapters,” or groups of people with the same competence who are responsible for consistency, capability building, and long-term functional vision. These chapters focus on “how we keep winning,” while the cross-functional units focus on “how we win now.” Getting chapters right is one of the most important yet trickiest parts of making the model work.
Structure is often the most prominent part of an operating model transformation, but it’s not the only move to get right. Workflow, talent, and culture can be even more important for companies looking to tap the potential of an improved operating model.
Organize to Value
Build your operating model with value at the core
2. Fast and frictionless workflows
In Safaricom’s previous structure, each of its commercial teams developed its own plan and sought resources from the product development function. Product teams, in turn, went to the central technology department to prioritize whose work would get done. “Most of the time, your priorities would be down the line, so you never got any work done,” said Chief Consumer Business Officer Fawzia Ali-Kimanthi. “We would wait until the whole product was developed and only then launch. By the time we launched, the customer had already moved on.”
To break out of this cycle of frustration, companies pursuing agile operating models accelerate their workflows in four ways.
First, they develop a unified steering process to coordinate the formerly disconnected strategy, budgeting, function-by-function priority setting, project management, business performance management, and staffing processes. This process, often called the quarterly business review (QBR), is a dedicated cycle for aligning on company-wide resourcing and priorities at all levels.
During Masmovil’s transformation, Recuero said, “Once we had the agile structure that we wanted, we were afraid that different tribes didn’t have a good way to prioritize together because there were a lot of dependencies among them. We understood we needed to have a QBR process so each unit could link its own priorities to the big strategic topics.”
In a typical QBR, the top team assesses strategic progress, outlines key priorities for the quarter ahead, and adjusts resources as needed. Each unit then proposes concrete objectives and key results (OKRs), commits to KPI targets, and aligns on dependencies with other units. The unit-level plans are further translated into squad-level road maps and OKRs. When the quarter starts, people across the company are clear on what needs to be accomplished and who is focused on what (Exhibit 3).
Second, telcos optimize practical ways of working, especially at the team level. For example, they define rhythms for how agile squads work in two-week cycles, ensure that teams understand risk issues and define clear guardrails to empower teams to act safely, create real-time performance dashboards, and employ coaches to help teams improve their performance. They also obsessively study metrics and feedback related to frictionless workflows—such as frequency of deploying changes and time spent on value-adding tasks rather than coordination meetings—to drive continuous improvement.
Third, they bring digital, IT, data, and networks together with the other business functions. For example, a unit responsible for mobile and broadband products often includes software engineers, architects, testers, system analysts, and other technical roles alongside commercial and product management, design, data, and customer journey experts. The unit is responsible for the IT platforms and network services specific to their work—not just introducing new features but also owning life cycle management and technical performance metrics. “You’ve got to put the business and tech together,” said Sally Marriott, chief technology officer at Tesco Mobile. “That’s the joy of agile, and that’s the piece that really helps—when you can get that right and genuinely have both tribes and squads that are truly cross functional.”
Fourth, many telcos are utilizing advances in AI to improve workflows. Masmovil, for example, established cross-functional teams focused on rapidly implementing AI within business processes. “Agile is helping us make the most out of AI. We went area by area, finding use cases that were relevant and made a proof of concept fast, implemented it, and then spread it across the company,” Recuero said.
Agile structures with end-to-end ownership of products and processes are crucial for scaling AI and agents. Instead of being limited to using AI to help individuals (such as copilot tools) or function-specific use cases (such as for HR workflows), an agile structure built around value creation can allow companies to deploy AI to the domains, end-to-end processes, and customer-facing opportunities with the most potential. In a siloed organization, no one would own such transformative AI applications.
3. Future-ready talent
An agile transformation requires changes for both leaders and the wider workforce. In complex, siloed telcos, a large share of senior talent focuses on “traffic control”—that is, managing and coordinating different projects, handovers, and interfaces across the company. Building an agile structure and simplifying workflows can help organizations allocate the right talent to the most important areas. This is critical to improving performance, as McKinsey’s experience suggests that a relatively small number of roles across an organization create 80 percent of total value.
As a result of their agile transformations, organizations have moved the people structure from a role-based to a skill-based model, which is essential for talent development.
During the design and launch of their agile operating models, for example, Tesco Mobile and Safaricom increased the share of engineers in their organizations to address bottlenecks and deliver faster on company missions. Other companies may find that they lack skills in data science or in other areas, or that some roles are less important in a more agile setup.
Agile also calls for a different leadership approach. Instead of focusing on a specific function, leaders should take a broader lens and conduct the entire cross-functional orchestra to deliver. They set bold goals, build culture, and ensure they are not bottlenecks. Many leaders have a weekly rhythm of interacting directly with dozens of teams to discuss outcomes and help accelerate work. Reflecting on Masmovil’s evolved leadership model, Recuero said, “It takes a difficult mindset shift from control to setting the right context.”
4. A trusting performance culture
In shifting to agile, leaders have moved from giving detailed directions to acting more as coaches—facilitating, removing impediments, and stepping aside once a mission is clear. While each company has its own signature culture, each emphasizes transparency, continuous feedback, and treating failure as a learning opportunity. “There’s a deeper sense of purpose now,” said Cogeco’s Gillespie. “We talk about curiosity and transparency—everything is on the table.”
Another prevalent theme is a culture of doing. At Safaricom, for example, Ali-Kimanthi said, “Everyone is a doer and everybody has to deliver for the customer. The mindset changed from ‘I’m told what to do’ to ‘I own the outcome.’”
A flatter organization geared for delivery also provides different opportunities for career progression. “Agile creates more opportunities for people to upskill, reskill, and grow,” said Florence Nyokabi, Safaricom’s chief human resources officer (CHRO). Instead of elevating strong performers into management and coordination roles based on a hierarchical structure, the companies we spoke with are evolving their talent approach. “The new people model was a big game changer—moving toward proficiency-based career tracks,” Safaricom’s Pal said.
How: Taking a deliberate journey
The telcos we spoke with have been on their agile journeys for two to five years. They all started with a strong commitment from top leadership as to why they embraced agile and what they wanted to accomplish. They also shared some key approaches to how they adopted agile ways of working—along with the determination to push through a long journey.
Starting with learning
In 2020, Peter Ndegwa joined Safaricom as CEO and led the development of a five-year plan to transform the telco into a purpose-led tech company with a new culture. “Agile transformation will only work with sponsorship at the top,” said Safaricom CHRO Nyokabi. “It has to be led by the CEO and the C-suite. Then they can collectively engage the rest of the organization, lead by example, and lead visibly.”
Safaricom leaders brought in executives from other newly transformed agile telcos, such as Spark New Zealand, to share their insights. They decided to start small, with four tribes consisting of about 200 people in total as early agile adopters. “Soon we saw they were delivering, the silos were melting away, and we could measure and see that it was a success,” said Safaricom CFO Pal. “In less than one month, a cross-functional team could deliver things like mobile data rollover, which was almost deemed an impossible task. The discussion went from ‘Should we go fully agile?’ into ‘How quickly can we do it?’”
Other telcos took a similar path. Leaders gleaned insights from the experiences of other organizations and from smaller-scale experiments within the company. After creating some high-level designs of key elements, such as structure and workflows, they faced a critical moment of commitment.
Advancing all at once or in waves
After the companies we spoke to committed to going agile, they typically launched two tracks. First, they launched front-runner tribes—the first units built around the new structure and ways of working—as quickly as possible. At the same time, they started preparing for a full organizational change. Masmovil and Tesco Mobile executed their wider organizational changes all at once, while the others—Cogeco, Entel, Magyar Telekom, and Safaricom—launched theirs in multiple waves.
An important lesson for telco leaders is that agile approaches can scale broadly. After a mere two years of transformation, for example, 80 percent of Masmovil employees were working in agile. “Agile is for everyone. It’s important that when people think about agile, they don’t think about a book or a specific framework,” Recuero said. “They need to understand that this is a mindset, and you can take advantage of it whether you’re an accountant or a developer.”
Another key insight from these telco leaders is that an agile transformation is not a one-time effort—it will require regular checkups and continuous improvement of the operating model. “Don’t stop; keep moving,” said Tesco Mobile’s McBride. “Because if you don’t make any changes after 18 months or two years, then a fixed mindset and walls start building up. You need to keep evolving and make change the norm.”
It’s been said about technology that “The pace of change has never been this fast, yet it will never be this slow again.” If the past decade felt tumultuous to telcos, the next decades are likely to see even more change as technological shifts, geopolitical uncertainty, consolidation, and other disruptive forces come more often and with greater frequency. Telcos around the world need to figure out how to become even more customer-centric, leaner, faster, and more engaging for their employees.
Leaders today can build on the lessons learned by pioneers in agile transformations. While every company’s journey will be unique, there is a clear path to follow around the why, what, and how of successful transformations. As the leaders we interviewed emphasized, the path is not always easy to follow—and a winning transformation requires commitment and grit from the whole organization.
