Former Vodafone executive Paul Donovan (Credit: Vodafone)
commentary It is not a foregone conclusion that the successor to outgoing Telstra CEO Sol Trujillo will come from within the company.
Trujillo seemed to hope it would yesterday, spruiking his team mercilessly and giving David Moffatt golden child-type praise for his success rolling out the premium T-Life stores.
Some say that if the board felt there was an internal candidate who really shone they would have announced the successor yesterday.
"My belief is that we've seen a lot of talent inside the company," Trujillo said, adding that he thought the board recognised that. But of course he would want it to be that way — it would be a massive feather in his cap if it could be said that he moulded his successor. I can see his resume now: Trujillo, founder of Next G, succession-planner extraordinaire.
Yet as he himself said, the decision doesn't rest with him. It will ultimately rest with the board, which will do due diligence and choose a candidate on their merits, not on the outgoing CEO's wishes, such that overseas candidates such as former Vodafone executive Paul Donovan (pictured above) could be a strong chance.
Some say that if the board felt there was an internal candidate who really shone they would have announced the successor yesterday. I believe they might be right.
The problem I see with an internal candidate is McGauchie's avowal that the board would look for an "outstanding leader". McGauchie gushed about Trujillo yesterday, sounding like a young bride talking about her husband: The first time she saw him she just 'knew'.
"I was frankly overwhelmed by what I saw when I met Sol the first time in Palo Alto a bit over four years ago and the vision that he showed, the strategic thinking that he showed about this industry," he said. "Indeed he has delivered above and beyond anything that I think we could have reasonably expected."
If McGauchie is going to remain chair, I can't see him choosing a candidate that doesn't give him this gut feeling. Moffatt might have a hope, but Stanhope certainly doesn't.
The crisis which is currently occurring is a global financial crisis. It's going to take globally savvy executives to ride it out.
This is where people would argue that we don't want another Sol. But the board doesn't care about how the competitive market is doing, or what the public thinks about the CEO. All they care is about the share price, which although it took a dive after Telstra was thrown out of the National Broadband Network, hasn't fared as badly as many others.
And the argument about having an internal candidate who has a good relationship with the government doesn't really cut it with me either. Sol didn't act out his antagonistic strategy around the NBN alone; the board was behind him making decisions too. Trujillo is going, but is the rest of the contingent who decided on that brinkmanship? And will they have changed their minds?
McGauchie puts down the NBN at every step. It's unviable, he says,and Telstra could do lots of other things. He told the media yesterday to get over its NBN obsession. I just don't think he'd choose someone on the strength of getting back in the government's process.
So if not internal, perhaps an Australian at least? Well the problem is the sheer size of Telstra. It's a behemoth. Which means that if you want to have someone who's got telco experience instead of choosing the CEO of a supermarket chain or an energy utility company. There are few in Australia who have had experience of large enough divisions or companies which would have them comfortably stepping into Trujillo's shoes.
As mentioned in our top ten list of candidates, Optus CEO Paul O'Sullivan would be a prime candidate and right for a move, but his company is in the middle of a bid for the largest infrastructure build to be seen in decades. I don't think he'd leave the ship for the company that lost the deal. I have also been assured by insiders that they would be excessively surprised if O'Sullivan would take up the position.
Paul Broad from AAPT? Doubtful. The Telecom NZ subsidiary hasn't been a top performer and has been weathering a storm of speculation about possible takeovers. 3 CEO Nigel Dews will be too happy with the prospect of running VHA to think about it. Vodafone CEO Russell Hewitt would be a possibility if the board was willing to run a blind eye over his unconventional qualifications.
Who does that leave us with? Small fry.
Consequently, my eyes have turned overseas, which to me makes almost more sense in any case, as the crisis which is currently occurring is a global financial crisis. It's going to take globally savvy executives to ride it out.
There are any number of candidates which could be picked up. Of course the head of BT Retail, Gavin Patterson, has to be considered, but he hasn't even been in that position for a year. Telstra would have to poach him with the requisite pay packet. Although I would love it if he did become CEO of course, he's quite a looker.
Paul Donovan, on the other hand, has just finished his stint as the head of Eastern Europe, Middle East, Africa, Asia-Pacific and affiliates at Vodafone. He was a contender for the top job, but missed out when Vittorio Colao, who had been heading up the European division, won the role.
Weeks after Colao grabbed the reins, he split Donovan's role into two, reportedly to strengthen his leadership position. Unsurprisingly, Donovan resigned.
There are a few things which make my ears prick up about Donovan. The first was that rather than accept a lesser position and be ruled over by a man who was once his peer, he left Vodafone. There were rumours that he would be the CEO of Arsenal of all things, but it seems that was not to be. He will now be looking for a challenge, something to prove he had what it would have taken to have been the top dog.
Coming from Vodafone, he will understand the mobile and consumer space, which will be a large part of Telstra's strategy going forward. He has held many roles within the company, including CEO of its Irish division.
The clincher for me is his directorship in China Mobile. Donovan has, like Sol, long seen the potential in China and was Vodafone's face in the region.
Yet he won't neglect the other areas. He has fifteen years of telco experience, including at British Telecom. He has spent time in the hyped company of the decade, Apple, as well as filling positions within marketing at brand powerhouses Coca Cola and Mars.
Having tackled the role of global director of business integration, leading One Vodafone, the group's business transformation program, he will understand what Sol has been trying to do with Telstra's own transformation program.
He has also worked within Optus Communications as commercial director, giving him an Australian perspective. He wouldn't be coming blind to the role.
But the clincher for me is his directorship in China Mobile. Donovan has, like Sol, long seen the potential in China and was Vodafone's face in the region. He could nurture Telstra's investments there. Perhaps he could even send tendrils into India where he has had experience on the board of Bharti Airtel.
Despite having no idea what he is doing now, apart from sitting on the board of China's Mobile, or whether he would be willing to move somewhere he couldn't use his season tickets for Arsenal, I think he has something to prove, and perhaps the board might let him do it.