Sprint CEO Dan Hesse on responsibility, long-term goal setting, and ethical culture
By Elliot Clark
The drive from the main entrance to the corporate headquarters building of Sprint in Overland Park, KS, takes several minutes. It is an immense campus, a small metropolis unto itself. A global telecommunications and mobile service provider, Sprint is one of the largest companies in the world. Like most of the world’s largest companies, headquarters is a small city.
I was there to meet Dan Hesse, the CEO of Sprint who had recently won the CR Magazine Responsible CEO Lifetime Achievement Award. I had spoken briefly with Dan prior to the awards dinner and met him during the day. I had been impressed over the phone and in person, but now I was going not only to spend time with him, but to spend time inside Sprint. Embedded in the organization, if only briefly, I wanted to gain some insight into the culture and operations.
I believe companies and CEOs need to focus on culture to drive ethics and I was keen to see how a man picked by other CEOs as extraordinary would impress me in his native environment. CEOs are often mirrors of companies, and the companies are mirrors of the CEO. Sprint did not disappoint.
I was going to meet the man, and in the process found some amazing things about this humble giant of a technology company. They have a program called “Introduction to the Code of Conduct” where new employees role-play scenarios to ensure they make ethical decisions. They have an eco tour called “The Sustainability Walking Tour” of the LEED-certified buildings on the sprawling 200-acre campus.
The focus of their corporate responsibility platform is called “Sprint Good Works” and contains programs and goals in three categories: people, product, and planet. Since 2008, the company has refined, achieved, and reported on their goals involving a host of initiatives for:
- employees (25 percent participation in the Sprint Get Fit Challenge and an aggregate loss in 2012 of 21,994 lbs);
- community (voluntarism in 2012 delivering 650,000 meals to the needy and raising $2.7 million for United Way);
- product (reducing distracted driving); and • planet (recycling of phones, reducing paper, and water
These programs are all part of a 10-year program for improvement. The amazing thing is that Sprint is ahead of most of those goals with four years left to finish. Many of these initiatives grew out of the vision of Dan Hesse, who was given the task of merging the culture of legacy Sprint and legacy Nextel. He also has a deeply committed leadership team he oversees.
The culture he has helped foster has turned Sprint into one of the most responsible companies in the world focused on setting standards for recycling of mobile phones, accessibility for handicapped and the aged, and customer safety. However, one has to applaud not just Dan, but the tens of thousands of employees who personally bought into the importance of these concepts. So this story is as much about Sprint—and how it
has joined together as a team to implement this vision—as it is about the achievements of a single employee, who happens to be CEO.
Here is a rare glimpse into the forces and experiences that formed the character of one of the most successful and responsible CEOs in modern business.
Elliot Clark: How did your personal experiences prior to Sprint influence your corporate-responsibility priorities in your professional life?
Dan Hesse: First, I was raised by parents who had a very strong set of values. They both grew up during the Depression. My mother’s father had a general store. He was known for providing credit to customers, people who couldn’t afford to pay. My father grew up on a farm in northeast Nebraska. He was quite poor, so when we grew up we saved everything. I remember the Christmas tree—we would take the tinsel off and pack it up. We opened presents carefully because we reused wrapping paper the following year. If you wanted to get on my father’s bad side, leave the water running, or leave the lights on. We were very frugal. And we were reminded that there were people less fortunate.
There were a few things later on in life that had an impact. One was a college course: The Economics of Pollution. At that time, acid rain was a big issue. I began to learn to think in terms of tradeoffs, not solely in terms of right or wrong answers. For example, the more scrubbers you installed, or the more stringent your environmental standards were, the higher the price of goods would be. That might mean an American company couldn’t compete effectively with an international company. Jobs would be lost. You had to take all of this into consideration, and you learned to look at both hard costs and what I call soft costs, which is similar to what we do now. When I look at green projects, there are a lot of things we could do to be greener that we just can’t financially justify, but there are many where we can so we are working on those. We always look to ensure we are making good decisions for our shareholders and our communities.
Later on, I relocated professionally to the Netherlands from 1991 to 1995, and that had an impact on me because the Dutch were very focused on global warming and its effect on the environment, before this became a big issue in the U.S. You had 15 million people living on basically the same land mass as New Jersey. New Jersey is the most densely populated U.S. state. The Netherlands is about two or three times more densely populated. The Dutch reuse practically everything. For example, they had two systems for water. The water that watered our lawns was not potable. The water that is used indoors is potable. The Dutch are quite proud that they’re savers. The stereotype in Europe is the Dutch are “cheap” but they’re proud of this.
Later on, I lived in Seattle, where environmental issues are front and center.
So, prior to Sprint, I had a number of influences, starting with my parents and my upbringing, that had focused me on protecting the resources that we have and making sure that you use them as wisely as possible, and the importance of how you treat other people, especially those who are less fortunate.
Clark: The people values really come from the influence of your parents in a sense?
Hesse: I believe so. My maternal grandmother lived with us and she was blind. That gave me a special appreciation for people with disabilities, which also is an important platform for Sprint’s social responsibility. We ask what wireless can do to improve the quality of lives of people with disabilities. As people age, they lose some abilities. I heard that in the United States, 10 thousand people turn age 65 every day. It’s a growing segment that we want to make sure we serve well.
Clark: Let’s turn to your corporate responsibility platform, Sprint Good Works. How do you manage that on a day-by-day basis? Give me some idea of how the priorities and initiatives are managed on a practical level. What makes them work?
Hesse: We manage it like every other part of the business. At Sprint, people respect what the boss inspects. Things have to be quantified, measured, followed up on. We have charts, we measure numbers, and at Sprint operations meetings, we report and measure our progress against our goals with a red, yellow or green designation.
Green means we are doing well, we’re on or ahead of plan. Yellow means we’re close to plan. Red is assigned when we’re below plan.
We have specific measures across our three CR focus key areas: people, product, and planet; discrete measures of what our goals are by certain dates. For example, we set 10-year environmental goals in 2008. In order to achieve those goals by 2017, we have to make progress each and every year.
The Sprint CR steering committee meets once every month, and reviews our scorecard of very specific measures with my entire senior leadership team. And we assign the responsibility for numbers, for example a greenhouse gas (GHG) emission reduction.
The person that owns the biggest piece of that GHG reduction is the head of network. Eighty-seven percent of our power consumption comes from network use. Right now, we’re rolling out a brand new 4G LTE network across the entire country.
We’re replacing our entire 3G network as we install new 4G equipment because new network equipment uses 25 percent less power than the older equipment and provides better performance. We’re the only carrier that’s made a public commitment to reduce the absolute level of greenhouse gas emissions by 10 percent by 2017.
Another example is paper usage reduction: We put an edict out that all copies need to be two-sided. But the biggest use was paper bills. We have 50 million customers and we send out bills every month to most of them. So every month we have targets on increasing the percentage of customers using e-bill, or electronic billing. We gave our customers incentives, where they pay less every month if they go to e-bill. In addition to that, we created a new envelope. When you get your bill, you don’t get an outer envelope, a bill, and then an inner envelope to send it back. It’s basically one piece of paper that you fold the other way and send it in with your check. It dramatically reduced our paper usage. We have water reduction goals, so here on [Sprint’s world headquarters campus in Overland Park, Kan.] I think 90 percent of the non-potable [non-drinking] water that we use is recycled, or reused, water.
We address corporate responsibility like we do any other business issue. We meet regularly, measure it relentlessly, and have accountability for specific targets for each and every area of our plan. We measure and use performance scorecards with red, yellow or green. People know it’s serious because CR is measured just like earnings or subscribers.
Clark: If you look at the 10 years goals you set when you arrived in 2007, you’re 50 to 60 percent of the way down the path toward that. What score do you give the Sprint Good Works program—is it a red, a yellow or a green?
Hesse: I give it a green. When we set these goals in 2008, I think the organization, by and large, thought they were incredibly aggressive. And what we’re finding now, with the focus, measurement, and incredible buy-in from our employees, top to bottom, five and a half years almost six years into it now, we could’ve set the goals higher. We’re already meeting some of our 10 year goals.
Some goals will be challenging. One goal we set is to bring back for either reuse or recycling, 90 percent of the phones we sell. We’re about half way there. The last half, that’s tougher to get. So this goal may be tough to reach, and we remain very focused on it. But with greenhouse gases, paper use, water use, and in some other areas, we’re far ahead of where we thought we would be.
Clark: Your platform is based on the three key areas: people, product, and planet. We’re going to start with people. Let’s talk about the larger community. You’ve initiated programs around community development. What are you doing in support of either communities in general or communities in crisis in the U.S. or elsewhere?
Hesse: People ask me, why do you deal with the hassles of being a Fortune 100 company CEO? The answer: I was raised to think about my “purpose” in life. I could use the word “vocation” interchangeably. The word “vocation” could be used to describe the clergy, public service, teaching, parenting,
etc. I believe that perhaps no platform provides an opportunity to make a more positive impact on the lives and livelihoods of large numbers of people than being the CEO of a large company today.
I would’ve said government years ago, but it’s more difficult to have impact today than it was many years ago. If you would have asked me what I wanted to be when I was in college, like a lot of young people I would have answered that I wanted to be President of the United States someday. I hoped to make this country a better place.
Instead, I went into business and I realize now that as CEO of a large company, you can positively impact millions of employees, customers, shareholders, and suppliers. For example, companies that supply Sprint are dependent upon our success. We also can impact the communities in which we operate and serve.
Sprint does a lot for our hometown of Kansas City. We have extensive programs ranging from philanthropy to community service. We encourage Sprint employees to get involved with local philanthropic and service agencies and organizations. We allow them time off from work to volunteer. We’re very generous in terms of giving, whether it’s to United Way or other charities. The company gives money through the Sprint Foundation and encourages our employees to give as well. We have a well supported matching gifts program.
We are building a great communications infrastructure, not only in Kansas City, but in other cities, that is a generator for the economy and for jobs. We are focused on how we can improve the health and well-being of people using mobile technology. So, we recently launched a new business incubator in Kansas City. We chose Kansas City because we thought it was a great breeding ground for medical and health applications on mobile platforms. So we are helping entrepreneurs launch new businesses, which will create jobs, which helps the local economy.
Clark: Let’s talk about the customers. You mentioned you have 50 million customers. And wireless technology’s transformational. You mentioned a little bit of how it affected your childhood growing up with a disabled relative in your home. So how does your responsibility platform affect the relationship between Sprint and its customer? What does Sprint Good Works do that impacts their lives?
Hesse: We talked about accessibility. There are many people with disabilities, and if you consider the disabilities that come with aging, more and more people are facing disabilities all the time. Another area is our campaign to eliminate distracted driving, which I believe saves lives.
First of all, our green products make the planet that we live in a better place. We focus on green because our network uses a lot of energy. Our devices generate e-waste. So there are areas in which we can have major impact.
Using technology to enhance handicap accessibility, especially technologies like text-to-speech and speech-to-text, and GPS, and many other technologies, can improve the quality of lives.
Distracted driving: We contribute to the problem, because our devices can be distracting. My son has a t-shirt that says “Man texting while driving kills man texting while walking.” We’ve created tools using our technologies that will turn the phone off once it starts moving in the car, so that you can’t text or receive texts while you’re driving.
Another area we prioritize is privacy. That’s something very precious to our customers. We take this very seriously. And we’ve been leaders in the area of privacy early on, making our privacy policies very clear, letting customers opt-in rather than have to opt-out in terms of sharing a customer’s information.
We came up with a new mobile advertising platform, where a customer on their phone can very easily opt in to a program to view ads that are interesting and relevant to them versus general advertising. So I might like to see ads about cars and stereo equipment rather than ads about pantyhose. But rather than just assume our customers want relevant versus general advertising, we let them opt-in. We’ve been a leader in the area of privacy because of how personal these devices have become.
With respect to our people, they’ve become participants in their communities. By allowing them time off, or encouraging them to participate in and contribute to their communities, I believe this also helps customers who live in these communities.
Clark: Let’s talk about the workforce and how people sort of conduct themselves in business. How do you as CEO personally ensure that Sprint has an ethical culture? Who in your leadership structure, for example, makes sure that the entire workforce shares a culture of responsible values?
Hesse: I believe that is my responsibility. Obviously, my heads of HR and Legal, and all my leaders, have a shared responsibility in that as well.
We regularly survey our employees on our stated priorities or what we call the Sprint Imperatives. These include acting with integrity, empowering others, demonstrating teamwork and camaraderie, and developing your people yourself. It also includes having fun.
So we poll our employees, who are my internal customers. We survey them on how are we doing against these values, and we can see how we are doing historically and against benchmark data from other companies.
We want to know if employees feel that our company is “walking the talk.” I regularly ask in meetings, “Are we doing the right thing?” We want to make sure people have had an opportunity to express their opinion. We ask, “Do you agree or disagree?”, encouraging people to disagree if they truly do.
I tell my people ahead of time, don’t be intimidated to let your voice be heard even at the Board level. We owe it to our Board to tell it exactly as we see it. I will call my people before a board meeting and reinforce they should tell the Board what they think. Acting with integrity is one of the Sprint Imperatives. Not to express a contrary view if you hold it isn’t acting with integrity.
When I arrived at Sprint in late 2007, what disturbed me was that everybody told me that they were legacy Sprint, or they were legacy Nextel, even though the merger was completed in mid-2005. Sprint and Nextel each had outstanding cultures, but they were different. Sprint PCS, very entrepreneurial, the fastest company in U.S. history from zero to a billion dollars in revenue. Nextel, extremely entrepreneurial, did a lot with a little. They were on an island technically, but they built a very strong company. But there wasn’t one Sprint culture.
So I told the organization we were going to take the best elements of both cultures, as well as what I thought contributed to a strong culture, but we were going to have only one culture. I sent a survey to every employee in the company, and asked “What do you think our culture should be?” I listed about 25 attributes, what I would call almost “Boy Scout” qualities, and asked employees to vote on what they thought would be the elements of a culture that would lead to success.
But I also told them, I want your input, I want everybody to tell me what you think, but I’m, ultimately, going to pick the 10 attributes of the new Sprint culture. It won’t necessarily be the 10 attributes that get the most votes. I have to be accountable and own certain decisions. But, please tell me what you think. If I disagree with you, please try to convince me otherwise. That’s the culture that we engender at the company. Acting with integrity was selected as a cultural attribute, a Sprint Imperative, and speaking openly and honestly is at the center of what integrity means.
Clark: Let’s talk about the product for a moment. So you helped foster the creation of ULE 110, the standard for the recyclability of mobile phones. Not all of your competitors have adopted the standard. Do you ever worry that the commitment to sustainability puts you at a competitive disadvantage?
Hesse: I don’t worry about it. I think it could ultimately be a competitive advantage. You take some chances. We took a chance when we launched the first green device, the Samsung Reclaim back in 2009. It didn’t do great, but it did respectably.
I’ve seen competitors follow our lead in the area of sustainability and ULE. I had the opportunity to chair the CTIA, the wireless industry trade association. One of the things the Chair gets to do is pick a special priority for the association that year. I picked “green.” And the industry came together in areas like packaging. We agreed on less packaging and using recyclable materials. We also agreed to standards on charging cords. If you remember years ago, practically every phone had a different charger. Now, almost every phone uses a standard micro-USB.
Years ago, if I got a new phone, my old charger was useless. Packaging and chargers are just two of many examples of the industries coming together. Suppliers like Samsung are now ULE-certifying their top sellers, like the Galaxy 4.
Clark: Mobile devices—and you just mentioned some of these issues—can produce some fairly toxic byproducts. So what has Sprint done and accomplished with respect to environmental stewardship? You’ve mentioned a few things already, with the paper reduction, and greenhouse gas reduction. Is there anything else that we haven’t discussed?
Hesse: Our buyback program is the best in the industry. We’ll buy back your device at a very good price, whether you bought it from Sprint or you bought it from somebody else. And we’llmake sure that it is adequately reused, or remanufactured if possible—either the entire phone or the components. Anything that’s ultimately discarded is discarded in a very responsible, environmentally friendly way. We actually set a new Guinness record for the number of devices recycled in a week recently. I think we buy back something on the order of 11 phones every minute for reuse or recycling. We’re taking back a huge number of devices, and we make sure they don’t go into the waste stream.
Clark: So you’re buying phones that you re-use but also ones that you have to discard?
Hesse: We’ll buy back your phone whether it’s a Sprint device or whether it’s an AT&T, Verizon, or T-Mobile device. We give customers an incentive not to throw away phones or leave phones sitting in drawers. They’re worth something at the Sprint store.
Clark: Recently you were honored by your peers, or other CEOs, as the CR Magazine CEO of the Year Lifetime Achievement Award winner. What does it mean to you to get this kind of recognition from other CEOs, particularly ones who won the CEO of the Year Award?
Hesse: In my early years in management, there were three annual surveys, what we called a “360” evaluation. One was an evaluation by your subordinates, what you were like as a boss. One was an evaluation by your boss. And then there was a peer evaluation. I learned the peer evaluation was the most valuable and candid. I ran HR for one of the large divisions of AT&T years ago. We discovered that peer review was the best predictor of the three of leadership and career success. Peers have the best understanding of the challenge of a job at that level.
First of all, it’s a great honor to be recognized by your peers in the CEO community. Secondly, the CEOs who have won this award in the past understand the challenges associated with corporate responsibility and the challenge a public company has balancing short-terms earnings pressure against longer- term initiatives. I think it’s great recognition for the company and our employees much more than recognition of me. I think everybody at Sprint took great pride in this award because I’m, in a sense, the figurehead for the company and what we’ve achieved over the last six years. The fact that other CEOs, who understand what is required to make progress in the area of corporate responsibility, voted for me meant a lot to me personally.
Clark: You’ve now added to your accolades CR Magazine’s Corporate Responsibility Lifetime Achievement Award. You still have a lot of “lifetime” left. What are the things that you’re looking forward to accomplishing in the future?
Hesse: First of all, we’ve set many goals that we need to accomplish by 2017. So, number one, I want to make sure that we achieve our 10-year goals.
I plan to be at Sprint to see those goals accomplished. I have never been more excited about the potential for wireless to improve the lives of people in the United States and around the world. Whether it is healthcare, education, or accessibility, I am, excited to be a part of product and offer creation.
Tomorrow, for example, I get together with my innovation team. We come up with new ideas and new products, and we create an innovation road map. Just like we measure progress on CR, we measure progress in innovation. We’re granted an average of over two U.S. patents every business day.
It is exciting to be a part of the wireless industry. Sprint sponsors a mobile health accelerator in Kansas City, where they’ll develop new applications to improve health. There will be a number of new advances in areas like robotics, 3D printing, big data analytics and nano-technology, all with wireless applications.
We’re moving beyond phones. There could be a wireless chip in your clothes that’s going to monitor your heart beat and blood pressure, or a wireless chip in your refrigerator, so when you’re at the store you’ll know the expiration dates on the food in the home refrigerator, to tell you if you need milk or if your milk is sour. There will be chips in your TV, and in your car to make it safer. This has been called the “internet of things.” The platform is going beyond your phone to where there will be a chip in almost everything enabling us to improve the planet and enrich our quality of life.
When we innovate, we focus on corporate responsibility. We innovate around things that we think will make our customers’ lives better. Sprint ID Packs, which provide special features for the blind or the hard-of-hearing, were a product of these innovation meetings.
Innovation is one of the 10 Sprint Imperatives that are a foundation of our brand. What really excites us is how our great company in this transformational industry can have a very meaningful, positive impact, on our world.