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29 JUNE 2019
5G and me
by Andrew Murray-Watson
Since the dawn of the mobile age, telecoms companies have been battling against the idea that they are simply utility providers of pipes in the sky. For Edward Bouygues, Director of Strategy for Bouygues Telecom, part of the Bouygues Group, this notion that is never far from his thoughts.

“Every single telco is worried about that question. For us it would be very disappointing just to be a dumb pipe like a water company,” he says. “But it is very difficult to do a side business that is profitable as your main business. A rare example is Amazon with Amazon Web Services (AWS). One (non-core) area we are very good at is managing data. We are bringing connectivity to objects, for example.”

Bouygues is the grandson of Francis Bouygues, the founder of Bouygues Group, and son of Martin Bouygues, the current CEO of the giant French conglomerate. He is entrusted with navigating the long-term future of the business while demonstrating to investors and staff that he deserves his role on merit rather than simply because of the family name.

The pressure of history

Being the son of a corporate scion might seem like a stroke of outrageous good fortune for anyone seeking a career in business. The Bouygues Group employs over 129,000 staff and in 2018 recorded turnover of almost €36 billion. Its operations span telecoms, construction, real estate and media. It is a household name not just in France but across Europe and beyond. In total, it operates in 90 different countries and is a global player in construction, energy, and transport infrastructure.

It is also a rare beast – a family business (the family owns 20% with employees owning another 20%) that is also listed on the stock market. Which means there are a huge number of eyes watching Edward to see if he is of the calibre of his father and grandfather and capable of leading the business in the decades to come.

He says: “For sure, the pressure exists. I think about it and I can’t say it has absolutely no effect. But it has advantages as well. If I need to contact someone who is not easy to reach, I have a better chance because of the name and they will listen to me. So the pressure and the advantage cancel each other out.”

Bouygues cut his teeth in the construction branch of the family empire before in 2014 devoting 18 months to an MBA at London Business School.

5G: hype vs reality

His recent appointment as Director of Strategy for Bouygues Telecom comes at a critical time for an industry that is still trying to fully understand the implications of a 5G rollout and security questions posed by the widespread embedding of Huawei kit in critical parts of the network.

For industry watchers, Bouygues’ views carry huge significance.

He says: “We felt that there was a huge gap between the experience of smartphone users on 3G and 4G. And many people believe the gap between 4G and 5G will be as big.

“But what we see – and what we have discussed with other carriers – is that for the moment we have not found the killer app for 5G yet. Manufacturers are trying to sell stories about drones and autonomous cars, but for the moment the main application for 5G is to ease the congestion on the data network in heavy use areas such as city centres, airports and so on.”

He adds that, for the consumer, the hype is running far ahead of the change in experience. Which means focusing as much on the present as the future.

“The spectrum efficiency of 5G compared with 4G is only between 10-15% more. The latency can get better with edge computing [which decentralises data] and bringing the server closer to the user. But for B2C users, 5G is not going to make a massive difference. And I sure hope all these autonomous machines that use 5G have a back-up plan if they lose the network. They need to be capable of flying or driving without 5G connectivity - which means these activities should already be possible with 4G. In fact, many applications for 5G are already available on 4G.”

But 5G will offer specific opportunities for B2B users, Bouygues says, albeit a little way off.

“5G is great for network slicing – chopping off a piece of the spectrum to devote it to one specific need. So you could reserve a band for industrial users, such as the emergency services. This needs to be defined by regulators and the tech won’t be ready for testing until 2022.”

Which makes the recent furore concerning Huawei and its links to the Chinese government all the more significant. “I don’t think the French government or any European government has made up their mind on Huawei just yet,” he says diplomatically.

Futureproofing

While Bouygues and his 38-strong team are busy planning to futureproof the company, they are also deeply involved in the day-to-day analysis of Bouygues Telecoms’ current performance.

Bouygues says: “Half of the team is involved in data management. They are essential to what we do and have access to all the data within the company. They can tell you about data consumption on 4G, sales numbers – whatever we do, in fact. And we are working very hard on bringing value to the business through data. We are putting in place AI systems to help us in decision-making. There is a good chance that in a few years we will make decisions based on what the computer tells us.”

This twin focus on both the short term and long term mirrors the healthy tensions that exist within a family business that is also listed on the stock market.

“When you are family-run, you are trying to create something that stands for a very long time that can be passed onto the next generation. But we still have to deliver results for investors every quarter,” Bouygues says.

“Before I went to LBS, I had spent all my career in the family group. I had some very strong views about certain subjects – the advantages of a conglomerate, for example.

“But LBS opened my mind to other views on business structures other than conglomerates. Some of my professors had very different views to my own that I had to confront, such as the perceived inefficiencies of companies like Bouygues.”

Bouygues admits that he has been tempted to demonstrate his business acumen outside of the family business: “Once in a while I think of doing something on my own – to prove that I am capable to myself and to others. But I am very happy with what I am doing here. Why not prove myself inside the company?”

Recent research by Åsa Björnberg, Executive Fellow, Organisational Behaviour at LBS, revealed that it is exactly this type of “emotional ownership” that safeguards the long-term future of family-owned businesses.

In the case of Bouygues Group, the “healthy tension” between delivering on short term investor expectations and the long-term family-orientated vision for the company is solved by employing two deputy CEOs. One has a finance-orientated investor-focused role while the other is primarily tasked with overseeing the group’s long term strategic vision.

And the single most important thing when running a large company?

“Value your customer,” says Bouygues. “Do everything for your customer. The rest trickles down from that. That is the family way of doing it.”
Source:

Business Strategy Review
Business Strategy Review analyses and interprets contemporary research on strategic management and the wider business environment, publishing articles which combine disciplines and cross cultural boundaries. Leading business thinkers from around the world, both academic and managerial, come together in Business Strategy Review to debate current issues and present cutting-edge research and ideas. Visit our website.

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