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Smit: No Team, No Dream

Comcast’s innovation, customer experience successes stem from group effort 12/12/2016 8:00 AM Eastern
Comcast Cable CEO Neil Smit at the Comcast Center in Philadelphia.
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For Comcast Cable CEO Neil Smit — the 2016 Multichannel News executive of the year — teamwork is the secret of the MSO’s success.

For Comcast Cable CEO Neil Smit, it’s always been about the team.

 

In each of the past jobs he’s held — as a cable company CEO, a marketing team leader at AOL and on a Navy SEAL team (he retired from the elite military unit as a lieutenant commander) — the most important aspect of the job has been the people that surround him.

 

That’s never been more true now as head of the Comcast Cable division for the past six years, Smith said. It was even obvious back when he first met with Comcast’s top brass — chairman and CEO Brian Roberts and then-chief operating officer Steve Burke, now the CEO of NBCUniversal — about possibly running the cable unit.

 

“My wife and I came out to meet Brian and his wife and Steve and [his wife] Gretchen Burke and the rest of the team and their spouses,” Smit said. “I asked her on the way home, ‘What do you think?’ She said, ‘I think they are good people with good values and you prefer working in a team environment.’ I felt the same way. That’s been the best part about being here, being able to work with that team day in and day out.”

 

Teams have been a big part of Smit’s career through stints at Nabisco, where he was a regional president, a five-and-a-half-year tour with the SEALs and at AOL, where he oversaw that company’s Internet access business. Smit also spent five years as CEO of Charter Communications, building up that midsized cable operator and steering it through a bankruptcy that freed up its crushing debt load and allowed it to invest in the business, a move that many believe laid the foundation for Charter’s success today.

 

He joined Comcast in 2010 as president of its cable unit (he was named CEO in 2011) and began setting the stage for what could be the first full year of positive video customer growth in a decade for the nation’s largest MSO. For that performance, Smit has been named Multichannel News’s 2016 Executive of the Year.

 

Related: X1: The Rocket Fueling Comcast Growth [subscription required]

 

‘LASER-FOCUSED’ EXEC

“Neil is one of the best and most thoughtful leaders I know,” Roberts said in an email message. “He’s smart, strategic and laser-focused on execution. He’s critical to our growth and evolution — driving our product innovation and transforming the customer experience.

 

“His passion, focus and optimism these past few years make him truly worthy of this wonderful and, in my opinion, very well-deserved recognition,” Roberts said.

 

Smit, in typical modest fashion, defers most of the credit for Comcast’s success to the cable company’s employees. But that sense of collaboration has been with him throughout his career, whether it be in the military, where the people that surround you make literal life-and-death decisions, to the business world, where the right team can mean the difference between success or failure.

 

“For me it’s less about the work and more about the people I get to work with,” Smit said.

 

But make no mistake about it, the work is important. Roberts crowed days after Smit was hired back in 2010 that the new cable division president came into the office on the weekend before he was officially supposed to start just to listen in on customerservice calls. It was a habit that Smit picked up when he was at AOL and brought with him when he took over Charter in 2005.

 

He still does that today, he said, adding that he makes all of his senior managers — including himself — follow up personally on service calls. When a customer gets a callback from Neil from Comcast, it could very well be Smit on the line.

 

Smit said he makes about three customer callbacks a week. “I think it’s important to stay in touch with the customer,” he said.

 

Keeping a sharp focus on the customer experience has been Smit’s mantra since he came on board, and it has paid off in spades for Comcast and its investors.

 

In the six years that Smit has been head of the cable unit — which accounts for more than 60% of Comcast’s total revenue and more than 75% of its cash flow — Smit has consistently improved the video and high-speed data businesses. In those six years, Comcast has improved video customer losses in 25 of 27 quarters, a pace that Smit picked up from Burke when he ran the cable unit, and high-speed data customers have increased nearly 30% in the same period.

 

At the same time, cable unit revenue has risen 33% since Smit joined in January 2010 and cash flow has improved by 35%.

 

That customer focus and the power of its state-of-the-art operating platform, X1, has led to six consecutive years of improved video subscriber losses. This year, Comcast is expected to report its first full year of video customer gains in a decade, with most analysts predicting the cable operator will add at least 100,000 basic video customers for 2016. It would be the cherry on top of a six-year period in which basic video-subscriber losses have been reduced 21-fold, from 756,000 in 2010 to just 36,000 in 2015.

 

Smit will give most of the credit to his team, a seasoned cadre of executives that includes executive vice president and chief operating officer Dave Watson; and president, technology and product Tony Werner, as well as the thousands of frontline employees under them who have served as the foundation for Comcast’s success.

 

“From an operations standpoint, he has a great appreciation for detail, but he lets his team go ahead and get the job done,” Watson said in an interview. “He has a tremendous focus, but he lets you get the job done.”

 

MoffettNathanson principal and senior analyst Craig Moffett agreed.

 

“His real success comes not just from the fact that he’s a smart guy, but because he’s an exceptionally good leader,” Moffett said. “Comcast over the last five years has really upgraded its talent immensely. It’s a double-edged sword — an organization with lots of talent can easily become unwieldy unless you have a good orchestra leader who’s able to make everybody play together. That’s really where I think he has distinguished himself.”

 

GOAL-SETTING FOR INNOVATION

Straight out of the box in 2010, Smit challenged Comcast employees by setting a goal of at least one new product or service enhancement per quarter. Nearly 24 quarters later, the company has released dozens of new offerings, including Xfinity on Campus, a service that lets college students watch live TV and on-demand content on IP-enabled devices while at college; various “skinny bundle” offerings; multiscreen streaming video-on-demand offerings such as Stream TV; and others.

 

While Comcast has excelled on all product fronts — it added about 8.4 million broadband customers since 2010 and its X1 operating platform is considered by many to be the gold standard for the industry — video has been at the heart of the company’s cable success, dating back to Roberts’ efforts years earlier to bolster its on demand libraries and rights.

 

“At a time when everybody else in the industry was starting to coalesce around the vision of broadband first, Comcast kept their eyes on the prize of video,” Moffett said. “They never lost their enthusiasm for video as the core product. That’s not to say they didn’t invest in broadband, but they always saw themselves first and foremost as an entertainment company.”

 

Smit said he knew from the start that he and Roberts were on the same page.

 

“What’s great about working for Brian is he’s in it for the long haul,” Smit said. “He invests in the future, he believes in growth, he’s entrepreneurial and he’s up for new opportunities and new challenges. I’m a big believer in continuously looking for growth opportunities, whether it’s in people or platforms or technologies. We have a really good relationship.”

 

Video is just as important today, fueling new entrants in the SVOD and OTT space, as well as providing added fodder for mobile products from a wide range of competitors.

 

But programming alone won’t keep customers loyal, especially in today’s environment. Smit said that Comcast realized at the outset that it was the overall customer experience which fostered that loyalty. Early on Smit, Roberts and the rest of the Comcast team moved to drastically improve customer service, he said.

 

The efforts started out small. Comcast first guaranteed one-hour appointment windows for service calls and allowed customers to track technicians via an Uber-like app, for example. In 2015, Roberts unveiled an ambitious three-year, $300 million plan to build three new call centers, hire 5,500 customer-service representatives and revamp Xfinity retail stores across the country.

 

Smit said that the idea is to get staffing to the proper level — he defined that as having the right people taking the right service calls — which allows customer issues to be resolved more efficiently. That includes putting the right tools in the hands of both customers and service reps, including a knowledge-based system that prompts the best agent response to customer problems, overlaid with artificial intelligence that should improve the quality of responses even more. On the technician side, Comcast gives its workers better diagnostic tools to identify problems.

 

Even the network is getting in on the act. Comcast’s network is smarter, Smit said, allowing the company to restart a customer set-top box remotely to solve problems before they occur.

 

“We’re getting smarter — we’re getting more information from the set-tops and modems that we can leverage to make a self-healing system,” Smit said.

 

Comcast has also built call centers in Albuquerque, N.M., Spokane, Wash., and Tucson, Ariz., and has plans for additional call centers in Charlotte, S.C. and Fort Collins, Colo. Comcast also has hired many of the targeted 5,500 workers and has added additional enhancements to its service including access to Netflix service on its X1 set-tops.

 

“We can turn pretty quickly when we all get aligned around a product or a major initiative like this, the customer experience,” Smit said. “We do big things well.”

 

The numbers also speak loudly. In the third quarter, customer-service calls were down about 14% and Comcast’s on-time arrival rate for technicians improved to more than 97%. First call resolution of service issues improved by 7% and the company’s response time on social media channels has improved by 95% during the same period.

 

The Netflix addition to X1 was a milestone, as the SVOD pioneer has largely been considered to be a direct competitor to cable and a key contributor to the pay TV industry’s woes over the past few years. But Smit said the decision to incorporate the Netflix app on X1 boxes was easy: It was all about ease of use.

 

“I spoke with [Netflix CEO] Reed [Hastings] about six months before we got the product out and we got a deal done and released the product in that period of time,” Smit said. “The speed at which new content or new features or functions come out, you need to have the platforms in place to do that. In order for the cable industry to compete longer-term, it needs to have great content as well as a great user interface.”

 

NEXT UP: WIRELESS

Comcast’s next big investment likely will be tied to its next big product, a wireless offering slated for mid-2017 that will be created through an existing mobile virtual network operator agreement (MVNO) with Verizon Communications. Comcast created a wireless business unit earlier this year — Comcast Mobile, headed by former executive vice president of sales and marketing Greg Butz — to address the new product.

 

Comcast hasn’t given any details on the new product, and Smit wasn’t about to buck that trend. But he did say that mobile continues to be an important area for the company.

 

“We think leveraging our 28.5 million customer relationships, our 15 million WiFi hotspots and our Verizon MVNO is a good value and will continue to reduce churn,” Smit said. “[Customers] want more value and we think we can add value with the launch.”

 

Comcast has been less optimistic about over-the-top pay TV services. It has said it can’t see a viable business model there, even as services proliferate like Sling TV, DirecTV Now and Hulu’s planned OTT service slated for next year. Comcast is a part owner of Hulu through NBCUniversal.

 

Smit echoed Roberts’s sentiments on the issue, adding that for Comcast the economics of OTT are simply not as clear as in other products.

 

But the operator does see potential and value in one key component of OTT — the broadband network. Comcast has increased data speeds 17 times in the past 15 years as broadband consumption has increased 40% to 50% each year. Comcast has invested in new capacity, routers and DOCSIS 3.1, which promises Internet speeds of 10 Gigabits per second. On the programming side, NBCUniversal spent $3.8 billion to purchase DreamWorks Animation, a move that will add significantly to its content capabilities.

 

For Smit, those moves are merely another opportunity for collaboration and another chance for the team to prove its mettle.

 

“Brian and the team of us feel we can invest in the future of the company,” Smit said. “It’s a belief that the team can execute on those investments.”

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