Last week BT announced that Ian Livingston will take-over as CEO of BT Group from 1st June. What do we think should be on Ian's 'to-do' list?.

In our view Ian has five challenges to address:

- Top-line growth: BTs recovery from the abyss peaked in Q3 two years ago with growth (year-on-year) of 8%. The corresponding figure was 5% twelve months ago, and 1% in the results announced in February this year. Any growth for what is a fixed-only business is highly credit worthy, and yet the feeling is BT should have done better. Ian's challenge is to repeat the success he has had in turning around BT Retail across the Group.

- Customers and services: BT needs to evolve its portfolio to suit its customers, not technology. For example, approximately 19,000 graduates will join the UK job market in 2008 (Source: Association of Graduate Recruiters). This generation of students are compulsive communicators (good for the industry), and use a mix of direct (voice, email, but also Instant Messaging and texts) and indirect (social networking sites, on-line message boards, second-life etc) means to communicate. BT needs to provide these new workers with the direct and indirect communications services they need in the workplace.

Central to achieving a greater understanding of customer needs is marketing. BT needs to ensure that its brand is spontaneously linked to the communications services it provides to the market segments (both decision makers and users) that matter most to it. Ian needs to bring customers and marketing more to the fore in BT.

- Networks and technology: Last week in EuroView I referred to BTs need to refresh its 21CN story and address the issue of fibre in the access network. In The Sunday Times two days ago Ian was reported as laying down a challenge to regulator Ofcom on FTTP (fibre to the premises) and the USO (Universal Service Obligation). I doubt he issued a challenge as such, but the point is BT feels it should not have to pay the billions it would cost to provide FTTP across the UK, as it is no longer dominant, and the concept of USO is outdated.

FTTP is the issue in the UK telecoms market in 2008. Resolution of this is important for the UK economy (or it will get left behind), and BT has to be part of the solution if it is to happen. But it has to be sorted quickly, oddly enough because of the 2012 Olympics. Can you imagine the furore if UK citizens were unable to watch the Olympics in HD over broadband (but overseas customers could) because Ofcom and BT were unable to sort this out? BT is, of course, also the official communications partner to the 2012 London Olympics to add another twist to this.

- Strategy and structure: Some weeks ago we said that BT's strategy needed updating. The strategy (to defend traditional services, grow the new wave and transform the business through 21CN and IT) remains valid, but is now well-worn. We would like to see its strategy expressed more in terms of customers, services (not products) and customer service.

Last year BT re-organised to create Design and Operate functions within Andy Green's Group Operations and Strategy division. This includes both the BT network and IT systems. Since Andy left, it has been unclear to us who (other than the CEO) leads this division. Aligning structure to strategy is a popular business school idiom, but it also happens to work. This needs to be sorted out.

- People and processes: Communications is a services business, so the service that customers receive is largely dictated by those that deliver it. Ian needs to continue to invest in the integrated, automated and rationalised IT systems, but also in the people that are central to making customers happy. Investing in the former should lead to great improvements in efficiency, but one (process) without the other (people) is flawed. As Openreach has shown, investment in people can make a big difference. People not systems deliver service excellence, and become the embodiment of the brand.

Ian inherits a stable ship, but the company needs to kick-on from here. Addressing these challenges will go a long way (in our view) towards achieving this.