Old innovation strategies that used to work for all telcos are now insufficient. This writer offers newer tech-co perspectives for consideration…
Amid internal and external pressures in the last decade, telcos have realized that radically transforming their business model towards a technology company (‘techco’) model along with their IT investments, is critical if they are to improve the way they meet the needs of their customers.
We have observed that many telcos are working on a legacy approach where IT and network teams are risk-averse, work in siloes, and have a lengthy product and service development process with strict verification criteria. All these ways of working hold back their ability to quickly bring new solutions to market.
To increase their agility in responding to customer needs, telcos first need to change their approach to innovation across multiple areas including culture and skillsets, as well as product and service creation. Switching to a DevOps approach is worth considering, as it prioritizes speed, agility, and automation — while also increasing data sharing across all groups to enable faster learning.
Culture is key
To drive faster innovation cycles, adopting an entrepreneurial mindset will be integral. By providing leaders with more autonomy to own their budget and product development timelines to meet pressing customer needs, and enabling them to function like a start-up, leaders will be empowering them to disrupt traditional technology timelines. They can also take greater risks than larger, more bureaucratic teams, which has been known to stall telco innovation.
Additionally, telcos can drive more disruptive growth by implementing agile horizontal teams where individuals can work across multiple groups instead of being isolated to specific siloes: this allows learnings to filter throughout the organization, consequently accelerating transformation efforts.
Also, leaders should focus on upskilling the existing workforce, giving particularly strong stakeholders greater responsibilities and autonomy to develop and manage their own solutions.
The ecosystem approach
In the past, telcos focused on developing deep relationships with network equipment providers (NEPs). These relationships were often exclusive and lasted many years, locking the telco into the innovation cycles of their NEPs.
Hence, telcos should now explore an ecosystem or multi-vendor model, working with a larger group of partners to allow for solutions that are built on best-of-breed components. This would also enable them to increase the flexibility of their networks and avoid the rigidity that often comes with strict vendor lock-in. Cloud native is essential for this, enabling operators to scale and upgrade their networks more easily.
Leveraging open source technology is also a critical element of this strategy, as it complements a virtualized architecture by allowing a huge community of developers to create new and innovative solutions running on off-the-shelf hardware. Singapore’s MyRepublic used cloud and open source to avoid vendor lock-in, improving their ability to meet short-term demand changes with greater flexibility, scalability, and availability. They also reduced hardware costs by 30% and cut year-on-year total cost of ownership by double-digit percentages.
This model is particularly powerful when customer needs are changeable, their budgets limited, and time-to-market is shorter than in traditional markets. As customers demand ever more specific requirements on their network, an ecosystem approach allows the telco to produce the environment for the customer to provision their own service.
Additionally, given that telcos in APAC are focused on B2B and, in some cases, specific verticals to generate revenues outside connectivity — building ecosystems of sector-specific partnerships can help expand growth areas. An example is SK Telecom, which is focused on developing its AR/VR and metaverse capabilities, while building partnerships with content developers.
Ecosystems enable operators to latch onto the expertise generated by a vertically orientated ecosystem of independent software vendors (ISVs), managed service providers (MSPs), developers and start-ups. Even for those operators that are focused on protecting their core comms or developing a more horizontal play, the vertical opportunity is imperative across domains and requires the telco to designate resources toward establishing internal groups and, importantly, solution ecosystems.
Change is a business imperative
To ensure their long-term survival, telcos must make far-reaching changes to the way they structure their business and interact with customers. Moving away from a model that has served them well for such a long period of time will be a long process blighted by numerous growing pains, but it is essential they invest in a future that will see them traverse up the value chain and realize the B2B opportunity.
The first thing leaders must do is define their ultimate goal and systematically socialize this across the business. When this is clear, objectives can be set with appropriate KPIs to measure against — cascading from the highest-level goal to each individual’s roles.
The final focus areas are about technology and how to use it to its full potential. It is almost a given that telecoms operators will continue to evolve the underlying technology: the most prominent challenge is ensuring they have the skills and expertise in place to make use of this, plus be able to maximize their potential even with external partners and customers.