As digitization continues to disrupt all parts of the economy, the best antidote remains innovation. Telecom providers, like organizations in every sector, face a shifting landscape of competitive challenges and opportunities— fueled by digitization and emerging technologies — and a pressing need to innovate their business models and mitigate risk if they are to make a successful transition to a future digital society.
The telecom industry plays an essential role in the lives of businesses and people, sitting at the heart of a world that is becoming more connected every day — from augmented reality to virtual reality and eventually to holographic communication. Telcos must ask themselves about their future strategy and offerings, and they must prioritize new services and revenue streams to win an ever-more-discerning and demanding customer base.
For the first time, it seems the telco sector is facing genuine threats to its dominance, thus needing to reinvent itself in order to survive the future.
More favorably for providers, technology advances including 5G, Internet of Things (IoT) and edge computing present telcos with compelling opportunities to expand beyond traditional telecom services to harness the power embedded in their advanced networks to partner with — and compete with —established tech giants and offer computing platforms and services directly to enterprise customers.
Business Model Challenges
One inhibitor facing telecom operators’ ability to capitalize on the digital revolution is their current business and/or operations models, which are quite different than those of their competitors. The telecom model relies on high investment and a conservative approach, while not placing as much priority on the human element. In contrast, their over-the-top (OTT) competitors usually make smaller investments (in part because they use the telco infrastructure), embrace risk, and consider human capital one of their most valued assets.
The companies who will achieve success in the future are the ones who are world-class at adapting and driving new value and allow their people to be free to think and take risks to enable innovation. Embracing a strategic, forward-looking business model is critical to survival and growth.
In the past, telcos have had the mindset that those who are in protected markets with reliable income streams have a lesser need to drive innovation. In reality, however, these are the markets that are financially better placed to make the required investments in innovation. Those who are in saturated and highly competitive markets must innovate to stay ahead but may not have been financially positioned to make those necessary investments to reap the benefits.
Strategy is about choices — about being clear on the organization’s strategic aspirations and identity, and aligning its products and services, capabilities, and resources with that identity in a deliberate and coherent way. Having multiple strategic identities leads to conflicting objectives, unhealthy competition for investments and resources, and a heavy burden on people and culture.