In my travels I meet many Telco CEOs who have a common question, “How can I transform my organization to be more innovative?” My response is always the same, “You can not.” They look a little perplexed as most people tell them they can if they buy their snake-oil. Usually packaged up as digital-tripe like ‘digital transformation’ with a self-serving spin of ‘NFV/SDN’ or ‘buy all your BOSS (Business and Operational Support System) from us’.
I go on to explain the issues they face:
- The financial markets judges the CEO on next quarter’s numbers, so even though they want to innovate, the whole organization’s focus will be making those numbers. Telcos are trapped in the innovator’s dilemma, they have to meet today’s financial number, tomorrow be damned.
- Large entrenched organization with tightly bound processes focused on running a network with built-in services like internet access, telephony and SMS. (There are many more services than this, I’m simplifying to make a point.)
- Highly-politicized, anti-failure culture, focused on making the next rung of the career ladder – perception not results matters.
Which means: Business as Usual (BAU) kills most innovation.
At this point they smile in recognition of their situation and respond with, “So we’re screwed?” My response, “Of course not, you just need to innovate outside of your existing organization, like Dialog IdeaMart.” I immediately focus on a case study to stop them thinking they can become VCs (Venture Capitalists) or other such dopey investment incubator idea. They can try, but will generally fail.
IdeaMart is simply an innovation incubator, where a small group of people, think one highly-competent web programmer and a lone-hunter business person are given free reign to throw a ton of crap against the wall and see what sticks. The old-school method would be market studies and business cases, all of which leads to inaction. There are tons of services working around the world, innovation incubators simply need to do to something (copy) – rather than the usual litany of excuses. Facebook copied other social networks is wasn’t the first, Apple’s iPhone copied other smartphones it wasn’t the first either. Successful innovation is not about being the first.
IdeaMart has put something quite clever and special together. They target both developers and non-developers. They support a range of business models including per use and revenue share. They are an incredibly small team. Yet they have 900k users of IdeaMart’s 4000 services, generating 1.5+M API calls per day, and achieved 220% revenue growth this year (an acceleration from last year). Its working.
Once the CEO hears the word API, “So its APIs, we need to buy some API management and an API marketplace.” My immediate response is an emphatic “No! The money is not in the APIs, its in the services.” APIs are an important technology but telcos suck at working with general developers, use the APIs internally, possibly with partners and customers .
“Your opportunity is in the distribution of new telecom-enabled services where local distribution matters. No other business entity offers access to virtually all the consumers and businesses within a country. The key is those services must have defensible telecom value.”
Do not copy Apple or Google, focus on their weaknesses like Amazon and Facebook:
- Where local distribution matters;
- Telecoms-enabled services, where the network matters (like CRBT);
- Cloud-based NOT handset based services; and
- Enterprise Applications: where complexity / trust / multiple decision makers make the sale more complex that simply downloading an app.
We’re seeing some telcos get-it, you’ll meet some of them at TADSummit on 17-18 November, successfully building local ecosystems. We’re seeing incubators of technologists get-it, and create cool services with strong local market engagement that are then killed by telco marketing. The Innovation Incubator need 2 types of people, technologists and lone-hunter business people. TADSummit is as important to telco marketing as it is to telco technologists.
Business As Usual Kills Innovation
Thank you Alan for referencing Dialog Ideamart. We believe in continuous improvement.
Yes, we love Ideamart.
They could change our life style too… Ideamart is the revolution of srilankan telecommunication. We wish them best of luck!
Extremely accurate summary of why telcos fail to innovate. More importantly the suggested formula of focusing on re-distribution of locale sensitive, enterprise grade apps does indeed work well. Looking forward to TADSummit.
A deadly combination of clueless and arrogant executives stuck in the long past halcyon days, ever increased complexity of hundreds of disparate legacy systems, lock-in by multiple short-sighted system integrators who prefer to keep status quo instead of making value propositions and organizations structured by corrupted managers in such a way to hinder development of any internal competency is dragging telcos down for good.
Excellent post Alan – you nailed it.
Very well said.
I think the change should start at the board level. investors should be aware of size and complexity of the issue. if they still want to maintain a profitably venture, they should hire a CEO that understand that a massive disruptive change is needed to shake the whole organization BAU mindset. everything else is doomed for failure
Great read Alan, thanks ! Fully agree on Ideamart, great platform they have put together. Have you come across any other successful examples from telcos out there when it comes to exposing their APIs ?