Communication service providers (CSPs) are often criticised for not being innovative, but that should hardly be surprising. For years they have had to cut costs and concentrate on core investments like network and IT, reduce headcount, and concentrate on getting and keeping customers mainly through marketing. This scenario does not leave much room, or money for innovation.
The other popular means of reducing headcount and costs is to outsource some core functions but have you ever heard of an operator outsourcing innovation? I didn’t think so.
It seems we have an impasse here. Most CSPs realise the need for innovation, if only to have some unique products or services to differentiate them from the competition. Others work on the premise that others will innovate and if they find out first they could tie up exclusive deals with the innovator or simply acquire them.
The latter model has its issues as well. Trying to assimilate innovative organisations, particularly those in the digital space, into a CSP environment often spells the end of the marriage. The CSP is often left with the innovation but not necessarily the innovators.
Those developing new digital services are least likely to agree to an exclusive deal with any one CSP so as not to limit their sales or exit strategy. Getting caught in a bidding war might deliver the best initial deal but there is no guarantee of recurring revenues in the future. Alternatively, they could simply opt to partner with an over-the-top (OTT) player or distribute through an app store or content consolidator to attract a much larger audience.
Even that model is wearing thin these days. With hundreds of thousands of other apps to contend with the chances of blinding success are limited. Is this an angle for CSPs to take in attracting innovators? Stick with us and we can guarantee direct access to our user base or go OTT and risk the chance of never being discovered.
This is especially relevant if the content or apps being developed are limited to a country, region, demographic or community sector. By going OTT, the firms may miss the intended target, whereas a partnership with a CSP focusing on one market could garner the best results.
As I stressed in my last post, partnering offers some fantastic benefits to the partners if each clearly knows the role they have to play, and no one partner tries to bully or dominate the others. Good partnership managers are also a rare breed as they have to balance legal, technical, marketing, and personality issues with great diplomacy.
However, there is another option – one where the CSP decides to become the innovator by establishing teams that are funded by the parent but act as independent entities left to their own devices.
This may sound totally alien to many C-levels in the Telecom industry but it really is the only way it can work. By establishing an environment that looks and feels exactly the way a young innovation team would work is the start. Paying them a reasonable retainer with the promise of much more commensurate on the success of the endeavour is then other.
Young innovators work all hours, often from home and are stimulated by overcoming challenges and coming up with something unique rather than working 9 to 5 and taking home a pay packet. Innovative CSPs like Telefônica understood this model when they established Telefônica Digital.
Others have set up innovation teams of five to ten techie developers, a bit like a mini 'hackathon,' that come up with ideas and then challenge each other to develop a solution.
Of course, some CSPs may choose not to innovate or not seek out innovation altogether, and stick with what they know best. The question is, who will survive on the long run. Your guess is as good as mine!