The Accelerating Innovation in the Telecommunications Arena paper from TelecomTV is the latest in a series of initiatives that try to understand how telco can become successful innovators.
As is traditional with these, there are a lot of references to digital services, digital services providers and digital transformation. There is also a candour that this story that has been around for years without any real sign of success. The paper makes a call for more collaboration, more standards, lowering risk; but seems to miss the most important; more willingness to take risk!
Telcos actually live in an ultra-low risk environment!
Despite a decade of supposed existential threat, I am unaware of any telco truly having ceased to exist. Telcos remain profitable, just not as profitable as they once were. They are slowly losing the value added services to other players and becoming providers primarily of internet access. Covid19 has confirmed that access to the internet remains a fundamental need. This is the most opportune moment for telco in twenty years. Yet, in this period, where the releases of functionality from Zoom have been continuous, I am unaware of any form of innovative product or feature from telco.
Risk aversion is in the DNA of telcos
Risk aversion is built into the telco! From the 5 9’s availability culture, all the way up to the continued focus on capitalisation of all investment. I highlight three personal experiences to illustrate this:
- At a supplier, Cramer Systems, I watched as a project which started as a way of enabling flexible innovative use of a telco’s copper access network, was turned into a project to replicate the existing legacy PSTN system.
- As part of a telco, BT CCC, I saw an innovative, externally facing call centre division consumed by the main organisation. External customers (banks, cars and finance), where the real innovation occurred, were abandoned; the division ultimately becoming just another part of BT’s internal call centre.
- As an analyst at a TMForum catalyst, I have seen a product manager for a major telco look in horror as I asked them how they would take the catalyst idea and turn it into a real product with real customers. Catalysts obviously weren’t for real.
Being cynical, you could argue that the real risk and innovation that telcos have achieved in the last few decades has been in accountancy. BT’s two major scandals in global services certainly demonstrated a willingness to be innovative and take risk.
Darwin had it right
Successful evolution (innovation) works because there is a risk of death before reproduction. With no risk of real death for a telco it seems an unlikely environment for innovation. Therefore, for many the likely future journey is towards becoming a utility telco (Appledore will be publishing research in this area).
For others who don’t accept this end destination, there needs to be an acceptance of risk and the possibility of ultimate project failure. As Alan Quayle noted in his excellent response to the TelecomTV paper, we are not talking about taking crazy one-off risks. Rather we are talking about a managed portfolio of innovation bets, some big, some small. With these bets managed within a culture that accepts risk of failure and manages that risk adapting along the way. Telcos need to start making these bets and incentivising people to see them through to their conclusions. Permitting failure, with the opportunity for valuable lessons, or achieving successful adaptation and growth. Setting up yet one more technology led talking shop will unfortunately not do this.
Appledore have extensively written on the challenges of SDN/NFV innovation in telco. We also have looked at some of the technology capabilities and change implementation approaches that we believe can overcome these.