Digital Transformation & Maturity

How a look into the past can save telecommunications companies

That headline is a pretty bold statement, right? Well, that doesn’t make it any less true. In the past, telecommunications companies enjoyed a monopoly–like status within their industry. Data transmission capacities were scarce and in the hands of a selected few.

But the industry’s borders are beginning to vanish, a process that will likely accelerate in the coming years. New players are entering the market, trying to establish themselves at the center of an evolving communications and media ecosystem. Among these new players are household names like Apple, Samsung, Google, Amazon, and Netflix. These are innovative companies, known for disrupting entire industries, with big war chests and agile approaches to product development.

Let’s take Apple and Samsung as examples. They are already in the process of taking over the decision–making power over SIM–card distribution from incumbent telcos. As of now, SIM cards are still distributed by traditional players. But with the emergence of the embedded SIM (eSIM), manufacturers of mobile devices will eventually control who will provide data transmission services to consumers. Buying data transmission capacities themselves and subsequently offering those to consumers won’t be difficult for tech giants like Apple and Samsung.

As a result, telcos now face the existential risk of losing their relationship with end consumers. Thus, telcos risk becoming simple suppliers of a cheap and replaceable commodity – i.e. data transmission capacities – in a rapidly evolving ecosystem.

So, what can the established players in the telecommunications industry do to avoid this grim fate? To prepare for the future, it’s worthwhile to take a look into the past. John “Cable Cowboy” Malone, CEO of Tele-Communications Inc. (TCI) from 1973 to 1996, was known for his one-of-a-kind management approach back then. His management style emphasized:

  1. Keeping corporate structures decentralized, flexible, and cost–efficient.
  2. Allocating capital into innovative joint ventures.

He actively sought young, promising cable entrepreneurs, partnered with them, and provided them with access to TCI’s massive customer base and infrastructure. A consummate dealmaker, Malone asked for stakes of their businesses in return.  Among his investments are well known names like BET (acquired by Viacom for $3 billion), founded by Bob Johnson, Teleport (acquired by AT&T for $11 billion), and the Sprint/PCS joint venture (acquired by the Sprint Corporation for $9 billion).

Today’s CEOs should follow Malone’s footsteps. Their companies need to undergo a radical “weight loss program” to regain flexibility. On their search for new growth markets, they need to allocate parts of their budgets to building digital ventures that are not stuck in a slow-moving corporate environment. These digital ventures would be at the pulse of today’s and tomorrow’s consumers. They would enable corporates to offer their customers a multitude of new services that will seamlessly integrate into their daily lives. In turn, they can enhance customer retention and thereby raise recurring revenues and growth.

However, building digital ventures isn’t easy. You act in a fast-paced environment characterized by high uncertainty. During every stage – from setup to launch to scale – things can go south, resulting in high losses and, sometimes, the death of the venture. While every new company has its own unique characteristics, most of the steps one needs to take to thrive, stay constant and consistent. I experienced that first hand while advising many corporates focused on incubating digital ventures. I helped to constantly customize and refine the process of setting up, launching, and scaling companies. During this time, I was able to distill all my learnings into a systematic approach to building digital ventures –– a comprehensive, yet reasonably sized playbook consisting of 100 tasks. It’s called the 100 Task Startup.

The 100 tasks are distributed along three phases: Setup, Launch, Scale. Let’s take a closer look at the setup stage. In this stage, the foundation for all future startup activities is built. The corporate has to allocate an appropriate amount of budget and needs to start staffing their launchpad and ventures. The data and reporting infrastructure needs to be set up, and the right tech stack to support your company’s entire value chain need to be determined. These are just a small subset of the 28 essential tasks that should be considered just in the first stage, even before the venture’s launch. Without proper execution of these tasks, ventures risk failing during the launch and scale stages.

Like me, corporates will experience a lot of costly failures when they start incubating their own companies. To succeed, they have to learn from their experiments, objectively reflecting about what went wrong and what are the lessons to be learned from it. With every iteration, the building process will become more efficient. This will take time. But it will eventually help corporates – not only telcos but also other industries – make progress towards a promising digital future.

Clearly, the key is not only to work through the 100 tasks in a checklist-like sequential manner. What matters is also to adhere to the lean startup methodology while building your venture using the 100 tasks. Specifically, waterfall processes, in which one thing is done after the other, will slow you down considerably. Instead, iterating individual tasks – quickly redoing them in case they don’t match your customer’s pain points – ensures your digital venture is constantly incorporating the customer’s feedback into the venture.

In the end, telcos have no other option than to reinvent themselves through continuous experiments. They need to undertake the “Cable Cowboy diet”. And they need to invest heavily in building their own digital ventures. Otherwise, their central positions in their rapidly evolving ecosystem will shift to the periphery instead of to the center. They will be left as mere providers of a cheap and replaceable commodity, inching closer and closer to irrelevance.



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    About The Author

    Founder and CEO, Bell Ventures

    Martin Bell, CEO at Bell Ventures, is a leading authority on corporate incubation. More specifically, he advises large corporations across the world on how to rapidly turn their innovative ideas into successful products and companies. He was the Chief Architect of Rocket Internet’s 100-day launch process through which he led 20 startups in one year. Prior to this he studied at Wharton and Harvard. Martin’s fundamental belief is that in a world of accelerating change, innovation is an imperative rather than an option, disruption is an opportunity rather than a threat, and entrepreneurship is for all rather than for few. He believes that success in venture building is not a matter of luck, but something that can be triggered by following a step-by-step process, which he can teach, and you can learn.

    2 Comments

    1. Hello Author,

      Telecommunication Industry has done a progressively better year on year or we can say a decade after decade. Wires used in earlier decades were made up of some well known good conductors like copper, but nowadays data transmission with fiber optic cables have set a high benchmark in relation to previous connectivity hardware used.

    2. The Media, TV and broadcast industry is still growing — despite digital disruption. Telcos need to better track the development strategies and its stealthy impacts to the Telco industry. Are Telcos loosing revenue sources and opportunities to adjacent industries as landscapes change?

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