In 2000, it cost $2.7 billion for a human genome to be sequenced. By 2007 it was down to $10 million. By 2014, the cost had dropped to $1,000. In 2020 it will cost a penny and be cheaper than flushing the toilet, according to the prediction of SP Telecom’s CEO, Mui Hoon Poh, in her keynote at TM Forum Live! Asia.
This describes the scale of change today – exponential not linear, she said, pointing to the story of Kodak Eastman’s demise – a 120-year-old company that sank when digital photography changed the whole photography market at once, including the camera, film, processing, storage, distribution, marketing and more.
It isn’t just that Kodak lost its competitive edge or became complacent, she said, but that the changes were unprecedented and on so many fronts at once – it wasn’t about a gradual, linear decline of market share. But this is the world that businesses must survive and thrive in, or disappear. How do you deal with that level of exponential growth?
Digital underpins this disruption, but also offers opportunities for telcos to “ignite growth”, she said, stressing that digital capabilities are core to the overall business strategy, not one strand of strategy. She then used McKinsey’s economic essentials of digital strategy (see below) to highlight the potential that’s out there.
This is Mui Hoon Poh’s interpretation of the schematic.
Undistort demand: In the analog world, it’s hard to match demand to the customer. In the digital world, we can unbundle things, tailor the offering, price more accurately and take away subsidies for things the customer doesn’t need. Think about music or newspapers. Now you don’t have to have the whole CD or a bundled newspaper and all the supplements – just the parts you want.
Create new markets: Everyone talks about Uber. It is interesting, but why? Because it’s about creating market out of unused capacity in cars and matching it to people who need rides, fast. This requires mechanisms such as matching, exchanges, standards and verification – and these created a whole new sector.
Unconstraining supply: Take Airbnb – when you ‘unlump’ the capacity, you create new supply that is attractive to a lot of new customers through digital capabilities.
Re-imagine business systems: This is about changing the supply-side cost structure by automating, virtualizing, disintermediating and becoming more accurate and predictive. Free, a communications service provider that has disrupted the market in France, got rid of all physical channels and is all-digital, making it a simpler product set and lowering costs dramatically.
Create new value propositions: Examples include Nike and John Deere, which are using digital capability to enhance their products with information so they can better package them and make them more attractive. “Make the product social and build a community around it -- make it a service,” Mui Hoon Poh said.
Hyperscaling platforms: Google is the best example of creating new value chains and ecosystems – an entirely new type of media company, whose growth is based on search.
Other key trends which offer threats and huge opportunities are the changing nature of ownership – many of the world’s most successful companies are built around leveraging others’ assets – and growing customer expectations.
Mui Hoon Poh said the telco market faces many challenges, such as commoditization, market saturation, OTT competition and more. But, she added, “Actually there are opportunities if we know how to leverage the digital capabilities around us.” She pointed out that today’s telco is focused on three things when it comes to transformation: customer experience, business models and operations.
She added six key strategies to capitalize on these digital capabilities:
Reinvent the core
Pursue adjacencies – connectivity alone is not enough
Build the right talent capabilities
Build an agile, digital, empowering culture
Revamp IT
Start with the customer and work backwards
She added, “I’m very glad to be part of TM Forum. There is a lot of value from sharing with community and I’m very keen to continue to be part of it and contribute back to it."
Watch this video for an exclusive back stage interview with Mui Hoon Poh:
