For the last ten years in Asia's telecom markets, innovation has been driven largely by the industry's
In short, their brief has been to operate - not to innovate.
Moreover, the strategies required to succeed in this endeavor focus on process systemization, and financial and operational discipline. Thus, operators tend to attract people with procedural expertise, whose strengths are logical, straight-line thinking and high attention to detail - not innovation and creativity. The human capital operators attract is unlikely to include the sort of people who apply for jobs as
In this environment, almost by definition, within Asia's telecom industry the responsibility for innovation has been transferred to the
But now that penetration is maturing quickly, reaching comparable levels to some developed countries, operators must learn to innovate. The evolution of the telecom market does not have to be driven by
Mobile money is an excellent example.
This service innovation has seen operators using mobile to extend mainstream financial services to the many billions of consumers worldwide who are currently excluded from the formal economy.
The equation is simple. Traditional financial services require heavy investment in infrastructure to support users who primarily carry out micro-transactions. Distribution of these same services and transactions over mobile networks and handsets reduces the required investment dramatically, thereby enabling mainstream financial services to be offered cost-effectively to previously unbanked people for the first time. This breakthrough is generating major benefits, not just for the consumers themselves, but for the local businesses and economies in the countries where they live.
But mobile commerce is also now serving as a cash replacement in developed markets. Already, in Japan, more than 50 million people, or about half of all cellphone users, carry phones capable of serving as wallets.
More importantly, in a reversal of the traditional telecom paradigm, this service-led innovation is forcing equipment
This exception to the rule demonstrates the potential for telecom operators to drive service innovation - and, in 2010, that is exactly where they need to focus. If they don't, there is a real danger they will fall two steps behind the
This point is not lost on telecom executives. In
In the face of increasing competition, operators recognize the need to develop more intimate relationships with customers. They plan to invest in customer care and develop long-term loyalty through an enriched user experience. They believe the battle for wallet share will not be won through a killer application, but by service quality and innovation. They don't intend to mimic
As one integrated operator put it: "Telcos' niche is to provide services based on our better knowledge of local customers..."
To this end, the study found operators planning to invest in business intelligence and advanced analytics to profile end-users and uncover preferences and trends that will guide service innovation. In the future, the market can expect localized services and personalization, as operators seek to deliver a differentiated customer experience.
Clearly, if operators are to get into the driving seat with service innovation culture, we can expect substantial changes in terms of increased R&D investment and moves to attract innovators. Indeed, the study found many CEOs already concerned about finding the right talent.
As one interviewee admitted: "Talent is an issue. There are good IT people;
Many CEOs also recognized the value of partnering closely with third parties, such as
This is not to say that operators won't have to create their own internal innovation culture. To drive service innovation, operators will also have to create organizational structures and processes that make creative thinking and challenging the status quo a way of life.
Such changes are not easy - but they are possible.
We must remember that operators have already been extremely innovative in their efforts to provide a low-cost service to an incredibly broad population base. They have proved the masters of pricing and cost structure innovation and restructuring their business models to reduce their infrastructure and people costs substantially by significant orders of magnitude. Over the last few years they have learnt how to share infrastructure, created highly flexible cost structures via outsourcing and leveraged every possible distribution mechanism to deploy their services into previously inaccessible areas.
Thanks to their efforts, telecommunications is one of the few services available to the public that is accessible to almost everyone - reaching people who still don't have electricity or clean drinking water.
Thus, operators have shown themselves capable of innovative thinking and moving into new business models. If they now deploy their resources decisively toward service innovation, operators have a real chance to begin to play a greater role in shaping the future of the industry.
While they still have the advantage of holding primary consumer relationships, they must invest in R&D, attract new talent and partner closely with service providers to create more compelling services that will forge a loyal customer base and allow them to control their own destiny.
Jonathan Dharmapalan is the leader of