Why are Telcos not innovating as they used to?

Back in the days while I was a university student, one of my best friends was doing an internship at Orange Telecom in the Dominican Republic. He was sharing his experience with such a passion that it captured my attention and got me interested in learning more about the mobile and telecom industry. It was quite intriguing. The more I read the more I wanted to be part of it.

He approached one day and told me that he was finishing his internship and he was leaving back to France. He mentioned that there was a possibility for me to jump in and replace him as a Product & Service Executive. I was really excited about the idea.

I got my interview and I managed to get my way in. I never felt so happy in my life. Orange offered a fast-paced environment, a workplace culture that encouraged innovation. Everybody had the chance to prove themselves and mistakes were part of the learning experience to build meaningful solutions that would impact the market. People’s drive was all about disrupting the market. Orange empowered you to be proactive and self-confident in order to bring ideas to life. I thought I was in heaven. I was working 14 hours a day. I was missing classes that were affecting my grades. I was working on weekends and holidays. I volunteered for any tasks. I was completely workaholic and obsessive. I finally had the opportunity to manage my own projects. Some failed and some were successful. Working at Orange has been one of the most high-impacting and rewarding experience of my entire life.

Organizational structure and leadership: Startup Vs Big Corporation

  1. Motivational drive. When it came to innovation, creativity and building new products and services there were no rules. We were creating products that were then used on other subsidiaries. We were the most innovative Orange subsidiary in the entire world. Orange organizational structure was similar to a startup. The only difference was that it was backed by France Telecom and, therefore, we had a lot of cash. You were driven by the challenge of disrupting the status quo. You learned on the go. They offered a lot of opportunities for career development in order to train their personnel. Whether you needed to learn how to use excel, improve your presentation skills, learn more on how to sell better and close deals or learn more about the technical aspects of mobile product development. You didn’t need to be a top tier school graduate. You only needed to be driven. People were highly motivated and empowered, capable of excelling and doing spectacular things, beyond expectations. Great startups emerge every day from empowered individuals.
  2. Leadership. Leadership played an important role. A small company that is growing tend to have a leadership that is more liberal, humanistic, creative and fast forward. On the other hand, when a company is big leadership tends to become more financial oriented and staff are treated as numbers. At Orange, anyone could reach the CEO, CTO or CMO or any other C-suite executives. You could exchange with other departments and just needed to open the door and ask “ Hey, do you have a minute?”. We even went out and had lunch together! We used to hang out freely and not as part of some HR metrics to keep a great working environment. It was all natural. C-suite leaders should get out of their offices and meet all their staff regularly. Build a bond with their community, share experience and learn from what people has to say. Instead of cultivating fear and snobbism they should cultivate a sharing humble culture. Leaders become leaders through the eyes of others because they showed they care, they helped, they were available. A Senior told me once that she was working for her juniors because she was hired to help them to get the most out of their talents and achieve their goals. This is the kind of attitude that leaders should have to stimulate innovation.
  3. Working environment. Working at Orange was like working for Google or Facebook. People were not using suits. It was young, fresh, open-minded towards diversity but most important it was fun.You spend more than 50% of your lifetime at work. Your co-workers become your family and, therefore, you need to integrate everyone without discrimination. A hierarchical and discriminatory organizational structure will do not let ideas flow. Everybody should be empowered to share, correct, improve or innovate in an organization towards a common goal. Whether is a customer service experience, a telemarketing practice, a new product idea or any technical support process. The organizational structure should be more open and horizontal. Everybody can help and contribute. Individuals should be responsible for their own progress within a company and the company has to provide all the tools for their employees to keep motivated, empowered and self-driven. However, some Telco’s organization structure seems to be obscure and secretive where everyone fears about everything; their co-workers, their bosses, their mistakes, etc. It seems like everybody is on the defensive mode all the time. Communication should be more open. Intranet, for example, should allow co-workers to exchange ideas. Telcos intranet should be more updated and oriented to a business network where employees can learn more from each other, can access to online training anytime, can participate to competition and can earn perks to being promoted or can create projects that can help the company to innovate.
  4. Individual Business Units.

Each project should be able to be managed individually just as a startup or like a business unit by a team with different skills capable to highly impact the economy through their innovations. Most Telcos are obnoxiously bureaucratic in these days. Managers are not empowered and decision making takes ages. It’s all about ARPU, reducing costs, annual yields, stocks value. Thinking about retention as the new acquisition. Innovation requires a startup philosophy rather than a big corporate one. You can create value through innovation. At big Telcos, it’s not about conquering the market or being disruptive anymore. Innovation only applies if it means reducing costs and increase ARPU. According to colleagues working at Telcos, it is not as fun as it used to be. It is all about improving performance and maintaining the market share. There is no space for big revolutionary ideas but technological improvements. Telcos are struggling to be something different than a utility company.

Innovation left to other companies

Telcos relied on manufacturers for a long time (Nokia, Sony Ericsson, Motorola, Apple, Samsung, etc). The Telco who had the coolest device was the most innovative in the market. They build customer acquisition basically by promoting the brand and its values and customer service, etc. But they rarely created meaningful products and services.

Orange *123 was a voice recognition service that had a great impact on the market back in 2002. It allowed customers to call a cab without pressing the phone number, order a pizza or learning about your horoscope by just saying the magic words. Today it is completely obsolete.

Back then we were very involved in the design thinking of each product and service and we were not engineers nor developers. We had absolutely no clue about coding. We were purely marketers. We were doing this on excel and ppt and then we had meetings with the IT department to see if it possible to build our ideas. We try to test it with the university community and get some feedback and launch it.

That structure was obviously not sustainable unless we were trained to code or include developers on the team. Design thinking methodology didn’t actually evolved. Instead, Telcos relied on mobile manufacturers.

There was once a mobile app development movement and some Telcos are now realizing the importance of supporting innovation labs. Orange had their own innovation lab that is now closed. But it was only to copy already existing apps. None of these apps actually had a decent user base simply because Telcos didn’t understand that each app required a team and had to be treated as a startup and not as a feature of the brand. Google acquired Android and many companies and offered venture capital to its employees for developing their own startups. Why compete when you can own them. Why penalize people for creating new stuff if you could become their business angels? Many companies were innovating while Telcos stayed in another room alone.

When the iPhone arrived it was a completely disruptive scenario. It changed the rules of the game putting telcos in a very difficult position. The smartphone disrupted completely the data market. Voice service was already signing its death sentence. As hardware and software company building mobile it was obviously clear that the industry needed a shake. But Telcos continued with their business model and relying on manufacturers. Telcos only meaningful job today is to provide great internet access by improving their infrastructure. They are the road for everybody to transit but soon that road might not be required. They are a utility company, indeed. They are players who want them out of the game for good.

In the mean time while Telcos are focusing on ARPU and reducing costs, Google tried to figure out how to organized the information available in the chaotic world of web, it then acquired a software company named Android and then a mobile company named Motorola and now it is building a Telco, Google Project Fi. Oh, Oh!

Innovation Labs, Venture Capital & Product Development

Itunes, Skype, Whatsapp, Youtube and all successful apps should have been built from Telco’s innovations labs. Telcos have created innovation labs to copy existing successful products rather than creating new industries. Their straight and backward mindset do not let them be innovative. If they do not change their business model and change the mindset they will be condemned to disappear or end by being acquired by companies like Microsoft, Apple, Google, Facebook.

Telcos are focused on OTTs, creating content, maybe IoT. But they should be really being promoting more software, mobile and web development companies. Telcos should be venture capital firms and startup accelerators. The Telco’s Product & Service department should be the department responsible for Venture Capital and Startup Acceleration Programs. Telcos infrastructure is a piece of land to build something it. If they do not build anything someone will, after buying their land first.

The race for survival has started the long time ago…

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