Telco is boring… is it?
In the past years, I heard many of my colleagues are telling me that the interesting area to pursue is investment banking, fintech, logistics, and e-commerce. Perhaps, there is a bias in my little informal survey given that I only asked my acquaintance from work or friends that met occasionally. However, when I joined one of the telco companies, people are consistently tell me that telco is a stable and mature business and there is not much to improve — or more bluntly, boring.
Two years ago, I made a jump to telco Industry. I was working with fast-growing, soon-to-be-unicorn (at that time) and now it is a decacorn company in South East Asia. Some people, both who were experience in telco industry and the people who are not, advised me not to go. In general, they told me that you will be be bored…
The idea is close but the body & mind does not agree…
In the 90s, Telco industry was associated with the conventional telecommunication service, i.e. land line service. It was natural because the only way we can do person-to-person communication instantly was through fixed line 0 We will exclude exchanging physical letters in this context. However, with the rise of internet and the birth of complex smart phone, it was telco industry who play significant role in providing all the infrastructure to it. From the hard physical infrastructure such as digging massive holes for copper, fiber optics cable as well as enabling it through new technology from 2G, 3G and now we are talking about 6G.
It is both opportunity and curse for telco players. They play an important role in “connecting”, but at the same time they are focusing in building capability around simply “connecting” — because that’s the low hanging fruit: profit is visible, capability is available, and the risk is low.
Some visionaries see that the opportunities are plenty in this arena. They see the extension of this telecommunication business and get one layer closer to the users: expanding a more specific use cases such as security, data center for corporations and app-based, content-based service to retail consumers. This is believed to be both increasing the revenue from their conventional “connectivity” services as well as expanding their revenue stream from new or they usually call it “adjacent” revenue.
However, these “adjacent” revenue streams are not easy to crack and the competition is tough. These adjacent owners are OTT providers such as Netflix, which has started even in the times when internet is still super slow or social media / content Facebook which has the best engineers in the world. Not to mention that the “adjacent” is something that has unclear profitability roadmap for telco, which means less incentives for executives to bet their career in this area.
The idea is very close to the heart to telco players, but all the factors that lead to serious execution is very far from the mind of the builders.
What are the factors that became blockers?
- New innovation is not follow telco profitability textbook
Telco players are often associated to be performed according to the industry standard. Unfortunately, industry standard that has long been established is built upon the traditional telco or “connectivity” business. While all the new innovation that telco may expand into is a completely different game: a new venture, super uncertain, and different profitability structure. - The grass on the other side is always greener
To deliver exciting-but-uncertain business may attractive for executives. Well, it may be exciting at the beginning, but the the real test is often happening in the middle of the journey where management do not see a certain sign that it will have impact in the future. This is the moment of truth for the management who bear the burden and need to make the project successful. And this is also, the tipping point where people, which by all means are human being — not a robot, lose their hope with very less support from their environment. When this happen, moving to the other division that provide more stability and visible career path may be an option. - Internal politics
The common premise to expand to new business is that “we can leverage our internal ecosystem”. It is true, but maybe a blind spot for many planners. It’s true if you have 10 million mobile customers, you can tap into x% of these 10 million for your new business because whatever you are building will be embedded into the existing channel. However, sometime the planners are forgetting that an organization is constructed by employees and divisions with their own vested interest. Hence, most of the time, the new ventures that need support from the “existing ecosystem” do not get support that it needs because “existing ecosystem” do not want to — with all reasons as logical as it can be. A classic example is that the “new business” will cannibalize the current business. Some C-level executive may wise enough to bridge this by having a middle ground, such as sharing KPIs, however, some executives may think it is simpler to kill the certain initiatives and focus on the business-as-usual — a simple logical decision. - Capability deficit
Any capability deficit, the simple silver bullet answer to it is: Let’s recruit the best people with whatever price tag. That will solve half of the problem, but it will not solve the other most critical half. This issue is the easiest to spot but also the easiest to overlook.
Bringing in the best people needs also bundled with the adjustment of working environment. It means, the people that will bring new idea, new way of working ,and possibly new revenue stream will need to be protected from old ways of working, existing culture, and old system. However, in some cases, management think that the new guy will figure it out. It’s true though, but most of the time, the new guy will bring some more demand: usually more people, change of system, new tools, and so on and so forth — which in summary, the new guy will ask for “exception”. This, may be true or not, become the thing that is often being overlook by the management. Either management may think that this guy has soo many reasons that he could not do it or simply do not want to listen because giving the new guy privileges will jeopardize the current stability. So, capability issue cannot be solved by bring in the “capability” itself. It also takes commitment to protect and nurture the new capability, and some time it takes sacrifice and shake the current stability.
With all these challenges, I believe the fun is figuring out how to design an environment where the idea that telco can explore more things are happening. The complexion of the challenges lie in multidisciplinary aspects and I believe that is what’s make telco is not boring…
