Dichotomy of the modern ‘telco’ Part IV – adapting to the digital economy

Telcos had long coveted a content strategy.  The 2^nd post suggests how it might work in an internet era.  Why this is different from their original thoughts is discussed in the previous post while the challenges faced by telcos are detailed in the first.  How they may adjust in unfamiliar territory is the subject here..

‘Tech startups have made such a disruptive impact on traditional businesses that AirBnB and Uber have become clichéd presentation points at conferences the world over.  But many are also coming to realise the same tools that make startups so nimble and disruptive are equally accessible to them – if they only learn how to use them.’

What do customers seek?  Lower price, higher bandwidth and better customer service are a given but in a digital economy, there’s more.  I’ll focus on one – digital lifestyle.

A celco offering bundled services with WeChat and Facebook with their subscriber plan is testament to this customer wish.  Ignoring for a moment that this goes against net neutrality, is there a better way to forward plan bundled services?  Currently these services are chosen based on popularity and may not be what an eclectic mix of customers really want.  The digital sector uses tools that can provide better insights into customers’ digital way of life and thus data to improve stickiness.

Stickyness, reducing churn and a digital lifestyle

Perhaps the telcos’ coveted content plan of yore is really about digital lifestyles.  It can be a revenue source, it can reduce churn.  WeChat’s rich ecosystem of digital services is a good example of a sticky strategy as the digital industry calls churn.  Vodafone, the co-creator of M-Pesa, the Kenyan phone-based payment scheme with Safaricom saw its churn reduced to below 0.1% with its introduction.  Getting a digital strategy right is good for business.

Telcos are of course already heading that way; investing in online services startups, video, security services and getting into finance.  But they appear disparate. If indeed this is part of the plan, it’s in a new setting for the planners and not one that they are used to.  A better understanding of the workings of the digital economy and creating the right environment for their executives helps.

Be mindful of the culture

Appreciating the ethos of the internet generation is important. It largely boils down to open versus close; inclusiveness vs exclusiveness, internal vs external, collaborative with a sense of freedom surmised succinctly by Chad Dickenson, founder of Etsy.

“’Free and open’ was what made the internet work then, and it’s a critical principle now. I didn’t have to ask permission to build my first websites.  I had unfettered access to material that helped me teach myself how to code. As I learned more, I quickly came to understand that the internet was so much more than a network of cables and wires that connected computers around the world. It was a platform for the purest expression of freedom, openness and possibility that I had experienced in my life”

Needless to say, it’s unlikely that Chad could have created Etsy within the old environment. 

Google’s PageRank algorithm mirrors the internal versus external argument.  Instead of a committee categorising content (internally), PageRank essentially hands over the role to algorithms and websites (outsiders) since websites by linking to one another rank each other.  It’s a challenge for traditional firms to think up something like this.

There’s help.

Crowdsourcing brings the outside in

Companies traditionally distrust the outside preferring to perform roles internally.  It runs counter to a digital lifestyle approach.  Their top-down, command-control culture assumes they know best.  They don’t.  The tech industry has shown that the world has changed to a more open, transparent, inclusive and participative environment.  And customers really do know best.

“Amazon is letting viewers help choose its new lineup of TV shows, scuttling a secretive, wasteful process once reserved for Hollywood taste-makers. The online retailing giant will let visitors from the U.S, U.K. and Germany watch, rate and critique 14 pilot episodes the company has bankrolled. Viewer comments will help the company decide which shows — if any — get the green light. "Why follow the guru method when you don't have to anymore?" says Roy Price, director of Amazon Studios. "The audience is out there and the audience is interested. We might as well make them a partner in the process." - shootonline.com.

Customers today like to be engaged.  The current generation also tend to be less patient, more involved, DIY-oriented and lives a digital lifestyle.

If you ask, many will respond.  But why ask?   AT&T asked consumers to complete an online video.  The start of a story is posted online.  Anyone can then suggest how the story continues.  The only condition is that AT&T phones are featured as the crowd cartoonists build their ideas into the crowd-directed story.  It earned a large number of eyeballs ie. low-cost marketing. This is creative but it’s difficult to continually come up with such ideas if the organisation culture remains closed.  And the mere effort to ask creates engagement and communication with consumers, a tenet of digital businesses.

The culture that lead to lean startup and agile: these modern management techniques came from the open source model, an internet software developmental model.

Crowdsourcing; a tool for business

Besides marketing and conducting surveys (Amazon), a lot more can be achieved by cleverly engaging the consumers from what they want, their habits to monitoring trends, product development, brand insights, business development, etc.

How do you engage?  That’s the subject of the concluding article next week but the digital industry seem to look at work as an internalising versus externalising decision.

And wouldn’t it be nice if mobile handsets that come with subscriber plans are pre-installed with digital services they commonly use rather than the currently one-size-fits-all bundled schemes?

Comments appreciated. 

@tommichen7

©Thet Ngian Chen, internetbusinessmodelasia.blogspot.com (2012, 2013, 2014, 2015).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Thet Ngian Chen and internetbusinessmodelasia.blogspot.com with appropriate and specific direction to the original content.