I’ll explain the real possible strategies on 5G
5G, here are the possible strategies offered to a telecommunications service operator. The analysis by Ottavio Carparelli, a former senior manager in the telecommunications sector, now a consultant in corporate strategy
Last week, taking a cue from the research projects carried out at the 5G Academy of the Federico II University of Naples , I briefly expressed the following points:
– The 5G network alone will not change the world; like all communication networks it is one of the factors that allow changes to occur in society, but it must be combined with various other elements, technological, industrial; legislative, custom, innovation, etc. for the possibilities to become reality.
– Among the many possible fields of application of a very broadband connectivity and with sufficiently fast and deterministic response times (5G, WiFi6, or others), those associated with augmented reality are the most suggestive and perhaps with the most transformative impact on society .
Taking these assumptions into consideration, today I face the discussion of the possible strategies offered to a telecommunication service operator in such an exciting but also nebulous context.
These are considerations that are not new to an operator at all, let's say that the nodes that have been discussed for some time are really coming to a head.
The first possible scenario, which was once defined in English as that of the "dumb pipe provider" (supplier of pipes without added value), begins by considering the new communication network as an end in itself: we accept that we prefer to leave to others the ability to imagine innovative and transformational use scenarios, and focuses on offering a communication service with the highest possible quality and efficiency. It is important to establish that there is nothing fundamentally wrong with this approach, which could be defined as “healthy”. A dose of effectiveness and efficiency would be desirable in every company, and in particular in companies providing infrastructure services. But, with 5G, even more than with previous networks, the optimal development of new usage scenarios will also depend on the ability to arbitrate between the use and localization of different technologies, an operator who did not have a good understanding of the application and of the use case would not be able to optimize its offering for that use case, and therefore could be supplanted by another operator. In practice, in a fictitious example, if Tim has been involved in defining the ideal infrastructure needed for the Pompeii excavations to set up an augmented reality visit, he can make a better offer to the superintendency than another company offering. “Simply” a better price per second or per amount of use.
The second possible strategy that has often emerged is to focus on a number of market segments (let's say, starting with archaeological sites in our example). In practice, it is a matter of choosing a sector "ready" to draw obvious benefits from new technologies, we work with specialists in the sector to define the solution that would bring the desired results and we invest in the creation and marketing of that solution, typically in a consortium way . Important marketing strategies have taught us that this is the right strategy when dealing with advanced technologies: it is important to choose the bridgehead that takes us to the other side, otherwise you stay in the ford. The limit of this strategy is that in any case the leadership of understanding the opportunity and customer needs is left to an actor in the segment (who can therefore change partnership if he does not make the most of his own profit), and that the approach positioning in multiple vertical segments is very expensive and prone to errors. There are experiences of operators who have launched on this business model in the past without pulling the hoped-for profit
And here is the third possible scenario, what I personally have always defined as the “flower bed and butterfly net”, while in English it is often called the application playground. In this concept, a system is created that hosts solution developers, vertical or horizontal, and encourages them to implement their solutions on the infrastructure provided by the operator (the flower bed), it is assumed that this creates bonds of work in common and trust between the application expert and the telecommunications expert, and this should lead to advanced visibility on what is good and innovative in the industry. Once you have identified the applications / butterfly, thanks to a very friendly screen (facilitations, market access, etc.), you gently capture those butterflies and help them to be successful, benefiting from them. It is a model inspired by application stores, which has already been tried in various ways by telecommunication operators, but has not paid off (at least not in a way that is easy to measure directly). There may be various reasons for this type of result in the past, the fact that many operators have a more national character which puts them at a disadvantage compared to infrastructure players that are global by nature (Google and Apple's application stores have a very different interest. for a mobile application developer), the fact that technological and strategic leadership on the flower bed and screen has been separated from business responsibilities to enterprises (which is likely more capable of recognizing butterfly applications for their customers) , and so on. The fact is, that this story of the application playground, repeated regularly, gives some players in the telecommunications sector a bit of goosebumps.
So? So the answer is that, probably, you need to play wisely on the second and third models, without focusing only on one of them, until you recognize that you need to be ready to let initiatives that are truly focused on specific market segments become separate entities. It is one of the foundations of various innovation management systems, to create an environment that allows us to identify promising ideas (many are), and to provide some of them with robust help that makes us indispensable, and not just limit ourselves to a supporting role. This leads to the need to make courageous choices as regards the leaders of the enterprise business within an operator; people with a passion for innovation and innovation management are probably the profiles that will be preferred in the coming years; as well as it will be necessary to set up a system of metrics that takes into account more neo-entrepreneurial business models (the return on global investment is measured, and it is not a problem if two investments do not give returns, if 8 investments have been made and others are fine or great). Some of the recent appointments and re-organizations within operators should probably be seen in this light.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/vi-spiego-le-vere-strategie-sul-5g/ on Sun, 16 Aug 2020 08:50:54 +0000.