Social Machinery

Analysts and telecom executives haven’t been highlighting extensively product and service commoditization as the main risk operators will face in the coming years driven by their marginalization into the value chain as a mere “bit pipe” provider. Meanwhile new media players are expanding their reach in the mobile space with strong and global brands threatening current operator’s revenues.

Faced with a bleak prospect, many have considered that Telco’s future is to become just a dump pipe similar to what utility companies are today. But, how true is this hypothetical and “devastating” outlook?

The Future needs to be shaped not predicted

 “We cannot predict the future, but we can invent it.”

In this ever-changing communication industry the past is not a good indication of what could happen tomorrow. Who could predict the rise of Apple as the most profitable and relevant player in the handset industry 5 years back? -  Or who could imagine that a 23 years old university student could create a web 2.0 application that could congregate more than 500 million subscribers in just four years.

Nevertheless, you need to be preparing today for the future, and the future of Telco is about not about competing with their peers but building around their customers, their brand and transferring value to the society.

Are Telco picking the right battles?

On the latest Interbrand’s Top 100 Global Brands Scorecard there are no telecom carriers mentioned. Every single vertical is represented in this global report; from consumer good brands, to healthcare, banking or technology companies. But Telcos are the big absent.

 This not something new; during the nine years telecom providers haven’t been mentioned in this ranking. Even do the industry deals with one of the most fundamental human needs: communication and without it, mankind, individually as well as socially, cannot exist. Yet, brands in this industry have not yet managed to conquer consumers’ hearts and minds internationally.  According to Interbrand the main reason is that:”They remain widely seen as utilities providing technical access to mainly local telecommunication networks.”

It seems that the numerous and continuing changes in their identities during the last two decades has created the customer perception that they have not fully developed their position as brands. They lack a clear idea focus and a well-defined brand personality to guide their behavior along the customer journey.

Sounds like a big incongruence: Hardly anything has changed our lives as much during the last decades as the development of communication technologies. In that sense telecommunications brands have certainly changed our world. However, these brands have not yet reached the status that should follow from this influence upon our lives.

My interpretation is that telecom provider has been picking the wrong battles.

Most telecom strategic planning is focused on linking their organization’s position in the marketplace — its mission and objectives, its strengths and weaknesses, and the opportunities and threats it faces. The classical strategic planning model popularized in the 60s by companies like DuPont.

In essence this kind of strategic models starts by recognizing that the essence of telecom strategy is to achieve superior competitive advantage.  That is what every Telco tries to achieve. Nevertheless this is extremely dangerous mindset because it puts competitors at the center. And when Telco do that, then there is a tendency to watch your competitors and try to imitate them. Your company ends up being searching for sameness and not for greatness. Even worst, its final result is something which is the worst thing that could ever happen to a business: commoditization, a business in which there is nothing that you can claim that differentiates your offering, and therefore, all you can do is to fight for price.

Playing strategy as war only brings devastation; wars destroy value. Instead Telco needs to put customers in the center of their strategy. They should be the one driving your business …and this changes everything…

In that scenario, Telco’s strategy is not about competition but a search for creating unique value to their customers; their efforts are put on understanding your customer’s requirement and building a relationship of mutual trust and benefits.

As Arnoldo Hax, stated in his Delta project model, “Commodities only exist in the minds of the inept.”  Obviously a product could be a commodity. Like coffee grains, how easy is to say that coffee grains from Colombia are better than Brazil?  But coffee as a business— the way Starbucks offers coffee; the way Coffee Bean coffee, the way that retail stores sell coffee – is completely different.

Therefore, commodities don’t really exist.  The customers are all different, and if Telco do not understand that, they are commoditizing something — and this believe is dangerously spread in the telecom industry.

Rethinking what a Telco brand is?

 Avoiding the commoditization trap by putting customers in the center of Telco strategy is not enough. Customers need to perceive Telcos play an essential role in their lives. And here is the challenge: Is about perception not reality. How people perceive Telco’s brand is the reality. It doesn’t matter how important is communication in people’s everyday lives if they don’t perceive it in this way. 

Unfortunately, our industry has been too much focus on technology. And consumers don’t care about technology. For instance Sony  moved from seeing itself as a hardware company to seeing itself as an entertainment company few years ago or Apple – even do is a consumer electronics company everyone love it because of their design capabilities. In the telecom space, it’s not about the technology; it’s about the perceived value your brand brings to consumers.

There were no telecom carriers in Interbrand’s most recent Top 100 Global Brands Scorecard. Why have telecom companies typically had such weak brands? Telecom companies think they’re in the business of technology when they’re really in the business of connecting people. Telco need to stop thinking about pre-paid and post-paid segments and think where they add value to a increasing connected society. 

And value needs to be real: How was your last experience as a consumer when you on your Telco’s customer service center? Usually they’re terrible; Customer service is no good. It’s as if Telcos have defined themselves too much in the virtual world and not enough in the real world.

Telcos need to merge these three main aspects to have a thriving future: Consumer in the center of their strategy, a strong brand equity and transfer real value to their customer’s lifecycle.