True digital disruption: Why CSPs must adopt a change in mindset MAY 2016

By Ilkka Aura, Executive Vice President, Europe and Americas

Digital disruption could be defined as the change that occurs when new digital technologies, customer engagement and business models exponentially improve the value proposition of existing goods and services while reducing the costs of producing them. However, in order to achieve ‘true’ digital disruption, it is important that operators adopt a fundamental change in mindset towards the processes required.

Recommended processes for achieving digital disruption often involve replacing human touchpoints with automation and self-care. Yet this is merely a technical achievement, rather than the actual change in mindset which is needed to trigger a number of changes in the processes and supporting technology.

The design principle for CSP systems and processes has for a long time been to achieve a so-called ‘carrier grade system’, which refers to a hardware system or software component that is extremely reliable, well tested and proven in its capabilities. Carrier grade systems are tested and engineered to meet or exceed 99.999 percent of all high availability standards, and provide very fast fault recovery through redundancy (normally less than 50 milliseconds). This design principle has also called for strict procedural governance, together with a cautious and linear approach and risk preventive corporate culture. This approach by default has lengthened development cycles and delivered sporadic release cycles.

CSPs versus Internet players

Today’s competition no longer involves CSPs against CSPs, but rather CSPs versus Internet players such as Google and Facebook, device manufactures like Apple, and OTT application providers like WhatsApp and WeChat. However, these disruptors do not have the same regulatory burdens that licensed communication providers do, meaning that the competitive landscape is not a level playing field since participants do not all play by the same set of rules.

In order to succeed in the new competitive landscape, CSPs will have to adopt the same processes for agility and diversity as those used by their new competitors. As a result, there is a need for CSPs to decisively change their processes to encourage experimentation over procedural governance and non-linear, disruptive innovation over a more cautious linear approach. Yet it is important to note that while technical specifications may have been modeled and tested in closed laboratory environments, the uptake of new innovative services in the real marketplace haven’t been. Early engagement with the customer as a ‘commercial beta’ release has also revealed more potential for new digital services than a few months of business plan fine-tuning and Excel calculations.

CSPs will need to have the courage to let go of some of the control and engage in collaboration with various partners within the ecosystem. The design principle will also need to be a customer-centric outside in integration with the partners in the ecosystem, instead of adopting a traditional ‘walled garden’ inside-out integration approach, focused on networks and technology.

Seeing things in a new way

It is essential that these new process designs and the corporate culture encourage employees to focus on web-speed instead of carrier grade. The processes will also have to support early engagement with customers, even with a few glitches along the way. The growth of CSP revenue is no longer found in traditional communication services, but rather in adjacent new digital services like entertainment, mobile payment, home security and connected car services for consumers. Hence, the importance for CSPs to change their mindset to match with that of their new competitors by emphasizing agility, experimentation, early engagement and learnings from failures, in particular.

Although changing mindset is not easy, as Stanford University Professor Carol S. Dweck points out, “Mindset change is not about picking up a few pointers here and there. It’s about seeing things in a new way.”

Helping the organization and individual employees to see things in a new way is the true test of visionary leadership that may equally come from the ranks as well as from the executives.

This piece was originally published in TM Forum.

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