A common thread among these ventures was a quest for new markets previously served through awkward kludges. Customers were frequently unaware that they needed new telecom services, yet they rapidly embraced them for both their utility and status. Critically, the most successful businesses had high barriers to entry for competitors, which they created not just through technology but via distribution and other aspects of their business model.
Fortunately, telecom can provide useful solutions throughout many neglected aspects of customers’ lives. For consumers, mapping services, portable music, and social networking applications have responded to needs many people did not know they had. For enterprises, specialized platforms can considerably boost employee productivity and responsiveness to customer demands. Nokia has shown the potential for growing in the device industry via software and services, as has Ericsson in the field of telecom equipment. Some network operators, such as the Philippines’ PLDT, have also created high margin data services that continue to fuel substantial growth.
Many firms in the telecom industry struggle with creating appropriate business models for new services. They have great ideas about what customers will want, but through cross-applying old business models to the new venture they squelch demand. We believe that a disciplined, market-centric approach to business model creation can play a major role in assuring success. This schema starts with how customers assess value and prices services in ways that register intuitively.
Telecom companies can also greatly benefit from a rigorous view of what triggers rapid take-up of new propositions. We have developed a nuanced perspective on why some services quickly catch on, while others take years to find their footing. Such a viewpoint can help firms place bets more cost-effectively, and in some cases help them move the needle on how quickly adoption can occur.