New Markets Advisors
  • About
    • Our Distinct Model
    • Team
    • Join Us
  • Services
    • Develop Growth Strategies
    • Uncover Jobs to be Done
    • Build Innovation Capabilities
  • Industries
    • Arts and Culture
    • Consumer Goods
    • Financial Services
    • Healthcare
    • Social Innovation
    • Technology
  • Past Work
    • Success Stories
    • Recent Clients
    • Testimonials
  • Our Thinking
    • Leading through the Coronavirus Crisis
    • Books
    • Working Papers
    • Articles
    • Blog
    • Speaking Engagements
  • Contact

New Markets Insights
​
Strategy and Analysis from Innovation Specialists

The Ecosystem Approach to Market Creation, Modeled by AT&T

3/3/2010

 
By: New Markets Advisors
In the past 30 years, AT&T has undergone several transformational shifts. Government regulators broke up the monolithic “Ma Bell” in 1984, and dozens of successor companies sought to become top dog in the telecom food chain.
It turned out that the old, integrated model had many merits, and dealmakers thrived during the tortuous process of putting Humpty-Dumpty back together again. Today, AT&T is again a provider of complete telecom services, albeit lacking the hardware business it once dominated.

​Recently the company announced a further step toward integration, opening three “Innovation Centers” around the world. The company says these centers will enable it “to work directly with device makers, application developers and network equipment providers to expedite development of an ecosystem of mobile and wired broadband services and capabilities for consumers and business users.”

Why should AT&T, one of the world’s largest telecom companies, need to create these centers? After all, vendors are eager to work with such a dominant firm. An answer lies in a pathbreaking 2001 article by Harvard Business School Professor Clayton Christensen, titled “Skate to Where the Money Will Be.” Christensen argued that industries almost always get their start through supplying integrated offerings to customers, as that is the only way that companies can get performance to be good enough to meet basic market demands. As industries mature and those performance needs become increasingly sated, customers start to value other things such as customization, speed, and price. This sets the stage for modular solutions to emerge. The PC industry provides an excellent illustration, with its shift from the integrated IBM model to the highly modular ecosystem of today that has different firms provide operating systems, microprocessors, services and so on.

It turns out that government pushed telecom into the modular world too early. Major shifts in the technical architecture of telecom networks were difficult to engineer when key players had diverging interests. It was also tough to change customer behavior when the network “owned” the customer financially, even as device makers created the machines which could dictate most of the customer experience. AT&T and Apple tried a different approach with the launch of the iPhone, tightly integrating the device and the network, but that task has certainly proven challenging.

I have had my own frustrating experiences in this world. As CEO of Brainstorm, a middleware developer for mobile networks, I worked with one of the largest European operators a decade ago to launch their picture messaging services. These services worked differently on the dozens of handsets the operator supported, and network equipment makers were inconsistent in how they handled the messaging protocol. The operator tasked my firm with harmonizing this highly diverse, constantly changing cast of actors. The result was no less than 50 changes in our software platform as the industry rapidly evolved. This is no way to orchestrate the introduction of new customer behaviors.

AT&T’s Innovation Centers seem a promising step toward uniting the right players under one roof. The question is whether these people will have the autonomy needed to create truly integrated solutions. At Samsung, innovators have thrived in its Value Innovation Program Center, bringing together key players in device development, but fundamental to their success has been Samsung’s ownership over a broad collection of assets from chip design to display manufacture. Will AT&T’s innovators be empowered, for instance, to tweak an operating system or communications protocol? Even more critically, will they have the freedom to suggest innovations in the business model? The current business models in this industry are rapidly heading toward commoditization, and one of the brightest hopes for new offerings has to be a game-changing approach to monetizing the ubiquity of telecom throughout customers’ lives. Otherwise, AT&T’s innovations may become marginal differentiators, not the performance breakthroughs that justify this integrated approach.

Story by Steve Wunker.


Comments are closed.

    This section will not be visible in live published website. Below are your current settings:


    Current Number Of Columns are = 3

    Expand Posts Area =

    Gap/Space Between Posts = 10px

    Blog Post Style = card

    Use of custom card colors instead of default colors =

    Blog Post Card Background Color = current color

    Blog Post Card Shadow Color = current color

    Blog Post Card Border Color = current color

    Publish the website and visit your blog page to see the results

Picture

ABOUT
Our Distinct Model
​Team
​Join

SERVICES
dEVELOP growth strategIES
UNCOVER JOBS TO BE DONE 
BUILD INNOVATION CAPABILITIES


​​

INDUSTRIES
Arts and culture
​consumer goods 
financial services
healthcare
Social Innovation
Technology

​

PAST WORK
success Stories
recent clients
Testimonials

OUR THINKING
Leading through the coronavirus
books
working papers
articles
blog
SPEAKING ENGAGEMENTS

NEW MARKETS ADVISORS
50 Franklin Street
​Second Floor
Boston, MA 02110
United States

Tel. +1 617 936 4035

Contact Us

New Markets Advisors: Empowering Companies to COMPETE DIFFERENTLY ​© Copyright 2021. All Rights Reserved. Terms of Use. PRIVACY POLICY.
  • About
    • Our Distinct Model
    • Team
    • Join Us
  • Services
    • Develop Growth Strategies
    • Uncover Jobs to be Done
    • Build Innovation Capabilities
  • Industries
    • Arts and Culture
    • Consumer Goods
    • Financial Services
    • Healthcare
    • Social Innovation
    • Technology
  • Past Work
    • Success Stories
    • Recent Clients
    • Testimonials
  • Our Thinking
    • Leading through the Coronavirus Crisis
    • Books
    • Working Papers
    • Articles
    • Blog
    • Speaking Engagements
  • Contact