The Innovation Ideal

Boston Consulting Group’s latest innovation index features just one mobile operator – where are the rest hiding?

Boston Consulting Group’s annual “Most Innovative Companies” report has been described as a “reality check” for European operators.

European Communications flagged up the fact that Japanese telco, Softbank, was the only operator in the 2014 report, coming in at number 30. The publication also pointed out that, since the list started a decade ago, Vodafone has made four appearances (most recently in 2010) and Telefonica one appearance (in 2009).

Meanwhile, tech companies such as Apple and Google topped the rankings, followed by Samsung, Microsoft and IBM.

CCS Insight Analyst Kester Mann was quoted in the article saying that European operators are aware that they need to be more innovative, but falling revenues and increasing regulation is making things tough: “The list is a reality check for Europe where the innovation culture is not so strong when compared to Asia and the US”.

Decrying the lack of an innovation culture within operators has almost become something of a cliché. The comparison usually being between the nimble OTT, with their popular customer-centred services, and the lumbering operator, moving at a comparatively glacial speed with their outdated business models and legacy architecture.

Google Executive Tim Carter even declared recently that innovation is simply unaffordable to most operators, claiming that that the “luxury” of digital innovation is now the sole preserve of cash-rich companies, such as Google, and entrepreneurs with little to lose.

Operators are the first to admit that the pace of change has accelerated in recent years, and they need to do more to step out of the traditional value chain. However, accomplishing innovation in the digital economy is difficult for operators because they are fighting against the rapid time frames that Internet players or start-ups can deliver. Many are fostering innovation in separate incubator hubs to accelerate service delivery. But perhaps we also need to broaden our definition of “innovation”, if we want to really assess the impact that operators can make now and in the long term within the digital economy.

Operators are actively exploring ways to mitigate the threat of digital economy players, while capitalizing on their strengths and network infrastructure to become a more integrated part of the digital economy and the associated growth opportunity.

Sure, the OTTs and other digital service providers excel in product delivery and are agile in responding to rapidly changing customer requirements. But what about innovative delivery of the other ‘Marketing P’s’? Operators excel in pitching Price (e.g. customised contracts, bolt-ons, family plans), Place (e.g. dealer mobility) and Promotion (contextual awareness). This is where they can bring significant value to the rest of the digital eco-system right now, and develop mutually beneficial and long-term relationships with partners in new verticals.