Industry Stories

Culture is a Key Aspect of Digital Transformation in Telecom

Over the last few decades, the telecom industry has seen a rapid pace of change. Earlier, voice calls dominated the bulk of business. Today, there is an insatiable demand for data. For telecom companies, it has been challenging to deliver new differentiated services, while maintaining profitability.

In addition, there is intense competition from a new breed of over-the-top (OTT) players who are targeting the same market with new, diversified offerings. As per a recent report by a well renowned analyst company, in the communications service providers market, the growth in the voice market is flat and mobile voice revenues are declining, though fixed data services are expected to grow by 4% between 2018 to 2022 due to strong demand for broadband, ethernet, and high-speed fiber connectivity. In another forecast by a large market research company, the global OTT market is set to grow at a CAGR of 17.03% during the period 2018-2022. Even while the absolute size of OTT revenues may still be small in comparison with the telecom market, the growth numbers clearly tell us which way the wind is blowing.

For telecom players, the writing on the wall is clear: digitize or die. The biggest challenge is not about implementing technology or reskilling employees. Transforming the culture of an organization is perhaps the hardest and the most underestimated part of any digital transformation journey. Unless the culture changes, we cannot expect any real change on the ground.

What Makes the Digital Natives Tick

Digital native organizations operate very differently as compared to the legacy players. They tend to be entrepreneurial in nature. They care less about the process, and more about the outcomes. On the other hand, legacy organizations are extremely process-driven. They spend a lot of time defining, adhering to and measuring process compliance.

When we study some of the phenomenally successful digital native companies such as Apple, Google, Facebook or Amazon, there are a few elements of a digital culture that we can discern.

  • Frictionless Internal Boundaries
    In most digital native organizations, we see product teams working seamlessly with the development teams. Because of the physical proximity, there is automatically more transparency, and communication is simpler. This approach also lends itself well to the agile way of working.
  • Stronger Community Ties
    Digital native companies tend to be strong proponents of building a strong digital ecosystem even outside the organization. They are encouraged to engage more actively on technology community platforms to share knowledge and gain insights. They also contribute extensively to the open source community.
  • Ability to Learn and Adapt
    Most new age tech companies often have more fluid processes that are not set in stone. There is always great emphasis on the outcome or end goal rather than the process. As a result, they tend to be more dynamic and open to learning and tweaking their processes constantly.
  • Collaboration
    Digital natives excel at the ability to collaborate with external players in order to bolster their own offerings. Rather than attempting to build everything in-house, they are far more likely to play to their strengths and find partners who can complement them seamlessly to deliver customer-centric solutions.
  • Talent Assimilation
    They are exceptionally good at identifying and embracing new talent from outside the organization and assimilating them into their approach. The greater emphasis on collaborative styles of working further helps in the assimilation process.

Can Legacy be the New Kid on the Block

If we look at these traits, there are a few points that stand out and give clear direction to legacy organizations. There are two broad areas where legacy organizations need to change – Organizational Structure and Operating Models, in order to be competitive and beat the newer generation of telecom companies.

Organization structure

The hierarchical command and control structure that most of the incumbents still follow isn’t conducive to the entrepreneurial mindset and innovation that the digital approach requires. There is a need to rethink organizational structure in favor of hiring new talent from different domains, with contemporary skills like Design Thinking. Traditional hierarchical structure needs to give way to a flatter organization where innovative thinking is encouraged at the ground level; right from the fresh out of college intern to the top executive must feel free to collaborate and share ideas. Employees must be encouraged to unlearn and learn new ways of thinking without constraint and trying new models and approaches.

Operating models

Operating models need to support the creation of digital native attitudes. One great example is a leading telecommunications company, one of the largest in Asia Pacific. The company understood the need to first behave like a software/technology company if it needed to accrue the benefits of digitization. To enable this, it hired digital natives who brought together product management, IP and operations teams into a quasi-physical location so that they could benefit from the organic unity of a shared physical location. In cases where a part of the team is remote, the company ensured that they were still connected via video at all times. This physical and visual manifestation of the culture made an amazing amount of difference in the way the company operated.

In India, telecom company Reliance Jio, often called the ‘largest start-up project in India’ has championed a similar open culture that does away with plush private cabins in favor of an open-office format. The company’s consumer base crossed the 200 million mark within just 22 months since its launch to become number 3 in terms of consumer base and number 2 in terms of revenue.

As the telecom industry continues to evolve, incumbents that want to survive will have to change with it. The key to this is changing their culture. There is no time to lose.