Shock of the New

Posted on Tuesday, September 04, 2018

Are telcos innovative? I do not remember when I saw this debate recently. I think it was a TMForum webinar. I was reminded again of this recently seeing a ranking of innovative companies in Colombia. None were telcos or even in the telecom industry.

I am getting to be ‘older’ and my memory is unreliable, but I recall one of those in-webinar quick surveys that essentially asked if telcos could be innovative. The numbers said rather overwhelmingly ‘no’.

Chris Lewis’ Great Telco Debate (coming up in November) has the question “The role of the telco in the broader digital economy:  Should telecoms players invest in the optimal network combining fixed and mobile assets, or should they spread their wings embracing areas such as banking, insurance, media and content?”

This is basically the ‘dumb-pipes’ versus ‘up-the-value-chain’ discussion that we have been having on and off for years.

I know it would be far more exciting to be involved in “banking, insurance, media and content” but I think there are limits to how far one can go from one’s inherent nature.

Queue Monty Python’s “Chartered Accountancy” sketch.

Telcos are really good at running large ‘machines’ with tight tolerances, high reliability, low bit error rates etc.

Trying to get beyond what they are good at has been less successful. The list of failures is long and painful to read. That does not stop Telefonica and AT&T from continuing to try. Maybe they will succeed.

But most will not.

However, it is one thing to say that ‘the leopard cannot change its spots’ and quite another to find that an entire industry is not innovative – not just the telcos but their suppliers as well. (A former Yankee Group colleague used to say, privately, that the operators were merely a distribution channel for the equipment and software vendors.)

The Colombia innovation study appeared in Revista Dinero and was done in association with respected businesspersons’ association ANDI.

No telco appears in the top 25. None of the sector’s principal suppliers do either. I thought the issue might be that all operators and vendors in Colombia are multinational, but the most innovative company in Colombia by this study is Bayer Colombia. Henkel Colombia (for ‘cutting edge’ innovation’ no doubt) was number 11. Spanish bank BBVA was number 18.

It is not like the competition in the country is particularly difficult: Colombia regularly appears near the bottom of the list for R&D investment in Latin American rankings.

Telefonica did appear once, at the top of a list of companies which invested in Science and Technology (but that list was in the print edition only).

I have tried to come up with reasons why the result was counter to even my expectations.

Only members of the ANDI participated. Maybe only Telefonica is a member. (America Móvil generally does not like clubs, especially expensive ones.)

The survey was self-measured. Maybe the non-telco multinationals answered on behalf of their parents, not themselves. Conversely, maybe, the telecom players just said “It comes from HQ”.

The methodology is heavy on process and the patents figured heavily in the results factor.

If local telecom subsidiaries answered that they were only following the plans that come down from top, the scope for innovation would be limited. Processes would be weak to non-existent. Organizational evidence of an innovation focus – like Chief Innovation Officers – would be nil.

That does not explain how other multinational subsidiaries made the list but the might have decided that their sales planning or marketing activities were ‘innovative’.

From a results point of view, drug companies (like Bayer) or consumer products companies (Henkel) are concerned about copies and so would be sure to file a lot of local patents. Services companies like telcos could file process-oriented patents (and only in some jurisdictions) but the main source of innovation – new services – are not generally patentable. Technology vendors are not at risk to copying in a country like Colombia – and are largely protected by standards – so they do not need to file local patents.

Certainly, the poor showing in this ranking could be somewhere in the methodology and so the assessment is ‘unfair’ in some sense, or at least not representative of the situation at the parents or in the industry generally.

Still it was a shock, even for me.

That none of the authors noticed this or commented or sent the questionnaire back to Telefonica with a clarification of the rules for multinational companies or asked America Móvil to be sure to send the survey back or wondered why considered-to-be-service-innovator TIGO was not on the list, is maybe a commentary on how the analysts – as telco customers – expected the result to come out.

Maybe telco customers do not expect innovation from telcos. That will come from Apple or Google or Amazon or Facebook.

They just want the pipes to work well.


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