In my post defining the Social Telco I made brief reference to the help telcos need with innovation, but I think it’s worth a post in its own right. This is a topic I addressed in an Ovum comment a while back too – that comment was picked up in a couple of places which are available outside Ovum’s gated community here and here. The focus of that piece was an Innovation Day AT&T held, which was designed to showcase some of the things coming out of the AT&T Labs. My main point was that telcos were lousy at innovation and that substantial R&D investments were probably no longer a worthwhile exercise with few exceptions. That’s essentially the point I’d like to expand on here. 

Telcos do a terrible job at innovation

Telcos are abysmal at creating new services that customers actually want. Part of the problem is that they have historically been very engineering-led, rather than marketing-led, organizations. Engineers ordered parts for the network, which offered certain features. The only decision to be made was which of these features to switch on. Telcos have been very bad at really understanding customers’ needs and creating services to meet those needs. In the old voice world, that wasn’t a big deal, since there were few competitors and they were largely relying on the same infrastructure from the same suppliers. But VoIP changed all that, and provided a view of things to come: when truly innovative players enter markets where telcos dominate, they create real disruption.

There are significant barriers to change

All the major shifts in communication in the last 20 years have come through players other than telcos – the world wide web and email were created by DARPA, IM was pioneered by Internet players such as AOL, Microsoft and Yahoo!, social networks created the next big wave of communication and so on. Telcos are nowhere to be found in that list. The major barriers are:

• telcos are still engineering driven in many ways and buy their apps from traditional players
• they have large installed bases and have defending those bases as a major strategic priority – anything that threatens to cannibalize them is therefore suspect
• the development process for new services has been so long and expensive that they can afford to place only very few big bets, making them risk averse and preventing them from straying far from their traditional services
• all their business models are based on funding new investments through new revenue streams, and mitigate the opportunity for adding new functionality that isn’t paid for directly. They are also not expert in advertising-funded business models.

All of this means that telcos are still bad at innovation and unlikely to get any better. The shift to software-based rather than hardware-based services, including the implementation of IMS, should assist a little in making services quicker and cheaper to roll out, and therefore allow for more experimentation and risk-taking. But a large part of the barrier is still cultural – telcos’ size, scale and history all prevent them from being as innovative or as fast-moving as web players.

The solution: outsource innovation

The logical solution is therefore to outsource R&D to some extent to third parties. That means Web 2.0 players but it also means the armies of developers – both professional and amateur – who love nothing better than to leverage APIs and/or SDKs from existing players to create new and interesting mashups and combinations of functionality to create new services. This means telcos have to make those interfaces available too, in a way that’s attractive for developers. The iPhone is the best possible example of the ideal way to motivate developers: make the end result exciting. The iPhone has tiny market share compared with most of the other mobile operating systems out there, but it captures massive developer mind share because the possibilities are so vast and because of the cool factor. Telcos need to find ways to expose their network functionality which will mimic the success of the iPhone SDK among the developer community.

All carriers need to adopt this model – some with more control than others

Telcos and their equipment suppliers are currently responsible for 90%+ of the innovation which happens in telco services, and that’s simply not going to provide the kind of innovation that’s needed today. However, with an army of developers using APIs and SDKs to create new services, telcos can tap into a much larger base of innovation, and can either allow a thousand flowers to bloom by simply taking a hands-off approach or taking a more hands-on approach and actively selecting and qualifying the most promising applications for a more carrier-endorsed release to customers. The latter approach allows more control and therefore quality assurance, but it also means the telco is once again second-guessing customers’ preferences rather than simply allowing the market to work. Each carrier will have to make its own decisions about that tradeoff. But all carriers should be adopting an open approach to innovation and leveraging all the talent available  in creating the next generation of services.

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A couple of experiences recently have reminded me of the importance of taking a fresh look at things from time to time – of taking oneself out of the everyday experience and attempting to look at situations from a different viewpoint in order to see the bigger picture and reorient oneself.

A personal experience (feel free to skip)

Our fridge broke down over the Memorial Day weekend – not the first time, but in fact the third in the last few months. Clearly time to replace it. But in the moment it was just stressful and frustrating: we have a tiny portable fridge that sits near my home office but it wasn’t anywhere near large enough to store all the food we had in our large fridge, and because the problem developed over a couple of days we had to throw out a lot of food and then deal with the inconvenience of living out of this small fridge in the basement while we figured out an alternative solution. To add to the frustration, it turns out that it’s very hard to buy a new fridge and get quick delivery – most stores will only do it in 15 days or so, which was clearly not going to work for us. So in a 3-hour window in our busy Memorial Day plans we had to hop in the car and go on a fruitless search for a new fridge – we didn’t find one, and so were in a bad mood for the rest of the day.

In the end, we bought a new fridge the following day and it was delivered on Wednesday. What little food we’d saved survived and was quickly rehoused, the freezer kept going well enough to preserve most of that food, and so by the end of Wednesday we were back to normal, more or less. At that point, perspective was easy to come by – things had not been so bad and we’d survived. Yes, it was frustrating, and yes, it was expensive – a hundred dollars’ worth of food and several hundred dollars’ of refrigerator later. But in the moment itself it was so hard to get away from the stress and frustration of what to do with all this food, where we were going to get a new refrigerator, whether we should settle for something less than ideal in the interests of getting the situation resolved quickly etc. In the moment, perspective was hard to come by, and we felt overwhelmed. After the fact, it was easier to see things in the proper light and feel less aggravated about the whole thing.

Perspective is hard to come by when we’re up to our elbows in rotten food

The long and the short of it is that when you’re up to your elbows in rotting food, it’s really hard to get a proper sense of perspective. And our working lives (and our personal lives too) are so often that way – we get tangled up in the minutiae of what we have to get done and all our time is taken up checking boxes and meeting deadlines, with very little time for something completely different. In some jobs, that might be OK – but in the vast majority of our lives, we all need to take a little time occasionally to reassess things, to get some fresh perspective, and to make sure we’re on the right track in a big picture sense, not just on deadline.

Google Wave is the perfect example

I’m writing this – at least in draft – on the evening of the day when Google Wave was announced to the world. Although it won’t launch officially for a few more months, it’s already generating huge buzz and promises to be a revolutionary communications platform. But it would never have come about without a couple of important examples of taking a fresh look. Firstly, Google has enshrined in its working practices the principle of 20% time – giving each employee an opportunity to work on something other than their day job for 1 day in 5. This pulls people out of the weeds and allows them to get a bit of perspective on bigger-picture things they could be working on.

But in addition, in this particular case, Google took a team of people who had come up with an idea – 5 years ago, in fact – and allowed them to go off and attempt to reinvent the communications experience. These were, in fact, not Google’s Gmail team or Google Talk team, but the people who created the product that eventually became Google Maps. They weren’t so entrenched in the minutiae of getting email to load faster or search to work better or putting more emoticon options in the IM product that they couldn’t see the whole thing needed an overhaul. They were physically separated from Google’s main campus in Mountain View by being located in Australia, of all places. And they came up with something truly revolutionary. I don’t think they could have done that without taking a step back and getting a fresh perspective – without looking through new eyes, in effect.

Establishing a process for gaining perspective regularly

Taking a fresh look and getting a fresh perspective is important to all of us and to our work and wellbeing. We need to step back from the coalface and see if we’re digging in the right place, or count our blessings and attempt to put our small troubles in appropriate perspective. It’s important for innovation, but it’s also important for our emotional health and our sense of satisfaction and enjoyment of what we do, to double check we’re on the right track or to make a course correction if we’re not. I haven’t yet developed a good discipline for doing this in either my work or personal life, but I’m going to be spending some time figuring out how to do it. I think it will come down to establishing a regular time to reflect and consider how things are going – to take inventory of both my work and personal life on a frequent basis. I’d love to hear any suggestions anyone else might have on how they’ve achieved this too.

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