Analysis: New business models--same talent?

This guest post was written by Michel Deschapelles of executive search firm Egon Zehnder International, which occasionally writes on telecom management and staffing issues for Connected Planet.

Telcos have always had a network operator mindset and have been understandably proud of the state-of-the-art communications infrastructure they’ve built. But the days of simply being a pipe master have long passed, as telcos and multiple system operators (MSOs) transform themselves into far broader businesses -- expanding into business services, developing new business models, and, as Valerie Spriet wrote in this space last month, increasingly acquiring content providers in order to secure long-term flow of digital content for their distribution platforms. The question for many companies, however, will not be whether these are viable models, but how they should approach the talent issues these moves raise.

Examples of the broadening of the business are everywhere. In business services, for example, British Telecom has been notably successful with its Global Services division. Operating in 170 countries, the division provides global communications solutions for leading companies around the world. Today, it accounts for almost 40 percent of BT’s revenue overall.

Many telcos, fighting back against mobile application providers like Google, are moving into value-added services (VAS), incremental applications that while marginal in cost are an important revenue generator for the business. AT&T, with its massive rebranding under the banner of “Rethink Possible,” is attempting to reposition itself as a multi-service provider of connectedness for the digital lifestyles of its customers. For example, the company is adding speech technology for voice dialing, ‘U-Verse’ for controlling a DVR and watching selected content from one’s phone, photo and video sharing across communities of interest, and more.

Meanwhile, Sprint is entering the fray with a browser-based platform. Called Browser-VAS, it enables developers to create-value added services for many device types and operating systems, and it takes Sprint from the app download world to cloud-based web services. Other cell phone companies are looking for similar means to leverage the data capabilities of their networks and win back ground from the over-the-top players

As more and more organizations move from the operator mindset into these far broader services and businesses, they will be challenged to make sure they have the right talent for such a far-reaching shift. This talent must be able to bring about the necessary internal cultural change and to face the external, customer- and service-centric world to generate growth. Instead of optimizing old operator-oriented business models, they must develop models that successfully transform an existing business by creating new markets, as the introduction of wireless did in the 1990s and as the iPhone did more recently.

New markets and new businesses will require new organizational models and approaches to talent within the company. Five principles are indispensable for beginning to build these new internal models:

-- Break the business process. The move to new models requires a willingness to shatter the processes that are at the heart of the old business, as AT&T’s ‘Rethink Possible’ is attempting to do. “It’s not going to be the old model that there’s brand work, and then there’s consumer work or enterprise work; it’s all ‘Rethink Possible,’” AT&T Senior VP of Brand Marketing and Advertising Esther Lee told Ad Age magazine.

-- Install management ‘from the outside.’ Because a services business requires greater proximity to the customer, people no longer simply work for the company and its internal management team, but for those customers. They are, in a sense, outside the organization and must be managed differently. For example, keeping employees loyal to the organization while they spend most of their time working elsewhere requires incentive schemes that incorporate customer satisfaction goals as well as company financial targets.

-- Relook at branding. Because operators can no longer compete solely on the basis of a technology layer that is becoming increasingly commoditized, the battle for supremacy in the services-centered world will be fought out in the minds of customers. Branding, marketing, and the ability to change customer perceptions and win mind-share must become core competencies of the organization -- competencies backed up by the ability to deliver on those brand promises.

-- Systematically evaluate talent. Define the skill sets that will be needed in a more services-oriented business and use the most acute assessment techniques available to understand where there are gaps in the organization. In seeking to fill those gaps, it is critical not only to make sure that candidates have the right skills but also that they have the leadership competencies that all successful executives must have, regardless of the function in which they work. Among the most important: change leadership, market orientation, customer orientation, and strategic orientation.

-- Consider ‘best athletes’ from outside the industry. The pool of potential talent should not be restricted to candidates from the telco industry. The marketing, branding, and customer-facing skills that telcos need might be found in fast-moving consumer products, web-based startups with innovative ideas, and service intensive industries (i.e., hospitality, retail, etc.) and should not be overlooked.

While humans still communicate with voice, new players are making voice calls almost cost-neutral, which is compelling operators need to innovative new ways to monetize the network, as Wi-Fi hot spots do today. Networks matter. Products matter. Services matter. But at the end of the day, what will matter most is the talent to make new business models work.