What Business Are We In? And Should We Want to Be In It?

For some years telecoms companies have been leaning strongly on tactical concepts as realizing quick wins by outsourcing parts, buying technology licenses like UMTS, strongly changing governance regulations such as loosing monopolies, and in general improving their financial situation. But what will be their next step?

Telecoms companies were enforced to take tactical measures due to the hyper-dynamic behavior of the telecoms market. But now they become more and more aware that it is really time to make some real and strategical choices. And the most important question which should be answered fast is: What business are we in? What are reasonable boundaries? And what product and services portfolio are we going provide?

To be able to survive telecoms companies must make choices on technology shifts, products and services, competition, and customer interaction. Also, choices are needed in order to reduce complexity, and adapt their business model. And they will have to do this fast: Time waits for no one! AT Kearney has dived into telecoms, and they advice the Chief Executive Officer (CEO) to act like Jack Welch from General Electrics (GE) did many years ago: Enforce your managers to realize at least 10% of your profit from for telecoms new and emerging markets, what ever new and emerging is.

Let us look at an example: The Dutch telecoms operator KPN. KPN has sold participations in branches strange companies like their lease company, and participations in 'far away' telecoms companies, like Indonesian telecoms. KPN outsourced its ICT as well as some other parts. The result was a smaller yet financial sound company. Recently KPN bought the ICT company Getronics, and started to reduce complexity by replacing labels from Internet companies they own by KPN. Examples are 'Het Net' and 'Planet'.

Now the interesting part comes: What emerging market thinks KPN to be entering? Is it ICT for small home offices (SOHO)? Their backup offering seems like it. Or Software as a Service (SaaS) for SOHO? Will they become a technology supplier? Or will they become communication experts? Hard to tell.

From this telecoms example we can learn that you can afford to live for a while on tactical decisions. But there definitely comes a time that you need strategic decisions. What are your emerging markets? What are your assets? And what is your portfolio then? And how are you going to implement this? Let us discuss!

Contact Hans Lodder at Results2Match.com.

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