The GSM Association (GSMA) Mobile Economy Africa Report 2016 mirrors the global realities in the telecom Industry: slower subscriber growth, declining returns on capital, slower revenue growth amidst increasing data traffic necessitating sustained massive Industry CAPEX. At the Mobile World Congress in Barcelona this February 2017, the GSMA Chairman, Sunil Bharti Mittal, was even more concerned about the poor Reputation score of the telecom Industry.
So why is Company/Industry reputation tracking so important?. It is a critical tool to measure stakeholder perception which includes consumer emotional attachment to the company/Industry which in turn influences consumer purchase/adoption of its products and services. The World’s leading Reputation research and advisory firm, the Reputation Institute (RI) recently released the 2017 edition of its annual study measuring the reputation of the World’s top Global firms. It is very telling that not one Global telecom Operator company was adjudged to be among the top 100 most reputable companies. The key measure in the RI Reputation Index is on customer engagement which includes quality of products/services, good value for money and meeting customer needs. The telecom Industry serves over five (5) Billion unique users and spends about $200B annually. The poor rating of the telecom Industry in such Industry reputation Index suggests that the Industry is generally not much cherished by its customers across the World.
It is a good time for introspection and some home truths.
# Hometruth No.1: For an Industry to be highly regarded by its customers, it must continuously understand, connect and meet the needs of customers as its raison d’etre (reason for existence). Global consumer companies like Nestle and Coca-Cola are recognizing and responding to shifts in consumer preferences. As more customers switch from processed food to healthier options, Nestle is now more poised to be more of a “health company” than just a consumer company. Coca-Cola is also now making a more conscious sales push for healthier beverages like water, milk and soy-based drinks as more consumers shift from sugary drinks. We may question whether these examples apply to an Industry like telecoms. The reality is that any Industry that is slow to embrace this new age of the empowered customer is at the risk of losing relevance and being disrupted. Over the Top (OTTs) players now exist to create services in response to existing and changing needs of customers leveraging available technology. We have watched whatsapp evolve from enabling chats, voice calls and now video calling at the expense of traditional telcos.
#HomeTruth No.2: For an Industry to be highly regarded by its customers, Innovation must necessarily be intrinsic in its DNA in connecting with the needs of its customers. A good company example is Global Consumer giant, P&G, which has operationalized a customer engagement model which enables collaboration with customers to develop new products. This customer engagement platform now contributes 35% of P&G’s Innovation efforts and has translated to increased R&D productivity by 60%. Customer-centred companies are designed to go to sometimes “extreme” lengths to meet existing and new customer needs. Some companies even anticipate and create such needs. A good example is the Elon Musk-inspired Tesla. Tesla is built on the conviction that electricity will be the primary power source for automobiles to replace internal-combustion engines with cost benefits to consumers. This may have sounded far-fetched some years ago but Tesla has now just overtaken 100-year old Ford Motors to become the second-largest U.S. Auto maker by stock value at $46.14B. Facebook and Google are leading interesting initiatives to connect the unconnected to the Internet.
HomeTruth No. 3: For an Industry to be highly regarded by its customers, most companies in that space will be run with the mindset of the customer at the very core of its existence. The operational practices, metrics, structure, skill sets in such companies will naturally reflect its customer-centredness. Innovation, partnerships, experimentation, high risk appetite are ingrained in the mindset of the company examples shared above.
So how do telecom Operators measure up against these three (3) home truths?. Maybe the problem starts with the fact that telecom was primarily set up as a utility business. The implications of this are far-reaching. Utilities exist to provide essential services to a captive market which in effect, means its primary focus will be on asset monetization (selling network capacity) than on being customer-centred. It therefore follows that the organizational mindset, culture, operations and structure of a business with a utility heritage will be more skewed to extracting value from its assets than connecting to the needs of the customer. The leading traditional metrics like net additions, market share, average revenue per user are more customer quantitative than qualitative. Maybe this Utility heritage also explains why as the Industry became more competitive, it naturally resorted to price discounts rather than competing on other key levers of differentiation like Innovation.
It will not be fair to say than no progress is being made. We are seeing more cross-Industry partnerships and mergers across telecoms, multi-media, e-commerce, financial services, technology all seeking to connect to new customer expectations and total lifestyle needs. For example, Facebook is now working with Orange and other Operators under the Telecom Infra Project (TIP) which will hopefully create new exciting services. However, it does appear that telecom Operators are still generally managed, measured and regarded more like an infrastructure than a consumer business. It was interesting to see that some technology partners to telecom Operators like Ericsson, Nokia, Cisco and IBM were among the top 100 most reputable companies in the 2017 RI Reputation Report referred to earlier. Aviation which is another consumer-captive Industry is generally not highly rated on customer friendliness but it had several companies like Air-France/KLM, Virgin, Delta Airlines, British Airways in the Global top 100 list. So clearly, telecom Operators must be doing something very wrong.
In today’s World, our new reality is that a new customer engagement paradigm beyond the transactional realm is now an imperative for continued relevance and business success in any Industry including telecoms. If the telecom Industry has not fully embraced this reality of the changing customer engagement paradigms, maybe this explains why the customers are not so enamoured of the Industry.
It is time for deep introspection within the telecom Industry in the African Continent in particular. The impact of telecom on socio-economic development especially in developing economies is critical. Telecom Operators are at the centre of an extensive ecosystem of suppliers, retailers, businesses and almost, if not, all of the country’s population that can be transformed into an unparalleled customer engagement engine which can translate to relevant products, services and solutions to meet the unique needs of our populace directly or improve other sectors of the economy. Telecom is more than a Utility, it represents platforms, partnerships and relationships that can be translated to much more than a basic voice call or data connection. It is the foundation of a new digital economy which can accelerate socio-economic progress in the African Continent. Telecoms should be the most loved Industry as the enabler for socio-economic progress. However, It will require a massive rewiring from the “Utility” mindset to a “Development” mindset. It will challenge everything that has been built on the Utility mindset and would call for a creative destruction of the status quo to create a new sustainable Industry future from what has been created till date.
Today, some of the World’s most capitalized companies like Apple, Alphabet (Google), Microsoft, Amazon and Facebook are considered technology companies but have evolved to be much more that with a pervasive influence in the lives of consumers all over the World. These companies have intrinsically endeared themselves to consumers in the course of this journey. There is no reason why telecom Operators cannot do even more.