March 24

Nespresso and the future of telecoms, part 2

Telecoms

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In my previous post, I explained how Nestlé built a new product category by moving from a supply-oriented business model to a customer-orientated one.  Here how telecoms firms might start asking the right questions to follow their lead.

video conferencing new telecom business models

Recently I have been helping a large global telco reinvent their video communications strategy.  As we reviewed some strategic options, their SVP noted that the ‘only way we will get the CEO and CMO interested is if our video strategy drives demand for our core connectivity services.”  He was spot-on, of course.  But as we discussed we realised that true value would only be created by asking a different question and answering a different problem.

The CEO is asking the classic “factory-owner” question of “what else can I see to drive increased production and improve my economies of scale?” Niraj Dawar suggests that future competitive advantage comes from asking a different question: “What costs and risks you can reduce for your customers in their search for, purchase of, usage of, and disposal of the kind of value you produce?”

I’m not going to give away any commercially sensitive ideas here, but let’s apply a little bit of “Nespresso thinking” to the video collaboration business in the form of a few questions that it would be worth asking:

  • Right now, I sell video conferencing units and measure bandwidth consumption, but don’t know who uses them or why.  How can I understand what customers are doing with my service?
  • I instinctively know video isn’t used as much as it could, as this addresses deep-seated cultural norms and behavioural issues. How do I enter into contact with the employees in my customers’ organisations, and train, inform and inspire them to use video more regularly?
  • I currently talk about the quality of the video call.  But is the selection, purchase and installation of the hardware and software equally enjoyable and simple?  How about the scheduling and call set-up?
  • Why aren’t my customers’ employees teleworking more now they have video capabilities? Have they really reduced business travel? How can I help them truly benefit from video?
  • How can I move from selling an entire system to corporate IT via a monolithic RFP, to enabling individual users to upgrade their plans and end-points as they see fit?

These questions start to take us away from ‘what’ we provide and get us to the ‘how’ we provide service.  To switch industries for a second, we move away from asking “how can I sell a lot more fizzy drink?” (a production-orientated perspective’). Instead, we move towards a customer-orientated perspective: “won’t consumers gladly pay a 700% price premium for the convenience of buying a cold can of soda from a vending machine on a hot day?!

What are the questions you think telecom firms should be asking to shift towards end-user related value creation opportunities? Please leave a comment below or on social media.


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About the author 

Richard Medcalf

Strategist, consultant and business leader with 15 years experience in helping companies thrive in an Internet world. Formerly a partner in strategy consultancy Analysys Mason; now at Cisco Systems, developing new strategic partnerships with leading telecoms players.

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Nespresso and the future of telecoms, part 1

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