Blue Ocean Strategy in the Networked Society – Part 2
In my previous post, I created the Strategy Canvas for the Red Ocean of an Asian telecom operator. In this post, I will show you how applying Blue Ocean Strategy within the Networked Society will affect the operator’s business, strategy and market.
The Eliminate-Reduce-Raise-Create Grid (ERRC) grid is about pushing companies to create new value and unlock a new blue ocean. In this example, the ERRC grid looks like this:
- Pay As You Go: Consumers want to control their spending and since I am proposing to introduce bundles of buckets, this should be eliminated.
- Different tariff plans: The large number of different tariff plans should be eliminated and replaced by simple bundled tariff plans. This will lead to reduced operations in BSS and hence increased cost savings.
- National roaming charges are still high while in other markets consumers only pay a single access charge. The regulator here should remove national roaming charges in order to stimulate voice traffic.
- Some services are not adding value to customers; most of them are standard supplementary or sms-based services.
- Services portfolio: Increase and diversify the portfolio based on consumer’s needs, behaviors and spending patterns.
- Network performance: A high-quality network will improve customer satisfaction and reduce churn.
- Coverage: Reach a large number of urban, suburban and rural populations to increase customer reach, satisfaction and sales. This will require additional investments in the radio network. This investment should be easily justified by the acquisition of new customers.
- Consumer intelligence: Understanding the consumer’s needs is essential for future growth opportunities. Ericsson ConsumerLab provides valuable input for strategic decisions through its extensive research on consumer behavior. According to the recent Personal Information Economy report, more than 44 percent of respondents would let companies use their information to personalize offers, while 41 percent would allow then to use it to improve or develop new products. Hence the 'Raise' for consumer intelligence.
- Bundled plans: This will provide ‘segmented’ consumers a targeted offering while at the same time providing the means to sell new data services (3G & 4G network are deployed in every region of the country) and fight the so-called over-the-top internet services providers. At the same time, it provides a suitable solution to subscribers own cost control in this market.
- Innovation: This is an important opportunity for competitive differentiation in this marketplace. It is an opportunity to develop value propositions beyond simple voice and data plans for the growing enterprise marketplace (companies from different industries are connected in the Networked Society), for the non-served rural population and the growing, urban and suburban market. Cloud computing is an integral part of the Networked Society. Cloud offerings will improve traffic volumes but also drive higher ARPU by moving up the value chain and selling integrated offerings of connectivity, infrastructure and software-as-a-service. These offerings will create longer-term loyalty with customers and increase customers’ stickiness while creating a new marketplace.
- Innovative business models: Explore new revenue streams by testing innovative business models that address customers’ needs. In the Networked Society, telcos have the opportunity to become core ICT providers by creating network-centric business through data centers or service-oriented developments. In the Networked Society, different customers from different industries are connected. This totally new marketplace needs to be addressed, served and supported. Exploiting the tremendous opportunities for growth will require innovative business models to cater to this increasing demand.
- Cost control: Mobile traffic demand will continue unabated leading to a growing need for continued investments in the radio access, backhaul, and core networks as well as OSS/BSS. Operating legacy platforms and services in parallel with a new network introduces significant costs in the network, OSS, BSS and overall service operations. Cost reduction can be achieved through network outsourcing. Ericsson is the world leader in managed services. Ericsson operates large multi-vendor networks and related business processes such as provisioning, network engineering, applications management, field maintenance, network optimization and spare parts management.
And here is the Blue Ocean Strategy Canvas: