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Blue Ocean Strategy for European operators: creation is critical

In my last post, we looked at the first three categories from the ERRC (eliminate-raise-reduce-create) grid for a European telecom operator to pursue a successful Blue Ocean strategy. Today, I want to look at what an operator should create to find that clear Blue Ocean.

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Create

  • Data share plans: In the Networked Society, consumers have and use multiple devices. Such plans will provide a targeted offering for “segmented” consumers, providing an opportunity to offer additional value propositions with new data services, and fight the OTT service providers. In such a plan, OTT providers will eat up the data bucket and will no longer be perceived as free.
  • Consumers and societal intelligence: Understanding consumers and the needs of society is essential for future growth opportunities. Many economists think that future growth will come from solving societal problems. Ericsson ConsumerLab can provide valuable input for strategic decisions, through its extensive research into consumer behavior. According to the recent Personal Information Economy report from Ericsson ConsumerLab, more than 44 percent of respondents would let companies use their information to personalize offers, and 41 percent would let companies use personal info to improve or develop new products. Hence the increase in consumer and societal intelligence.
  • Innovation: This is an important opportunity for competitive differentiation in the marketplace, 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 sub/urban addressable 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, increase customer stickiness and create a new marketplace.
  • Innovative business models: Explore new revenue streams by testing innovative business models to 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. There are truly tremendous opportunities for growth ahead that will require innovative business models to cater to this increasing demand. One example could be the implementation of a revenue share model with the customer segments, by involving them in the sales of the products and services through incentive plans.
  • Cost control: Mobile traffic demand will continue unabated and the need for continued investments in mobile broadband, core network and OSS/BSS platforms will increase. Operating legacy platforms and services in parallel with a new network brings significant costs to the network, OSS, BSS and overall service operations. Cost reduction can be achieved with network outsourcing. As the world leader in Managed Services, Ericsson operates large multi-vendor networks and related business processes – such as provisioning, network engineering, field maintenance and network optimization.
  • New strategic positioning: The more we learn about poverty, healthcare, water, nutrition and other societal issues, the more opportunities we see to use economics and new business models to address them. Many economists see the solutions to such problems as stimulating future growth. A good example is the M-Pesa money transfer and microfinance service launched by Safaricom in Kenya.

Aligning strategic positioning with shared value opens up fundamentally new ways of thinking about business. From being known as a telecom carrier, the telecom operator can become a smarter cities builder, a wellness provider or a health and safety enabler.

This Blue Ocean Strategy canvas wraps up the big picture.

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In my next post, I will summarize my analysis and my findings, on the impact of applying Blue Ocean Strategy in the Networked Society on the Asian and the European operator future business and strategic directions. I will also discuss applying cutting-edge technologies such as Cloud, Big Data, M2M, Open Hardware and SDN.

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