Carriers put innovation on hold

Telecoms networks have proved remarkably complacent

Ivan Snell and Constantin Schwarz do not mince words. For them, in their Snell UK Telco Innovation Report 2004, Hull’s Kingston Communications, international satellite operator Inmarsat, service provider Band-X and an anonymous cable operator are “innovation agnostics”. Cable & Wireless, Energis and MMO2 are “aware innovators”. BT Wholesale is an “innovation practitioner”. Only BT Exact and Orange are led, the authors insist, by innovation.

For all the government’s rhetoric about the importance of innovation, having a director of innovation, insisted one marketing director, “would be dull”. A colleague concurred: “Yes, innovation is a strategic priority but I could not point to anyone at an executive level, even the CEO, and say there is a person who is accountable (for innovation)”. Few carriers could articulate what the tangible business benefits were of managing innovation systematically. As a result, budgets for innovation didn’t match those for operations or capital expenditure.

Perhaps such weaknesses emerge because, as one respondent put it, “We get most of our innovation from small companies.” More likely, the basic culture of innovation is just not ingrained among UK carriers.

All this is bad news – for IT managers anxious to move to new ways of working, for the UK telecoms industry, and for the general public.

The report exaggerates a little in arguing that legacy fixed telecoms lines have reached maturity, that mobile subscriber numbers have peaked in many countries and that average revenue per user is flat. But it is right to say that serious growth in telecoms can only come from innovation. Meanwhile, Ofcom says that the industry’s revenues in 2002, at £48bn, amounted to four percent of UK GDP, up from £15bn and 2.4 percent in 1985. So the question of “where next?” for telecoms is really of national significance.

I don’t buy the report’s view that times to market and rates of customer adoption have accelerated over the past century of general innovations and telecoms breakthroughs. I also don’t believe the Great Telecoms Crash simply reflected hype-driven over-investment in data networks: it was much more to do with speculative and silly acquisitions abroad.

Last, Snell could also have been tougher on the mantra of fixed-to-mobile convergence in handsets, numbers, voicemail and billing, and on the far-from-innovatory use of 3G networks to take voice traffic from fixed ones.

But on the basics, the report is highly recommended. Its recipe for success in telecoms in fact applies to every aspect of innovation in IT: organise innovation separately. Allocate ring-fenced budgets for it, in the manner of BT and Orange. But make sure innovation is at the same time integrated into the organisation’s policies and practices, and lead it with senior, accountable people.

Beware one-sided views of innovation – doing it all internally, doing it all through outsiders. Instead? Lay down formal mechanisms for rewarding “innovation behaviours”, and, oh yes, organise corporate book clubs on innovation.

Now that last measure really would be something new.