Telcos must compete less and collaborate more as innovation efforts get put under the spotlight, according to research firm, Ovum.
In its latest study, Understanding How Telcos Innovate , which analysed more than 3500 new service launches by telcos, it found that innovation is critical to telco survival, yet many miss the big picture, exaggerate the threat from over-the-top (OTT) players, and misunderstand the broader benefits of innovation.
Ovum industry, communications, and broadband practice principal analyst, Emeka Obiodu, said telcos were too selective when choosing partners and overburdened their prospective allies with unrealistic revenue expectations.
Instead, the report recommended that telcos use partnerships to scout for new ideas, assimilate them, and capture value.
In addition, the research indicated the importance of prioritising innovations that exploit the centrality of operators’ networks.
“An efficient network that has been updated with new innovations can be combined with innovative business models to continuously deliver value to telcos and their shareholders,” she said.
Obiodu claimed that a well-crafted strategy can use additional, preferably low-cost, new products and services to supplement and shield core products.
The research also highlighted the significance of a comprehensive approach to evaluating the benefits of innovation.
“Telcos should use the notion of “net innovation benefit” – which is made up of “net new revenues”, “net cost savings”, and “net non-monetary benefits” – to measure the success of their innovation activities.
“The advantage of this metric is that it unifies the traditional metrics used for new products, processes, and marketing initiatives,” she said.
According to Obiodu, using such a comprehensive approach to evaluating new ideas, will enable telcos to avoid the short-sightedness and misunderstandings that have underpinned some of their previous innovation activities.