Operators – Learn From the Banks

It’s a brave man that advises anyone to look to the banks as a paragon of good business practice right now. But the analyst, Strand Consult, issued an interesting research note yesterday, in which it argued that mobile operators could indeed learn a lot from them.

In the note, the analyst kicks off with a typically bold statement, saying that: “Senior leaders in mobile operators don’t know much about the digital world.”

This, Strand argues, is not their fault, since they came of age in age in the early 1980s, before email, the PC, and mobile phones. The average age of a CEO in industry, says Strand, is 50. The chairman is 10 years older. Naturally they know the classic telecommunication business – fixed line. And they know the balance sheet.

But Strand goes on to say how much the world has changed in the past 15 years, and notes the challenge this poses to these senior executives to keep up. It’s here that the comparison with the banking industry comes in, as the note says: “Telcos can learn something from banking industry, which truly transformed itself from offline to online. Banks have been shrewd to monetize the transition, offering different levels of payment and service depending on adoption.”

It goes on to say that traditional telcos can adapt by hiring young and smart digital marketing managers who have ideas and energy which need to be synthesized in the company overall.

This, it seems is starting to happen. Telefonica, for instance, has its Telefonica Digital division, whose mission is to “seize the opportunities within the digital world” with mobile advertising, M2M and eHealth services referenced as key components of this brave new world.

Yesterday, together with our online editor, Alex Spencer, I spent a couple of hours at Telefonica’s Wayra Academy in London. (We’ll have a video report from the Academy in the next few days.) It’s the 10th such project from the operator, with most of the others in Latin America, but a couple of other European ones too.

It’s an incubator. Telefonica invites start-ups to pitch for a 6-month placement in the Academy. Over 1,000 companies applied to join the UK arm. 16 were successful, their success guaranteeing them six months’ rent-free office space – and very cool office space, the obligatory bean bags, graffiti walls and ping-pong table all present and correct – plus a €50,000 investment from Telefonica in return for a 10 per cent stake in the business.

The approach seems enlightened to say the least, coming from a business type whose top people, in Strand’s words, “don’t know much about the digital world”. Telefonica is not the only operator embracing the digital world in this way. The Middle Eastern operator, Etisalat also has a Digital Services unit, and the Turkish operator, Turkcell, has forgotten more than most of its peers ever knew about innovative digital and mobile marketing techniques.

I applaud the approach, and hope that some of these investments pay off for Telefonica and other mobile operators who are brave enough to grasp the digital nettle. It may be a while before the words “innovation” and “mobile operator” sit comfortably alongside each other, but initiatives like the Wayra Academy are advancing the process.

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