Elisa stands out among telcos
As digital services are reshaping our world, many different players are creating new and disruptive services, while telcos’ traditional revenue streams are plateauing and, in some cases, in decline. While many telcos have embarked on the journey to diversify their offerings and establish themselves as serious players in the digital services space, many are struggling to make business model adjustments that are critical to success as operators move into adjacent growth segments. Few telcos have figured out how to keep the wheels turning on their core business, while also building new businesses and embedding agile working practices across their organisation.
In our evaluation of new digital services propositions from Finnish telco, Elisa, STL Partners discovered a contender that punches significantly above its weight. (See our earlier case studies on Elisa Automate and Smart Factory.) Elisa’s successes in pioneering new services, maintaining customer relevance and delivering impressive financial results are not an overnight sensation but the product of long-term, systematic transformation and hard-won lessons.
We were curious to find out what combination of attributes make Elisa an exemplar of how to win in the digital revolution, and how other telcos can take a leaf out of the Elisa playbook to create a similarly agile, adaptable environment for innovation within their own organisations.
Through a series of in-depth interviews with key members of Elisa’s senior management, we set out to explore the company’s recent history of evolution and the culture, practices and processes that are positioning Elisa to co-operate as well as compete with digitally-minded telcos worldwide.
For this research we interviewed six members of Elisa’s executive management:
- Veli-Matti Mattila, CEO
- Henri Korpi, Executive Vice President, International Digital Services, including Elisa Automate and Elisa Smart Factory
- Vesa-Pekka Nikula, at the time of the interviews Executive Vice President, Production – the Production team is responsible for networks, IT and software underpinning all of Elisa’s operations in Finland, Estonia and new international digital services. Currently Executive Vice President, Consumer Customers.
- Merja Ranta-aho, Executive Vice President, HR – Elisa’s HR team plays a key role in developing processes and practices that encourage continuous learning across the organisation.
- Liisa Puurunen, Vice President, International Digital Services, International Entertainment – this team is tasked with ideation and development of new business propositions built out from Elisa’s core capabilities in the area of entertainment.
- Tapio Turunen, at the time of the interview, Director, Business Development – this team is responsible for strategy development across Elisa. Currently Vice President, Business Development, Corporate Customers.
The figure below shows a high-level view of Elisa’s operational structure, with additional notes on how those interviewed for this research fit into the organisation.
Elisa operational model and interviewee overview
Source: Elisa, with STL Partners notes
Comparing Elisa’s culture with other telcos
In parallel with our research into the Elisa’s critical success factors, STL Partners has been running a survey on culture, leadership and purpose in telecoms operators. The goal of the survey is to understand how important these factors are to telcos’ success, and what types of behaviours contribute to a working environment that motivates and enables people to learn new skills and innovate.
As of November 2019, we received 19 responses from Elisa out of a total of nearly 170 respondents overall, primarily from other European operators, as well as some from North America, Asia Pacific, and the Middle East. The results illustrated in the graphic below show a stark difference between how people in Elisa perceive their culture and leadership compared to their peers.
Elisa’s culture is perceived as significantly more effective than other telcos’
Source: STL Partners
The fact that people within Elisa feel as though the company culture is significantly more supportive to its success than in the average telco validates STL Partners’ view that it has a unique approach that others can learn from.
Elisa similarly stands out against its peers across other areas covered in the survey, such as how the organisation responds to mistakes, leadership and management styles and maturity of digital capabilities.
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Is it just a Finnish thing?
There are elements of Finnish culture and the regulatory environment that have benefitted Elisa:
- Sisu, a Finnish word which can be translated as the spirit of determination and grit, which is considered by some to be at the heart of Finnish character.
- Early deregulation of the telecoms industry meant that Finnish operators were further ahead than telcos in many other countries in adapting to commoditisation of telecoms services when global internet players disrupted the market
- Unlike other European countries, the Finnish regulator never introduced a fourth mobile player, possibly because there was already strong price competition between Elisa, DNA and Telia. This has likely given the market more stability than others in Europe, as the telecoms industry has adapted to growing demand for data.
Although these circumstances have certainly helped Elisa, we believe that the position it is in today is the result of deliberate actions and processes implemented in response to its weak performance in the early 2000s, when falling revenues and curtailed dividends saw its share price plummet by 75% between January 2001 and December 2002.
Sixteen years later, Elisa has started to establish a healthy track record of pioneering digital services built on its core competences, scaling businesses in its domestic market, and expanding its international reach at pace through carefully selected acquisitions, and its share price has returned to previous highs.
Table of contents
- Executive Summary
- Key success factors other telcos can emulate
- Next steps
- Elisa stands out among telcos
- Comparing Elisa’s culture with other telcos
- Is it just a Finnish thing?
- How Elisa transitioned to a digital operating model
- A long history of innovation
- Developing the business case for innovation the Elisa way
- The shift to a software-defined enterprise
- A phased approach to turning an idea or opportunity into a business
- Critical success factors
- Leadership: Earning shareholders’ trust
- Vision and strategy: Striving for excellence
- Culture and practices: Embedding systematic learning
- An unswerving customer focus
- Talent strategy: Giving people the autonomy to experiment
- The long-term outlook for Elisa