Leveraging insight: The neglected strategic capability

High quality insights are crucial for telcos

Each year telcos invest in external insights from strategic and tactical research houses, alongside primary research budgets. This investment is a response to the ever-evolving trends that are shaping the industry, the need to understand them and support decision-making. It is therefore critical that telcos develop the capability to leverage them well.

What drives the need for insight?

Learning and seeking evidence drive the insight needs across the business. This ranges from individuals drafting a one-off client proposal, to strategy teams developing the corporate response to an emerging opportunity. The breadth of the insight need has implications for research buying and funding practices, as well as how insight is distributed.

Being in the business of external insights, STL Partners is always keen to understand how telco customers use insights and what research management practices they deploy to derive more value from insight services. STL Partners asked Olga Holin, a seasoned research buyer with recent telecoms experience, to talk to a group of her peers and synthesise their perspectives on what “good” insight practice looks like.

The report examines the drivers for external insight acquisition and the types of insights typically acquired. It outlines the insight management approaches at four telcos (representative of Olga’s sample) and highlights the benefits and challenges of each. It then sets forth several guidelines for operators and other organisations to ensure insight quality and derive more value from insight acquisitions going forward.

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Why are external insights necessary?

Across all the organisations we spoke to, respondents agreed that research insights were necessary and valuable, chiefly to drive learning and aid business decision making. The stated reasons for acquiring research include:

  • To identify future growth opportunities and threats in order to plan and innovate accordingly,
  • To inform and educate employees, thereby complementing existing capabilities,
  • To validate internal assumptions and build a deeper understanding of the business and its environment,
  • To assess business performance in context and validate effectiveness.

While some of this insight could conceivably be generated internally, the value drivers of external research over an internal function are:

  • “We don’t know what we don’t know” – To gain access to topics and trends potentially not on the organisational radar. Drawing on the expertise from external sources allows organisations to capture insight more easily and assures no threats or opportunities are missed.
  • To remove blind spots in internal thinking – To challenge mental models, by providing objectivity to change the way an organisation might perceive a certain technology or topic.
  • To influence senior executives – To strengthen the credibility of business cases and market overviews. The insights of analyst houses with strong reputations make analyses more convincing to senior management. As one telco put it, “They don’t always listen to us, but they usually listen to external reputable sources.”
  • To increase the speed of internal knowledge acquisition and learning – To develop the knowledge of employees quickly (they don’t have to find the information, just contextualise it).
  • To secure quality information – To ensure information is robust, unbiased, consistent with industry definitions (external agencies validate information via multiple sources and have no vested interests to protect).
  • To supplement limited internal insight resources – To answer information einquiries more quickly and through experts versus having to recruit internal experts to understand an emerging area.
  • To get access to information that might otherwise be unattainable (e.g. competitor information).
  • To seed change – The outside and informed perspective of a research house can highlight a need for change that may not be recognised due to internal mindsets and environment.

The value to the organisation of having these insights will be influenced by the extent to which findings can inform learning or decisions in more than one part of the business – and the longevity of the findings (how quickly they go out of date) or whether they have a future focus.

External insights may only be required to address needs in a limited business area at a specific point in time, e.g. where a product team wants to know how a newly launched product is faring versus competitor offerings. This type of insight can be considered tactical insight, as it provides the information to enable quick adjustments and decision making in the shorter term, more likely the type of decisions taken by middle managers.

Strategic insights, on the other hand, can generally inform decision making across the organisation more broadly. The topics are relevant to more than one area (e.g. digital transformation) and over a longer period (they say something about the future).

Strategic insights are able to influence decision making at an executive level, equipping teams for discussions around larger investments and those concerned with long-term returns rather than immediate gains. This is illustrated below.

 Tactical versus strategic research

external insights

Source: STL Partners

The nature of the research has implications as to how it should be managed to maximise value.

Table of Contents

  • Executive Summary
    • Recommendations to maximise insight value
    • Telco insights challenge
    • Next steps
  • Introduction
  • Why are external insights necessary?
  • Insight management across the research lifecycle
    • Basic insight management process
    • Advanced insight management process
  • Telco insight management case studies
    • Telco 1
    • Telco 2
    • Telco 3
    • Telco 4
    • Set-up versus research type
  • How to increase the value of research in organisations
  • Index

Related research

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The Future of Work: How AI can help telcos keep up

What will the Future of Work look like?

The Future of Work is a complex mix of external and internal drivers which will exert pressure on the telco to change – both immediately and into the long-term. Drivers include government policy, general changes in cultural attitudes and new types of technology. For example, intelligent tools will see humans and machines working more closely together. AI and automation will be major drivers of change, but they are also tools to address the impact of this change.

AI and automation both drive and solve Future of Work challenges

Futuore of work AI automation analytics

Source: STL Partners

This report leverages secondary research from a variety of consultancies, research houses and academic institutions. It also builds on STL Partners’ previous research around the use of A3 and future new technologies in telecoms, as well as organisational learning to increase telco ability to absorb change and thrive in dynamic environments:

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The Future of Work

We begin by summarising secondary research around the Future of Work. Key topics we explore are:

Components of the Future of Work

Future of work equation

Source: STL Partners

  1. The term Fourth Industrial Revolution is often used interchangeably with the technologies involved in Industry 4.0. However, this report uses a broader definition (quoted from Salesforce):
    • “The blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.” 
  2. Societal and cultural change includes changes in government and public attitude, particularly around climate change and issues of equality. It also includes changing attitudes of employees towards work.
  3. Business environment change encompasses a variety of topics around competitive dynamics (e.g. national versus global economies of scale) and changing market conditions, in particular with relation to changing corporate structures (hierarchies, team structures, employees versus contractors).
  4. Pandemic-related change: The move towards homeworking and hastening of some existing/new trends (e.g. automation, ecommerce).

Content

  • Executive Summary
  • Introduction
  • The Future of Work
    1. The Fourth Industrial Revolution
    2. Societal and cultural change
    3. Business environment change
    4. Pandemic-related change
  • How will FoW trends impact telcos in the next 5 to 10 years?
    • Expected market conditions
    • Implications for telcos’ strategic direction
    • Workforce and cultural change
  • Telco responses to FoW trends and how A3 can help
    • Strategic direction
    • Skills development
    • Organisational and cultural change
  • Appendix 1
  • Index

Related Research

 

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Building the learning telco

Organisational learning is key to telcos’ success in the Coordination Age

Developments in technology and organisational digital transformations increased the pressure on learning and development (L&D) departments in telcos. L&D departments, many of which were compliance-focused, were tasked with upgrading telcos’ entire skills inventories to ensure that workforces were fit for new ways of working (e.g. AT&T’s “Workforce Reskilling” effort announced in 2016).

What was perhaps under-appreciated initially was that the need for L&D would not go away:

  • Telcos continue to operate in dynamic environments that are inherently unstable (e.g. pandemics, climate crises, new and evolving technologies);
  • Traditional telco revenue streams have remained under pressure, requiring new and innovative thinking to identify opportunities for growth.

The VUCA acronym (first coined in 1987) – standing for volatility, uncertainty, complexity, ambiguity – provides a useful framework to describe the current telco environment.

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The telco’s highly VUCA environment

learning telco

Source: STL Partners

Telcos have made changes to organisation structures in order to accommodate this reality, e.g. “flattening” the organisation and decentralising decision-making to accelerate the pace at which organisations can take action (absorb change and innovate).

Additionally, they are recognising the importance of learning to this process. Workforce skills must remain relevant and collective corporate intelligence must evolve to decide and inform winning strategies.

This type of “organisational learning” requires conscious efforts on the part of both the organisation and individual employees. It is not enough to make L&D the sole responsibility of an L&D team, or an HR department and to task them with identifying appropriate content and courses to push out to employees.

Organisations need to foster an environment where learning is encouraged and enabled in pursuit of organisational improvement, customer satisfaction, innovation and growth. After all, it is impossible to improve/do something new without learning in the first instance. Learning tools, processes and practices are required – and barriers to learning should be removed.

Learning barriers can include:

  • L&D teams creating bottlenecks to learning (e.g. restricted course access)
  • The existence of knowledge silos
  • Beliefs that “knowledge is power”
  • A lack of clear goals around using knowledge/new capabilities for improvement (i.e. learningto create behaviour change)
  • No incentives for individuals or teams to engage in learning
  • Uncertainty about processes for capturing and sharing learning
  • Fear of failure inhibiting trials in order to learn something new.

This report considers the key practices associated with organisational learning and identifies lessons from telcos who are progressing towards becoming a learning organisation.

Table of contents

  • Executive Summary
  • Introduction
  • The value of organisational learning
  • Enabling organisational learning
    • Types of learning in organisations
  • Organisational learning in practice
    • Learning as an organisational priority
    • Identifying learning purpose
    • Content-based learning
    • Person-led learning (knowledge sharing)
    • Process-led learning
    • Trial, reflection and practice
    • Recognition and rewards for learning
  • Towards learning organisations
    • Findings
    • Evaluation
  • Conclusions
  • Index

Related Research

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How to identify and meet new customer needs

Customer-led innovation at Telia and Elisa

In order to secure competitive advantage and long-term growth, telcos need to identify and meet new customer needs. The importance of this is confirmed by the STL Partner’s Telco investment priorities survey published in January 2021. Understanding customer needs and innovation, both essential for addressing new needs and driving growth, featured in the top ten priorities.

Telco top investment  priorities

top-telco-investment-priorities-stl

Source:  STL Partners, Telecoms priorities: Ready for the crunch?

This report seeks to identify best practice for telcos. Through in-depth interviews with senior managers in Elisa and Telia, and an expert in disruptive innovation, we identify the critical success factors and lessons learned in these organisations.

Telia created Division X in 2017, a separate business unit focused on commercialising and growing revenue from emerging businesses and technologies such as IoT (including 5G), data insights, and digital B2C services. Its focus is on customer needs and speed of execution, to spearhead and accelerate innovation, which it deems necessary in Telia’s drive to “reinvent better connected living”.

International Digital Services is Elisa’s third main business division, alongside Consumer and Corporate, which serve the domestic market. As International Digital Services has matured, it has focussed specifically on addressing new needs and developing new services, in both industrial and corporate domains.

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The report is based on interviews with:

  • Liisa Puurunen, Vice President, Brand, CX and start-ups, International Digital Services, Elisa — Liisa has a background in leading new businesses and start-ups in Elisa in the Consumer division and International Digital Services. Liisa’s role is to understand where there are new needs to be met, and to get best practise in place across the whole customer journey, within both industrial and corporate domains.
  • Annukka Matilainen, Development Director for Omnichannel and Smart Automation, Elisa —Annukka led the Consumer team’s response to COVID-19
  • Stephanie Huf, Head of Marketing, Division X, Telia — Stephanie’s role is to support the business lines in Division X to in engaging with customers to identify their needs. For example, her team identifies what customers want, defines the value propositions and works with product and business teams to test these in line with customer insight. (Since participating in this research Stephanie Huf has moved to a new role.)
  • Anette Bohman, Strategy Director, Division X, Telia  — Anette supports and guides Division X in defining Telia’s future.
  • John McDonald, FIRSTEP — John is a strategist in disruptive innovation in the health industry in Canada. He helps leaders create alignment around how the forces of disruption are unfolding and where to place the bets. FIRSTEP works with health organisations searching for fresh insights that spark new opportunities for growth.

Create a separate team to maximise new business opportunities

A separate team has many benefits

New business requires a separate, dedicated team. Its needs are different from day-to-day business and it needs its own focus.

One of the biggest learnings for Elisa in addressing new opportunities, is that there needs to be a ‘sandbox team’ with its own resources and budgets, rules, methods and mindset. It must have access to senior managers for decision making and funding, and strong leadership.

The sandbox team needs to be remote from the demands of day-to-day operations and implementation. If finding new needs is only part of someone’s job it is difficult to manage, as short-term demands will inevitably take precedence. Delivery and experimentation are different functions and they should be separate.

Liisa Puurunen’s team is a start-up in its own right. It is leaner than the usual Elisa approach and people are only brought into the team when there is a test to be done, keeping it flexible.

Rationale for a separate team

separate-team-rationale
Source: STL Partners

Contents

  • Executive Summary
    • Create a dedicated and separate team
    • Take a customer centric approach at all stages of innovation
    • Types of innovation will meet different new needs
  • Introduction
  • Create a separate team to maximise new business opportunities
    • A separate team has many benefits
    • Telia Smart Family: The case for a separate innovations team
    • Evaluate success in relevant ways that may be non-traditional
  • Take a customer centric approach to all stages of innovation
    • Ensure a customer centric culture
    • Start with a customer problem
  • Meeting needs and scaling bets
    • Co-create with customers, but choose them carefully
    • Elisa’s empowered teams enable a successful response to COVID-19
  • Types of innovation to meet different new needs
    • New needs in the core versus new businesses
    • Dedicate some resource to extreme innovation
    • Telia Data Insights: New Business innovation in response to COVID-19
    • The case for disruptive innovation
  • Plan exit strategies
    • Perseverance and pivoting can bring success
    • Be prepared to kill your darlings

Related research

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Elisa: Telco leadership excellence – and how to do it

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

Elisa operational structure and interviewees

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’

To what extent is Elisa's culture an enabler or barrier to success surveySource: 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
    • Partnerships
  • The long-term outlook for Elisa

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