|Issue:||Latin America III 2000|
|Topic:||Wireless Internet and Wireless Data – The Forthcoming Battle|
I know an old Special Forces sergeant who began his military career as a fortification engineer with the Swedish army. When he started his military career twenty years ago, military strategy was all about defending large, strong, fixed installations. His particular job was to build and maintain the fixed installations, according to specific instructions scheduling what he was to do as well as where and how it was to be done. The installations, as such, were huge underground facilities, often the size of 5 -10 storey buildings, and there were a lot of them. The installations were designed to resist all kinds of attacks, ranging from nuclear weapons to infiltration forces. The key to winning the battle back then was Firepower-Endurance-Cover.
When the cold war ended, so also did the threat that was behind the entire military strategy of the time. All of a sudden, it was no longer possible to clearly identify your enemies or predict where and when battles might take place. Instead, the new strategic analyses showed untraditional threats like environmental catastrophes, smugglers, crazy individuals, UN peacekeeping efforts and tired old enemies. In only a few years, the huge military installations had become obsolete; the odds of actually placing a 5 storey underground facility in the right place, at the right time, facing the right kind of enemy, were practically zero. Faced with a new strategic scenario, the Swedish army created small, flexible, highly manoeuvrable, highly trained, specialised army units. The idea was to train them to be the best within their respective areas, and then use them in pin-pointed actions, without taking away the opportunity to use the synergies of working together as a larger unit, if the crisis situation so required. My friend, the sergeant, was initially very disappointed about having to leave his warm, dry, underground house, but it turned out that his knowledge of explosives and infiltration tactics was useful to one of the special units. “In order to capture value through the new opportunities, we, as an operator need to act with power, flexibility and excellence in every area we enter.” As a matter of fact, he was one of the few who was kept on in the new forces. In fact, most of the soldiers in the new forces were young, hungry men who loved the outdoors and enjoyed the physical training that the new situation required. Eventually my friend adapted and started to love the freedom of the outdoors, where the results were immediate and created mostly by his own initiative and dedication rather than by the ability to follow orders and strategies to the letter. His new mantra had become Firepower-Flexibility-Excellence. When I look upon the great strategic challenges presented to us by telecommunications industry developments, I cant help but notice many similarities. The changing situation is driven by almost the same factors: · Political power to change the established boundaries (De-regulation). · Industrial capital wanting access to new markets. People wanting to get more freedom and access to more information. · Speed and direction of change, creating unknown game rules. In order to capture value through the new opportunities, we, as an operator, need to act with power, flexibility and excellence in every area we enter. Otherwise we will be abandoned like the 5 storey facilities 40 meters below the Swedish soil. This article is about preparing for the unpredictable, unregulated, war in the markets for wireless data and wireless Internet. Wireless data opportunities in Brazil Brazil is a land of opportunity in many respects and the wireless industry is definitely one of the areas where this is true. When it comes to the Brazilian consumer market, the regulator, Anatel, is predicting subscriber growth of almost 200% in the next 3 to 4 years. The wireless subscribers should exceed fixed lines by the year 2005. Brazil, despite low PC penetration, is currently the fastest growing Internet market in South America. The opportunities for mobile Internet there are not just interesting, they are real and growing explosively. On the corporate side, much of the Brazilian industry has yet to catch up with the IT-revolution. The capital available to facilitate this, though, considering the growing number of foreign investors in Brazil, will clearly be enough to jump-start such development. Since this development is starting a few years later than in the US and European markets, the technical opportunities are comparatively greater. Wireless opportunities, above all, have come to the fore. The wireless opportunity in Brazil, nowadays, is excellent. The competitors – no longer just other operators From an operators point of view, it is easy to think that the future is equally excellent. However the new technologies are also creating situations where the battleground will change completely. Promising technologies, WAP, GPRS, blue-tooth, etc., will enable many players other than the incumbent operator to interact with the end-consumer. Suddenly, the operator is faced with the task of competing with a variety of players, all wanting to create their own customer relationships. These new players have unconventional ways of competing and they are, very often, difficult to classify simply either as competitors or as partners. The competitive landscape has changed. The competition is no longer just other operators in the same concession area; it now includes many other types of companies. These companies can be categorised in the following way: Handset suppliers – Implementing middle-ware and proprietary services Hardware vendors – Offering corporate and hosting solutions. System integrators – Offering corporate, hosting and end-customer services Application developers – Offering applications in vertical portals. ISPs – Offering horizontal solutions to end-customers. Content aggregators – Offering services to end-customers. Content providers – Offering services in their own brands and their own portals. Mobile operators – Expanding outside their concession area. Consulting agencies – Heading towards system integration in the corporate market. Ironically for a traditional operator, some of these players are absolutely crucial in order to sustain the traditional voice business. This means that the balancing act will become very delicate. How to manage a war with several competitors Well, as my friend the sergeant used to say, “I am thankful for my comrades in arms. I always know that they are defending my back, so that I can point my gun in only one direction.” If we, the traditional operators, continue to look at competitors without distinguishing between them, we will be facing an impossible competitor – one coming from all directions. From a distance, the competitors will look small and fairly harmless, but as they close in, we will learn that their specialisations will always make them better, faster, and more trained within their specific area. If we dont adapt to this situation, we will soon have nothing left to defend but worthless old positions, as the competitor will have already gone around us. What then is the key to winning the war? Well it can be described in a few, very simple steps: · Define the core businesses that you want to go after (Define the fronts). · Define your own goals, intentions and cultural requirements with regard to each of the respective businesses (Issue the orders). Dedicate a handpicked staff, with the capabilities needed for each specific business, and give them freedom to act. (Mobilise through cross-functional teams). · Set up strategic and tactical interaction rules in order to take advantage of operational synergies, size benefits and market insights. “When setting up strategic and tactical interactions, it is important to work with simplicity as the guiding star.” When defining business areas, it is always challenging to find the right focus. Looking at more mature markets, we, as an operator, can find a way of re-defining businesses and still maintain todays existing strategic strengths. When setting up strategic and tactical interactions, it is important to work with simplicity as the guiding star. “… the main purpose of restructuring is to release energy to fight in specific areas, not to make a perfectly co-ordinated unity out of all businesses.” Remember that the main purpose of restructuring is to release energy to fight in specific areas, not to make a perfectly co-ordinated unity out of all businesses. Any interaction should have the purpose of strengthening the businesses in their fights, not of limiting their freedom to act. It becomes obvious that a clear and simple model must be set up in order to describe necessary, neat interactions on all levels. “The challenge is, once again, to maintain the core business and fight the existing battles…” TESS, together with almost all other operators in Brazil, is a Full Service Operator but is now facing the need to reshape its organisation to get more value from the new businesses that are arising in conjunction with the growing mobile data and mobile Internet market. TESS has taken the first step in this direction by starting a separate company called TIS (TESS Internet Services). The general idea is to place operational control of some current, non-core businesses in a separate, dedicated, company staffed by handpicked professionals in accordance with the models described above. The new company currently has two operating business units and is in the process of defining more. So far the business units are: Conclusion o an independent mobile consumer portal, offering services for the Brazil target area. The portal is defined according to the M-ISP-business in the table above. The portal intends to try and capture value in the growing mobile Internet world by offering services like information services, personal communication, m-commerce, entertainment etc. o an incubator to help launch new Brazilian companies or help establish existing, foreign companies in Brazil. The incubator will gain leverage from the competence and benefits of the mobile portal. By creating a new company, the mother company was able to get into the area of mobile Internet very quickly without losing focus on its existing core-business as an FSO (Full Service Operator). The challenge facing us is to set up a well-functioning strategic and tactical interaction between the operating companys core – business and the new subsidiary and also, to prepare some surprises for the competition. The challenge is, once again, to maintain the core business and fight the existing battles while establishing and incubating new businesses to ward off future competition. As a final word I would again like to quote my friend, the Special Forces sergeant. “We want to win the war before it starts, by making it absolutely clear to the enemy that it is lethal to enter our area.”