Incumbent telecom companies face a stark choice: accept and perfect their role as smart, scale-efficient pipe providers or reenergize their innovation engines to win out over aggressive new players. Those who choose the latter path have powerful assets and capabilities at their disposal, including long-standing relationships with their customers; a wealth of customer insights, which they can mine to develop tailored offerings to their targeted customer segments; and the ability to securely authenticate customers, identify their presence on the network, and pinpoint their location.
- The quest for growth. Look for telecom operators in developed markets to emphasize organic growth in 2011. They will develop new services like apps, social media, and TV for existing retail customers; they will create innovative services to attract new enterprise customers in financial services, health, energy, and the public sector; and they will seek out digital customers where they increasingly live: online. Broadband will be another crucial growth area. Mobile telephony is now the dominant force in the industry in emerging markets, but adequate mobile broadband infrastructure (such as the land-based phone network needed to reach transmission towers) is lagging. In 2011, operators will continue to build additional mobile broadband infrastructure to cope with rapidly increasing demand.
- Innovation-oriented management. The winners in telecom this year will be those operators that successfully manage five ingredients of innovation: a consistent ideation process, the ability to consistently nurture new ideas at every stage in the innovation life cycle, a culture of innovation, fresh talent from outside the telecom industry, and an entrepreneurial leadership style that brings all of these elements together.
- Ongoing efficiency gains. In 2011, the most successful telecom operators will focus on operational efficiency to help pay for the coming restructuring and the massive levels of capital investment it will require. This will mean finding new ways to cooperate with suppliers and other partners, both to shift the financial burden of building next-generation fiber infrastructure from a capital to an operating expense and to devise collaborative new business models to enable the partners to compete successfully. Hence many telecom companies will structurally separate their network business from their services business. All of these imperatives will lead operators to pursue not just cost reduction but cost “reshaping”: new operating models, lean management, resource sharing, and outsourcing.
Further digitization, increased competition, new infrastructure requirements — all of these trends will come to a head in 2011. The leading telecom operators are already making the tough decisions necessary to secure a share of future growth, expand into new areas, protect value, and transform their organizations. This year will test every telecom operator, and those that build the right new capabilities will remain relevant in the more open and competitive telecom environment of the future.
After a couple of decidedly down years for industrial companies (especially those in the United States), many key statistics are turning positive again. Median sales for American industrial machinery makers grew by 2.9 percent in the first quarter of 2010, and that growth accelerated to 10.7 percent in the second quarter, when median net income jumped a whopping 46.2 percent compared to the same period in 2009. Furthermore, at the end of October 2010, U.S. industrials’ shares were up 12.9 percent year to date compared to just 6.1 percent for the S&P 500.
However, with this still-fledgling industrial revival come some pressing issues involving the makeup of supply chains, manufacturing footprints, currency strategies, R&D spending, and labor costs. Even in good times, these issues are never far from the forefront for industrial companies, but in the unstable footing of this post-recession environment, being right about them is more essential than ever. Many industrial companies are being forced to make changes that they have long deferred: