How can TMT companies effectively differentiate themselves from each other to gain market share? And what can they learn from each other?
We launched our Barometer on Change in October, looking at the challenges organisations face while implementing change. From our survey of over 300 business leaders from a range of sectors, it's clear that ‘change’ is the new constant. 90% agreed that the pace and pressure of change had increased over the last three years, and 84% believed that the next three years will bring another significant increase.
But what about the TMT sector in particular? How have Technology, Media and Telco companies coped with change? How can they effectively differentiate themselves from each other to gain market share? And what can they learn from each other?
Convergence and the flop of quad play
Traditional telcos and media providers are operating in increasingly converged markets. Looking at the consumer facing market, all organisations have a relatively similar offer, with customer choice stemming from price or personal brand preference. Providers have attempted to differentiate through bundled packages. Broadband and fixed phone service bundles were standard at the start of this decade, and triple and quad play were proposed as the next big shifts for the sector.
But times change, and rigid contracts with one provider don't appeal to increasingly savvy and digi-rich consumers. Changing customer needs and greater connectivity across a digital economy and society have opened the door to creeping upheaval from new competitors, both in traditional telco/media markets as well as new tech entrants. Established providers are facing competition from entrants such as Hyperoptic, Giffgaff, Sky Mobile, and Relish, as well as tech companies such as Netflix, Google, Samsung and Apple
So how do established companies cope with this new landscape, and being squeezed?
Pivot your offer to match customer needs
Looking outside of the traditional offer is key. 87% of respondents to our Barometer survey stated that new products and services are essential to thrive. We've seen some organisations already trying this - for instance Three giving unlimited data for Netflix, and EE offering promotions for Apple Music - and this is likely to increase in the future.
Thinking differently doesn't necessarily mean you need to change what you do, but companies do need to look ahead to avoid having to take drastic measures to catch up later. The recent IBM purchase of Red Hat is a good example of this, with IBM paying $34 billion to offer cloud services across multiple environments to their clients. But had IBM started to look at establishing their own cloud services back when Amazon Web Services was launched, it's unlikely this would have happened.
A good example of a pivot from an established company is Microsoft. From 2014 onwards, with new CEO Satya Nadella, they moved away from Windows to focus on cloud and mobile computing as customer demand shifted. They've also embraced collaboration, announcing partnerships with competitors, such as Amazon and Dell, to boost their products and offerings.
How to set yourself up for change
Microsoft's pivot is a good model for established telcos and media companies, where a drastic change in focus isn't possible due to the huge levels of fixed infrastructure and investment. Microsoft looked at customer preferences and needs and shifted focus to develop relevant products and services to move with customers.
It's not easy to thrive in change, but focusing on the three areas we highlight in our Barometer on Change report - courage, agility, and talent - will allow organisations to be proactive and face new challenges head on through clarity of purpose, the ability to experiment and deliver at speed, and by nurturing talent at all levels.
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