Unless strategies are taken seriously they are just wishful thinking. Using the right technology is an important part of implementing strategy, but how the technology is used is just as important as what technology is used. Operators can have the best technology but often fail to deliver because the objectives are not defined, not followed or implemented in an ad hoc manner. In this section we describe a framework or philosophical model that allows strategy to be aligned with implementation.
A Call to Arms for Network Operators
In everyday life, people tend to consider telecommunications more as a service than a product – for example, we talk about the phone service or broadband Internet service. Perhaps this distinction is lost on consumers, but the distinction can and does have a major impact on the way that telecommunications network operators (telcos) go about providing service (or products).
According to the Cambridge English dictionary (http://dictionary.cambridge.org):
- Product: something that is made to be sold, usually something that is produced by an industrial process…
- Service: a government system or private organisation that is responsible for a particular type of activity, or for providing a particular thing that people need.
Given the origins of telecoms (in most countries) as a government controlled utility providing phone service, it is easy to understand why the public consider telecoms as a service. Of course much has changed since then, with operators privatised and competitive operators established but the general way of thinking of telecoms services remains unchanged, whether they are phone or Internet, fixed (landline) or mobile.
Here we will argue that telecommunications should be considered as a product and that the networks over which they are provided should be considered as production lines. By approaching things in this way, and focussing on the efficiency and smooth operation of the production line, we believe that the operations of telecommunications networks can be transformed.
Cottage Industry versus Production Line
In our experience, over many years, working for telecommunications operators it is clear that networks are often built in an ad hoc fashion, with parts “bolted on” over time to meet an evolving and emerging set of requirements. This makes sense if we consider that most networks start small and are designed to provide a specific service, but rapidly grow in scale and complexity as more services / features are supported and the coverage expands. This creates complexity, not just from a pure technical level, but also at a human level as the network grows beyond what can be “held in the head” of the original design team.
We can compare telecoms networks to different approaches to manufacturing products:
- Small-scale production with the ability to customise, but a high-level of operator intervention
- Production-line, optimised for the delivery of a single product of limited range of products
In the case of manufacturing, production has evolved from small-scale cottage industries to large-scale manufacturing on production lines. We will argue that the provision of services over a telecoms network has not fully made this transition, and in many cases networks are operated like cottage industries.
A typical example of this is when an operator deploys a large scale network optimised to support a mass market service, such as broadband Internet, but then sees the opportunity to sell a customised business service over the same network. In doing this they see the additional revenue from the business customer but fail to consider the additional costs imposed on the mass market service from needing to maintain a more complex network. If we compare this to a production line, a factory manage would think long and hard about modifying the production line to produce a non-standard product.
This is not to say that non-standard products should never be produced or that business products should never be offered over a consumer network, but that they should not be delivered at the expense of compromising the mainstream business. There are proven approaches to customisation that work in industrial environments; these are:
- Hand finishing
- Assembly of solutions from a kit of standard parts
- Mass customisation
These are the approaches that should also be adopted in telecommunications.
Please note that in this article, we are not arguing that the there is no role for “cottage industry”, this may be appropriate for a small operator providing specialised services to large business customers. But even here, there is a substantial risk that as the number of customers grows, complexity grows and it is very difficult to obtain any economies of scale. In these cases, we would see the correct solution as the kit of standard parts and the role of the “cottage industry” is in assembling these.
This concept is closely linked to “activity systems” in corporate strategy – see for example: https://strategicthinker.wordpress.com/activity-map/. An organisation’s activity system is how it is organised to enable it to deliver the product / service to the customer. This can be drawn as an activity map. One of the tools of corporate strategy is organising the activity system to enable the organisation to deliver its value proposition better than any competitors. An often cited example of this is Southwest Airlines, where everything that it does is tailored to delivering its low cost, convenient, on-time, friendly but limited customer service. This level of focus has enable Southwest Airlines to be the most consistently profitable airline in the US.
Activity systems relate to all organisational activities, including: sales, marketing, customer care. This is very important for a network operators and in the future we will discuss this in more detail in the strategy section of this web-site. However, in this article we are focussed on a limited part of the activity system: the network (which we think of as a production line) and those activities immediately associated with it:
- Network – production line
- Product development – definition of requirements for the production line
- Network design – design of the production line
- Network operation – maintenance of the production line
We will discuss each of these in turn in more detail later, but at the moment we would like to emphasise the following points:
- Product development should be a two way activity. It is not sufficient just to consider what the customer wants but it is equally important to consider how well the product can be supported by the network. This becomes obvious if one considers manufacturing where the ease of production is very important. There is the field of industrial design (http://www.idsa.org/education/what-is-industrial-design) which is the process “of creating products and systems that optimise function, value and appearance for the mutual benefit of user and manufacturer. We need a similar approach for telecommunications.
- Network operators often try to cut costs by improving the efficiency of network operation. However, as operators typically do not understand their activity systems then this “efficiency improvement” often amounts to cutting corners and getting people to work longer hours. Systematic and substantial improvements in efficiency come from improving the activity system. In the case of the network, the focus should be on improving the production line – improvements in this area will “automatically” reduce the requirement for network operations.
Building Telco Production Lines