Telecoms operators and startups: Rethink and reinvent
by Dr. Karim Taga, Hariprasad Pichai, Christoph Uferer
Harnessing the disruptive power of startups

Telecoms operators around the world are already engaging with startups in an attempt to benefit from their agility, execution speed and disruptive power. However, realizing tangible benefits and value from these initiatives has been a persistent challenge. Fundamental changes to current approaches are required to truly harness the innovative power of startups, young companies and digital upstarts: operators must rethink their business and operating models, reinvent their engagement models, and refresh their processes, governance mechanisms and cultures.

Telecoms operators need to innovate

It is no news that telecoms operators have faced disruptive competition across their traditional core businesses – voice, data, messaging, ICT services – from startups, digital players and cross-industry disruptors. Operators have long grappled with engagement approaches with such disruptors, ranging from co-creation, competition and investments to outright regulatory challenges. Meanwhile, young and ambitious companies have lived up to their own hype by becoming vehicles to drive innovation and disrupt the business models and value chains of traditional industries: the potential for riding this vehicle remains untapped in most operator engagement models we have seen.

Telecoms operators seek startup collaboration…

When we asked senior executives of some of the main telecoms operators across the globe about the rationale for their association with startups, the dominant answers were “innovation”, “future” and “agility”, as well as “opportunity” and “partner” . Corporates realize that engagement with startups needs to be carefully aligned with the overall strategy and executed meticulously to create value.

… yet telecoms operators are still far from being the partners of choice for startups

Over 90 percent of telecoms operators we spoke to in our last study considered innovation partnerships with startups and established players relevant or highly relevant, but still, few telecoms operators felt capable of actually executing these kinds of partnerships . Startups need specific sets of conditions to perform, especially under umbrellas of large telecoms or media companies, even in cases in which dedicated digital units or innovation arms exist.