Operator boards to blame for lack of innovation

The boards of the world’s ten largest operators are dominated by executives with legal, financial and engineering backgrounds, resulting in a conservative culture that “struggles to drive and nurture innovation”, according to recruitment consultancy European Leaders.

Tthe firm found that this culture is at odds with the boards of OTT giants, which have large proportions of strategy, marketing and operations professionals, arguably contributing to  a more innovative culture.

By analysing the 119 board members who currently control the world’s top ten mobile operators by revenue, the firm found that 58 per cent have a legal, financial or technical engineering background and almost half (46 per cent) are focused on key financial and legal considerations affecting the operator. Nearly a quarter (24 per cent) have not worked in senior positions outside of the mobile or telecoms industry.

In contrast, studying 81 people from ten of the most prominent OTT players found that 62 per cent of OTT company board members are focused on sales, marketing, strategy and ongoing business operations and almost a third (31 per cent) are recognised “market strategists”. Just 12 per cent are concerned with business finance matters.

“Operators have built strong businesses with healthy margins. But as competition for customers heats up, the make-up of most operator boards stifles their ability to compete with innovative, nimble and more aggressive OTT players,” said Philip Randerson, managing director at European Leaders.

“The ‘type’ of individual that dominates operator boards tend to create a more conservative, defensive and insular culture. Executives are more focused on maintaining the status quo than driving forward and taking calculated risks.”

He added that in contrast, OTT players have earned a reputation for innovation and for disrupting the status.

“It’s no wonder given the make-up of their boards, where the roles of members are typically associated with forward thinking and disruptive innovation,” said Randerson. “OTT Boards are dominated by strategists and marketers – many of whom have helped build powerful brands and big valuations in super quick time.”

Mobile operators included in the study

America Movil
AT&T
China Mobile
China Unicom
Deutsche Telecom
France Telecom
Telefonica
Verizon Wireless
Vimpelcom
Vodafone

OTT companies included in the study

Amazon
Apple
eBay
Facebook
Foursquare
Google
Pintrest
Spotify
Vonage
Netflix