Telcos crave innovation, but start-ups find the maze impossible to navigate

If anything sums up the telco industry, it is the pursuit of innovation coupled with the failure to be a leader in emerging segments. The solution might well be working with more start-ups, but are they accessible enough?

To be fair to the telcos, this gripe is not solely one for the telecommunications industry. Navigating through the red-tape maze to engage any large, traditional business with a new idea or technology is a tricky task. But it is an issue none-the-less; it is incredibly difficult for start-ups to engage the right person and pitch the value of their technology to the business.

A couple of sessions in AfricaCom caught our attention. With the AHUB section of the conference specifically designed for start-ups and entrepreneurs, this rarely listened to segment of the digital ecosystem has a voice, and it raised one worrying issue; pitching telcos is an incredibly difficult task.

One start-up suggested there is a ‘take it or leave it’ attitude with some telcos, perhaps not rewarding the full value presented. Another said there is a risk of technology being copied or ripped off. But one gripe which was brought up several times was the difficulty in engaging telcos and presenting new ideas.

The main reason for this is the complexity of telco operations. This are usually massive businesses, with decision makers scattered all over the place, siloed departments without a cohesive objective, internal politics which can threaten any conversation, an insistence by some to maintain the status quo or a procurement process with levels of red-tape jam sandwich-enthusiasts in Brussels would find impressive. Irrelevant of the reason, the telcos are ultimately the ones which will be punished.

This is an industry which is crying out for innovation, because more innovative players are swooping in and stealing potential fortunes. It’s the story we’ve been hearing for years; telcos are building the connectivity foundations for the digital economy, but the OTTs are the ones who are reaping the greatest rewards. Something has to change for the telco industry, and the pursuit of innovation is feeding this desire.

While some of the larger vendors are very effective at producing new ideas and products, a lot of innovation comes from the start-up community. These are guys who play around with new concepts and explore dark corners not of interest to the major vendors until the value has been validated. This could be an advantage for the telcos, if only they were any good at engaging the little guys.

In terms of countering this trend, the general feedback went down two avenues. Firstly, have an innovation-enthusiastic management team. Many companies would suggest they do, though in reality most are focused on oiling the cogs as opposed to searching for new engines. Some certainly do, MTN Zambia was highlighted as a company with a particularly enthusiastic CEO who has embedded himself into the start-up community, though the majority do not.

Secondly, there are telcos who have created their own venture capitalist or technology research business units. Orange is one example, and in these cases the team explicitly and proactively searches for new technologies to incorporate into the machine. These are the telcos who will be making waves for years to come.

Whichever route is taken, the outcome is similar. There is a platform to engage start-ups and less established businesses who can help the telco remain relevant in the digital ecosystem. The big question is whether the telcos are open to change and disrupting their own business.