Lessons for Telco Platforms from other Verticals
The weight of incumbency along with the competitive necessities would lead to eventual but faster deployment of 5G, WiFi 6, and Open vRAN. While these low hanging fruits are being plucked, it is the Platformification that will catapult Operators into the “age of now” membership economy.
However, all of us have this innate ability to tell apart what is fundamental from what is merely incidental. This applies to the whole Platform mania among the Telcos as well. Platforms in non-Telco sectors are failing at an alarming rate. So, it is particularly important to comprehend whether platformification is an afterthought or an inducted strategy in order to flip the odds for Telcos.
Telcos can avoid the obvious mistakes by identifying the sources of platform failures in other sectors. And here is an interesting excerpt from HBR More Than 250 Platforms Reveals Why Most Fail:
why and how platforms fail, we tried to identify as many failed American
platforms as possible over the last twenty years that competed with the 43
successful platforms. The 209 failures allowed us to extract some general
lessons about why platforms struggle. In general, platforms fail for four
(1) mispricing on one side of the market,
(2) failure to develop trust with users and partners,
(3) prematurely dismissing the competition, and
(4) entering too late.
On a closer look, you would realize these reasons do apply to the non-platform business as well. So we zeroed-in on the B2B platforms and discovered very fundamental problems for enterprise platforms:
- Chicken & Egg Problem
Simply put, who would you get first onto the platform? It is
a problem of getting partners, vendors and customers onto the platform and
scaling them up to the critical mass to get that flywheel effect. Why should a
willing partner or a vendor show up, if the demand side doesn’t already exist?
On the contrary, why would the customers come and trust their money for the un-validated promises of the platform.
The problem can be decomposed into
- Cold Start (Seeding)
- Mutual Baiting
- Critical Mass
- Double Company
Seeding a platform from zero to network effect is very complicated. The cold-start problem is the key challenge that every platform or a multi-sided marketplace has had to overcome. The latent heat of steam is required to spark the virtuous engine into motion. We need to subsidize and seduce one or both sides (mutual baiting) of their marketplaces with cash and promise in order to get the flywheel started.
This problem squarely fits into the common objection raised against the Platformification of Telcos: Isn’t it an easy bet for Amazons or Apples to add Telco services to their already successful platforms rather than Telcos becoming platforms (mimicking Apples or Amazons) and trying to crack the market??
The answer is two-fold:
Unlike Amazons or Facebooks, CSPs are telco-native and these services are not vertical adjuncts. So customers tend to benefit more from the masters of the domain.
The second point is, fortunately, CSPs do not have to deal with the chicken and egg problem. Because they already have customers, vendors and partners – all they are doing is bringing them on to the common platform which is open and democratic. Without vendor lock-in, thanks to ORAN Alliance, this should be easier.
- Complex Purchasing and Delivery Path
Selling and buying is super complicated on the enterprise sides of things. Highly specific customizations, region-specific regulations and taxation along with opaque payment and settlement cycles make it challenging for B2B marketplaces. Also, between co-innovation on the platform and getting a solution live, there is a significant component of billable activities that are off-platform, which needs to be taken care of.
Experience is central to any platform. And solving for frictionless journeys for Partners, Vendors and Customers is like running three companies at the same time. Unless and until the driving technology behind the transformation is highly nuanced and reliable, platform games are going to be super tough.
Acknowledging the unique dynamics of individual market segments, STL have built dTelco for Retail and dEnterprise for Enterprise specifically. Nevertheless both of them are powered by dPartners and Marketplace capabilities to scale their partner ecosystems effectively right from acquisition, on boarding, compliance, settlement, management and retention. Also providing an integrated suite of services for partners to make every moment across the partner lifecycle journey seamless. Attention to detail and depth of thought is what sets great solutions apart from average ones. Telcos would appreciate that in STL’s platform solutions when they create edge cases. Here is a cool whitepaper for more details into our obsession with Platforms and Marketplaces.