Restructuring and reorganization were the means used by telecommunications providers to deal with the side effects of a “basic connectivity” offering that was reaching its saturation point. Today, technological and market-driven impulses trigger new connectivity and pressure organizational change. Growth instead of stagnation is the new headline for organizational transformation measures.
Given the advancements in technology and the changes in the market, organizational challenges for next-generation telecommunications providers are enormous. “Softwarization” and a shortage in IT skills have led to a growing gap between available and necessary skills. The shortening of development cycles in cross-sector competition and new requirements for the quality and availability of telecommunications services necessitate methodological and procedural adjustments. Anticipating the specific requirements of vertical markets and implementing them in competitive converging sectors requires a high degree of cultural and structural adaptability.
The rapid and massive increase in complexity resulting from constantly evolving technologies, new service offerings, and markets will soon overwhelm a traditional hierarchical organizational structure.
Our consulting approach to organizational transformation in this radically evolving environment supports telecommunications providers in developing their organization sustainably from within based on their corporate strategy and by involving the organizational base. We also support the integration of necessary knowledge and capacity from outside, for example, in the context of company acquisitions or partnerships at vertical and lateral levels.
Evolution and integration are the fundamental principles of our work. Our approach is characterized by a modular structure and flexible use of methods tailored to the respective framework conditions of our customers. Modules 1 and 2 form the foundation of every transformation project. Modules 3 to 6 are related to the implementation phase.
1. Orientation and navigation
The path to the next-generation telecommunications organization requires a clear picture of the existing organization and its fundamental goals. With this picture, we answer the following questions: Under which organizational framework conditions can the company’s goals be achieved, and how large is the organizational gap? From this analysis, we derive measures to create the framework conditions.
The company’s fundamental goals are defined based on a previous strategy process. However, deriving goals for an organizational unit or employee is usually not just a challenge for technical reasons. There is often a gap or latent conflict between the motivators of individual participants and teams and the overall goals, which are often very abstract for them. Neglecting this gap is particularly problematic for knowledge-based organizations.
With these considerations in mind, we carefully assess the consistency of the goals in this first phase of a transformation project. Manifesting conflicting goals in this phase bears risks for the success of an organizational transformation. If necessary, we adjust the target cascade with representatives from all organizational levels and our clients’ preferred practice to use either more traditional methods such as OKR or methods from evolutionary organizational transformation.
2. Methods and models
In this phase, we jointly determine how the future organization should work or, in other words, which methods and models the structure and working practices of the new organization will be based on. As a result, we define the forms of collaboration within the linear organization as well as in the projects and differentiate according to the typical characteristics of the organizational forms, which are characterized by different requirements for each model. The resulting methodological framework includes, for example, definitions of where and to what extent agile procedures are used, the extent to which self-management of teams is established, or the principles according to which the regular goal-setting and planning process takes place.
In our approach to selecting different methods and models, we are fundamentally guided by an organizational ecological approach that especially considers the increasing complexity problem. This approach is based on the findings of recent organizational research showing that organizations are only partially subject to objective rules of a structural or process-organizational nature. To a considerable extent, organizations are shaped by each organizational participant’s subjective interpretation of the organization and its rules. In other words, the reactions of the complex organizational system to specific events are not predictable, distinguishing it from complicated technical systems, and is one of the reasons why change processes often fail.
Consequently, successful organizational measures must consider the subjective view of organizational participants, and iterations are necessary to evaluate the organization’s reactions to different measures and, if necessary, to adapt the procedure to such findings.
3. Skills development and re-skilling
Based on the action plan for organizational development and the defined methodological framework, we work with the client organization to derive the skills profile required for the target organization. The existing employee base with its specific skill set often shows gaps compared to the target profile. Depending on the extent and nature of the deviations, we define different packages of measures to close these gaps. The first step is to assess the extent to which the existing workforce can close the gap with training measures. If this is not possible, recruitment options and, if necessary, cooperations are examined, considering the relevant market situation. The result is an action plan with various qualifications, recruitment, and cooperation initiatives, which is then implemented.
In addition to the organizational skills component, this module addresses the innovative strength of the organization. The ability to innovate and its consistent implementation are critical success factors for next-generation telecommunications companies in the evolving competitive environment to serve vertical markets with convincing solutions. However, the industry still has an average research and development budget of significantly less than 5% of turnover, which is far too low compared to the relevant competitors. Along with adjusting investments in this department, the appropriate organizational infrastructure must be created to turn investments into successful innovations. The design of a sustainable process for innovation and the necessary infrastructure is a critical component of organizational development.
4. Value creation process and systems
This is where we define how value creation will take place in the target organization. First, we determine the framework conditions and the status quo of the process organization. The strategic development goals for the future product portfolio and market approach determine the requirements for the future process organization and the corresponding technical system. The same goes for the operational and administrative business organization.
If business processes represent the veins of value creation, their content, as well as information regarding business operations, are the blood flowing in them. The quality and structure of the data also have a decisive influence on value creation. Modeling data and data-related processes is an essential contribution to defining value-creation processes.
In this module, we start with the conceptual framework for integrating processes and systems, which includes defining the intra-organizational processes as well as the interfaces to the extended business ecosystem of partners in the supplier, service, and preparation areas. We generally address the topics of interfaces for IT development in the domains of BSS and OSS systems and ERP systems, and we support business intelligence and data analytics infrastructures within each organizational area. Our experience in process optimization and system integration helps us find and integrate suitable solutions for the various organizational areas and the whole target organization.
5. Culture, structure, and governance
Given the strategic context of the telecommunications industry, we assume that providers of basic connectivity in a horizontal market will have to transform themselves into developers and providers of a comprehensive portfolio of advanced connectivity solutions and, where applicable, value-added services based on these solutions. This change represents a significant challenge for an organization’s ability to adapt its culture to the new collective skills profile and heterogeneous market environment. We support this adaption by involving a network of experts in the individual vertical markets relevant to the organization, depending on its market orientation.
Traditional telecommunications providers focus on the network (production site of the offering) and the marketing and sales activities geared toward a horizontal private and business customer market. The core business of providers will change considerably or be significantly expanded against the backdrop of the current strategic change processes.
Accordingly, the center of a telecommunications organization must also adapt to these strategic framework conditions in terms of structure and management.
Key challenges for structural changes include the strategic need to develop new markets. These new and high-potential markets are specialized vertical markets, demand drivers for 5G-based, advanced communication services.
The high degree of specialization in these markets requires telecommunications providers to reflect the corresponding areas of expertise in their organization, which must be mapped both internally and in cooperation with partners. Further structural challenges arise from the need to map software and its development as a critical driver of value creation, also both internally and in cooperation with partners.
The dimensions of the individual organizational areas depend on the proportion of internal and external value added, particularly in the abovementioned areas. Here, we interface with the skills development module to bring together the capacity requirements with the qualifications and recruiting measures.
As part of the method and model definition, we have set the course for the design of governance in the new organization. Considering the solution and market-driven complexity, decision-making processes will be more or less decentralized to ensure proactivity and adaptability in the market environment.
6. Merger and integration support
The past few years have been characterized by mergers of telecommunications companies with the aim of horizontal integration, which has strengthened companies, particularly on the network side. With a view to the next generation of telecommunications companies, we expect to see increasing vertical and lateral integration in the future through mergers of companies from upstream and downstream stages of the value chain to bundle complementary offerings in a common sales market. This applies in particular to the software and solutions business, as well as to companies from the telecommunications target markets.
Since the opening of the telecommunications markets, we have supported companies in the integration of network operators from the mobile, fixed network, and cable businesses. We have also supported establishing and integrating group companies in the software and IT infrastructure sectors. Our consulting focus is on organizational and technical integration in the context of company mergers.
