The Lean Telco

As alluded to in my previous posts, I have tweaked the Lean Startup methodology and the Wardley Map model to create value in a telco environment.

Value is a subjective topic but in a Telco context, my efforts have been aimed at creating sustainable growth strategies. Very simply, sustainable growth comes from sustainable differentiation, which stems from the creation and evolution of technological, commercial and operational characteristics that become difficult, expensive and time consuming to emulate from your competition.

Sustainable growth comes from sustainable cost reduction and revenue growth (Duh!).

Sustainable cost reduction can be achieved through drastic cost structure changes. In 2020 Telco, it can be attained through the implementation of a cloud native architecture and principles, underpinned by strategies of network disaggregation, extensive use of open APIs and open network topologies; SDN and control / user plane separation and systematic automation. While these goals are challenging by themselves, particularly in a brownfield legacy telco environment, they are the bare necessary changes for survival. The challenges associated with the organization, skill sets and methodologies to evaluate, test, deploy, purchase and maintain these technologies are even larger.
Every telco is extremely skilled at managing technological and operational risk, through iterative, waterfall evaluation and tests, resulting in deployment of high availability and capacity networks. This methodology has also led to lengthy evaluation periods and deployments. Most vendor will recognize that the sales cycles in telco are over 2 years long and that making any change in a commercial network takes several million of dollar or euros. This has led to an oligopoly where only a handful of specialized vendors are able to sustain economically these drastic processes.
Lately, telcos have been trying to diversify the pool of vendors to increase competition and innovation by promoting open source and open API projects such as open RAN.
While these projects have shown interesting progress, the real cost reduction comes from the change in methodology and processes to take advantage of these more nimble vendors offering.

What I am proposing with Lean Telco is a methodological framework for identifying, evaluating, testing, sourcing, deploying telco products and services that will provide sustainable differentiation with drastically different cost structure than the incumbent versions.

Once you have successfully changed the cost structure of evaluating, buying, deploying and managing telco infrastructure and capacity, you can survive as a high capacity, low overhead provider of connectivity. But if you want to strive and grow, you need to attack the revenue part of the equation. Actually, one would argue should start with growth objectives, and look at cost structure as an optimization challenge.

Growing revenue sustainably, in a telco environment comes from either having more people using your existing services, or using more of them, connect new people or create new services. I have prototyped, tested and launched projects in each of these categories in my last role at Telefonica.

1. Having more people use your existing products is difficult for telcos, because those products (residential and enterprise mobility, internet, telephony, TV...) are poorly differentiated, since they rely on the same technology from the same vendors. As a result most telcos end up trying to deploy first (5G, SDWAN...) or to claim a performance advantage, usually derived from a superior spectrum or infrastructure investment. The only real differentiation ends up being pricing. This is very expensive and not sustainable.
2. Having your customers using more of your service does not necessarily lead to more revenue, as bundles and unlimited plans are periodically rolled out to counter internet hyperscalers offering who rely on a different cost structure and revenue model. Again, since these services are mostly the same from one operator to another, differentiation comes from bundling and pricing. This is not sustainable.
3. Connecting new people / clients is a worthy endeavour, but the last unconnected live mostly in rural, low density areas and selling services to new corporate clients usually mean competing against public cloud offering that are more cost effective and flexible than what most telcos can offer. There are possibility of growth there, but it requires breaking out from the current telco technological framework and a willingness to assemble new value chains.
4. Creating new services is certainly where there is the most value, if we look at the growth of telephony over internet, video streaming services, social media and social messaging, SDWAN, cloud security... it is also the area with the most uncertainty and risk.

Telcos are not well equipped to manage the risk and uncertainty inherent in the discovery and creation of new services. The methodologies, organization and processes they use is to deliver with absolute certainty a product or utility with zero default to a mass market without variation. This model works well for mature, disciplined technology and vendors, not at all for exploration and innovation.
Too often, some Telcos build an extremely detailed plan, with contingencies. They budget it, staff it, resource it to execute it within a given timeframe, only to discover that the client didn't really want / need / value what was proposed (cf. push to talk, IMS/VoLTE, RCS, private networks...).

Just like in Lean Startup, the methodology I propose allows the progressive liberation of resource and funds as commercial uncertainty is shed by direct client interaction, testing and feedback. In a typical telco environment, the client interaction is at the very end of the process, here we are going to intersperse it throughout the development process to allow pivots, or early termination if the hypothesis are not met.

Trained, mentored and helped by many, I have adapted a few methodologies to enable Telcos to identify, validate, and deploy new services in an agile and cost effective fashion. I call it the Lean Telco Methodology.

How do I create a Lean Telco?
I use Wadley Maps for situational awareness and create a topographical representation of the current environment, which in my area of interest range from telco network virtualization (NFV), orchestration (MANO), cloud native distribution and orchestration (K8, micro service) and hybrid cloud / edge computing (telco private stacks, AWS outpost, MS Azure edge, Google Anthos...). This is not a map until we apply the level of maturity (Genesis / handmade, Custom / solution, Product, Utility) to each of them, as well as their direction and barriers on the horizontal axis. On the vertical axis, instead of using Wardley's traditional visibility method, I use technology stacks such as access, transport, core network, OSS /BSS, orchestration... The purpose of the map is not to be precise or even right, it is to share and compare comprehension of the environment, the players, their direction, velocity and the barriers. This visualization enables a level of shared understanding necessary to strategic discussions and gameplay around permutations and what-if? scenarios.


Once identified priorities and areas of risks / opportunities to investigate, I use the Lean UX framework and Lean Startup methodology to systematically identify potential current problems needing solving, unmet customer needs, unsatisfactory experiences and potential new products / services that customer wouldn't even know or have an opinion about. A series of workshop is usually best to crystalize the ideas. Once identified, they need to be refined into customer centric objectives. Contrary to popular belief, customer centricity is not necessarily going to ask prospective customers about what they think. Most wouldn't have any idea about what to do with 5G, augmented reality or a private network if you asked them. This is where lean UX and empathetic composite models are useful.

Each idea is reviewed by a jury and graded, the jury will define which ideas can make it to the next stage. The ideas are shaped and staffed as independent projects, with dedicated resource, budget and time box. Each project lead has the overall responsibility for moving the project to the next phase and to deliver the results of the current phase to justify additional resource and budget for the next one.
At a high level, the phases are:

• Ideation - ($5k-10k /1 - 3 months) -the idea is shaped into a project, with central opportunities, areas of innovation, right to play for the company, sustainable differentiating factor, commercial high level opportunity and cost / timing for the next phase.
• Prototyping - ($20k - 50k / 2 - 6 months) - In this phase a prototype is built, that might or might not incorporate any development or use of technology for the target invention. The idea is just to emulate the resolution of the problem and put it into customers hands as early as possible to identify whether the objectives, assumptions are framed properly and whether the client would value the resolution.
• Beta - ($300k - $600k / 3 - 6 months) -  once the central problems are identified, and we know the client values their resolution, it is time to create a MVP to prove that it is technically, commercially, organizationally possible to solve that problem and that the value created exceeds the costs.
• Product - ($1m - $3m / 3 - 6 months) - In this phase, once proven that the solution is possible, it is necessary to prove that the solution will scale and will be deployable with a mature operational and commercial model.
• Growth - (TBD) This is the phase where the project needs to be commercially and economically sustainable.

Each phase require client interactions, in the form of actual tests in conditions as close as possible to commercial network. Within each phase, we decompose the project into customer centric objectives. Each objective into hypothesis. Each hypothesis into series of experiments that will validate or invalidate the hypothesis. It helps to set clear expectations and success criteria for each of these.
Wardley maps helps again, within each phase understanding what tasks, experiments are more suited for pioneers, settlers or town planners and indeed whether the project lead can adopt this mental posture in this phase or whether someone else needs to take the lead.

The result is a portfolio of new revenue making projects, that are systematically validated by customer feedback, capacity and propensity to pay; together with a robust operational and commercial model. Each project is periodically reviewed and graded, all projects must pass a gate review before the next phase and liberation of funds, which allow a nimble, measured, progressive investment plan, as risks and uncertainty decrease throughout the life of the project.