Steven Ambrose, CEO of Strategy Worx Consulting, reflects on how new mobile technologies have disrupted business models, market economies and even human society.
A useful starting point for MEF’s latest webinar – on disruption and innovation in the mobile market – was to look at it from the perspective of challengers versus incumbents. Most of us work either for one of the 800lb gorillas – large mobile networks or handset manufacturers, for example – or, conversely, a young start-up that’s looking to challenge the dominance of these major players.
From there, a number of questions emerge. How can challengers disrupt the status quo and how must incumbents respond? How can an enormous multinational corporate remain innovative despite layers and layers of bureaucracy? How has technology changed the way societies work, and can mobile-first developing countries steal a march on more mature markets? And finally, when faced with a disruptive new market entrant, how do you tell when to partner and when to compete?
As head of Orange’s OTT division, Giles Corbett sees the world with a unique point of view. As part of one of the world’s largest operators, he understands the importance of leveraging large infrastructure investments, but he also looks at things from a more entrepreneurial perspective.
He believes that as actors in this industry it is our utmost responsibility to disrupt it. It is through disruption that we create enormous reserves of value for people in developing countries enabling them to do things which would have been unthinkable before. Our new challenge is to figure out the business models – how to make money from it.
In his view, innovation is about doing new things in new ways. Disruption is slightly different: it results from technology driving down costs to the point where new behaviours emerge. It fundamentally undermines traditional business models and his job is to see this as something more than a threat – rather, an opportunity for the future of the business.
Brett Loubser, Head of WeChat Africa reminded us that big corporations often fear disruption – but instead they should see themselves as pioneers. Disruption is the key to innovation and we must embrace it, whether that disruption begins within the business or by partnering with others.
He remembered that before Apple launched the iPhone there was significant internal conflict around the fact it was going to disrupt existing product lines.
Brett suggested the single most disruptive innovation of recent years is the smartphone – the world’s first truly personal computer. It has impacted sales of desktop and laptop computers, portable navigation devices and digital camera hardware. Manufacturers of these devices have had to dramatically adjust their business models as a result.
In Africa, the consumer’s first experience of both telephony and the internet is their smartphone. This has disrupted fixed line telephony – where infrastructure is so much more expensive and harder to roll out. Emerging market media outlets – for example, newspapers, portable radios and magazines – need to be carefully considered in the light of the success of mobile.
Sissel Henriette Larsen (Telenor Digital – Business Units Asia)explained how Telenor – a major player in enabling “access to mobile telephony“ was transitioning to a business that delivers “mobile access to the internet”. A subtle yet important distinction. Her digital division explores new business models and is a global distributor of new services that are developed both in house and by third party partners.
She said it’s okay that these new ventures disrupt Telenor’s core services. Since 2012 they have partnered with OTT service providers like Line, Whatsapp, and Facebook and set up pilots to see how these new partnerships might work for, not against, the business.
Sissel confirmed there was lots of internal debate about whether to block a new service or partner with them. However, her experiments were by and large a success. Now Telenor embraces these new partners and has transformed small, localised pilots into large scale global deployments.
Finally, Ernst Janse van Rensburg CCO of white label mobile money provider Remitix, talked about the role of growth markets in global innovation and disruption.
He explained how – while cash has ruled Africa forever – the logistics of bringing physical currency to consumers are massive, especially across a land mass as enormous as Africa. However, because mobile penetration stands at 90%-plus across Africa, suddenly banks have access to consumers no matter how remote they may be. The M-Pesa service in Kenya – which has converted a phone into a mobile wallet – now constitutes more than a third of all financial transactions in Kenya– (pretty astounding, especially when you consider M-Pesa is only 7 years old).
This success hasn’t yet been replicated in other countries (except maybe isolated examples such as in Zimbabwe and Bangladesh). However, we must remember that selling mobile wallets is like selling fax machines – until all your friends have one it doesn’t really help. But once you hit the tipping point it becomes a must-have. Getting early adopters is key.
Strategy Worx Consulting
So what did I learn from the session? Firstly, the mobile industry has, all-in-all, coped well with disruption. Mobile networks globally are growing, their reach becoming more and more pervasive. This is largely due to the need for rich data on which many platforms like WeChat and Remitix depend. Also, a lot of the disruption is incremental and, like any other industry, mobile needs to keep reinventing itself in order to stay relevant.
Around the world, people want to use their mobile devices to do more than just connect to each other. Increasingly, they see their smartphone as a personal computer (with the emphasis on ‘personal’), which allows them to buy, sell, bank, and interact with businesses and public services.
Disruptive new technologies will continue to emerge, making mincemeat of our current business models. Companies must therefore carry on innovating, thinking hard about how to turn threats into opportunities. It’s what successful businesses have always had to do.