How I learned to stop worrying and love discontinuities!

Chris Bohrson signing in for my second week…….

This week I’ll focus on the situation from our case (How to Sell a Whole Product), what made us decide to pursue an untapped market segment and how we used some of the course concepts.

The business we were in was focused on supplying complex hardware/software systems to phone companies for testing their vast copper phone networks. I supposed this sounds a little mundane. But the systems were highly complex and required extensive customization to work properly in different phone companies. It required complex technology including rules-based reasoning expert systems, a very long and complex sales cycle and a high degree of customer intimacy. Also, I know it sounds like a cliché but we really did help phone companies “re-engineer” their service assurance process. Phone companies spend billions every year supporting the phone network so all of us can make calls reliably. How often have you seen a van drive by with the phone company logo on the side? Large phone companies have thousands of these trucks as well as thousands of skilled people answering the phones when you have a problem and repairing the network. While copper is a great conductor, and makes for a great phone line; it also degrades and needs to be constantly repaired. By testing the phone network we enabled phone companies to dramatically increase productivity of those thousands of skilled people. It was also a great business as there are millions of phone lines worldwide.

In any case, in the late 90’s the revenue for phone companies’ voice services started to decline. Of course today it seems rather straightforward but no one realized in those days how fast mobile voice would become a “killer application”. The result of this was that the large investments in these systems, despite their substantial payback, were not making the cut for funding. Phone companies simply did not want to invest money in copper.  So, we needed a major, new source of revenue that leveraged our core competencies. We had a lot of great customers and skilled people in our business. We were convinced we could find something dramatic that would offer big value to phone companies and build a great new line of business for ourselves. 

In the next couple of weeks, I’ll talk about how we figured out what to do and how we used some of the course concepts including voice of the customer, early adopting customers and whole product thinking.

Have a great week.  I am now an American living in England.  So, I am off to enjoy the English summer.  I know it sounds like an oxymoron but it is sunny over here a lot of the time!

Comments

[Chris]

Having dealt with phone companies as an IT consultant for many years I'm in awe that they even break even given their internal machinations. So many people, departments and views of reality. One consequence is that an increasing number of SMB's are severing relationships with major carriers and signing up with hosted PBX and so called VoIP Virtual PBX services at an increasing rate.

[Chris Bohrson]

Chris, thanks for the comments. In our efforts to commercialize this new technology around the world to various phone companies, we dealt with a lot of capable, dedicated people. Most, at all levels of the organization, realized that the business model they had used for decades was not going to carry then into the future. Wireless was cutting into their local voice services as people were spending more time talking on their wireless phone than their traditional wireline phone. For example, after moving to the UK I signed up for Vodaphone wireless service and have no contract with BT. Also, applications like Skype have cut into long distance as have cable companies offering VoIP. Further, as you point out, small businesses are finding alternatives to the traditional PBX business.

As with most very large organizations facing discontinuitues in their business they were struggling with how to make the changes required. For some this was tougher than others as in many countries the phone company had been for decades considered a source of employment versus a working business. Some have made a major transition and are now "open field runners". Others are struggling. But as you point out even as some make the transition I would expect continued erosion of their traditional business.