The Last Blue Ocean Left In Business Telecom?

Admirers of Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne, like me, know that uncontested market space can be found through a shift in thinking — by looking at value from a different perspective than your competitors.  Business telecom, which I’ll define for this article as services sold to businesses to enable communication, has been largely a red ocean for many years. (For those not familiar with the red/blue ocean metaphor it refers to markets that are crowded with competitors — thus red with the blood of fierce battles for market share— versus markets without competition— thus blue and available for unchallenged pursuit.)

Data services, like internet access and networking, are standards-based so blue oceans are illusive and short-lived and redness generally predominates.  Voice services, while also standards-based, have offered somewhat more opportunities for unique value creation. Mostly this has occurred through the development of creative features and integrations.  Nearly every telecom provider has, at one time or another, developed a feature or an integration that was novel. Voicemail transcription, conditional call forwarding, CRM plug-ins, and other great ideas gave their innovators an edge — a bit of blue water to sail upon for a spurt of market share growth and perhaps a successful exit.  But a patch of blue water does not an ocean make.

A true blue ocean is a massive opportunity for profitable, long-term growth.  This means that it generally can’t be accessed through a tweak like a clever feature or a plug-in to a popular, complementary app.  It requires identifying an opportunity that can only be accessed through radical value redesign. An example may be clarifying. For decades the customers available for an airline to target were presumed to be of two types: business travelers and relatively-wealthy leisure travelers.  To win and keep these customers required an airline to service hundreds of airports large and small with direct flights; to provide in-terminal and in-flight amenities like lounges, premium seating, and full meals; and to reward loyalty with points programs and seating upgrades. Airlines fought viscously over these customers creating red oceans battling over better lounges, wider seats, bigger planes, more points, and higher statuses.  And then an airline came along and targeted a whole different universe of customers. Not business travelers or lavish vacationers but people that needed to go somewhere far from home but were not willing to pay the high airfares that were common at that time. These people were driving or taking a bus when they traveled — or they just weren't traveling, despite their desire. They valued their money more than their time. They didn’t highly value direct flights or fancy planes or lounges.  They didn’t want to pay for premium seats nor hot meals and they couldn’t imagine ever having enough points to be of any use. Southwest Airlines grew quickly and profitably to dominate the blue ocean of those unserved travelers. They engineered their company’s operations to deliver the value these customers were willing to pay for. They mostly did it by cutting things out. Like not flying out of the biggest airports where the costs were much higher. Not flying half-empty planes of all sizes direct but instead using just one type of plane as full as possible through one or two or three stops to its final destination.  Not having premium seating or even any seat assignments. And no lounges or points or meals. This new value paradigm unlocked a huge blue ocean and eventually transformed the entire airline industry.

Communications Platform as a Service (CPaaS) is a blue ocean strategy for telecom providers.  Like Southwest Airlines’ strategy it mostly involves eliminating unappreciated value. CPaaS is much like my favorite childhood toy: a box of Legos.  It enables service providers, consultants and systems integrators, or even customers themselves to build out of components whatever communication tool they need to address a business problem.  And, crucially, it doesn’t require them to use or pay for anything they don’t need. Most legacy telecom providers are terrified of CPaaS and it's no wonder. They know the truth of a joke I used to tell which is, “the only money to be made in telecom today is from the calls your customers don’t make.”  And, you could argue, the features they don’t use and the support calls they don’t place. Because legacy telecom providers don’t sell Legos, they sell the whole fire truck or pirate ship or whatever — even if you only need the hose or the anchor, they want you to pay for the complete, packaged product. It made sense for a while for businesses to buy prebuilt, packaged, generic solutions like unified communications as a service (UCaaS) but not anymore.

Today nearly every business should be looking at CPaaS for their communication and collaboration needs for two huge reasons:

1. It doesn’t make sense to pay for a bunch of usage and features that you don’t need and don’t value.
2. By customizing your communication and collaboration services to match your unique business processes and management tools you can gain a differentiated competitive edge.

This second point is especially powerful and I’ll explore it in greater depth in an upcoming article. The concept is that how a business communicates with prospects, customers, partners, and suppliers, and how employees collaborate can and should be an opportunity to gain competitive advantage.  If a business uses the same UCaaS solution as their competitors then the opportunity to excel against them in the communication realm is eliminated. But if a business uses the CPaaS Legos to build an optimized toolset that, for example, routes and answers calls in exactly the best way for their customers and organization; or interfaces with their CRM and marketing automation in the best way for their prospects and salespeople; or integrates with their reporting and analytics systems in the best way for their executives — and not just the way that some service provider decided to do it for everyone — then that business can deliver greater value to its target market.  And that’s how a business can find and exploit their own blue ocean. Godspeed.