Why is Transformation so Difficult?

Senior management mandated transformation and the new Bell Labs set to work.  They produced eComp that did the industry a great service by showing the vision.  eComp was the equivalent of the original Bell Labs’ early electronic switch prototypes.  But, there was no Western Electric to take the prototype and start from scratch to build a product.  So, they turned to the large established vendors that seem to be good stand-ins for Western Electric. The problem is that these vendors have teams composed of legacy skill sets.  It is like asking the mechanical switch engineers to produce an electronic switch.  To make things even more complicated, the established vendors have profitable businesses based on legacy technology and business models.  Thus, they have a disincentive to change.  Similarly, there are now fiefdoms in today’s larger, more complex Telcos, that are reluctant to embrace new technology.

In today’s world, the forward-looking solutions come from small start-ups.  For example, VMware’s pioneering work as a small start-up played a key role in the explosive growth of cloud computing.  If Amazon had done business in the same way that Telcos had, Cloud Computing would not have happened. 

If the Telcos really believe the transformation is imperative, they will have to learn to do business with small innovative technology start-ups.  As part of this learning process, they will have to learn how to prepare strong business cases that can be used internally to get their organizations moving in sync to implement the innovative technology necessary to make transformation a reality.  Bell Labs and other Telcos advanced technology departments doing demos and prototypes will not result in transformation.  The ultimate threat is that if the Telcos don’t transform and meet modern requirements, other forms will emerge and relegate the Telcos to history’s dust bin.  Some see this as an idle threat and then look at efforts to do it by Google and Facebook and begin to wonder.