1. Customer relationship - Outsourcing the unexpected: Bharti Airtel Business Model Innovation

Bharti Airtel, India’s leading mobile telecom service provider, managed to increase their subscription base from 8.2 million in 2004 to 27 million in 2006. In 2007, Bharti announced that they have even crossed the 50 million customer mark within 143 months of start of operation. They recognised the need for a better customer relationship, growing revenue stream and, at the same time, decreasing operational cost. In order to do so, they did the unexpected and outsourced the IT and networking services while staying purely focused on marketing, sales and distribution.

In 2007, Bharti crossed the 50 million customer mark within 143 months of start of operation

Number 1 in this list of inspiring business models because of Bharti’s strong vision on reaching customers by effective marketing and sales methods rather then by a technology push from the IT and networking services.

2. Revenue streams - Standing on the shoulders of the advertisers: Blyk’s Business Model Innovation

Blyk is a Finnish MVNO (mobile virtual network operator) operating in the UK and offers free mobile telephony to the youth till the age of 24. Blyk offers their customers (or maybe I have to call them just joiners ;)) 217 texts and 43 minutes for free each month. The minutes are paid by advertisers and are aligned with the extensive personal profiles completed by the subscribers in advance. This increases advertisers rate of convergence enormously and saves some boring ads on the mobile phones for the customers. It is a business model driven by advertisers (watch this video of Blyk).

Number 2 in this list of inspiring business model innovations because of the braveness of Blyk to offer real free communications for a strong niche market.

3. Customer segments - Cultivating emerging markets: Tencent’s Business Model Innovation

Telco’s in emerging market are known to deliver the best shareholders’ value by their high performance and low operating costs. However, contradictory to what many people think it is rather uneasy to deploy new innovative business models in emerging markets. First reason is the greenfield situation where all competitors have exactly the same entry levels, the need for innovative value differentiator are even higher to earn that unique customer segment. Secondly, Telco’s in emerging markets have an even higher urge to deploy a business model which runs on very small operational costs, again due to the highly competitive greenfield situation.

Tencent’s numbers are outstanding with 580 million registered users whereof 280 million active on a very frequent basis. In the feastdays of Tencent their service was used by 29 million users per day.

The 3rd award in inspiring business model innovations in the telecom goes to a unique business model which has been set up by Tencent (China) in the emerging markets. Tencent deploys a unique business model combining both telecom services and gaming. They offer their own communication, instant messaging (IM) service named ‘QQ‘ which is based on the popular IM-service of the mid ninetees ICQ. QQ holds room for popular chatrooms, personal avatars, games, internet storage, and internet dating services. Most of the services are free and therefore very popular among the youth. By the way, next to the popular QQ IM service, Tencent also offers a tailored office (TM) and enterprise edition (RTX) or their instant messaging service.

Number 3 in this list of inspiring business model innovations because of very successful mix of gaming and telecom service meeting the needs of the youth in emerging markets.

4. Core capabilities - Leveraging the knowledge of the crowd: Iliad’s Open Source Freebox Business Model Innovation

In France, Iliad with their subsidary French ISP ‘Free‘ had shaken up the telecom business by bringing free internet television to the end consumer. They developed their own ‘freebox’ - an internet television set-top box for households - which is based on the open source Linux software. It is believed that Free was the first ISP that rolled out a triply play strategy and the company is therefore recognised as one of the most important innovation drivers in France. Besides the unique open source based core capabilities, the company gets credits for their strong pricing strategy. It is still maintaining their initial price of 29.99 euros per month for the set-top box. Free has continously added new services and features to their box without making compromised on their consumer price.

Number 4 in this list of inspiring business model innovations due to Free’s power to utilise free available open source software in order to shake up the estabilished telecom industry unprecendedtly till today.

5. Partner network - Creating a community of ‘Foneros’: Fon’s Business Model Innovation

The spanish ISP Fon encourage wireless internet users to share their bandwidth for the community. Consumers who share their wifi get access to all other wifi access points in the community all over the world. The wifi-sharing community, named ‘Foneros’ shares in the revenues stream which is gained by the non-foneros who pay a small fee for accessing the network. The Fon start-up was a great success and the founder Martín Varsavsky raised 18 million in the first finance equity round in 2006. Major companies invested including Google, Skype and several equity investment firms. The innovative and largely used business model was upgraded in 2007 when BT and FON announced that they integrated BT’s UK wireless network with Fon, enabling an even greater wireless coverage for the Foneros.

The wifi-sharing community gets paid by users that pay a small fee for accessing the network.

Number 5 in this list of inspiring business model innovations due to the shown power of Martin Varsavsky’s business model along with a community initiative all over the world.

Five Inspiring Business Model Innovation in the Telecom

….when have you planned to innovate your business model?

* In fact, business model innovation focus on the transformation of business to reposition the business or to grow in new markets. The five inspiring examples describes not the full business model innovations. I focussed solely on the business building blocks that changed the most as you can see in the image. Moreover, succesfull business model innovations are mostly companied with a maximum of two changed building blocks; bringing focus in your business model innovation makes success.

Last week, a local Dutch political party proposed a small emendation to a policy plan “Youth and alcohol, 2008″. Nothing extraordinary, you probably think. However, this particular addition caused a tide of media attention uncommon for such a local plan. The party suggested to distribute chocolate bars to the nightlife in order to keep them patient and avoid violence. “This is another, complementary action besides all existing controlling measures. Chocolate bars possess a small ingredient which makes people relax…”, says Gerben Hoogterp - the councilor of the party. The effect on society? A twofold reaction. The first group takes a rather sober, neutral point of view and argue whether chocolate is able to chill people down. The second group embraces the idea and consider it as an new opportunity to raise awareness for the society issues with nightlife, alcohol and violence. I’ll describe how you can use the next web to engage these two groups.Regardless of who is right or wrong, I think the initiative should be able to have a huge impact on the society as long as you engage the heart of the society and enable them to hijack it. Make the youth the ‘owner’ of the idea and do not enforce it as a political leader. A profound brand hijacking strategy, new communication means and innovative way of thinking will mobilize the youth shortly.

Let’s discuss some chemicals first

The sugar in chocolate bars sparks the release of several nerve chemicals (including Endorphin) which result in a sense of well-being. Furthermore, it contains phenylethylamine, or PEA, which gives you the feeling similar to when you’re in love. (Elizabeth Somer- Why do I crave chocolate?). Therefore, there might be some relation between feeling ‘relaxed’ and eating chocolate. However this effect is not yet scientifically proven for human beings. Regardless of this, people enjoy eating chocolate and whether or not it stimulates an easy feeling, the political party endorse it as a effective method in mitigating collateral damage (e.g. violence, vandalism and even sexual assaults) of the nightlife.

Shaping the idea, raise the potential, ENABLE A BRAND HIJACK

I already mentioned it, the new measure might be very effective on the condition that it is well-executed and in line with the youths and their social environment.

RAISE AWARENESS

Before I describe the first essential component in enabling a brand hijack, you have (I know it is hard, but you have to!) watch the following video.
[youtube:http://www.youtube.com/watch?v=8J5a03iKrlc]

Did you bear to watch to it until the end? This video illustrates the notion of fear induction (as mentioned by Jean Pierre Ranschaert and Mieke Schevelenbos). The effect of fear induction is enormous, according to Jean “the viral effect seems big: over 110,000 views and 130 ratings in under two weeks [...] fear induction only produces short term effects, while real awareness raising campaigns need building up over time” which emphasize the power of such a video.

Considering the topic of violence and vandalism, it wouldn’t be that hard to produce a similar video for this purpose. Besides the lower costs, the likelihood of raising awareness at the right folks is higher by distributing it via video platforms as YouTube and social networks. For certain if you consider the ‘viral effect’ of it.

CONNECT

After awareness has been increased, opportunities are created to really connect to your target group (for now, let them simply define as ‘the outgoing youth’). And a chocolate bar has just much more potential to create a real connection over other means including standard leaflets and TV campaigns (let even alone fines!). Connect to the youth with a bar that is branded in a way that aligns with them. Empower their feelings. Not just simply distribute bars, but enrich it with an experience. The energy drink Red Bull is also not just an energy drink. It comes with an experience of boosting energy. Giving your wings in times you need them. A well-branded chocolate bar which embraces the experience of relaxing, encouraging love and peace has similar potentials as the Red Bull experience. Aligning the brand to the experience is only possible if you are really connected to the outgoing youth.

ENGAGE

Finally, a well branded chocolate bar should engage the target group and empower them to shape the experience further. A well tailored co-creation platform could enable the youth the think with and co-create this experience. There is a wide range of opportunities for such a platform, such as giving the youth the ability to co-create a public campaign. Let them suggest how to enhance the experience. Where should the chocolate bars be distributed? And co-creating the translation of the experience to other environments (think of the Red Bull Air races)?

Plenty of opportunities to enrich such a political initiative. Just do it!

&

I believe that social innovation platforms are doomed within organizational context. Why? The social aspect is still lacking and I’m quite sure about that. I noticed it in my daily operations and cases I’m involved in, and in my master thesis prior to my work as a consultant. In any case an organization wants to build a new platform that has to foster innovation, it seems that they continuously simply forget the social aspect of it. You cannot simply build an advanced technological platform and deploy it within you organization. Real innovation is fostered by people’s intrinsic values, organizational culture and rewarding mechanisms.

In most cases, the lack of use of an innovation platform is reproached to the effectiveness of internal marketing and promotion campaigns. But the real cause of the of the non-popularity goes far beyond that plain observation. An organization that want to foster innovation has to focus on the social issues, an technological platform should be given less priority.

Everybody entrepreneur

Three reasons why to focus on the social aspects and build a platform later on. First of all, is your organizational culture really that innovative? What kind of people do you recruit and employ? Are they open and willing to show entrepreneurship. Is entrepreneurship something that you call important, or is innovation something that is really deep-rooted in the whole corporate culture? Nedap is a good example of an organization that embeds innovation in the whole corporate culture. People in their company are really encouraged to show entrepreneurship. Nedap even does not use any grades for their employees and each employee is simply, yet clearly, called ‘entrepreneur’. Even the business cards don’t show any degree and just simply state the name and ‘entrepreneur’.

Start rewarding

Rewarding mechanisms are also still underexposed in most organizations. However, people simply won’t come up with new innovations if they know they probably don’t get any reward for it. They might do it for the first time, but certainly not for the second time. Unfortunately, most organization experience difficulties with redefining their embedded archaic metrics upon employees are rewarded. I do recommend a combination of short and long term metrics. Short term metrics focus on the added value on the short term, for instance in existing projects. Long term metrics focus on the result of innovation in the long run and measure the effect on business revenues. After all, only innovative organizations are able to increase business revenues year after year.

We really have to incorporate social issues in order to make social innovation work!