NTT’s Continuous Improvement Approach to Innovation. #IMSWF

Well, that may be true in some cases, but it’s clearly stating too much to suggest that it is genuinely universal. Our experience shows that there are different ways in which telecoms operators demonstrate innovation. As far as we can tell, none of the service providers that we use at RMA (our mobile and fixed providers) offer anything that is innovative – except the networks on which we rely. Of course, customers tend not to pay attention to these, simply taking them for granted.

But we also know from our research activities that there are plenty of initiatives in the industry that are innovative. Perhaps one interpretation is that most telecoms operators tend not to demonstrate their innovation obviously, not in the kind of flashy ways that capture attention and, when they do, they are held up as the exception rather than the rule.

It was nice, therefore, to chat with our friend Dr Naoki Uchida from NTT Laboratories at last week’s IMS World Forum in Barcelona. He discussed NTT’s approach to innovation and the culture behind it. The term “kaizen” is well known to many as an approach that focuses on continuous innovation. It is more usually applied to heavy industry than telecoms operators but it is clear that NTT has embraced this tradition in its practices.

Dr Uchida told us that his team is responsible for creating a new service each week. The role of NTT labs is to provide technology and products to be consumed by other companies in the NTT group. According to Dr Uchida, 30% of the services they create move to trial and about 10% to production.

This means that, while most services are deemed to be non-commercial and do not survive, there is a constant process of evolution. In this, the fittest services survive; the remainder are put to rest. More importantly, it means that NTT is not afraid to take risks; services are allowed to fail, but through careful development programmes, they increase their overall chances of success.

Several presenters at the IMS World Forum spoke of the need for telecoms operators to become more like “Google”, launching services and “throwing them away” if they are unsuccessful. We can’t find data on precisely how many new services Google launches each year, although there is a wealth of data about both new services and enhancements to existing ones given in the company history on . If we assume that NTT also refines existing services, then launching an average of 5 new services each year seems a reasonable return for a major operator.

Operators can innovate – clearly, not all are as active as NTT - but there are pockets of innovation. Some of that is network orientated and hence invisible to customers. But as NTT demonstrates, there can be considerable customer-facing innovation too. We have worked with companies like Avea, Turkcell, Cosmorom and others that have excellent engineering teams and produce many of their value added service portfolio in-house.

While we are reluctant to extrapolate from this (informal) sample, we wonder if it may be that NTT has the right management structure and a culture that is orientated around not just innovation but on capitalising on innovation with a clear path to market for new services. If this is correct, then it’s not that telecoms operators are congenitally incapable of innovation but rather that few of them have created the culture, processes and strategic orientation to make the most of the innovation generated by their engineering teams.

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