Next steps in solidifying start-up and mobile operator relationships

May 16, 2017 | Ecosystem Accelerator | Sub-Saharan Africa | Guest Blogger

Following our last report “Opening Doors: A Start-Up’s Guide to Working With Mobile Operators in Emerging Markets”,  Adia Sowho, Director of Digital Business at Etisalat Nigeria, has guest-authored this post to share her views and recommendations for local start-ups wanting to work with mobile operators. The views expressed do not necessarily reflect those of the GSMA. 

 

Last year I published an article sharing four tips to illustrate what frustrates start-ups and mobile operators when building partnerships. The spirited feedback on my second tip – Solidifying the Relationship – confirms what my daily interactions imply:

The philosophical, organisational and expectation-related disconnect between start-ups and established mobile operators is dangerously pronounced.

Reconciling this rift is my intent today.

The tech ecosystem – one that feeds emerging technology, expands consumer goods access, spurs job creation and broadens information sharing wealth – is in peril if mobile operators and start-ups can’t align. The stakes are particularly high in emerging markets where mobile operators’ commercial influence and reach may be even broader than financial service providers.

Mobile operator ubiquity means there may be more operators than profit potential, and partnerships are no longer a luxury, as they are a pipeline for product innovation that staves off margin decline and the competitive squeeze, in the face of declining revenues from voice.  At the 2017 Mobile World Congress, Sunil Bharti Mittal, Chairman of Airtel, remarked:  “…one doesn’t want a situation where there are one or two ‘healthy”‘operators, while another similar number struggle and the other three or four are in the ICU”.

This means: efficiently executed partnerships in the pursuit of relevant, creative, disruptive product development to re(shape) the digital future are needed more than ever.

 

As ‎Director of Digital Business at Etisalat Nigeria, I live empathetically at the intersection of competing motivations of revenue targets and product innovation. Implicit in my role is the idea that if mobile operators and start-ups can understand one another and practically appreciate the value in one another’s business contribution and approach, potent partnership potential is generated.

This is more than acknowledging your potential partner’s success. It is recognizing the deficiency in your own business and accepting that the whole is greater than the sum of your respective businesses.

 

Ready to partner? Here are four must-have perspectives for start-ups seeking a mobile operator relationship.

 

1. Risk needs sharing.

The universal risk–reward paradigm is bizarrely applied in mobile operator and start-up relationships. Start-ups sometimes enter discussions uninterested in absorbing risks driven by their own businesses, assuming that the mobile operator’s capital, networks and customer base makes its pockets full and immune to market consequences. The perception that no product fails at a mobile operator is presumptively false. Losing propositions are by far more popular than winners and the shadow of a losing product is cast over their internal champions and future product prioritization.

Most African mobile operators are still in the investment stage, meaning that mobile operators also possess a level of risk sensitivity and can’t fully absorb the start-up’s share. Risk doesn’t need to be equally distributed, but it should be reasonably dealt.

 

2. Parties are different but capable.

The collaboration should be symbiotic. Collaboration blooms when parties ascribe genuine and proportionate value to the contribution of the other party. The experience can be beautifully dependent – in fact, it must be – but inherent biases need to be set aside.

The problem?

In their respective cultures of mobile operators and start-ups, there is a strong belief that what each side knows, is more valuable.

In successful partnerships, parties share values and goals, even if stylistically or culturally different.

Don’t miss this. Start-ups complain that mobile operators are burdened with processes, over-reach on revenue share and move at glacial pace. Operators are skeptical of the aggressive, chaotic pace, fail-fast-initiatives and quick pivots of start-ups.  Value can only be realized if both sides are healthily infused with the other’s culture, the emerging market ecosystem depends on it.

 

3. Age doesn’t matter, awareness does.

I hate calling out start-up founders as if all are part of a homogenous community. But for brevity’s sake, I’ll say it: founders have some maturing to do and tend to be disappointingly unprepared, entitled and shortsighted in dealings with mobile operators.

Yes, yes, I know… mobile operators are the scourge of the tech community – insatiable appetites for revenue, slow to innovate and rife with bureaucracy. But they do what start-ups haven’t – gone to market at scale!

 

Start-ups should, therefore, be prepared to answer:

    • Why should the mobile operator be engaging with your start-up?
    • Start-ups fail, pivot or change every day, how likely are you to see this partnership through?
    • What will your product do for the mobile operator’s customers? Outside of increasing ARPU (Average Revenue Per User) and reducing customer churn, what makes the customer care enough to use it?  Have you proven this?
    • How willing are you to adjust your product based on feedback from the mobile operator? Do you have the technical capabilities to deliver a carrier-grade product?

 

Right or wrong, to mobile operators, unprepared start-ups are a risk. And sadly, this risk often obscures the view of the opportunities.  The person on the mobile operator side’s responsibility is to quantify that risk. Thoughtfully considering the risk factors, so that the opportunity becomes clear, is the way forward.

 

4. Change is hard but obscurity is deadly.

While I’ve evangelized respect and appreciation of start-ups and mobile operators, I need to leave this as a parting message:  Change hurts, but obscurity destroys. Mobile operators are waking up to a reality that is the future is not only about minutes and megabytes.

Seismic changes are overtaking the industry: agility, innovation, and business model variety are now essential. Start-ups have become an “access-to-innovation” avenue for mobile operators and pursuing it requires internal shifts and a meeting-in-the-middle mindset for benefits to be realized. The time is now for healthy deviation from rigid decision-making even though it has been the key to previous success at the mobile operator.  However, start-ups with a structure that shows the promise of organizational and corporate maturity is appealing to a mobile operator and is a must for partnership

Mobile operators aren’t charities. Start-ups with only an innovative idea, aren’t automatically entitled to a mobile operator’s time or money. But, with a concrete plan, they are certainly closer. Change is hard, but if this partnership is vetted, offerings are complementary and parties are mutually inclined to go-to-market together, it is worth it.

And not just worth it, vital.

 

 

 

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