CSP DNA Evolution JourneyMustertext A Transformational Journey for Communication Service Providers

Organizational DNA

Culture Identity

Motivations

Legends and mythsBusiness Capabilities

Adaptive architectures

Horizontal operations

Outside-in modeling Lean competencies

Vision

Incentives

Brand

Customer intimacy

Product agilityOperational efficiency

DNA Evolution Journey

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Evolution Road Map

New Capabilities and Mindset

BenefitsTime to marketCost Avoidance

Sustainability Revenue & Productivity growth

Reduce CAPEX investmentsNet Promoter Score

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Executive Summary

A DNA evolution journey approach is required in order for Communication Service Providers (CSP) to ensure their survival by transforming themselves into digital enterprises. A great deal of potential value is currently being lost, and CSPs are in danger of degenerating into mere pipeline providers unless they succeed in evolving their DNA. Their DNA crucially defines and limits their ability to deliver and maximize value for customers and stakeholders. An organization’s DNA consists of its cultural framework, business architecture and strategy, and brands1. CSPs should focus on evolving their horizontal and external collaboration mindset and capabilities. This will increase the likelihood that their market protection and expansion strategies

will succeed. They are already engaged in efforts to improve the customer experience and business process management and implement network analytics, all IP, and customer 360° projects. But they also need to increase internal and external collaboration and enhance their knowledge-sharing capabilities. This will help ensure their sustainability by generating more innovations and creating more value. The prerequisite is learning to better manage the uncertainty gaps that high-density competitive and complex value chain environment generate. This involves intentionally changing values, norms, and behaviors to embrace risks and uncertainty as the norm rather than the exception.

A DNA evolution can’t be accomplished merely by taking action at the level of IT or processes. Rather, it’s necessary to remodel the conventional CSP value chain based on an adaptive business architecture and collaborative mindset. This in turn requires intentionally embarking on a DNA evolution journey. It’s an essential prerequisite for seizing the new market opportunities that are being opened up by the digital revolution,

reaping greater benefits from ongoing transformation programs, and preventing organizational exhaustion. Without it, telecoms players will continue struggling and fail to survive the repeated attacks from nimbler, more energetic players. Give your teams a chance. Stop thinking in terms of transformation and start thinking evolution. This is vital for successfully and sustainably completing the digital transformation you envision.

The Situation

The Problem

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Most of the top executives of CSPs we have interviewed want to embark on a path for evolving their organizational DNA, and they know it can be done. By “organizational DNA”, we mean the mindset, values, and acceptable behaviors that are practiced and rewarded in an organization on a daily basis. It’s actually easy to plant the seeds for a molecular evolution and kick-start the process right away. CGI has helped organizations worldwide take the first steps of their digital evolution journey in just

12-16 weeks. Our approach starts by working with a department or business unit to identify an evolution target group. We apply our evolution toolkit to establish proof of concept and than expand the journey by achieving quick wins and following up with an 18-month agile run road map geared to the evolutionary targets. It’s also possible to begin with a startup or a recently acquired smaller company and then develop a plan for extending the process to the rest of the organization.

The Solution

These adaptive, collaborative ecosystems transform the whole organization into hubs of horizontal capabilities. By appropriately responding to market requirements, they ensure CSPs’ future market success. Times to market greatly diminish while shares of key future growth markets increase. CSPs are enabled to compete successfully on the same playing field while gaining the ability to maintain their integrated network and solutions differentiators. It isn’t easy to balance short-term market opportunities against long-term network infrastructure investments, but it can be done, as Comcast, Verizon, Bell Canada, Vodafone and Deutsche Telecom have already shown.

Customer-driven business model

Net Promoter Score demand management

Innovation, partnership, and agility maturity levels

Revenue and market expansion

Escalations and fighting silo fires

Revenues and operational output

Dashboard and metrics Cost and quality

Collaborative continuous improvement

Time to market and capacity management

intimacy

Uncertainty

Verticality

Visibilty

Horizontality

Managerial Focus Key IndicatorsMindset

Today’s DNA

Evolutionroad map

Tomorrow’sDNA

Where you are today and where you need to go: an organizational DNA perspective of a typical communication service provider.

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The CGI DNA Evolution Framework

The following framework helps a CSP start implementing its new DNA. CGI usually takes only 12 to 16 weeks to define and test this kind of evolutionary journey in a client organization. It does this by focusing first on a pilot unit and then helping to spread the relevant knowledge to the

rest of the organization. Key members of the CGI team stay on board to help the client team expand and extend the initial successes during the subsequent phase. CGI deploys its proven evolution toolkit1 to ensure successful navigation of the 18-month agile run road map.

1 The tools used by CGI include a Telco 3.0 capabilities heat map, a business transformation and change framework using DICE, an agile GO ON approach, design thinking, SAFe methodologies, and others as needed.

Discover

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Bus

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Iterative Analysis

Define Deploy

Futu

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tate

, sta

keho

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ana

lysi

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Mar

ket

Opp

ortu

nitie

s Cultural FrameworkAssessment

Business ArchitectureAssessment

Brand PerceptionAssessment

DNA Target ,Opportunities &

Evolution Road Map

Proof of ConceptNew Capabilities

and Mindset Evolution

Context TheGap

The WalkForward

EarlyResults

StartRunning

ExpandResults

Target Mindset

Horizontality

Intimacy

Uncertainty

DNA Evolution Framework

DNA Evolution Project Phases

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1. Enhanced innovativeness: Support for achieving the crucial strategic goals of agility and flexibility for reducing time to market and defining new business models by implementing a mindset of horizontal collaboration and an adaptive business architecture.

2. Cost avoidance and increased revenues: Removal of barriers to success for BPM, CX, network analytics, and center of excellence programs, thus reducing the overall cost of transformation programs by improving collaboration, sharing knowledge, and raising the quality of operations.

3. Sustainability: Evolution of key capabilities and attitudes to ensure the organization’s sustainability, prevent transformational exhaustion, and maximize the ability to manage internal change.

4. Market growth by improving management agility, thus paving the way to new business models, partnerships, and brands.

5. Organizational and productivity growth: The strategic drivers of internal organizational development are aligned and supported by a cultural framework approach that increases employee satisfaction and loyalty.

6. Optimization of current CAPEX investments: IT and process-driven projects become key enablers of the DNA evolution journey. IT and operational groups collaborate more extensively, and the delivery of business benefits to support key strategic goals of improving revenue growth, the customer experience, and brand value are supported.

Key learning points the reader will gain from this whitepaper

The need for CSPs to evolve their DNA

Road blocks to horizontal collaboration

The need for new business models and tools

Mindset changes for increasing collaboration and reducing uncertainty gaps

Managing complexity by shifting from a systemic to a knowledge perspective

The crucial roles played by the brand, cultural framework, business architecture, and organizational capabilities

Essential roles for increasing the likelihood of evolving to a collaborative, innovative, and adaptive DNA

How to shift a CSP’s vertical business model to a horizontal one by following a DNA framework that helps it

develop readiness for innovation by leveraging existing programs and projects via an evolution journey approach

Expected Benefits and ROI

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What’s more, the cloud and mobile applications markets are giving rise to collaborative ecosystems of companies and global networks of capabilities. Applications are now a global market. The game is being played by entire ecosystems, and it isn’t yet clear who the winners will be. CSPs should accept the uncertainty gap3 here and actively build and participate in an ecosystem4. The telecoms and media industries are now characterized by an extremely dense competitive landscape. New players operate in a totally new cultural context without any legacy constraints. At the same time, customer behaviors and loyalty patterns are rapidly evolving (as a result of, for example, post-paid accounts, texting via Web 3.0 providers, and online video streaming). In this sense, the digital revolution leaves CSPs no alternative to revising their DNA from an industry, competitive, and customer perspective – and not only in order to take advantage of new market opportunities. Their very survival is at stake. This is putting enormous pressure on them to evolve as the landscape changes almost beyond recognition and new value is created while other value is destroyed.

Part One: The Need for CSPs to Evolve

Most analysts are now focusing on revenue agility, cost efficiency, and customer experience as the critical prerequisites for the CSP industry’s survival and evolution. They say that these are the factors that will separate the winners from the losers. Many factors have contributed to this conclusion. Equipment acquisition costs have fallen, thus lowering the entry bar and intensifying competition. New legislation (e.g. the proposed regulation that would abolish roaming fees in the EU) and the search by existing CSPs for new sources of revenue have also created new challenges, while new players (both MVNOs and MVNEs) have appeared. Over-the-top (OTT) operators have also entered the CSP battlefield, unhindered by network maintenance costs and geographical barriers. This is forcing a strategic repositioning among pipe, content, and application providers, thus changing both the distribution of revenues in the value chain and profit margins. What’s more, the OTT operators have created new customer experience (CX) bundling expectations. Carriers have lost control of the customer relationship to smartphone and tablet producers. Adding insult to injury, new players are now siphoning off revenues via the commodity market of the very different app world by directly providing and billing services to end users.

From our perspective, there are also other challenges that are important for CSPs to face in order to become innovative and adaptive organizations. Their DNA and new product introduction (NPI) models, for example, stand in the way of their transformation. CSPs are reaching the limits of their standard business models for managing costs and acquiring new revenue streams. Like in other industries, the people factor is a critical aspect of the renewal process for them. It isn’t easy for any organization to move from a vertical to a horizontal operating model2 because of how our brains work. And it’s even harder when the complexity and pace of the market increase beyond what their business architectures and supporting BSS/OSS systems were originally designed for. In a high-density competitive landscape, time to market is another critical factor; reducing it requires an adaptive, horizontal business architecture and a collaborative mindset.

CSPs are refining their strategy to build on five interconnected components and are moving beyond general differentiation and cost efficiency strategies.

Customer Awareness

Shift Industry Dynamics

Capture Market Opportunities

Innovation/Speed

Short Term Strategy Focus

2 The responses are automatic reflexes and need to be planned for. Individuals’ behavior is directly influenced by the options available to them, how well they are able to master new situations, the impacts to their egos and informal power network, and how fairly they feel treated. See Gartner, “Accelerate Digital Workplace Momentum”.3 This term was introduced by IBM in 2010 while carrying out a survey of the CEOs of top 100 global firms. They mentioned that their top priority was to find ways of increasing collaboration in order to improve knowledge sharing, this being a critical factor for beating their competitors in view of the general uncertainty and fast pace of change in global markets.4 Interestingly, a few grasped this long ago, including Vodafone and Deutsche Telecom, and have been creating multiple ecosystems with local, regional, and global partners for quite a few years.

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Part One: The Need for CSPs to Evolve

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But hurdles still remain, for example:

Different business rules apply to different product portfolios.

RACI charts and solution milestones aren’t consistently defined, especially for large enterprise and complex deals for managed services.

Process frameworks need improvement in order to handle exceptions and customer change requests.

Operational teams need explicit training in order to develop an E2E perspective on the service delivery and customer journey.

Key performance indicators are mostly still driven by operational teams instead of by processes, making it difficult to identify the root causes of problems and improve overall process efficiencies.

Part Two: Road Blocks to Horizontal Collaboration

Over the past 15 years, CSPs have embarked upon an evolution journey, but without fully aligning their DNA with their envisioned future state. Until recently, they preferred to develop networks, OSS/BSS, and new technologies products in house. This trend is now changing: COTS solutions are being increasingly embraced, and Application Portfolio Rationalization (APR) programs have been put in place for removing legacy systems. In addition, many CSPs have embraced order-to-cash programs—although unfortunately without being able to completely remove the vertical silo divisions separating product lines and regions. New stacks are also being added but without completely removing or integrating the older ones, in other words also without eliminating legacy process and system complexities.

CSPs are working hard to overcome these roadblocks to collaboration, the cause of which is team-based values and norms in a vertically structured organization. For example, Verizon has succeeded in training its sales team at the solution level, reducing its product and BSS/OSS portfolios by hundreds of products and systems, and implementing a successful lean Six Sigma program for its enterprise market. TELUS has been able to drive a customer-first improvement program involving cross-functional teams drawn from operations, marketing, and CX. Bell Canada has simplified its delivery model by creating Centers of Excellence for key products.

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Part Two: Road Blocks to Horizontal Collaboration

If CSPs’ organizations spawn more self-managed collaboration and coordination behaviors, they will have a better chance of succeeding in the new digital economy by breaking down organizational silos. This means investing to change beliefs, values, and norms to achieve organizational simplicity in a very complex delivery environment.

With this state of affairs, it’s very difficult for subject-matter experts and managers to efficiently collaborate and coordinate outside their areas of responsibility. They can optimize their own areas, but this can have unintended consequences for other departments. Finally, when a customer submits a complex solution-driven order requiring the involvement of multiple vertical silos, manual interventions are indispensable for pushing it through and ensuring successful delivery and deployment. In an environment where complexity and exceptions reign, automation and through-flow aren’t necessarily the answer.

Strict governance5 and collaborative6 solutions haven’t proved to be successful in dealing with increasing uncertainty gaps, because they don’t bring about any changes in the team members’ mindsets, incentives, time allocation, and capabilities7. The disappointing performance of most transformation and evolution programs8 in recent years has not been due to poorly designed systems, processes, or business architectures. Rather, they have failed to deliver full benefits because stakeholders lack the proper mindset, incentives, and support capabilities for carrying programs to fruition and fully exploiting their potential.

5 Such as predefined process flows, RACI, and standard sets of business rules with specific KPI6 For example, organizational models that are project-based, matrix-based, process-driven, or structured around centers of excellence or communities of practices.7 2013 HEC Montréal, Centre d’études en transformation des organizations, seminars on community of best practices8 Failure rates of between 70 and 90% in transformation programs in general (Nasim & Sushil, 2011), see also the June 2014 study by Dr. Gail Johnson Morris about game changers and success factors. Our experience with the telecoms industry appears to corroborate these findings when a DNA framework approach was not used to support the evolution program.

New Technology and Product Introduction

Marketing Sales ServiceDelivery

Distribution Customer Care

Network Operations

Today Traditional Carrier Operational Driven Model

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Part Three: The Need for New Business Models and Tools

For more than ten years, testing of innovative organizational models has been underway at academic institutions and in some other industries9. Some CSPs have attempted to implement networked, knowledge-based, or collaborative models, but these efforts didn’t begin picking up speed until recently in response to regulatory, industry, and technological developments. They include MVNO and MVNE companies launched where regulators have opened up markets to boost competition. These pressures to innovate, as well as the fast pace of change, are obliging CSPs to move away from the value chain concept and the traditional business model and adopt an adaptive business architecture geared to adding value.

This adaptive model is required for the new digital economy, in which the IT, telecommunications, and media industries are converging. Consequently, in order to deal with the uncertainty gap CSPs must develop a horizontal, collaborative, and adaptive business model that is more closely aligned with the natural chaos theory of organizational processes. This is caused by a highly competitive external global environment and a very complex internal service delivery environment. This makes things highly unpredictable and irrational10.

The Adaptive Capabilities Architecture Model: A Value-Adding Ecosystem Perspective for Tomorrow

This fluid, agile, flexible business architecture lets CSPs capture key markets that offer them opportunities for growth while continuing to nurture cash cows for as long as possible11. It focuses on leveraging and monetizing core advantages. This is where our DNA evolution journey toolkit has helped CSPs transform primes and SMEs. It enables them to diagnose the capability deficits and mindset gaps that need to be closed to ensure their survival and expansion. These tools also ensure that all other corporate initiatives (for introducing new products, boosting efficiency, or evolving) are embedded and contribute to the DNA evolution journey.

The diagram below visualizes an assessment of two partners that wanted to combine their capabilities to penetrate a regional cloud market segment. The adaptive architecture makes it easier to understand the required capabilities. These are added together based on who does what best, which each receiving missing skills from the other partner. Each functional area is defined by the overall value it contributes to the E2E process. The capabilities are organized based on functional competencies, not product groups such as landline or cellular networks, UC or IT, or departments such as sales, marketing, customer care, etc.

9 2012 HEC Montréal, Centre d’études en transformation des organizations, horizontal organization management models10 Advances in behavioral economics and change management research support the view that greater uncertainty and time spans increase the likelihood of irrational behavior on the part of affected evolution program stakeholders. That is why we propose an agile run that focuses on simple themes and short-term results with a “what’s in it for me strategy”, in order to improve the adoption and implementation success rate.11 Boston Consulting Group Matrix product portfolio analysis

For CSPs to become more agile, the traditional, compartmentalized value chain perspective, which constrains innovative business and service delivery models, needs to give way to a focus on capabilities to add to sentence, to a focus on capabilities that support a grow, engage and then monetize business model.

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Each functional area is defined by the overall value it contributes to the E2E process. The capabilities correspond to functional competencies, not product or operational units.

Manage Subscriber

ServiceOptimization

Security Integration

Service Catalogue &

Registry

IntangibleService

& Mindset

ComplexEcosystem

ProvisioningPricing Billing

Payment

AccessConectivity

InboundMarketing

Viral

SalesDirect

IndirectIdentity Virtual

MonitorManage

transactionsBOSS

Managetroubles

and report

AttractiveRecognize

BrandSelf Serve Help Desk

Externalfocus,

flexible &Agile mindset

BusinessAnalytics

CustomerSupport

Partner X Partner Y

Once this adaptive business architecture is defined for partners, critical process flows can be added based on the solution process chart shown below and supplemented as required with ITIL and TM Forum sublevel process flows. This is the targeted capabilities and process driven model.

Employees’ values, norms, and behaviors are driven by the performance of the E2E process, not by departmental key process indicators or incentives. The employees thus belong to the process and are organized in competence centers to support it.

Identification Confirmation Delivery EvolutionAssurance

Tomorrow Process Driven Operating Model

Solution Driven Process Management

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Part Four: The Need for Mindset Changes to Increase Collaboration and Reduce Uncertainty

The key question is, what else could CSPs leverage to drive their cultural shifts that is not now addressed by change management methodologies and organizational development theories? It’s difficult for most initiatives to impact capabilities and mindsets, because these things are not currently monitored. Increases in capabilities and changes in mindsets are rarely measured, despite the fact that they can play a major role in motivating personnel and enabling them to embrace changes. Moreover, most CSPs consist of a jumble of subcultures that have resulted from acquisitions and mergers. Their inherent contradictions and competing interests make it even more important to address the collaboration paradigm. This can be done by tracking a set of measures within an added framework that supplements the corporate value framework used for the annual appraisal process. This departs from the assumption that, in order to engineer a successful transformation, a people-based renewal function12 is crucial for making newly incorporated groups feel welcome and empower them to adapt and perform.

12 Studies show that the key to success lies in empowering game changers and co-leaders, these being the ones with the greatest influence on people who are sitting on the fence. This creates the momentum that is required to motivate a majority of employees to join the innovation drive and support horizontal collaboration. Senior executives play a pivotal role in enabling these people; it is up to them to provide the right level of support and incentives to make departments and organizations more porous so people doing the work on the ground can drive the required changes, and to ease off on top-down pressures, which is also essential for the success of transformation programs. Evolution driven by innovation delivers much greater returns and causes far less stress.13 A mixture of top-down and bottom-up approaches that the Boston Consulting Group calls the “cascading principle”: a waterfall exerts a downstream push, but is also influenced by other streams and pools that redirect water back to the main waterfall to maintain and increase momentum.

Renewal to establish the new DNA based on empowerment to drive agility and innovation

Rework for BPMs initiatives to increase efficiency

Redeployment for CX programs to protect revenues and new market entries for adding new revenue streams

Realignment for APR and BPI projects to optimize costs

Renewal

Transformation

Rework

Realignement

Redeployment

Mindset triggers and What‘s in it for me?Successful evolution must use the renewal and human factors first to create the organizational capability to change:

I want

I choose

I can

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The mindset of the organization

Incentives and rewards for understanding what motivates people

Talent for bringing on board and retaining people with game-changing skills

Daily actions and motivations for measuring the accepted norms and values that determine

how employees act and behave

Legends and myths for defining leadership styles and the organizational context

Strategic plans for putting organizational goals and objectives in context

The capabilities of the company that are needed to implement defined tactical plans

Business models and tactical plans for executing strategies

Losses of focus and organizational energy take a huge toll on transformation programs, even running the risk of organizational exhaustion. The cultural framework assessment model lets you measure where you currently are in terms of mindsets and capabilities and where you need to go from there before embarking on major evolution or transformation projects. It also provides an excellent toolkit for integrating all organizational development initiatives. By initially focusing on modifying

The Cultural Framework of an Organization, a Mindset Assessment Tool

mindsets, you improve your organization’s readiness to change by encouraging the adoption of values, norms, and behaviors that will increase your chances of success in the three other areas of transformation (realignment, rework, and refocus), which are essential for achieving sustainable results. This tool lets you measure how much empowerment to provide to your game changers, informal leaders, and employees in a mixed approach for driving innovation13.

Incentives and Rewards

Daily Actions

Talent attraction, selection

& retention

Organizational Capabilities

Promotions

Motivations

Legends & Myths

Strategic Intent

Cultural Framework

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14 An interesting development in recent years is that some providers have stopped trying to integrate legacy and future BOSS and simply accepted that they will continue taking a swivel chair approach until their old products and services are completely replaced by IP-based ones. They think that the cost and effort required for integration is not justifiable, having taken a hard look at the business situation or made a few unsuccessful attempts that made the whole subject taboo. This is also reflects the discussions that other CSPs are currently having after mergers and acquisitions (e.g. Vodafone and Kabel Deutschland, E-plus and Telefonica).

Managing Complexity by Switching from a Systemic to a Knowledge Perspective

CSPs are very good at managing networks, BSS/OSS, product features, SLA, QoS for customers, and regulatory obligations, but they still have a hard time excelling in terms of time to market and customer experience, which depend on expertise, not systems. They have managed these highly interdependent, complex systems for decades and that has defined their DNA. But the days of deploying and delivering new networks, systems, and processes on their own are coming to an end. Now CSPs need partners, providers, and customers that they can work with to build new business models. What they need to focus on is sharing and learning, despite not always being in the driver’s seat.

The likes of Apple, Amazon, Microsoft, Google, and small app developers have changed the barriers to market entry, the customer experience, and times to market in the digital economy. The introduction of new products provides an excellent example of a required DNA change that most CSPs are still struggling to accomplish. Long technology and NPI cycles show that DNA changes take time, call for motivating intervention, and can be impeded by a company’s heritage14.

The cultural framework measures all of the variables that collectively constitute an organization’s mindset, thus providing a reference and basis for making improvements. After using it as a guide for acquiring new DNA, CSPs can learn to manage the uncertainty gap better. Instead of repeatedly adapting systems and processes, they introduce values and norms that encourage the right behaviors for dealing with an environment that’s in constant flux. Innovation and collaboration become a valued norm instead of something that only happens during explicit transformation programs. It enables CSPs to renew and redefine themselves on an ongoing basis, thus eliminating the need for any more such programs. This is supported by an adaptive business architecture that permits flexible and appropriate responses depending on how markets, customers, and competitors react and develop. This isn’t a disruptive approach; rather, it employs a series of agile runs to advance along the DNA evolution path. Nor does it add any more programs; instead, it leverages and enhances existing ones.

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As another example, many CSPs have introduced customer experience teams without making this a top priority for the whole organization or creating a community of best practices. The CX team then has to work hard across organizational silos to make NPS improvements because this requires horizontal collaboration on the part of all departments. Some CSPs have made it a top priority, issued a public statement to this effect, and changed their incentive programs to encourage appropriate behaviors. And they have in fact succeeded in making significant gains. But even then, they have been unable to evolve their mindset and capabilities to their full potential around that knowledge and skills framework. Why? Because the stakeholders impacted by the cultural shift haven’t been sufficiently equipped with the right capabilities and mindset for triggering this shift; instead, organizational changes have been driven by a top-down approach instead of employees saying, hey, we have to do something about this because it’s not working well for either our customers or us. The drive for renewal and collaboration still hasn’t become a natural reflex.

One of the main hurdles that can affect the ability of CSPs to evolve their DNA is the well-known waterfall gating process. Capital intensity and de facto reliance on CAPEX for allocating project funding can deter most organizational development or change management projects because they are exclusively OPEX-driven. This becomes an even bigger barrier to change when profit margins are dwindling in the traditional wireline and wireless markets. This scarcity of resources and the competing political fallout greatly constrains the allocation of resources at CSPs. It makes it even harder

to achieve sustainable investment levels for intangibles like a cultural framework. Our DNA evolution journey methodology proposes integrating OPEX-driven activities as a precursor to the successful implementation of CAPEX programs by providing tangible deliverables and results. Finally, it is our opinion that in a global knowledge base industry like the digital one, the collaboration paradigm is a key determinant of an organization’s ability to address the uncertainty gap. CSPs will soon see the end of benefits from efforts to reduce costs and boost revenues with acquisition synergies. Gaps in their ability to collaborate and manage knowledge will have to be addressed fast to ensure they have a viable future; the forecast growth rates are not enough for them to sustain the required investments in networks.

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These competencies are: Ability to change Ability to cooperate Ability to learn

The employees then need to master three basic elements of readiness for change: Ability to improve Ability to identify Ability to contribute

These capabilities are then evolved in three arenas in which employees and managers are already working today: The organization Operations Projects

A DNA Evolution Path Must Be Defined

The leaders of most CSPs have now recognized the need to evolve their DNA toward collaborative excellence. Cost improvements and CX projects require cross-functional teams that are empowered to innovate. Opportunities in new growth markets, like those for M2M, mobile engagement providers, network API, cloud, mobile content, and applications, can only be seized by multiple partners working in cooperation. This forces CSPs to adopt horizontal organizational models. In order for these new adaptive horizontal models to work well, however, the right mindset and appropriate incentives are a must. It is also essential to implement and nurture the required key roles and functions.

It’s extremely challenging for any organization to change its DNA from a vertical to a horizontal orientation. In most cases, attention focuses on getting visible results fast. Transformation primes tend to focus on processes and required changes to IT systems instead of on evolving the enterprise’s mindset and capabilities. Also, most programs we learn of deal first with tangible assets, despite the fact that these are then stalled or delayed by the need to pay attention to intangible assets15. Values and norms impact program costs from a productivity perspective, but it is political momentum that ultimately determines success or failure in achieving the targeted state and benefits. Tangible assets that can easily be documented, tracked, and measured are naturally part of a CSP’s DNA. But greater emphasis must be placed on measuring values, norms, and capabilities. Why? Because they are key for the transformation. Ignore them, and there will no genuine renewal and the prospects of survival will be diminished. Our DNA evolution journey methodology lets you integrate these competencies into the arenas by combining our cultural framework approach with an adaptive business architecture and a brand perception assessment.

15 Intangible assets are defined as things that are implicit, such as values, norms, behaviors, knowledge, internal and external networks, political agendas, etc.

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Taking employees from the denial phase to the promotion phase mainly requires efforts to unlearn the old DNA and acquire a new one. Employees must be able to go from the thinking stage to the doing stage without a major effort; it becomes more like a continuum in which changes are the norm instead of the exception, because values and norms become the anchor16, not the system or any processes used.

Employees who are ready and willing to change transition from the thinking stage to the doing stage without a major effort; it becomes more like a continuum in which changes are the norm instead of the exception. The samestatement applies to an organization that evolves its DNA.

16 In order to be effective, these soft factors – such as culture, leadership, and motivation – need to be supported by hard factors including duration, integrity of the project team, commitment to change, and the extra effort required on top of regular work. See “The Hard Side of Change Management” by Sirkin, Keenan, and Jackson (published in the Harvard Business Review) for a discussion of the DICE model, which is an integral part of our evolution approach.

A DNA Evolution Path Must Be Defined

Integration & promotion

Deny &Defense

UnderstandingAdaptation

Unlearning

Focusing

ThinkingDoing

Phased Transition Continuum

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Part Five: Opportunities and Allies

Programs that require horizontal collaboration (CX, BPM, Internet of things, digital enterprise, network analytics) provide the best opportunities for CSPs to start acting on these challenges, because they are cross-functional and nonthreatening to participants. Instead of focusing on reducing costs, they stress cost avoidance, market share growth, and achieving a higher net promoter score. Most stakeholders are also genuinely interested in collaborating in order to increase their members’ and their own capabilities. This is fertile ground for approaching goals by small steps with a strong customer and employee focus.

This needs to be led by a crucial element that links customers, partners, and employees: the brand. Your brand is your strongest ally for making organizational changes. Here we’re not talking about it as a way of communicating with the outside world, but rather as an essential part of your DNA, like your cultural framework and business architecture. Empowered knowledge workers are the same whether they are at home, at play, or at work.

How employees and customers perceive a company’s key attributes can reflect its brand perception and values, thus limiting its ability to evolve and transform itself. This makes it a crucial part of the organization’s DNA.

Brand

Customer intimacy

Product agility

Operational efficiency

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CSPs should make sure that their brand is the leading supporter of their DNA and is lived by employees and leaders on an everyday basis. How the brand is perceived defines the limits of the organization’s ability to transform itself. Is your brand mainly associated with CX or product agility or operational efficiency? How do you want to assert yourself in the marketplace, and how do your own employees evaluate your brand? They are your brand’s best critics and fans, and they are the ones who make your CX a key differentiator. As they gain the capabilities and mindset required to deal with uncertainty and complexity, self-managed behaviors geared to collaboration and coordination will emerge in the CSP’s organization and increase its chances of succeeding in the new digital economy.

Your customers are your second-most-important allies on your evolution journey. They at the center of your CX and BPM and define the customer journey, touchpoints, and moments of truth. They also define the value of your service delivery processes and can actively participate in resolving problems via a self-care approach.

This supplements the crucial role that customers play during the need identification phase. Plus, these days customers are becoming more directly involved in creating solutions, right from the start of NPI processes. This is because of the high complexity of requirements and potential solutions, which are defined while taking a “voice of the customer” approach to designing new products and services, especially for corporate customers. It’s vital to reduce the margin of error when introducing a new product, including investment opportunities lost as a result of overengineering.

Your employees and customers are thus at the center of your evolution path, which is bounded by how your brand is perceived. They define the path that your journey must take in order to succeed. This is basically nothing new; many CSPs around the world have implemented lean Six Sigma methodologies. What is new is the imperative to evolve in order to ensure long-term sustainability. CSPs can learn from other industries that have already been there17 and identified four key roles for nurturing collaborative and learning ecosystems that will facilitate the evolution journey.

17 The metalworking, automotive, and paper industries have all had to implement major evolution programs in response to their high-density, global competitive environments.

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Once you introduce these roles, success mostly comes from practicing transparency, taking a consensus-building approach at the start for defining the DNA evolution journey, and setting realistic short-term goals. Key stakeholders have to be aligned prior to embarking on the evolution journey. Facilitators play a key role in enabling this consensus-building process. By having them report to the cross-functional executive prime, you automatically dig holes between silos. This starts to create a horizontal momentum that has a highly motivating effect on most employees19. The other factor affecting success is how consistent, patient, public, and firm you are in supporting these roles by

Enabling Roles for Supporting CSPs’ DNA Evolution Path

Based on what we have observed and learned from other industries, it is worthwhile to establish several key roles for enabling horizontal collaboration, reducing the uncertainty gap, increasing learning opportunities, and optimizing business models.

The FacilitatorFacilitators already exist within a CSP’s informal organization. What you need to do is legitimize their role. They need more slack time for driving collaborative tasks forward with greater priority, thus becoming part of the norm instead of only being called on when there is an emergency. These individuals know how to move between organizational silos and open up communication pathways. They possess considerable cross-functional networking skills. They are usually good candidates for launching the pilot phase of horizontal collaboration programs. Customer care personnel are often able to bridge the gaps between sales, operations teams, the markets, and product silos. NPI BAs and PM complement them well with their knowledge of IT, marketing, business processes, and technology. Having spent years collaborating, these people have a natural ability to work in horizontal environments.

The Knowledge GatekeeperKnowledge gatekeepers are your insurance policy when working with multiple partners within a collaborative value chain. There is always a winner in any partnership. Understand which capabilities you and your partner bring to the table and how you expect to learn from each other. Be ready to protect your key differentiators when making the value proposition, because lack of trust will seriously reduce your chances of success. Knowing why, what you offer, and what you want to get makes the game transparent for all players. Defining the rules of the game at the beginning will also increase the likelihood of success. Many CSPs have strategic alliance directors who can also wear this hat if they are kept involved after day-to-day operational activities start. Otherwise this role should be assigned to one of the operational players involved in the regular activities. It is key for building trust, learning, and honing strategic agreements.

18 Companies that have invested heavily in collaboration systems and tools without providing enough slack time for employees to participate and animators to lead them have not have much success in closing the uncertainty gap. A few, however, have been able to gain real business benefits and ways to track them. Most of the CSP executives we have talked to in the last year have confirmed that innovation is at the top of their list of priorities, so there is a need to look at what other industries have been doing in this area in the last 10 years and apply the best practices.

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19 Organizations based on a quality circle mindset have enjoyed this type of benefits for years, but many CSPs we have worked with have not integrated them into their DNA.20 This is a social phenomenon known as the “bandwagon effect” that has been observed for years in connection with political campaigns. People wait to see who the winner will be before jumping on board. This is why it is so important to build a winning coalition as recommended by John Kotter: it generates the “tipping point” effect described by Malcom Gladwell. Web 3.0 technologies have made it even more important to consider these concepts for any evolution program.

The Learning DisseminatorLearning disseminators are your investment insurance against the uncertainty gap. Their job is to make sure that all the energy and time the organization spends to learn and apply knowledge is available to those who need it when they need it. They also have to ensure that important lessons from outside the organization are captured. Here the challenge is translating the tacit to the explicit. The DNA evolution methodology links to existing collaboration programs and supports them. Learning disseminators are the main interfaces for integrating these programs and driving them toward the same evolution path. Case studies from the last 10 years of experiments with communities of practices clearly demonstrate the need to assign people full-time to these roles. It is essential for nurturing the communities around key issues for the organization and ensure that key participants also gain from sharing their expertise 18.

The Cross-Functional ChampionThe role of cross-functional executive champion isn’t a new idea. It has been part of the transformation and program management landscape for years. Most CSPs have had success with it when implementing major transformation or IT programs. Surprisingly, however, it hasn’t been integrated into CSPs’ management processes at the operational level. BPM, CX, and Center of Excellence programs have had to implement it in order to establish a horizontal mindset. But this role must be supplemented by other managerial roles that become collaborative process owners and drivers. These enablers are essential for fostering the mindset and capability evolution journey via a combined bottom-up and top-down approach. Game changers are important on the inside at all levels, but outside help is also needed to create momentum for change. This applies especially when an organization is not considered amenable to change at the start of its journey.

giving them the time and resources they need to succeed. A DNA evolution journey takes months, but benefits can be noticeable every step of the way. Finally, it is crucial to take the approach of “no looking back” to old ways of doing things. Political players who think they can afford to wait and see will impede the introduction of these roles and the associated benefits simply by dragging their feet long enough, and fence sitters will also bide their time20. Unless game changers and co-leaders are given sufficient support, the renewal process has little chance of succeeding.

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Part Six: Conclusions

21 Improved time to market, better NPS, capture of new market opportunities, and increased learning capabilities22 Nurture the cash cow from wireline and wireless while looking for new stars (M2M, mobile data and video, cloud), abandoning the dogs, and carefully placing a few questions marks.

An organization’s DNA is defined by its cultural framework, led by its brand, and supported by its business architecture. This determines an organization’s capabilities to deliver value to its stakeholders. CSPs should focus first on evolving their cultural framework by developing an adaptive and collaborative DNA. Without it, CSPs will continue to struggle to evolve, and most of them will succumb to repeated attacks by niche players and global OTT providers that already have a flexible, energetic, and adaptive DNA.

In order to increase process agility and collaborative benefits, TM Forum and ITIL business architectures need to be supplemented by a DNA evolution path21. This mindset change is essential for any CSP to survive in the extremely high competitive density of today’s digital economy. Current consolidation and revenue acquisition strategies will inevitably run up against their limits. Only a cultural revolution from within can make CSPs sustainable. To plant the seeds for this DNA shift, they need to focus on creating an appropriate journey map. The approach and tools we are suggesting support a soft evolution without disturbing current strategic focuses22. Instead, a series of small steps generates momentum toward the required mindset and brand perception and gradually increases collaboration and agility. This can be done by ensuring that each current and future project contributes to achieving the DNA evolution target and by immediately implementing the four key enabling roles explained above.

All collaborative avenues have to be explored; none by itself will provide a “magic bullet”. Each CSP has to find the ones that fit its brand and identify the right operating model for ensuring its future success. But only action-based, demonstrated values can transform a CSP’s DNA. CSPs need to realize that their market success depends on their operating model. This in turn is limited by the organization’s capabilities. And these are directly linked to the cultural framework, which is nurtured by the brand. Their evolutionary options are constrained by their current culture and brand perceptions. These limitations have to be taken into account along the chosen path. The CGI evolution framework links together all of these elements and gives you an actionable plan that can be implemented step by step with small, measurable goals.

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Noticeable Changes

At the project level, cross-functional teams will become more productive, conflicts will diminish, and deliverables will be produced faster. Staff will start to identify more with their current project than with their operations team, and will want to work in a project-based organizational model.

At the operational level, employees will start to think in terms of processes and the outcome for customers, instead of focusing on departmental KPIs. Communities of practices will be created around specific issues and later dissolved naturally after the issues are resolved. Roles such as process directors and process SMEs will emerge, and supporting tools such as processand CX-driven dashboards will become the norm. CX teams will dissolve and be replaced by a CX operating model and mindset.

At the organizational level, you will start to see calls for different kinds of horizontal collaboration programs. Process owners and improvement teams will emerge that straddle operational silos. Capability-driven Centers of Excellence will become the norm for providing services, focusing on solutions and markets instead of products or customers. Managers and executives will start to create ecosystems of partners for providing complex solutions based on complementary capabilities and multiple business models.

At the personal level, change will become the norm rather than the exception, making every player a game changer within his or her area of influence and impact.

Part Six: Conclusions

The business context defines the DNA that is required for market success. An organization’s DNA consists of its brand, cultural framework, and business architecture and strategy. A DNA evolution road map is needed to implement the right operational model, ensure your company’s sustainability, and master changing business challenges.

Target Mindset

Horizontality

Intimacy

Uncertainty

Organizational DNA

Business Context Market Success

The DNA evolution, the missing link to market success

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About CGI

Founded in 1976, CGI is one of the largest IT and business process services providers in the world. We combine innovative services and solutions with a disciplined delivery approach that has resulted in an industry-leading track record of delivering 95% of projects on time and within budget. Our global reach, combined with our proximity model of serving clients from 400 local offices worldwide, provides the scale and immediacy required to rapidly respond to client needs. Our business consulting, systems integration and managed services help clients leverage current investments while adopting technology and business strategies that achieve top and bottom line results. As a demonstration of our commitment, our client satisfaction score consistently measures 9 out of 10.

Visit cgi.com for more information

Contact: Jean Gagnon, MBADirector Consulting Services, Communications Industry.CGI Deutschland Ltd. & Co. KG Heerdter Lohweg 35 | 40549 Düsseldorf | GermanyCell: +49 152 5672 3188 | E-mail: jean.gagnon@cgi.com