Navel-Gazing Won’t Lead to Transformation

Two weeks ago, I noted that change isn’t required in business, but neither is survival. Let’s assume you’re interested in survival.

You may have encountered a SWOT analysis on the job or if you went to business school. The thinking goes that identifying Strengths, Weaknesses, Opportunities, and Threats is a good place to start when trying to initiate change. But if you take this approach you are in danger, because transformations rarely start behind closed doors. The beginning of a successful transformation journey is to pick one’s head up and look around.

In his book The First 90 Days, Michael D. Watkins suggests that you turn the SWOT concept around a bit.  He suggests doing a TOWS analysis. What I take from his concept is to look outward initially. First, understand the Threats and Opportunities of the business environment. Then, examine the Weaknesses and Strengths of your organization. This enables you to plug gaping holes to minimize damage from Threats or take advantage of the Opportunities.

The reason Watkins’ approach makes sense can be seen from a biological example. Say you are a polar bear and you are among the best-suited species to thrive in a cold environment. As a polar bear, you would write this in your “Strength” column. After all, which other species can handle the cold as well as you can? This is a great attribute if the environment is cold. But if the environment is warm and getting warmer, the environment poses a mortal threat to your “Strength.” By focusing [inward] on strengths and weaknesses, we often miss the environment factors at play. Look outward first to avoid danger.

The same is true in business and the telecommunications industry in particular. Tom Nolle captures the environmental Threat succinctly when he describes “revenue per bit collapsing under the Internet pricing model of all-you-can-eat, and cost per bit declining a bit less dramatically. As a result, there’s a crossover point…” What he means is that costs exceed revenues. This euphemistic crossover point is bad news for service providers. You are in danger!

The Threat can be addressed in one of two straightforward ways. First, service providers can [try to] increase prices, but since bandwidth remains a commodity, downward price pressure means cost reductions are the only option. The option to reduce costs can be achieved tactically through off-shoring (to capture lower labor costs) or strategically through the Opportunity of automation (to avoid and/or shift labor costs).

Packet Design’s SDN Platform is enabling service providers to exploit the Opportunity of SDN. They are using the Platform in multi-vendor SDN ecosystems to increase business agility and reduce costs via use cases such as running their networks hotter. RESTful APIs enable customer applications and other orchestration systems to access the Platform’s microservices for intelligent, automated provisioning of network services.

This type of intelligence is at the forefront of how forward-looking service providers will eliminate wasteful operating expenses, reverse Nolle’s crossover points, and truly take advantage of one of the transformative innovations in networking and service delivery.