The process of implementing an innovation, its risks and flaws are discussed in the essay. The example of telecommunications company, “OK Telecoms”¯ is regarded. The company’s state of affairs is analyzed, and according to that, the innovation is recommended. The features of IPTV, possible risks and benefits for the company are discussed. Steps for implementing the innovation, limitations and weaknesses of the company as well as the methods of overcoming these problems are considered.
Keywords: innovation, IPTV, “Video On Demand”¯, innovative risks, risk minimization, innovative research.
The importance of innovations can hardly be overestimated: in the age of information and rapid development of new technologies those who manage to apply the technologies and adjust them to the environment win the competitive market and create new business opportunities. On the other hand, the companies that do not innovate or innovate slowly, sooner or later lose to their competitors and become part of the history. Therefore, the process of choosing and implementing innovations as well as the process of estimating risks, possible problems and benefits is highly important for the company’s success. Moreover, it is not enough to create innovation idea and estimate its efficiency; in order to successfully implement an innovation there should be exact plan of the implementation and reasons for financial authorities that might persuade investors of the efficiency of the plan.
This essay is dedicated to analysis of innovation in a telecommunications company; the chosen innovation is IPTV service. The aim of the essay is to discuss possible risks and benefits, elaborate innovation plan and analyze the issues of leadership and other management issues related to this innovation. Also, this essay includes alternative innovations analysis and grounding for the chosen innovation. PowerPoint presentation illustrates the necessity and efficiency of the innovation, and can be used to persuade a board of directors concerning the benefits and efficiency of the innovation.
The chosen organization, “OK Telecoms”¯, and its subsidiaries provide such services as a local and long distance telephone, Internet and data services, wireless voice and data services, alarm monitoring, and telecommunications equipment, along with many other associated solutions for local and global clients. The company was organized in 1996, and started its functioning as local Internet provider; later it expanded the services with telephone services and telecommunications equipment. In several years, wireless technologies were added to the company’s range of services. The development of the company was rapid in the beginning, since it has been on of the first Internet providers in the region. During the last 5 years, the development was not so rapid, but steady growth was witnessed.
1.2. Core characteristics
“OK telecoms”¯ is a limited liability company with several members. The company occupies a significant place at the telecoms market, its share is around 28% of total amount of Internet services in the region, 25% of telephone services and 40% of wireless voice and data services. In addition to that, “OK Telecoms”¯ sells around 30% of telecommunications equipment in the region. The company is making attempts to become a global player and offer its services in the neighboring regions, but the attempts did not give much effect because there are several large companies there, and two of them are tending towards confluence. Moreover, during the last several years new companies with strong investors and aggressive strategy of development have emerged in the region where “OK Telecoms”¯ operates.
1.3. Need for innovation
Analysis of recent “OK Telecoms”¯ development and information about main competitors in the region and neighboring parts of the country shows that the company needs new ideas and/or directions for future growth. The company’s revenues are steady, but taking into account new companies that provide the same services, this situation is going to change in near future. The company needs either extensive or intensive strategy of development, which means they have to start a marketing campaign aimed at involving more clients as well as offer more attractive conditions compared to other companies. Intensive way of development includes implementing innovative products and services which may be offered to new and existing clients and creating new market niche for “OK Telecoms”¯.
2.1. Reasons for innovation choice
The need for innovation is caused, first of all, by market conditions of “OK Telecoms”¯ and is described in Section 1.3. However, innovative development is not only a matter of financial success for the chosen company, but also an important constituent for the image of the company as well as means for forming public opinion about (Cagan & Vogel, 2001, p. 182) “OK Telecoms”¯. The choice of innovation is bounded by the following conditions:
- the innovation needs to comply with existing products and services
- the innovation should be attractive both for new and existing clients
- the innovation should be unique or new for the region where the company operates
- the innovation should be implemented in a reasonable amount of time (i.e. the company has enough potential to fulfill the plans in comparatively short period of time)
2.2. Innovation description
The suggested solution, IPTV service, corresponds to all demands mentioned in section 2.1. and can contribute greatly to the company’s success. IPTV is multi-channel, Internet protocol television which can facilitate the delivery of multi-definition content via a broadband connection (Raghavan & Anandalingam, 2005, p.108). Nowadays, research shows that the USA represents the largest broadband market.
The Canalys company forecasts that by 2010 the amount of IPTV users worldwide will reach 40 million. Compared to less than 4 million in 2006, the figures show possible tenfold increase, and thus indicate ”“ the IPTV service is going to be extremely popular, and its popularity will be rising.
Technically, IPTV television is received by the viewer through the technologies used for computer networks. It can easily be bundled with such kinds of services as Internet access and VoIP, provided by “OK Telecoms”¯. Additional feature that may be used for attracting clients is the “Video On Demand”¯ service that enables users to choose content themselves. Also, satellite data transmission may be used to facilitate and broaden the speed of IPTV, so these services may be bundled together to create better interactivity and convenience for users. Thus, IPTV represents the best fitting innovation for “OK Telecoms”¯ because it:
- perfectly matches the company’s profile
- can be suggested to new and existing clients
- can be bundled with existing services
- gives a clear competitive advantage for “OK Telecoms”¯
Since the IPTV market is going to extend in the next years, the choice of IPTV innovation promises active development for the company and can be regarded as additional advantage of introducing this innovation.
2.3. Risks and benefits
Potential risks of implementing the IPTV innovation are rather high. Among main possible risks are:
- clients will not need the innovation and will prefer ordinary TV instead
- clients won’t have the necessary channel bandwidth to provide IPTV service
- other companies will be more quick to introduce this service
- customers are going to choose to buy TV-FM tuners or watch online TV instead (because the costs are in the long run less than those of IPTV)
- there will be not enough finance or qualified professionals in the company for successful realization of the project
However, most of these risks “OK Telecoms”¯ can overcome by a well thought out sociological and statistical research bundled with corresponding marketing campaign (Wright, 2007, p.188).
Concerning potential benefits, the following can be named:
- “OK Telecoms”¯ will occupy a new market niche of IPTV and “VoD”¯ (Video On Demand) services
- the company will attract more clients and have the image of a modern and innovative enterprise
- the revenue can be increased at the expense of offering additional services to existing clients
- “package”¯ services can be offered such as VoIP and IPTV, Internet and IPTV and other combinations
- competitive advantage over other companies will be received
3. Implementation details
3.1. Leadership and resistance
In the regarded case, external resistance does not play an important role in the process of implementing the idea of IPTV, because the service is comparatively new for the region, and customers, as well as companies, have no clear attitude for the service yet. However, the innovation may meet significant internal resistance since on one hand, it is going to demand new skills from existing employees, and on the other hand, the workload is going to be increased (McNamara, 1991, p. 72). Moreover, some restructuring will eventually occur within the organization, which can also be a reason for resistance. The company may need one or two charismatic leaders, three or four interactive leaders and at least one strategic leader to promote all the details of the innovation and move the process forward (Maidique, 1980, p.64).
3.2. Risk minimization
In order to minimize risks connected with implementing the IPTV innovation, the company needs to conduct research concerning potential clients. The key questions for this research are the following:
- percent of population that might use IPTV
- percent of existing clients that might use IPTV
- percent of population that enjoy watching TV (and how many among them are dissatisfied with the quality of TV services)
- percent of population who are using high bandwidth channels for Internet or other data services
- forecasts of potential customers’ income level and sphere of interests
Also, to make the innovation successful, the company needs to prepare clear marketing campaign concerning the innovation, and before implementing the innovation the campaign should already be started. Possible benefits such as discounts or other bonuses may be offered to first clients in order to increase the number of customers and revenue level. Finally, the employees of the company should be trained to gain new skills and to be able to provide quality service for the customers. Charismatic leadership is needed to form a positive attitude of the employees concerning the innovation.
3.3. Limitations and weaknesses
“OK telecoms”¯ may be lacking staff and especially qualified professionals for realizing the project. Therefore, HR staff needs to work thoroughly in order to make a team including all necessary workers and train this team independently. Also, the company may lose its competitive advantage to other firms in case the innovation is implemented slowly; in the sphere of telecommunications speed and timely realization values above all (McNamara, 1991, p. 121). Therefore, the whole working process should be organized to give life to IPTV innovation, and necessary restructuring should be done if necessary in order to prevent this above mentioned possible weakness of “OK Telecoms”¯.
Timely and well thought out implementation of innovations can be an important step in the company’s development. Moreover, for the companies dealing in the IT and telecoms sphere (“OK Telecoms”¯ in particular) introducing innovations is absolutely necessary in order to ensure growth and stable revenue; in other words, the sole existence of the company depends on innovations. Introducing IPTV service, according to the results of the research, will significantly benefit the company. Though implementing the above mentioned innovation can be risky, all possible risks can be prevented by successful management. Therefore, taking into account the results of the analysis of “OK Telecoms”¯, the project concerning IPTV services is worth investing and can be successfully realized.