Low risk plays provide no differentiation


This might be obvious but i see it time and time again. Old world companies are so fixated on risk that they are going no where. Old world companies behaviours can be characterised by panic, followed by engaging consultants and outsourcing to drive down cost and build ‘unique capability’. End result not a lot of action, no differentiation, but a whole warm fuzzies are derived. That is to say its more about the process and less about the outcome.

Let me expand on this.. I had coffee with a friend who attended a senior managers day at a large Telco. The interesting thing about this conference was some very insightful thinking provided by Michael Porter who spoke at this event. He asked the executive if they had engaged McKinsey’s to help with their strategy. When the response was ‘yes’, he challenged this decision saying

how do you think you are going to be different from your competitors when you are all engaging the same consultants and getting the same advice”

 Michael hit the nail on the head there. Its an interesting phenomenon because maybe 15 or 20 years ago it wouldn’t have mattered because everyone played cosily in their own markets, but globalisation has changed all that. Unfortunately management practices haven’t kept up.  His point also raises a cultural issue. To me he also said “why is your culture supportive of outsourcing key decision functions, ticking a box and not on creating real differentiation”

Consulting isn’t unique in this. The currently the flavour of the month with Telco’s is reinventing themselves. But here’s the kicker, they are all doing this with the same company. Check this out

Tech Mahindra, a company which is incidentally 43% owned by BT, is currently doing systems / transformational / rebuilding of the following Telecommunications companies, Fuji, BT itself, Telecom NZ, Botswana and if you look at their own website a bunch more.  

How are these guys going to differentiate themselves when there is a strong possibility they will be getting the same stuff – consulting, design, software…

It appears to me that New world companies are different, they’re disrupting, attracting talent and getting on with it. They back themselves to achieve and generally speaking make things happen. Why can’t old world companies have this kind of attitude?


Leave a Reply