from selling technology to selling value (2008)

From selling technology …… to selling value

Marc Jadoul

Market Development Director, IP Transformation Center

Monte-Carlo, 12 October 2008

Change. Innovation. Value.

Agenda.

Agenda.

Change. Innovation. Value.

Agenda.

Change. Innovation. Value.

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

Charles Darwin (1809-1882)founder of modern evolution theory

““””

Frankly, I didn't expect to be soprecise.

““

””Gordon MooreIntel co-founder and author of Moore’s law

Moore’s law has been ruling the IT industry for the past 40 years.

transistors

10,000,000,000

1,000,000,000

100,000,000

10,000,000

1,000,000

100,000

10,000

1,000

1970 1975 1980 1985 1990 1995 2000 2005 2010

40048008

8080

8086

286386™

486™Pentium®

Pentium® IIPentium® III

Pentium® 4Itanium®Itanium® 2

Dual Core Itanium® 2

Source: Intel

Satisfying the need for speed.

speed

100 Mbps

10 Mbps

1 Mbps

<1990 1995 2000 2002 2005 2007 2009 2011 2015

Analog 28.8 Kbps

GPON1~10 Gbps

VDSL2>200 Mbps

ADSL2+24 MbpsADSL2

12 Mbps

ADSL1.2 Mbps

ADSL256 Kbps

Analog 56 Kbps

GPRS 53.6 Kbps

R99 348 Kbps

HSDPA14 Mbps

HSDPA+28 Mbps

HSDPA+42 Mbps

LTE25~100 Mbps

The odds of bandwidth abundance.

Price/MByte

1 premium SMS

20 regular SMSes

10 minute mobile call

40 photos email over dial-up

1 movie download over ADSL

End-User Price

~2 €

~ 2 €

~ 2 €

~ 2 €

~ 2 €

~ 15 000 €

~ 750 €

~ 2 €

~ 0.075 €

~ 0.0015 €

Bob MetcalfeEthernet pioneer, 3Com founderand author of Metcalfe’s law.

I helped [Al] Gore

inflate the Internet Bubble

““

””— I am not sorry.

Metcalfe’s law.

The value of a network is proportional to the square of the number of its nodes

(while the cost follows a more or less linear function)

# nodes

€

value

0 1 2 3 4 5

???

cost

Why Metcalfe’s law is not only about networks.

f(N2)

f(2N)

f(N)

A new end-user is born.

Source: NMPFT / Daily Herald Archive / Science and Society Picture Library

Sir Christopher Blandformer BT chairman

We will provide the greatest satisfaction to our customers and enjoy the greatest commercial success if we make every experience of our services simple and complete.

Didier Lombardchairman and CEO of the FT Group

We have grouped our products and services together under

the Orange banner in order to guarantee a unique experience

based on convenience and simplicity to our clients.

““

””““

””

The worst policy of all is to besiege walled cities.Sun Tzu (544—496 BC)author of ‘The Art of War’

““””

Source: Wikimedia Commons

Telcos riding the convergence wave.

‘Blue ocean’ strategies have become successful through the web.

Source: tostee.com

Source: Kim & Mauborgne

Compete in existing market space. Create uncontested market space.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a firm’s activities in pursuit of differentiation and low cost.

Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.

Blue OceanRed Ocean

Introducing Alcatel-Lucent’s entrepreneurial boot camp.

PeoplePeople

IdeasIdeas

DatingEvent

BootCampBootCamp

VentureCapitalistsVenture

Capitalists

ExpertsExperts

DecisionGates

InternalVentureInternalVenture

Source: Alcatel-Lucent

The greatest peril in in developing high-tech markets is making the transition from an early market to a mainstream market.

Early Market Mature Market

“chasm”

Techies

Visionaries

PragmatistsConservatives

Skeptics

Source: the Chasm Group

Source: Wikimedia Commons

Paul Wiefelsmanaging director of the Chasm Group

Develop a product/service mix strategy that can evolve over the life cycle.

““””

Source: Wikimedia Commons

A solution is a combination of products and/or services with intellectual capital, focused on a particular customer problemand driving measurable business value.

Source: ITSMA

Measurable Business ValueLower Higher

Genericcustomers

Targetedfunctions

Targetedsegments

Customerswith common

problems

A segmentof one

Leve

l of

Cus

tom

er S

peci

fici

ty

Products,Capabilities &Bundled Offers

Products,Capabilities &Bundled Offers

Integrated Services & Intellectual

Capital

Integrated Services & Intellectual

Capital

HorizontalSolutions

HorizontalSolutions

VerticalSolutionsVerticalSolutions

CustomerSpecificSolutions

CustomerSpecificSolutions

You are surrounded by simple, obvioussolutions that can dramatically increase

your income, power, influence and success. The problem is, you just don't see them.Jay Abraham founder and CEO of Abraham Groupauthor of ‘Getting Everything You Can Out of All You've Got’

““””

Perc

eive

d

valu

e

Low

The value of a solution only exists in the context of your customer’s environment.

Low High

High

Price

Pricefocused players

Value & differentiationfocused players

Ultim

ate

failur

es

Source: OVUM

The Ansoff matrix reloaded.

MarketPenetration

ProductsM

arke

ts ProductDevelopment

MarketDevelopment Diversification

Present New

Present

New

Source: Harvard Business Review, 1957

If you don’t listen, you don’t sell anything.

Carolyn MarlandManaging Director of the Guardian Group

““””

Source: bbc.co.uk

Why selling services and solutionsis different from selling boxes.

We’ll need to supplement our well developed

high tech abilities with abilities that are high concept and high touch.

Daniel H. Pinkauthor of ‘A Whole New Mind’

““

””

Cables and componentsfor telecoms and energy

Enterprise and consumerCPE and professional services

Carrierinfrastructure, applications and integration services

in 1998

in 2008

Carrierinfrastructure and applications Enterprise

infrastructure and applications

Integration, operation, maintenance, professional and managed Services

(*) extrapolation Q2 results

*

Alcatel-Lucent partners with its customers to manage the

complexity of IP* Transformation and to achieve speed-to-market

with predictable results.

““

””Mission statement of Alcatel-Lucent’s

(*) Internet Protocol

IP transformation ‘beyond the boxes.’

Services

• Portfolio rationalization• New customers, higher ARPU• Enhanced ‘user experience’

Operations

• Processes & organization• IT systems and applications• Managed services

Network

• ‘All IP’ network• Service Delivery Platform• Getting rid of ‘stovepipes’

IP transformation solution.

Full-lifecycleMaster IntegratorProfessional Services

BusinessTransformation

NetworkTransform.

ServicesTransform.

StakeholderEngagement

Cross-domainMulti-vendor

End-to-End

Consult

Design

Integrate

Maintain& Operate

2

1

34

5

Deploy& Migrate

IP Transformation Centers.Partnering for change.

A new business model for Alcatel-Lucent and our customers.

Source: Gartner, TNZ, Alcatel-Lucent

Overall business strategy & planning.

Marketing & sales, customer services and billing.

Network strategy & planning and business case analysis.

Network & OSS design.

Network & OSS build, integration and migration.

Multi-vendor network operations & maintenance.

Integration of network & OSS with BSS & enterprise IT.

AfterArea of responsibilityBefore

Network investment sign-off.

Simon Moutter former COO of Telecom New Zealand

Tying in Alcatel-Lucent’s global expertise with our marketing and engineering efforts is helping us get our thinking right about how we migrate our networks but also about what services and products we really need to deliver to meet customer needs.

““

””We have considerably improved our speed to market and that’s critical for competing in New Zealand’s increasingly competitive communications market.

““

””It’s about value. And we are seeing real financial benefitsarising out of this partnership.

““””

From selling technology to selling value.

Telco

Softco

Equipment Provider

TransformationPartner

www.alcatel-lucent.com

marc.jadoul@alcatel-lucent.comwww.linkedin.com/in/mjadoul

Tom Peters management guru andauthor of “In Search of Excellence”

Don’t back away from passion.