Porous boundaries

Over at This Blog Sits At, Grant McCracken has an interesting discussion about the new corporation.    One of the features he identified is porousness, the idea that boundaries between an organization and its environment are fuzzy and in flux.  This has long been the case in telecommunications services, whose very business is connecting people.  So it is perhaps not surprising that telcos have been porous places for some time.

For British Telecom (BT), Britain’s largest fixed network operator, Vodafone, Britain’s largest mobile operator, was both a major competitor (when BT owned mobile network Cellnet/ O2) and a major customer (because calls from Vodafone’s customers connected across BT’s network, and for this access Vodafone paid BT).  At the same time, BT’s customers, both fixed and mobile, called Vodafone’s mobile customers, so BT was also a major customer of Vodafone.  At one time, each company was the largest customer of the other.  

This makes something of a mockery of traditional linear supply-chain analysis.  How do you manage a relationship with a company that is simultaneously a major competitor, a major supplier, and a major customer?  With kid gloves and internal Chinese Walls, presumably.    You may even decide to leave one market, as BT did by demerging O2, in order to simplify the relationship.

Because most telecommunications markets were once regulated monopolies, most still have a major incumbent (as BT is in Britain).   This fact often makes governments and telecoms regulators tip the scales in favour of new entrants, in order to redress the inherited monopoly.   A common procedure is to allow new entrants to co-locate their switching equipment right alongside that of the incumbent — even, in some cases, inside the same buildings.   How many companies, other than telcos, could tolerate competitors having dedicated space and equipment inside their own buildings?

And it gets even more complex.  As I commented on Grant’s post,  major users of telecoms services, such as American Express, often want direct access to the switches of their telecommunications services supplier so as to facilitate rapid reconfiguration of their service profiles.  Large telcos, such as Verizon, will often allow such access to their major customers.  But then companies such as AmEx, not being phone companies, often do not have the skilled staff to execute such reconfigs. So, Verizon lends AmEx some personnel, and a Verizon employee is sent on longterm secondment to work for AmEx; he or she may be paid by AmEx and report to a boss at AmEx, while retaining a career and benefits at Verizon, and physically sitting still in a Verizon building. Where do his or her loyalties lie?

Porousness indeed.

0 Responses to “Porous boundaries”

  • No Comments

Leave a Reply

You must be logged in to post a comment.