Success Equals Efficiency
Peter GriffithEarlier this week I read about Vodafone’s 35% drop in six-monthly profit and what Chief Executive Vittorio Colao plans to do about it – “We will improve operational performance through customer value enhancement and cost efficiency, supported by a Euro 1 billion ($1.56 billion) cost reduction program,” he said in a statement. He then went on to say that “Vodafone’s previous strategic plan, formulated in 2006, has served the firm well – However, a number of challenges have evolved”. As a consequence Vodafone’s newly formulated strategy calls for the firm to focus on four key objectives – “Drive operational performance, pursue growth opportunities in total communications, execute in emerging markets and strengthen capital discipline.”
With traditional sources of (voice) revenue under constant pressure and competition for customers driving the widespread adoption of flat-rate tariffs – Colao’s message echoes a fundamental shift that has taken place in the mobile industry.
With revenues no longer tied to the number of customers and usage you have, the days of growth at any cost are gone – Delivering value for shareholders is now all about cutting costs and improving efficiency.
There are many solutions to help the industry overcome these challenges and a key area where companies like Vodafone could benefit is by looking at the total cost of network ownership. By focusing on initiatives to ensure they achieve the best possible return on their network investments, companies mobile operators could recover billions of dollars in stranded capacity from their networks – Helping them to reduce costs, improve revenue potential and maximize profits for shareholders – So why aren’t they doing this?
With announcements like those of Vittorio Colao, Vodafone is clearly heading down the right path – But to maximize shareholder return it is critical for these companies to be aggressive in terms of changing their traditional way doing things.
This requires accelerated ‘outside the box’ thinking and the rapid adoption of new and innovative ways of doing things that will make them more efficient – The good news is there are plenty of solutions out there to help – The hard part is embracing change and moving quickly and effectively to adopt these new ideas before the competition beats you to it!
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