As the business and consumer worlds gear up to launch 5G this year, the race to own 5G has put telecom companies and countries in a frenzy over who will get there first. And the stakes are higher than ever: with an estimated $500 billion boost to GDP and the creation of 3 million new jobs in the U.S. alone—a sum that every player in the race will want a piece of. This all comes as large communications service providers continue on a challenging search-and-rescue mission to improve EBITDA and drive growth amid the entrance of new digital players.

In an industry amid a transformation with massive value up for grabs, achieving frontrunner status can be tough when trying to go it alone.

A Unique Position

Leading telecoms companies are fast realizing this reality. As industry players struggle to reach growth targets, they’ve come to realize that forming “ecosystems”—a network of cross-industry players who work together to define, build and execute market-creating customer and consumer solutions.

An ecosystem is defined by the depth and breadth of potential collaboration among a set of players, and the power of the ecosystem is that no single player need own or operate all components of the solution, and that the value the ecosystem generates is larger than the combined value each of the players could contribute individually.

According a recent Accenture Strategy report, ecosystems are poised to unlock $100 trillion of value for business over the next 10 years by opening doors to competitive agility wide open, and the telecommunications industry is particularly primed for ecosystem disruption. According to Accenture’s ecosystem capabilities index—which grades industries on their ability to form successful ecosystems—the telecoms industry ranked the highest among all others. In fact, the study found that 83 percent of telecoms leaders say ecosystems are an important part of their disruption strategy.

When it comes to 5G readiness and the path to future growth, the implication is clear: ecosystems will be key to helping telecoms players, create new revenue streams especially in B2B, drive growth and withstand competitive threats by joining forces with competitors, peers and newcomers alike. And—when done right—these creative partnerships can even arm legacy players with the strength and capabilities they need to lead disruption in the industry not just weather its onslaught.

The Right Strategy

However, putting an ecosystem strategy into action isn’t without challenges. Despite recognizing their vast potential, less than half of telecoms executives interested in ecosystems are actively pursuing them, the Accenture Strategy research found.

One cause of this latency is executives’ lack of experience and capabilities to design and execute market-leading ecosystems. Another pressing challenge is executives’ fear and resistance to share their data to other players. In fact, nearly half (45 percent) of telecoms executives are concerned about sharing company assets and secrets with other organizations. Without a strategic plan or data transparency, companies will be prevented from seeing the true power an ecosystem and thus not taking action in the first place. 

To overcome challenges and capitalize on this emerging growth opportunity, telecoms companies should focus on three major pillars:

• Ecosystem Strategy: The study finds that 84 percent of business leaders, across industries, are aware of ecosystems’ importance to their strategy – yet nearly two-fifths (37 percent) can’t balance their current business while exploring new methods. To be successful, telecoms leaders must define their strategic intent and goals for the ecosystem. What are the innovation opportunities? What smart pivots need to happen to cultivate value? Finding value requires new mindsets and resource allocation.
   
• Ecosystem Business Model: New business models accounted for just 1-5% of 2015 revenues but are expected to be responsible for 30 percent by 2020. New business models thrive in an ecosystem. But to cultivate value, companies need a strong ecosystem business model that clearly identifies customers, markets, channels and the revenue model, one that clearly create economic opportunity for all those involved. Tools can help facilitate the speed of knowledge sharing. Process can drive quality, privacy and security.
   
• Ecosystem Operating Model: Many business executives are uncomfortable ceding control, which must happen for an ecosystem to be successful. Company leaders must fundamentally shift their mindset – relinquish control, share company data, and allow others to do what they do best. Leaders can play a key role in defining the reference architecture within their ecosystems, but in order to create the “true north” as a way forward, they must leverage partners to co-create and integrate tools and services that address their combined business issues and deliver differentiated results. Proper governance frameworks can ease fears and can reduce friction among ecosystem participants.

The Path Forward

The path to ecosystem success requires a clear and ambitious vision, the right partners, and the ability to think bigger and bolder. Telecom companies can execute a disruptive ecosystem strategy with three steps:

• Play Smarter: Market plays—disruptive growth opportunities with significant revenue potential—are at the center of every ecosystem. For each market play, define the vision, business case, prioritization and roadmap. When ecosystem players combine their functional, technology and industry strengths and capabilities, the resulting value proposition could be game-changing.
   
• Partner Wisely: Partners should bring complementary capabilities, a collaborative mindset, domain expertise, customer relationships and data that will help bring the market play to fruition. After finding the right teammates, leaders must then master the ability to identify the level of orchestration from ecosystem partners and their level of involvement in product development
   
• Think Bigger: Fundamental to the success of ecosystems is organizations’ ability to adopt an ecosystem “mindset.” This takes embracing new business models, thinking beyond current growth drivers, and looking outside the four walls of the company—and even the industry—for strategic partners and disruptive market plays.

As telecoms companies face these headwinds and with an eye to the 5G future, leading organizations are realizing that going it alone is no longer an option. They need the help of partners that bring unique capabilities, data, and deep industry knowledge that can be a source of mutual innovation. Ecosystems provide a roadmap to growth that can help telecoms players not just keep pace, but leap miles forward.