How To Succeed As A Startup Telecom By Really Trying. Here are 6 Essential Tips For Startup Success - in Good Times and Bad

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1 How To Succeed As A Startup Telecom By Really Trying Here are 6 Essential Tips For Startup Success - in Good Times and Bad

2 How To Succeed As A Startup Telecom By Really Trying Here Are 6 Essential Tips for Startup Success - in Good Times and Bad Here s a quick history lesson that dedicated managers in young telecom companies would do well to remember in these difficult days... From the earliest, most primitive bartering ventures all the way up to the very latest dot com entrepreneurs, the business world s most enduring success stories have been written not by market exuberance but by adversity. In good times, even uninspired, lazy telecom enterprises can prosper. Managerial cluelessness can be camouflaged. Why? Because in good times, even uninspired, lazy enterprises can prosper. Managerial cluelessness can be camouflaged by huge infusions of capital, mammoth consumer demand can keep bad products and services afloat, and hungry investors often inflate the value of even the sorriest companies simply because they happen to exist in a hot industry. But in bad times, all that changes... The only currency that will buy success after the bubble has burst and in telecom that loud pop is still reverberating in our ears is the kind that s made up of talent, sound management, fine products and services, and smooth efficiency. Fly-by-night CLECs and other pretenders don t have cash like that in the bank. In the infinitely more demanding environment we find ourselves in today, empty marketing hype and grandiose promises aren t worth much. We see the companies that once survived on bluster alone now falling by the wayside, unable to deliver the goods now that a harsher, far less forgiving marketplace is calling their bluff. We can learn from their missteps. Here s a case in point... How Hard Can It Be to Run A Telecom Company? Problems throughout the industry. Significant valuation changes in the telecommunications marketplace. These were the reasons the financial press gave for Comdisco s October, 2000 decision to stop all funding to Prism Communications Services. How quickly times had changed LTC International, Inc. 1

3 Just 10 months earlier, armed with hundreds of millions of dollars from Comdisco s coffers, Prism had announced plans to build a nationwide network spanning 33 U.S. markets. It was to offer voice, data, video, Internet, and secure business applications via DSL access, and touted itself as a leading integrated communications provider. The collapse of Prism Communications is just one episode in a winnowing-out process that s taking place in our industry. How was it that Prism was, in the end, only able to attract a few thousand customers and quickly become mired in millions of dollars in operating losses? Were external market forces and industry-wide problems really the culprits? Telecom industry consultants who were close to the story suggest that Prism could have more accurately foreseen the dangers it was facing if rather than focusing on market and industry forces...it instead had looked squarely in the mirror. Apparently the attitude of those at Comdisco a highly successful, $4 billion technology company was How hard can it be to run a phone company? The answer came fairly fast, and it wasn t to their liking... The plain truth is that without experienced industry people, good business sense, and a smart, executable strategy, Prism was simply unable to deal with the multitude of daunting challenges that face any serious player in the telecom market in good times and bad. Prism s collapse is just one episode in a winnowing-out process that s taking place in our industry. Although traumatic, this period is also a time of great opportunity for companies that do possess the determination and the expertise to deliver the goods in a sustainable and scaleable way. These are the companies that manage to have everyone in the organization pulling in the same direction, and see to it that every move every decision is dictated by strategy rather than impulsiveness. Does your company fit the bill? Do you believe that you have what it takes to survive the telecom wars and become a major provider? If so, the 6 Essential Tips discussed in the following pages will be of great service to you... Essential Tip #1: Why The Very Best Ideas Can Sometime Be Very Wrong for Your Company In telecom, the pressure to introduce new services is constant and it can t be ignored. How your company reacts to this pressure will go a long way towards determining whether you achieve the status of a lasting winner or don the mantle of an also-ran. Many young telecoms are underestimating the affect a new service introduction can have across their organizations. One common mistake is to assume that because a new service won t impact your network, 2001 LTC International, Inc. 2

4 implementation will be a breeze. Recently, a service provider we know decided to offer long-distance resale services at the same time it was launching a local access network. Although the long distance effort was an easy proposition for the network side of the organization, the company as a whole was badly distracted by the decision. Why? Because details like picking a long distance supplier, negotiating a contract, building and rolling-out a marketing plan, numerous revisions to the billing system, and training customer-care reps were not taken into consideration when the go was given. This kind of mistake is simply terrible business. Worst of all, it s self-inflicted damage something that can t be tolerated in the current market environment. Gaffes like this don t happen because CEOs aren t smart, or because they re not on top of their game they happen because CEOs aren t omniscient, and that s a fairly common human flaw! To compensate for human frailty, a Product Introduction Checklist can come in handy. It offers a logical, step-by-step approach to determining how multiple departments will be affected by a complex implementation. It ensures that the right questions are asked of the right people. A Product Introduction Checklist offers a logical, step-by-step approach to determining how multiple departments will be affected by a complex implementation. It fosters good working relationships between department heads. Communication, after all, tends to do that. We ve all heard the complaint: The Checklist should be designed to assess the strategic fit of the new product, determine its operational impact, and confirm that it will work financially. This document also comes with an important, valueadded bonus... Marketing s always dreaming up big ideas... advertising them...and then telling us Oh, by the way, we want to launch that tomorrow. Your Product Introduction Checklist will let you dodge bullets like this. You ll have a productive coordination between departments, the benefits of which will reverberate far beyond successful product introductions. And you ll also ensure that the good ideas that just aren t right for your company never sees the light of day. Essential Tip #2: Your Company Only Makes A First Impression Once Make It A Good One Getting new customers is one of the most fundamental and ongoing challenges all businesses face. But for competitive service providers, this age-old problem is made more daunting by the turbulence roiling our industry. With small- and medium-sized businesses seeing startup carriers like ICG Telecom and GST fall into bankruptcy, they re finding it tough to generate much confidence when other competitive carriers come calling LTC International, Inc. 3

5 After all, they re looking for dependability 99% network reliability and 24x7 access to repairs and service not a roll of the dice. So it s a double whammy you re facing a traditional problem made worse by very contemporary market conditions that have created suspicion and hesitancy. In today s competitive telecom environment there s no overestimating the importance of the first impression your company makes on customers. In this environment there s no overestimating the importance of the first impression your company makes on prospective customers. And there s also no underestimating the importance your first customers will have on the future success of your business. Bottom line: Your company is actually going to have to perform better in the early stages of your customer-acquisition drive. You can be merely good after you ve become established and have a strong reputation. But until then, you ve got to be great. For example, when a prospect calls your sales office and is ready to order a service, his expectations must be met. But if the CSR s desktop doesn t have visibility into the provisioning system, that customer will be told that a definite delivery date for his new service can t be set. And hearing that, all confidence both in the service itself and in your company s ability to maintain it goes right out the window. The sale is gone, never to return. And bad experiences like that snowball. These dissatisfied customers tell friends, the press, and reviewers about their disappointment, and before you know it, the word on the street is: Don t go with these guys; they re not ready. Your company would do well to focus-in on delivering on due dates for your customers. This is probably the number one customer-relations problem competitive carriers are dealing with these days. Research it, solve it, and you ll be that much further ahead of your competition. Plus, you ll have started a positive spin about your company that will be more valuable that any marketing or PR program you could ever launch. Departmental objectives must not only be consistent and complementary they must also be communicated concretely and unambiguously. Essential Tip #3: Get All Your Departments Working Together for The Good of The Whole Many of our industry s CEOs deserve a pat on the back for hiring excellent people to manage their companies key departments. Problem is, not enough of them see to it that these excellent hires are told they have to actually work and communicate with each other. Put another way, one of the most important steps a CEO can take is to ensure that the short- and medium-term targets he sets for his various departments harmonize rather than conflict with each other. Here s a quick example of what can happen if this harmony doesn t exist LTC International, Inc. 4

6 It s not uncommon to see network operations managers being evaluated on the mean time between network failures at the very same time marketing managers are being rewarded on the number of new services they introduce. Here s the problem: All these new services many of which involve snappy new technologies loaned by vendors are causing the business to crash. Operations and marketing are working at cross purposes and the whole company suffers as a result of this lack of coordination. There s an adversarial relationship from the word go. And the larger good of the company is obscured. A case in point... While planning the network launch at a small startup carrier, an experienced consultant suggested that customer-service people and network operations personnel sit down together for a series of face-toface meetings. But the V.P. of the network nixed the idea: That s not my problem, he said. The shareholders expect me to have the network up and running by March 15 th and that s all I m responsible for! The savvy consultant retorted: Do you think the shareholders simply want the network up and running by the 15 th...or would they also like to see some customers actually using it, too? Of course, the consultant had hit it on the button. The operations V.P had failed to connect his own department s mandate with the larger goal of the company to have a working and customer-rich network up and running by the 15 th. This disconnect could have been avoided had the CEO, upon setting the goal, precisely defined how successful implementation of the goal would be measured. The objectives of each department must not only be consistent and complementary they must also be communicated concretely and unambiguously. That way, each individual job is done well and contributes to a successful, company-wide effort. Essential Tip #4: Build Roadmaps That Will Guide You Around Operational Hazards Recently, a young telecom service provider began offering DSL over copper wire pairs that were owned by the incumbent LEC. Provisioning the system required that this CLEC had to arrange for the ILEC to install a second copper pair before the service technician could turn up the service. Straightforward, right? Let s see... A few months after the DSL offering was initiated, the CLEC s chief executives became very troubled by what they were finding on their performance reports more than 50% of all their service turn-ups were failing. They immediately jumped to the conclusion that the ILEC was 2001 LTC International, Inc. 5

7 deliberately delaying installation of the second copper pair, sabotaging the CLEC s operations. They were so convinced of the incumbent s guilt that they initiated litigation. Imagine their chagrin when an internal investigation uncovered the real culprit a serious internal operations error... No one had taken the time to put together a blueprint that mapped the sequence of events needed to provision a DSL service. It turns out that the provisioning system was not building in a sufficient grace period between ILEC installation and DSL service turn-up. In fact, appointments for copper pair installations were being made for the very same day the service was due to be turned-up. Sometimes, the ILEC tech would arrive in the morning, sometimes in the afternoon. Same thing for the CLEC representative responsible for turning-up the system. This meant, of course, that 50% of the time the service was appropriately provisioned, and the other 50% of the time the CLEC man would arrive before the ILEC tech had completed work so the turn-up would fail. How could the CLEC s senior executives have missed such an obvious operational problem? The answer: No one had taken the time to put together a blueprint that mapped the sequence of events needed to provision a DSL service. So the success of these installations was nothing more than a roll of the dice. This was an embarrassing and costly experience, but it had a long-term, positive effect on this CLEC. The startup now has procedures in place that map out precisely how operational actions will play out across the enterprise; there are no surprises...the left hand knows what the right is doing...and those performance reports are delivering far happier news to top management. Essential Tip #5: Don t Be Tripped Up By The Small Handful of Problems You Can Actually See Coming Because there are so many problems in this industry we can t see coming until they smack us in the head, we re particularly obliged to deal intelligently with the handful of concerns that can be identified and rectified before they cause disruption. But this isn t being done... For example, many CLEC s aren t putting enough energy into cultivating good working relationships with the ILECs. And this oversight is tantamount to administering one giant-size shot directly into your company s foot LTC International, Inc. 6

8 A smooth, cooperative relationship with ILECs is a critical factor in the success of any CLEC s business. For a CLEC, failing to cultivate good working relationships with ILECs is tantamount to administering one giantsize shot directly into your company s foot. Poor communications in this channel can mean that up to 90% of local and access service requests are rejected by the ILEC. This creates problems on two fronts: First, you ve got unhappy customers who aren t getting the services they ve been promised and, second, you re faced with long and costly discussions with the ILEC to try and iron out the problems. Remember that the ILECs have zero motivation to help CLECs. The burden of diplomacy rests entirely with you. But most startup telecoms aren t studying this issue, planning for it, or training the people who are tasked with working with ILECs. As a result, the ILEC simply has no way of knowing what information the CLEC needs and in what sequence. But with proper planning and people skills, that horrific 90% order-reject rate can be reduced to a much more tolerable 5%. So instead of waiting for trouble to begin before taking action, why not take the lead and see that those responsible for setting up ILEC relationships appreciate the nuances and benefits of diplomacy? Doing this will mean that when one of the many problems you can t prevent crops up, you ll have the time and resources to deal more effectively with it. Essential Tip #6: Quick Reflexes Are Great. Planning Ahead Is Better. There s no doubt about it: Stress has become fashionable it s worn by many as a badge of commitment and drive. These folks think that if you aren t stressed out, it can only mean one thing you re not working hard enough. Unfortunately, too much stress does nasty things to peoples cognitive powers. There are a great many very highly intelligent people in telecom, all of whom have deep knowledge of their particular specialty. Yet many are making foolish mistakes because while they re busy being consumed by today s work they forget the need to map out, and then follow, a well-thought-out plan for what they have to do tomorrow. Nimble and intelligent reflexes are wonderful assets, but businesses cannot be run spontaneously. Startup carriers have so much going on right now that the fundamental, long-range issues that can make or break success often go unrecognized and unresolved. That s too bad, because the companies that succeed in our industry will be those that have plans in force for almost every possible contingency LTC International, Inc. 7

9 And this broad strategizing has got to come from the top. It falls to the CEO to be the one who s able to stand above the fray no matter how pervasive the fray may be at times and ask the questions that will keep the company s larger objectives in focus for harried employees. It s a tough assignment, and requires a fine sense of balance. In a very real sense, you have to do two things at once, each requiring a different variety of awareness... A telecom CEO requires a fine sense of balance. You have to do two things at once, each requiring a different variety of awareness... Like a captain guiding a ship through the fog, you must lend a hand as your crew navigates around the obstacles that are always rising up, threatening to delay or destroy your mission. But as you do this finetuning as you deal with day-to-day problems you must constantly be mindful of what lies further ahead, in the distance, beyond these immediate dangers. You must always be aware and remind your people of your voyage s ultimate goal and the big strategic navigational moves that must be made to get you there successfully. This kind of dual vision is tough in any company, but particularly so in a startup telecom. If you make the mistake about the long-term adopt too much of a hands-off attitude you d probably find yourself out of business. Still, it pays CEOs to be aware of this problem and the dangers it creates. Who knows? You might be among the first startup telecoms to figure out a way to keep your eyes on all the controls and watch where you re going at the same time. In the meanwhile, do what you can to reduce stress in your workforce. Keep people talking to each other, get different departments together so that mutual understanding can be cultivated, and remind your people of the larger goals you are all pursuing. LTC International: Breathing Reality Into The Telecom Vision If the observations and suggestions we ve presented in this Report ring true to you if they reflect a familiarity with the challenges facing startup telecoms it s because each and every one of them was developed from first-hand experience with the issues your business faces every day. These are the kinds of issues LTC International helps our clients identify and master. We re often hired to prevent problems like these from ever 2001 LTC International, Inc. 8

10 happening. But many times we re brought in to repair the damage they ve already created, and make sure systems are in place for blocking their reoccurrence. At LTC International, each of our 68 consultants has come to us from operational and/or management positions in telecom companies. They have managed departments throughout the enterprise, have broad exposure to startup environments, thoroughly understand regulatory issues, and are fully familiar with incumbent operations. Here s how they can help your business... Telecom Architects: Providing The Foundation and Infrastructure for A Durable Success When commissioned to design a building, any good architect is faced with two basic issues: How the building is going to look (the vision) and how it s going to work (the reality). Once these issues have been addressed, the designer must incorporate both objectives into one harmonious, efficient, and cost-effective structure. As business architects, LTC International makes both vision and reality happen by drawing up blueprints for our clients. Our blueprints, of course, aren t for a physical structure they re designed to enable the construction and smooth operation of a viable, successful telecom company. But the building analogy is an apt one: Any viable structure depends on a myriad of mostly unseen details like the foundation, infrastructure, materials, wiring, plumbing, etc. without which the building would be non-functional, lose stability, and soon collapse. And this sad fate is precisely what comes to businesses that try to compete in good markets and bad without the procedures, systems, and planning tools that company-specific blueprints provide. LTC International enables a company to realize its business goals by delivering blueprints that breathe life into them and give them substance. Our Blueprints Will Help You Build, Renovate, or Expand Virtually all of the failures we ve seen in our industry can be blamed to one degree or another on lack of corporate coordination. A service provider can hire a great finance officer, find the best CIO in the business, and recruit a top-notch COO, but all the talented people in the world aren t going to make this company successful unless the business has an expert and coordinated design LTC International, Inc. 9

11 ``But give this same service provider a first-rate blueprint a detailed, all-inclusive battle plan designed by those that know telecom inside and out and it would have the power to build a beautifully integrated business in which each element contributed to the strength of the whole. LTC s blueprints aren t for a physical structure they re designed to enable the construction and smooth operation of a viable, successful telecom company. That s not to say there wouldn t be bumps along the way, but a welldesigned company always has the advantage because it s fighting the competition not itself. LTC s professionals can be of immense service to you no matter what stage of evolution your business in. We design, we build, and we renovate. We re architects, construction workers, and restoration artists. We can come in and design a business from scratch, and help you build it. Or we can work with you on fine-tuning an existing operation so that you ll be free of the kind of self-inflicted damage that we re seeing so much of in our industry these days. And we can help you as you plan for the future. With our blueprints detailed plans that will guide you every step of the way in hand, your move into new markets, products, and services can be accomplished smoothly and confidently. We want to ease your burden and help you succeed. And we have the telecom-specific experience to deliver on our promises. To learn more about the services LTC can offer your company, please contact Steve Puchala at Or visit us on the web at: LTC International, Inc. 10

12 LTC International Inc. 800 East Campbell Road Suite 241, Box 30 Richardson, TX USA Tel: Fax: LTC Europe Conference House 152 Morrison Street The Exchange Edinburgh, Scotland EH38EB UNITED KINGDOM Tel: Fax:

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