In reply to Rickard Damm – the future is services

Rickard Damm wrote an insightful and provocative post to the leadership of Ericsson on Nov 5th 2016, see https://www.linkedin.com/pulse/open-letter-new-leadership-ericsson-rickard-damm

In it Rickard stated:

“Services is not the future of anything. Sorry to ruin the party (…Rickard, the party pooper…). Services was a one-way street to misery. Really. Basically all other professional service firms do what Ericsson does, only better and cheaper. Stop this right away. No significant innovation comes from the service business and ‘cost out’-thinking will lead nowhere. “

We may find ourselves debating terminology (what is a service vs what is a product) and I will declare my bias up-front. I am a long-term services guy that has worked in technology for product companies who struggle to provide “services” to their customers. During my career I have been involved to the development of 3 products that collectively earnt hundreds of millions of dollars in revenue for the companies I worked for. Each and every one of those products was borne out of a services engagement and thus I say that the future of products is services.

As an example let me take the transition to cloud that is uppermost in many CTO’s minds today.

The gold standard in IT cloud is Amazon and (as a current developer using AWS) I can testify to the skill with which Amazon has managed to make their “services” pre-eminent in the mind of developers and IT managers. All I care about is that AWS delivers me a reliable “product” as a service, so that I can go about developing and running the applications I need to make money in my business. This is the model to which Ericsson may aspire and I believe they have the assets to get there.

However what I saw whilst I was at Ericsson was an “old-fashioned” approach to Professional Services that is not reflective of where Services needs to be if it is to at the forefront of innovation for Ericsson. Now, before some ex-colleagues leap down my throat, I was also priveleged to work with some extremely forward thinking and innovative people at Ericsson. Generalisation is always a poisoned chalice and i will accept criticism for the generalisation above but I do believe that “old-fashioned” Professional Services thinking held us back when I was there.

The market need that Ericsson customers experience is, I believe, that of a transformation to a new business model. Not all customers are at the same stage of maturity or readiness but all of them are embarking on similar journeys. Also the new business model is not 100% clear but it has certain defining characteristics:

  • One is the increased role of software in delivering ICT services;
  • Combined with a need for individualised customer experiences across a broad range of technology domains; and
  • A challenging performance-cost curve that demands order of magnitude increases in innovation.

Rickard, I agree with you that the industry is undergoing challenges. However I believe that winning characteristics will flourish the tougher the challenge and I would actually encourage those that aspire to rise to the challenge to join this industry.

Finally I will give a plug for my new adventure by saying that I believe one part of the solution comes down to machine learning. If you think about it a telecom network is just about one of the biggest machines that exists on the planet. To build a telecom network that actively learns about itself, repairs itself, actively sells the services it can provide on an individual customer or device basis, manages dynamic pricing and arbitrage across access domains and interconnect – wow that could be some machine!

In order to design and build such a machine requires a revolution in how we think about networks and, I believe, service design thinking is the key.

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