Revenue Assurance: Evolution or Revolution?

I must admit that I am a big fan of David Leshem’s blogs, and not just because he writes here on talkRA. David is one of those few people who not only has the vision to see the world as it is, as opposed to how it might be, but also has the courage to say how he sees things. His last post, entitled ‘Revenue Assurance Doublespeak‘, got me thinking. I was thinking about why I agree with David’s insistence that telcos should absorb revenue assurance into their metaphorical DNA, and why I doubt it will happen any time soon (if ever).

Knowing what should happen, and being able to make it happen, are two different things. We would all like to live in a world without crime, or one where nobody goes without food or shelter. However, that does not mean we can find or agree upon solutions to these problems. As an Israeli citizen, David will be very aware of how intractable some problems and conflicts can be, and how hard it is to get agreement about how to deal with them. On a more modest level, we would all agree that telcos would be better if they did not make mistakes. The problem is with agreeing how to deliver on that goal, and its importance relative to other priorities for the business. I believe David, and others, draw a picture of how telcos would work in an ideal world. Today, I want to discuss the problems in plotting a course that takes us from this world to that utopia.

Suppose a telco has a certain way of doing things. Let us think of this “way of doing things” as the metaphorical equivalent of DNA – the code within our genes. Our real DNA defines us as living organisms, and our metaphorical telco DNA defines how people do their jobs. This code gets repeated from old employees to new employees. It is difficult to change, because the code is repeated and instantiated by individuals, just as DNA is copied from one living cell to a new living cell. Changing the boss is not enough to change the attitudes of all the workers below. It may be that the workers change the boss more than the boss changes the workers. The bigger the company, the more effort is involved in making any changes. Individuals have a completely natural tendency to be conservative – people tend to stick with the things they know have worked in the past. If you did a job one way on one day, and you were not fired at the end of the day, chances are you will do the job the same way the day after. Even if individuals are asked to do things differently, they may have learned from experience that there may be more risk in making a change than in not making a change to the way things are done. The average employee may prefer the low-risk stance of avoiding change, if there is a danger that change will lead to a screw-up and that screw-up may lead to them losing their job or denting their promotion prospects.

A gross simplification of David’s analysis is that the corporate DNA of telcos is not open enough to getting functions to work together and confirm that their activities really do correspond to the best interests of the company as a whole. In David’s vision, RA is more than just finding mistakes with retail bills – it is about using system data and process review to align the behaviour of disparate activities in very different parts of the business, to ensure they satisfy the company’s overall goals (specifically, the goal of making money). That means RA – or whatever you prefer to call this holistic management of business interests – will have a relevant influence on many people across the company. As David identified, it will influence the regular activities of Marketing, Sales, and Operations.

Holistic RA is a poor name for the vision David expressed, as the vision goes well beyond the boundaries of what many people mean by the words ‘revenue assurance’. However, I will use it for now for want of a better phrase. There is no better phrase because we are mapping something that only exists in our imaginations, not something that we can routinely point to and show in real life. Lack of imagination is another kind of obstacle of change. It is a more difficult obstacle to overcome because people are unaware of it. So what are the mechanisms for change, that turn something which can be imagined into something that is real?

Outside of science fiction and James Bond movies, living beings do not have the power to change their DNA. Even if you could change the DNA of one cell, to change the whole organism you need to change it in every cell. RA staff often talk about the importance of CEO sponsorship and engagement, but even a CEO cannot walk around a business and change the attitudes and methods of every single individual. It just would not be practical, even if the CEO was god-like enough to know the detail of how everyone might do their jobs better.

If you sat down and created a new telco from scratch, then maybe involving David at the outset would help the business to adopt a way of doing things that is different to its competitors. It would include holistic RA within the corporate equivalent of its genetic code. Of course, doing that would still be hard. As soon as you gave a job to somebody recruited from another telco, they may carry across the bad habits from the DNA of their former employers. Consultants are little better, as they may have broader experience but still only experience how things are in real companies, not of how things might be done better. We should not assume that the best someone has done in real life is the best that could ever be done. All telcos might, in a sense, be lousy. The idea that every telco is lousy is not that radical. I know of one telco which has an executive team largely was drawn from outside of the telco world. They got their opportunity because of a thought process that said only outsiders to the world of telcos would be able to turn around a failing business, breaking out of a cycle of inadequate business models and poor customer service. Without charting their individual career paths, take it from me that this team of outsiders is by and large the executive team that runs Cable & Wireless. If it is possible to prefer someone without telco experience for an executive job, it is equally possible to prefer someone without telco experience for any other telco job. Remember here that the vision espoused by David is not one that people currently share, or tend to understand at any level of detail. That means we are talking about the job specifications and work attitudes of a lot of people. They need to be moulded and influenced to look at their jobs differently. Their sense of priorities need to be realigned to the needs of the business as identified by David. This in turn means the business must learn to reward the behaviours it really values. Because it is always easier to learn from experience, and copy something that actually exists, than to create something new, there are plenty of obstacles to realizing this form of holistic RA even if you started in a completely new company. Trying to change an existing company is magnitudes of difficulty harder.

Evolution is one mechanism for change. People often misuse the world evolution. Let me be precise about what evolution is. Evolution is not a change to an individual. Evolution is a change to a group. The DNA of an individual remains the same throughout its life. What happens to the group is that the proportion of individuals with different properties – different DNA – may change over time. In health terms, being black is an advantage if you live in a sunny country, so people who live in sunny countries and who have the right genetic properties are more likely to survive, more likely to prosper, and more likely to have children and these children will inherit their parent’s genes, and hence their black skins. Of course, a person’s behaviour is unlike their DNA in that it can change during their lifetime, but let us assume that changing a person’s behaviour is hard to do, and there is no mechanism that will guarantee you can change any individual. Put simply, no matter what incentives, training, rewards or demerits you use, you cannot be sure that any individual will behave the way you want them to. If somebody thrives in an environment, and you try to make them change, there will be an obvious reason to resist – the person has thrived previously, so why would the change be an advantage to them? Even if you know how somebody else could do their job better, there is no foolproof method that ensures you can persuade that somebody else to change. I think this reflects the truth of the environment as confronted by people like David and I. We may think we know how the telco could work a lot better, but we lack the ability to persuade or force people to change accordingly.

There is an alternative to evolution. It is revolution. With a revolution, we find a way to change a lot of people very quickly. Any student of history, however, can tell you that revolutions are often bloody affairs. Not only may many people suffer, but they can also fail to deliver the promised utopia and be disastrous in their consequences. The failure of past revolutions is yet another reason for individuals to be conservative and resist change. Another reason is that, in any revolution, there will be winners and losers, so the likely losers will do what they can to prevent a revolution from taking place. Looking back at my own career, I am starting to believe that the kind of holistic changes promoted by David, other commentators and I, are just too revolutionary for the telecoms industry to adopt on any significant scale. It is not enough that we can see a path to a utopian future. The problem is that this path is barred by too many sceptical individuals, who have nothing to lose by staying exactly as they are, and may have a lot to lose if things change.

Imagine, for a moment, the kind of holistic telco that David envisioned in his last post. For a start, you will need to cross-check and co-operate with other functions and align with them. You may suddenly find your job has a lot less freedom. You may try to do an honest job of coordinating for the company’s best interests, but find that other functions are blocking the right moves for the wrong reasons. You will need to work with hard facts – objective evidence based on what the data says about the company’s performance – and not with personal theories. That can be tricky if you lack the necessary skills to understand the data. That can be dangerous if the ‘data’ is in fact corrupt or has been misinterpreted. That can be embarrassing if the data shows your previous theories were nonsense and your past decisions were poor. Now consider that, when dealing with revenue assurance and related fields, we are largely talking about the propensity to commit errors in some sense. It should not be surprising to find only a minority of individuals are truly interested in making the changes necessary to improve business performance.

I sympathize and share David’s frustration. There is a different way to run telcos, but it is hard to stay patient when others fail to or refuse to see the changes that need to be made. A lot of theories about telco errors that used to be dismissed are now taken seriously. It used to be an exception to find a telco where solving RA errors was somebody’s job. Now most telcos have an RA team. However, the work done by a typical RA team is only a fraction of the big picture that needs to be addressed. It is one piece in the puzzle. Most worryingly, once an RA team is established, they too may become refuseniks to change, worried about losing their jobs if things were done differently. I think both David and I would like to be revolutionaries of a sort – walking into a business, changing it completely around, then walking away feeling confident we left the business in much better shape than before. However, we know enough to know how exceptional it is to stage a successful revolution.

I distinguished evolution from revolution, but evolution can sometimes lead to revolutionary change, if the circumstances are right. Take the poor old dinosaurs as an example. They were very successful for a very long time. They ruled the world. If everything had stayed the same, they would have stayed at the top of the evolutionary ladder. Instead, there was a change in the planet’s climate, and the dinosaurs were unable to adapt and survive. Warm-blooded mammals did adapt and did survive. Without the climatic transformation, the warm-blooded mammals called human beings would never have emerged. The same kind of thing can happen in business too. The world’s financial climate changed recently, and this has had a dramatic impact on institutions like investment banks. Many of the survivors will only survive by being radically different to their previous incarnations.

In the automobile industry, all manufacturers are suffering at present, not least because the world’s largest market, the US, has contracted dramatically. However, whilst some manufacturers are facing the abyss of total collapse, others are much stronger and better able to cope. Toyota has, in recent years, overtaken GM and Ford in terms of volumes and units of sale, but has also been a healthier business earning stronger margins. The comparison is particularly poignant because Toyota’s rise is at least in part due to its different DNA, in the sense of its holistic and extremely efficient manufacturing philosophy. The Toyota Production System is an inspiration for many initiatives to improve business efficiency and effectiveness in all kinds of industry. The TM Forum’s overarching vision draws upon the Toyota experience. However, Toyota’s rise was very much a consequence of unfavourable conditions that Toyota faced. It was the shortage of raw materials that prompted Toyota to identify new ways to reduce wastage and increase efficiency. Post-war Japan, in a bid to reconstruct and revive its economy, was more open to radical ideas than some of the winners in WWII. In an ironic twist, Japan’s foremost prize for quality control, the Deming Prize, is named after an American statistician and expert in process control. It was only thirty years later that Deming’s ideas started to have much influence on American big business, when American companies started looking for ways to counter the increasing competition they faced from Japan.

Let us suppose the vision of a fully-embedded, holistic revenue assurance can be realized in practice, and that the inevitable obstacles can be overcome. What is the likeliest path for its emergence? Will it be evolution or revolution? Evolution is slow. Revolution is fast, but happens rarely and is unpredictable. I think, if holistic RA is to be achieved, it will be the result of a combination of the two, much like that which occurred when the mammals took over from the dinosaurs or when Japanese industry became a serious threat to American manufacturing. Many of the changes will be slow and evolutionary, but a change in circumstances may create a catalyst for accentuating the benefits gained from those accumulated small differences. Mammals evolved slowly, but the relatively sudden change in climate turned their warm-blooded adaptations into a pronounced advantage over their cold-blooded competitors. Japanese industry underwent a revolution when it adopted quality control principles soon after WWII, but this needed to be compounded by thirty years of growth before the reasons for their competitive advantage became fully apparent to American rivals. My guess is that truly holistic revenue assurance, of the type David imagines, will only emerge under similar conditions. It needs a telco that is not successful or large by current measures, but which is not under threat of going bust or being taken over either. This combination is vital to give it the extra incentive to do things differently to its rivals, whilst also preserving the long-term stability to really alter its DNA by mandating the necessary change at the level of each and every individual member of staff. There has to be some goal of being more than a successful business in one country, but of growing into an international business empire. The business empire will need sufficient capital to stay independent and grow by acquisition in turns, but not so much that it can afford to drop its disciplined adherence to efficiency as it will always need to persistently maximize any commercial advantage over rivals. Staff will need to open to new ways of working and willing to embrace a belief they can be world-beaters by doing things differently. Ambition is very important, as just copying a more mature overseas businesses will help a less mature company to close a gap on its betters, but not to overtake them. Such ambition may be reinforced by cultural or national pride.

If I was looking at where in the world you might produce a telco willing to adopt holistic RA, the likeliest candidates would be multiplay incumbents in countries where the markets have been late to liberalize but which are liberalizing, so there is a greater willingness to leapfrog to new approaches and rapidly embrace change. To encourage long-term investment in the business, growth should also be assured because of increasing standards of living, relatively low levels of service penetration to date, and a rising population in the domestic market. However, growth potential within the country should be sufficiently limited to encourage overseas expansion, particularly into neighbouring markets. If those neighbouring markets are already liberalized, this will encourage efficient working practices even if the incumbent is unchallenged in its home market. Countries that have commodity wealth will have an advantage in terms of relatively independent supplies of capital. Relatively unindustrialized nations that can afford to make the investment will have most incentive to strategically diversify their economies by investing in high-technology sectors like telecommunications, and hence provide an operator will a long-term politically stable environment to pursue its objectives. This may also be coupled with national pride at expansion of business empires beyond its borders. All of this rules out Europe or North America as being the home of the first telcos to adopt holistic RA. Instead, it suggests that Africa, India or the Middle East might be the likeliest home for the first telco run according to the principles of holistic RA. There is an analogy to the conditions that prompted Japan to become a world-leader in car manufacturing, though it will probably take at least as long – 30 years – for such a success to emerge and for the reasons for success to become obvious. I hope that gives David some hope. Whether a 30 year period is best described as an evolution or revolution I will let you decide for yourselves. It all depends on how patient you are and how much time you can spare. I used to be very impatient for these kinds of changes to take place in telcos. Now I will be glad if we ever see a telco make it that far ;) When it comes to holistic RA, I am betting on a mouse to beat the dinosaurs.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.