– Thoughts on Strategy and Management

„Strategic changes“ meets Deutsche Telekom

T Home LogoTerms like „Strategic changes“ or even the term „change of the previous strategy“ can be found quite often when organizations want to demonstrate their focused flow of activities to improve their situation. One could guess it is more an announcement to lull the public, stakeholders or shareholders.
So, a couple of days ago I found this article “German Telekom changes the strategy”. German Telekom is still the major telecommunications provider in Germany. But in 2006 it lost 2 million customers. I would like to be fair, a decade ago German Telekom was the one and only telco in Germany, hence this company had the monopoly. In the last 10 years the things have change dramatically; therefore those companies (former monopolists) see dramatic falls in terms of customers and/or sales.
So, what is the new strategy? According to the news, a set of measures should improve the situation:

  • Low performing holdings and holdings that do not belong to core activities will be sold. Abroad acquisitions of mobile service providers are possible.  
  • In Germany the company will focus on internet based TV in order to exploit the market for broad band services. A product bundle of broad band access, Internet TV and telephone land line will be introduced.
  • Customer services should be improved. 
  • A low budget brand will be introduced. 
  • The entire brand concept will be made easier to understand. All products for land line and broad band will be offered under the brand “T-Home”. The brand “T-com” will be ceased.

A variety of definitions and concepts with different delimitations for the term “strategy” can be found in the academic literature as well as in practice. Often a general definition like this can be found: “top management’s plan to attain outcomes consistent with the organisation’s missions and goals”. Key characteristics of strategic decisions which have to be considered in order to define the term are: direction, scope and complexity, competitive advantages, resources, environment, markets, target group (e.g. stakeholder).
Taking this into account I have some problems to see what “new strategy” each of these items comprises. The improvement of customer service should be a basic condition for telco providers. Brand management is more important. I was always confused with the previous concept: You could order your land line and your internet access at the “T-Shop”. But you ended up with two different contracts from two different companies within the same holding ….and different customer hotlines; sometimes you got lost. (Both companies failed to change the date of birht of my human from 01.01.1900 to the real date.) Hence I think that the new brand concept and the product bundle will be easier to understand for customers and will also meet customer demand for a one stop shop-product. A focus on core activities? That’s fine, but not really new. I would suggest to describe those measures “strategic improvement”. A real change of strategy would have to go further. But as mentioned before:  a variety of definitions and concepts….

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