NEW YORK and LAS VEGAS, April 4, 2006 (PRIMEZONE) -- CTIA Wireless -- Technology, content and distribution companies have a significant opportunity to capitalize on the potential of convergence by embarking on a new way of managing their enterprise, eliminating virtual walls and barriers that have been impeding value creation, says a PricewaterhouseCoopers' (PwC) study released today at the CTIA Wireless Conference & Press Reception in Las Vegas. The study titled, Breaking down the walls: How an open business model is now the convergence imperative reveals that a new, more fluid and transparent method of business management is necessary to build value in today's media marketplace.
"Because this is a rare time in business when the media, technology and telecommunications sectors are fusing so quickly, companies that learn to embrace and implement change both within their organizations and among their business partners will succeed," said Randy Browning, partner and U.S. leader of PricewaterhouseCoopers' Technology, Information Communication, Entertainment & Media Advisory Services. "We're witnessing a dramatic rise in total technology spending across these sectors, which is leading to unprecedented technology innovation. Companies need to open up in order to keep up. Transparency is critical, and we are advocating that organizations apply new management practices that will enable them to realize sustainable shareholder value."
Strategic alliances, partnerships and M&A activities are occurring at a pace never before experienced, states the research findings, yet companies are not achieving returns on capital above their cost of capital. "The old style of business management is not working in the new era of convergence," says Mr. Browning, adding, "Businesses must abandon their siloed fiefdoms and slow decision-making processes and welcome what some may feel is an uncomfortable openness. They must, in essence, embrace disruption to achieve strategic flexibility."
PwC's study describes the four key attributes that companies must adopt as they move toward an open business model: employing the disciplines of the capital market; personalizing the customer relationship; maximizing the potential of content; and creating a culture of innovation:
1. Employing the disciplines of the capital markets:
PricewaterhouseCoopers advocates that companies deconstruct
the walls they have traditionally put in place among their
various divisions and partnerships, allowing business units
and strategic alliances to be measured using the disciplines
of the market, thus determining the metrics that will
measure success and reveal the true value of the individual
business unit or alliance relationship.
2. Personalizing the customer relationship: Companies understand
that they need to capture and analyze rich data on consumer
activity in order to personalize their relationship, but are
customers ready for the intrusion? In recent focus groups on
emerging digital revenue streams, PricewaterhouseCoopers
found that consumers are willing to give up information about
their lifestyles, habits and preferences in exchange for
information, promotion and advertising that appeals
specifically to them. The question of convergence
effectiveness therefore becomes not who owns the customer,
but who knows the customer.
3. Maximizing the potential of content: Companies in the
content, technology and distribution sectors need to
maximize their own and one another's capabilities to obtain
optimal return on investment. Companies availing themselves
of an open model will be more likely to integrate
advertising and marketing within and across divisions to
leverage all methods of content distribution -- and
ultimately, to monetize it. PwC focus groups revealed that
consumers are willing to pay for content that is unique or
difficult to find. Companies need to be aware of the value
of their content and avoid taking short term gains that
could jeopardize long-term value.
4. Creating a culture of innovation: Continuous innovation
defines the playing field and the best collaboration has
come when innovation is accessible at all levels of an
organization and among business partners. In the
convergence world, venture capital companies are looking
for opportunities to win in the consumer market with the
triple play of bundled voice, video and Internet access
built through partnerships. Companies also sometimes need
to overcome their instinct to put up barriers in order to
leverage customer innovation. An open business model
encourages customer-driven innovation and seeks to channel
it for overall value creation.
The forces that are driving convergence and the nature of convergence present a business circumstance in which attaining maximum shareholder value is beyond the capabilities of current management models. The convergence of businesses offers a new scenario in which greater value can occur across the lines of business -- value greater than any single line of business might attain. To succeed in this environment, companies must eliminate the walls in and around business units and partners that limit sharing of resources and degrade the possibility of value that convergence presents for the enterprise as a whole.
The report's findings incorporate analyses and viewpoints from senior executives at more than 40 companies within the target sectors, as well as with 20 analysts who cover these markets. The results of six separate focus groups with media buyers, advertisers and consumers -- conducted by PricewaterhouseCoopers -- were also included.
For an electronic copy of the complete PricewaterhouseCoopers report, Breaking down the walls: How an open business is now the convergence imperative, and other white papers and studies PricewaterhouseCoopers has published, visit http://www.pwc.com/us/convergence.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
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