The telecommunications industry has enough worries even without the financial crisis: saturated markets, oppressive ­pressure from competition, low profit margins, exacerbated by the urgent need to make investments to avoid falling behind with next generation services. Nevertheless, compared with other industries telecommunications is still lucky. Experience from previous ­crises shows that expenditures for telecommunications are the last item on the list and the one least affected when consumers begin cutting costs. Package offers such as flat rates ­especially have become so inexpensive in the meantime that a ­further reduction in prices is not to be expected. The ­incumbents in the sector also have little to fear: unlike companies in other industries, the coffers of many of the telecommunications giants are brimming over so that they have no concerns about their liquidity.    

Diversity instead of eat and be eaten   

But just sitting tight and waiting for the crisis to pass would be inadvisable indeed. Structural problems that have been lurking around just below the surface need to be solved. In this respect, the crisis is an excellent opportunity to face up to structural challenges because employees, management, and investors are all more willing to accept changes at such times. The objective here is to utilize the dynamics of the situational upheaval to finally keep the promises of innovation which have been made for so long. While all of the major players in the industry have diligently cut their costs and made their structures leaner in the past, there is still a more extensive need to modernize business models. Above all, the product lines of the long established companies fall in this category. Although still in demand, they offer virtually no opportunities for growth or differentiation. Telecommunications service providers who continue to rely on high network coverage and bandwidth would have to fear being left out in the cold and becoming nothing more than mere infrastructure providers even without the crisis. The dominating companies in the industry can choose from among a number of options: the purchase of innovation by M&A or the improve­ment of their own innovative capabilities through specific ­restructuring. However, shuffling their portfolios is a substantial organizational challenge for the incumbents in the industry and requires extensive investments as updating the portfolio often implies a complete re-alignment of the processes and of the ­organizational structures. The acquisition of smaller companies which are strong in innovations appears to be one way to ­escape this dilemma. But without careful integration of the smaller partner, the inherent potential will evaporate into thin air. The deadliest enemy for the success of the mission, no matter whether the company seeks rejuvenation through its own efforts or through the acquisition of another more innovative company, will be the inertia of its own organization.