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Delivering innovation at the speed of life

How BT is reaching beyond the boundaries of the organisation to find innovation ? wherever it may be

Matt Bross, BT?s Chief Technology Officer

Organisations have been innovating for centuries to make better products, deliver a better customer experience, open up new markets and reduce costs. However, in order to truly thrive in the crowded, fast-paced world we all live and work in today, organisations need to take a step back and look at how they currently innovate ? they may well find that they need to innovate the innovation process itself!

Why? Because no company has a guaranteed right to survive. In fact only 24 companies on the original FTSE 100 index (established in 1984) are still listed today. The pace of technological change is also relentless. Just look at the explosive adoption of mobile phones. One in every three people on the planet now has a mobile, and Voiceover IP is already showing signs of an even quicker adoption curve.

BT has a fantastic heritage as a technology innovator. Few companies can match its track record of breakthroughs in the telecommunications industry, from construction of the first transatlantic fibre optic telephone cable in 1988 to last year?s launch of BT Fusion ? the world?s first fully converged fixed to mobile service. BT is also seeing rapid growth in its revenues from non-traditional products and services such as IT, security and mobility.

This dizzying rate of change means that traditional models of innovation are outdated because they simply can?t deliver results fast enough to keep up with market demand ? and that?s why BT has transformed the way it serves its customers and shareholders by innovating in the innovation space itself. The thrust of BT?s innovation strategy in 2006/07 is in delivering ?innovation at the speed of life?. According to Matt Bross, BT?s Chief Technology Officer, there should not be a gap between what is technically possible and what BT can deliver in the markets it serves. Companies not willing to rise to this challenge are in danger of being left behind.

Open innovation

The only way for companies to stay ahead today is by adopting and maintaining an open approach to innovation. Open innovation is BT?s ability to harness and exploit innovation globally for the benefit of its customers, shareholders and employees. It acknowledges that how a company innovates and gets to market is now just as important a source of sustainable market differentiation as what it innovates. BT draws on a network of innovation partners including start-ups, academic institutions, VCs and strategic business partners in this open innovation environment.

BT reaches beyond the boundaries of the organisation to find innovation wherever it may be. For example, the global innovation scouting team identify the best brains and smartest ideas across the globe and seed them back into the business. Last year, this team identified more than 1,200 new technologies, business propositions and market trends.

BT also searches for innovative new ideas through its collaborations with academic institutions. BT has three strategic university partners ? Cambridge and University College London in the UK, and MIT in the US ? and has links with over 30 additional universities across the world. In total, activities with universities around the world provide BT with access to over £1bn of research in information and communications technology (ICT) and associated fields. BT now carries out around 10% of its research in universities, enabling it to broaden the scope of its research whilst remaining extremely cost effective.

Another element to making the open innovation strategy a reality is the external venturing process. BT has launched eight independent start-up companies to date, most in association with its corporate venturing partner, New Venture Partners. These start-ups generate value by launching innovative solutions into a global market-place in the form of high-technology businesses. For example, Azure Solutions, the world?s largest revenue assurance company, and iO Global, a leading provider of managed revenue-share content services for mobile network operators, give BT access to great new products and services that can be used internally or sold to customers.

Even though external partnerships are critical to making the open innovation strategy work, it doesn?t mean that innovation is something that is simply outsourced. A massive amount of BT?s innovation is generated directly by its world-class research and venturing unit at Adastral Park in the UK, complemented by a mobility applications research centre in Malaysia. In fact, during the last financial year BT invested over £727m in R&D, and has worked hard to make this budget deliver bigger returns and greater operational efficiencies for the company.

From idea to true business innovation

Once new ideas have been generated ? either internally or from the network of innovation partners ? it is vital that they do not become stale. To this end, BT created the Innovation Central team to accelerate the innovation delivery process through ?hothousing? ? an intensive environment where ideas are quickly hardened into robust business plans. Viable business propositions are then validated by creating a prototype, whether it?s a Flash animation or a fully working model. In less than two years, BT has already seen some hugely exciting products coming out of this process, from a new-generation WiFi phone to a chronic disease management system managed via a patient?s mobile. Using tightly-managed teams that draw on the best of internal and external resources, techniques like hothousing and prototyping can deliver results back to the business within days or weeks ? worlds away from the glacial pace of traditional telecom R&D.

Fostering an internal innovation culture

BT is determined to unleash the innovation potential of every employee, whether they?re involved in hard-core research, front-line sales and marketing or back-office administration. When it comes to innovation, everybody?s contribution counts ? after all, people make things work, boxes don?t! Getting the best out of people also means recognising their personal contribution to the innovation process and rewarding them accordingly. BT successfully launched the New Ideas scheme last autumn, forging a clear link between cause and effect in the innovation process.

Through this scheme employees can walk away with a cheque for up to £30,000 if their smart idea gets results. Most importantly of all, innovation needs to be embedded right across an organisation?s activities; otherwise you run the risk of throwing away the value-generating spark that?s been created at each point in what Matt Bross terms the ?Innovation Continuum? ? a concept that in simple terms means end-to-end innovation. This is the framework that demonstrates the flow of all of BT?s innovation activities ? from creating an idea, designing the infrastructure and realising the proposition to developing the right channels to market. For example, invent well but architect and commercialise poorly and you can be in big trouble.

The capabilities of a clever product will soon be cloned by your competitors. But if innovation is ingrained in all aspects of the value chain ? from developing and commercialising to marketing and distribution ? you can create something that?s far harder for your competitors to reverse engineer or emulate. Bross calls this an ?innovation chain reaction?.

The impact of Open Innovation

BT has successfully switched its focus on innovation from being an internal, technology-driven activity to an overtly commercial one. It doesn?t mean that pure technology doesn?t matter ? but what is more important is the way that it is exploited to deliver long-term stakeholder value. And by architecting its open innovation strategy, the amount of innovation that BT is capable of delivering today is no longer defined by the size of its R&D budget ? it?s as big as the company?s global innovation network.

The results of BT?s open innovation approach are clear to see from the health of the bottom line. Looking to the future, BT?s 21CN project ? a global IP MPLS platform ? will enable a new generation of converged voice, video and data services. Finally, in order to truly innovate at the speed of life organisations must adopt a collaborative process ? where everyone can make their own contribution towards driving innovation forwards.