Among Europe’s trailblazers in the world of open innovation, multiple winner of Corporate Startup Stars award, creator of one of the first corporate accelerators, Telefónica is among those few companies that innovate innovation. More than 10 years ago – a geological era in startup world jargon – they launched Wayra, a program that has been widely imitated by others and constituted a reference and benchmark throughout the years.
Mind the Bridge Chairman, Alberto Onetti, shared a Mind the Chat with Irene Gomez, Director of Connected Open Innovation for Telefónica and Wayra, to understand the results of this 10-year effort, and the future directions undertaken by the Group, that – not surprisingly – continue to put Telefónica in the forefront of corporate innovation practices.
“Innovation is about exploring, so as an innovation unit we need to continue exploring new ways of doing things. It’s a mindset we need to have.”
Spoiler alert: we are going to discuss the new Telefónica’s innovation vehicles, namely WayraX and Wayra Builder.
…but first, some background story of how Telefónica became a trend setter (aka the innovation cliffhanger).
It all started back in 2006, when the then-called Telefónica Innovation Ventures was launched with the intent of investing in growth startups with strategic fit for Telefónica. Fast forward to 2013, after the aforementioned launch of Wayra in 2010, Telefonica opened its network of incubation spaces, Open Future. The aim was to partner with public stakeholders in Spain and LATAM to support local entrepreneurship. Telefónica here does not invest – rather, it stimulates the local ecosystem, and as Irene puts it: “with this network they eventually really could make a social impact, while still building for themselves a fast track for Wayra, and overall a dealflow generator for new opportunities”. Telefónica has now more than 30 spaces for Open Future.
“Open Innovation is not a one-way road”.
Within Wayra, the company runs Activation Programmes, initiatives to introduce Telefónica’s technology and platforms to the startups, seeing the startup as a client to co-create with. It developed an open platform where they can both provide and build technologies to and with the startups, with the aim of projecting Telefónica into the future by working with tech entrepreneurs.
Measuring Return on Innovation
…And now, yes, the million dollar question you are (or should be) asking yourself: “ok, but is this really leading to something or just innovation marketing jibber jabber?”
Spot on – Perhaps the most interesting thing about Telefónica’s work is that they are among the first that started to track the results of their activities in Open Innovation, as in how much such practices contributed to increased revenues and reduced costs, i.e, what is the Return on Innovation?
See below Mind the Bridge’s framework for the goals of Open Innovation within a corporate depending on the degree of maturity of their activities.
In the end of 2019 Telefónica revealed the results of its innovation activities, which gained wide press attention (here an example).
To sum up, the Group invested in 20-25 startups per year, and have a portfolio of 500 active startups, 140+ of which are doing business with Telefónica, which yields a very interesting percentage of startups generating business activities for the corporate (close to 30%).
Such a figure is also driven by the decision to shift focus from startups to scaleups that have validated product-market fit, which drove in the funnel much more ventures ready to make business with Telefónica. Because of this “quest for fit”, the portfolio is predominantly B2B. Furthermore, Telefónica no longer works with a “batch approach”. The company is open all year round to the good startups that show up at its door.
On top of this, the innovation department has started to work with the Business Intelligence teams to gather insights and understand how startups could create the indirect benefit of offering more and better technological solutions to all the Telefónica clients.
“Measuring innovation is not easy and there is no clear consensus”.
And as with human transformation, the hardest part of this work, though perhaps the most important, was also the least visible, and started from within: Irene admits that Telefónica did put a lot of effort to have simple interfaces inside the organization to be able to be permeable to startups, and to adapt the company to work with early stage ventures – which carried along great learning. From internal culture, to procurement and legal processes and requirements, a lot of work was done with the departments that do not usually have the innovation tag on them.
The new programs: Wayra X and Wayra Builder
“How do we look for the new unicorns?”
– was the overarching question that drove to the creation of Wayra X
Yes, we are finally solving the riddle of what are these new vehicles launched by Telefónica: Wayra X is a new vehicle part of the Wayra family. It is a Digital Open Innovation Hub that invests in what goes beyond the core business, looking for disruptive startups that can be distributed 100% digitally, capable of improving and incorporating new technologies in people’s life (hence aimed at mass markets).
Wayra X does not have geographical boundaries, and focuses on seed and early stage companies with at least an MVP already in the market, providing funding of up to 150k. Telefónica will help these startups by giving them real exposure to Telefónica’s large clients, and other support to scale (such as in branding).
Irene describes it as something very connected to the moment we are currently living: one of the main differences between Wayra X and the “older” Hubs is that it is completely digital, and does not have physical spaces.
“We have the pieces, with Wayra Builder we are putting them together.”
Finally, the innovation team realized that within Telefónica there were a lot of patents with great potential, that nonetheless, because of business priorities were not finding a way out of the idea stage. Wayra Builder aims at identifying them within Telefónica, to scale them outside the company, creating a startup. It will do this by co-investing with other entities (Business Angels, VCs, other corporates, etc). By next year the internal KPI for Wayra Builder is to have launched about ~10 startups. Telefónica will probably be one of the first customers of those startups, so it will also help them to scale.