As the world’s largest telecom operator’s move away from innovation pipelines focused entirely on raw computing power and technology breakthroughs, a new report from global management consultancy Arthur D. Little (ADL) urges operators to embrace open innovation in order to capitalize on the flexibility and consumer-centric ethos of technology start-ups.
In Open Innovation with Start-Ups, ADL reports that with the S&P 500 full of companies less than two decades old, and venture capitalist investments reaching their highest level since 2001, now is the time for big operators to embrace the start-up – both in their approach to R&D, and in their hunt for development partners.  The report reveals that despite a tested technology pedigree and access to investment capital, major telco providers across the globe are struggling to attract start-up partners that will help them develop and launch the next WhatsApp or Instagram.
According to ADL’s report, the disruptive innovations that have driven growth in the global telecommunications industry over the last decade have left traditional telco providers unsure of how to improve their innovation capacity, and seek partnerships that will yield profitable product or service innovations.  The report urges these providers to embrace open innovation and begin courting promising start-up businesses, rather than treating them as a supplier or service to be procured.
To realize the huge innovation potential that exists when an established operator partners with a flexible, non-traditional start-up, ADL suggests the telecommunications industry base its future innovation strategy around four key pillars:

• Put innovation goals at the heart of the overall business plan
• Be proactive and seek to collaborate with start-ups, rather than serving as a gate-keeper
• Leverage scale and scope, while allowing start-up partners to develop internal capability
• Sustain the partnership by clearly defining shared business objectives from the start

“Many large global telecommunications providers are crying out for a fundamental re-set of their innovation efforts and capacity,” said Karim Taga, Global Practice Leader, ADL’s Technology, Information, Media, and Electronics (TIME) Practice. “As counter-intuitive as it sounds, some of the world’s biggest telcos will see their innovation efforts bear more fruit by opening up their R&D models, embracing fast-moving start-ups, and actively engaging with potential partners at every level in the global supply chain.”
“To truly benefit from start-up collaboration, operators need to fundamentally change their mind-set, operations and governance,” said Hariprasad Pichai, Principal in ADL’s Middle East TIME Practice.
“This would help operators change from simple facilitators of access to customer, billing and technology platforms to partners that actively seek out collaboration and commit to co-creating value by driving internal change.”
Access the full report here:
http://www.adl.com/startups