Jean-Philippe Vanot is the senior executive vice president of innovation and marketing for France Telecom—which, with its key brand, Orange, is the No. 1 provider of broadband Internet services in Europe and the No. 3 mobile operator. Outlook Q&A spoke with him about his company's growth and innovation strategy, and about the specific approaches France Telecom-Orange is using to improve efficiency and speed to market for innovative services.
Outlook Q&A: How important are growth and innovation to France Telecom in today’s uncertain economic environment?
Jean-Philippe Vanot: Innovation is an essential part of our business strategy, even more important than it was before the economic crisis occurred. In fact, we invest 1.7 percent of our total revenue to support our innovation agenda—about €900 million per year.
How do you make innovation a more consistent presence throughout France Telecom?
By staying focused on two very simple themes. The first is, “Less is more.” We intend to launch fewer products this year than we did last year. Certainly, that will help us in terms of controlling our capital expenditures. But the point goes beyond cost reduction. The offerings we focus on will have greater impact because we are dramatically improving their customer-centricity. Our products will be simpler, easier to understand and more relevant to our customers’ needs.
The second theme is, “Once but many.” We intend to increase the reusability and applicability of solutions and services across the geographies we serve. Although not every offering is always applicable to customers in every country, we believe that many of our solutions can serve multiple locations, and that other products can be rapidly re-customized and configured for a slightly different audience. This reusability helps us manage costs better and it also means that we can improve the return on our investment in innovations and increase their impact.
You mentioned having fewer offerings. Does that also mean reducing your existing portfolio?
Yes, we plan to prune some older products in our catalog that we now believe are not critical to our strategic directions. That portfolio reduction also has the benefit of reducing the cost of new enablers because they will not have to interface with our older, legacy systems. However, this kind of pruning can be quite challenging. The older products generally use many different kinds of enablers, some of which need to be retained. So it is somewhat like pruning a vineyard. You need to be careful to retain what is essential as you are cutting away what is not essential.
What are you doing to improve the relevance and customer-centricity of your offerings?
Generally speaking, we are moving from a product-focus to a service-focus approach. That means we will embed advanced usability principles into the service and make the customer’s interaction with our services much easier and simpler. We now begin testing for simplicity and usability back in the design phase, with a rigorous methodology that involves customer participation and evaluation. At a certain checkpoint, if the product or service is considered easily understandable and usable by our customer focus groups, we will continue with its development and go to market. If not, we stop development of that product or we modify the design and try again.
How do you keep different parts of the organizations aligned toward this common objective?
One of the first moves I made when I took over the innovation and marketing organization was to create a single, unified design and development team that includes both R&D and marketing. This improves the efficiency of the design and creates a much stronger relationship between service and brand. A product that is not market- and consumer-relevant does not strengthen the brand. Different parts of our company now can come together to work toward the common goal of customer-centric offerings.
What specific innovations are you working on in terms of customer-centricity?
One involves using more sophisticated analytics and recommendation tools to analyze all the customer usage data coming in, and then use that data to provide more personalized and customized services. Companies are becoming more adept at leveraging data from something like video on demand, but the key now is to provide similar capabilities to the mobile handset.
A second innovation is to be able to offer our products and services seamlessly across all the screens our customers use—mobile, TV, PC and so forth. When you move from one to the other, we want the Orange brand to be on that screen. This increases the “stickiness” or potential to retain that customer for a longer period.
Will your reliance on outside providers, partners and collaborators increase as your need for innovation increases?
Definitely. We are committed to open innovation because we believe it will be impossible to compete effectively using only a company’s internal resources.
“Open innovation” is a frequently used term, but can mean different things. What does it mean to France Telecom?
First, it means adopting a more collaborative approach to developing ideas and bringing them to market. So, for example, we are opening our APIs [application programming interfaces] and working with external developers to encourage them to create offerings for our mobile applications shop. A more effective service delivery platform is one key to this kind of collaborative development.
In addition, however, we need to be open not only to technologies, but also to innovative business models. We are working to improve our ability to detect and discover innovation anywhere in the world, and then integrate it into our portfolio. Detecting innovation is hard, and integrating it is even harder, but those capabilities are essential to long-term success in this marketplace.
What kinds of organizational challenges need to be overcome to make open innovation a success?
Every organization needs to cope with the “not invented here” syndrome. A common reaction from internal teams to an external innovation is, “Oh, that’s interesting, but give us a few months and we can come up with something even better.” If you take that approach, you’ll never get something to market. The advantage open innovation gives you is speed. But you have to be willing to be open in your actions, not just your intentions.
This more complex ecosystem creates quality-of-service challenges, as well, doesn’t it?
Yes, that is a complex matter. A total solution to a customer may involve bundling capabilities from several companies, but it’s still the Orange brand on the bundle. One way that we have addressed this matter is by creating what we call “service management centers”—technical entities that have an end-to-end view of the quality of service being experienced by our customers—the quality of each product, and also the quality of the network and IT platform. We have invested in probes that can tell us the quality of the customer experience, right up to their terminal, whether it be a handset, a PC or a television.
You mentioned wanting to develop solutions that have broad applicability across global locations. How do you balance global consistency with local relevance?
It is a daily challenge to find the right balance between global consistency and local relevance. We spend a great deal of time developing a deep understanding of the market conditions in each country where we operate—what is actually specific to that region or culture, versus what is more universal or global.
Do you find that the very meaning of “global” and “local” changes over time?
Yes, it does. As Internet penetration grows, people regardless of where they live become accustomed to online tools that have truly global reach. Google, for example, is the same tool wherever you live, differing only in terms of the language used. The interface and experience are the same. There has not been time yet for a mobile application or interface to have that same kind of global appeal or consistency, but it may happen in the future. We need to track those developments and continuously stay on top of them.
We’ve been successful to date, and we are confident in our ability to stay close to our customers and provide them with products and services that are innovative and, equally important, relevant to their needs.