An article by Claudia Nemat, Member of the Deutsche Telekom AG Board of Management, Technology and Innovation.
What is innovation? And most of all: How is it made possible? This is a question that we are discussing intensively at Deutsche Telekom. In our efforts to find the answer, we have come up with six theses that are of relevance to us. However, I am certain that a great deal also applies to areas other than telecommunications.
1. Innovation is recombination
As the saying goes, there's no need to reinvent the wheel. But is this true? New technologies emerging in the context of digitization make it possible to combine together things that already exist. Take cars, for example. The car has been around for a hundred years. Right now, there are three disruptions shaking up the car industry. The first is the engine: electric cars are starting to replace combustion engines. Second is the self-driving car. And, lastly, the topic of sharing: Is owning a car still necessary or do you simply pay for use by the mile or hour? These three examples have one thing in common: by combining old and new, something innovative is created from a traditional everyday object – with huge advantages for consumers. A similar effect can also be observed in our industry. Telephony has been at the mercy of hardware, i.e., telephone lines, for more than a hundred years. The digitization of infrastructure now means that networks are becoming increasingly shaped by intelligent software management, which will enable us to virtualize diverse infrastructure both nationwide and beyond. Like pan-IP and cloudification.
2. Monocultures feel good but are useless
The U.S. TV series Mad Men takes a satirical look at the monocultural world of a New York ad agency in the 1960s; a profession dominated by white men from a certain background. Fortunately, the workplace of today enjoys far greater diversity, which is not restricted solely to the communications industry. And for good reason. Because when it comes to innovation – reinventing the proverbial wheel (or car) – a variety of skills and approaches are essential. We're not only talking about the gender issue, but also about diversity in education, culture, nationality, age, and so on. This has been shown in studies. At Microsoft, games consoles were designed by white men with large hands, rendering them unusable on the Asian market.
3. No matter who you are, most of the smartest people work for someone else
Far from trying to disparage his own colleagues, this quote by Bill Joy, founder of Sun Microsystems, was a response to Bill Gates' boast that Microsoft had a "monopoly on IQ." Joy is a big proponent of cooperation. Not only does he promote the deconstruction of silo mentalities and better collaboration inside companies, but he is also in favor of more cooperation between businesses. When it comes to innovation and digitization, the same applies to Deutsche Telekom. Innovative business models and the value chains on which they are based are becoming ever more complex. Amidst such complexity, beneficial partnerships that make use of the skills available to us are essential.
4. Innovation thinks in solutions, not gadgets
Technology is a means, not an end. It serves the people, and not the other way around. We have the chance to make the most of the opportunities that this process offers – not just for economic growth, but for a better quality of life. It's about customers and what they want. We need to find out where our customers' pain points are now and where they will be in the future. We have to make the customer experience unparalleled. Like putting electric motors in cars that use less CO2 and contribute to climate protection targets, provided the electricity is not generated in coal-fired power stations. We are still not looking far enough beyond our own noses to focus on what our customers want. There is huge potential waiting to be tapped if we take this thesis on board fully.
5. Innovation needs investment
Turning innovative ideas into reality costs money – that's nothing new. German spending on research and development is higher than the OECD average and has grown over the last 10 years. Yet we are still miles behind the U.S. when it comes to financing start-ups, especially during later growth stages. Private investors in Germany are reticent about providing venture capital and establishing accelerators and incubators. At Deutsche Telekom, one of our big goals is to be a strong partner to young entrepreneurs and assist start-ups in a variety of ways including by providing expert support and venture capital.
6. Innovation is a culture, not a department
"Culture eats strategy for breakfast" is a popular quote credited to management expert Peter Drucker. By this, he meant that having the right culture in place within a company can be far more valuable than having the perfect strategy. Culture refers to the values and attitudes at a company. It determines how things are implemented. Which includes the strategy. And innovation. One aspect of culture is cross-departmental collaboration. Though most companies have dedicated innovation units, like Deutsche Telekom's Board department for Technology and Innovation, this does not mean that innovation is exclusive to this department. Just the opposite, in fact: Innovation must be put into practice across all areas of the company – cooperation, without the silo mentality. We also need "ambidextrous" leadership, i.e., the right balance between an extremely agile way of working that is open to trying new things and making mistakes, and the traditional, risk-minimizing, hierarchical approach. We need to be more tolerant of mistakes and accept that the occasional failed attempt will cost money. But giving up hope or keeping quiet out of fear of doing something wrong is simply not a viable alternative.