Definitions

Transcription

1 Definitions The Product Development creates and implements competitive products and services for profitable business based on strategies, customer needs and technological expertise. (Horizon 1) R&D initiatives should complement or replace a company s current core business. They may represent either extensions to existing businesses or moves in new directions. R&D enables building new streams of revenue or providing cost savings. Some H2 technologies/concepts are revolutionary from business model point of view, whereas the other H2 technologies/concepts are integrated as an incremental part into the existing production and business. The aim of R&D activities is either to leverage insight, build and transfer new competencies to the present business environments; or to promote new businesses based on the technological advances or lessons learnt (e.g. on earning logic) from customers. (Horizons 2-3) 1

2 Major challenges for R&D How to be innovative enough to enable creation of new streams of revenue, i.e. NBD, or cost savings [internal vs. external R&D] How to be able to introduce new technologies and business concepts with right timing; and be able to NOT to introduce them when not feasible [corporate financing vs. business unit orders] Existing business units as customers are not long term development oriented Corporate projects encounter difficulties when moving from R&D to operational business units How to get introduced value to operational level [ Chasm, NIH] to justify its (R&D s) existence How to control and monitor (meter) R&D whose results will be realized not until 3-5 years How to be able to re-direct and enable renewal of the corporation [provide new core competencies, contribute to strategy] NBD = New Business Development 2

3 Historical outlook R&D

4 Telekehityskeskus financing options Corporate funding (T&K neuvottelukunta) Cross-organisational projects Future (H2 technology) projects NBD projects initiated by Research Director Orders from BUs at low price to promote BU orders from TKK External financing EU and Eurescom projects TEKES funded PKT-Tele program To promote SME networking (common web site, joint events, education) To promote operator SME networking For Telecom Finland: to utilize innovativeness in SMEs TEKES funding for joint projects 30-50% For SMEs: to promote sales and R&D R&D Director funding Internal NBD cases based on vision Outsourced R&D: Case SSP/Intellitel based on vision 4

5 Telecom Research Projects were grouped under larger technology programs for easier control Technology programs were of strategic importance for TF BUs gave guidance to these programs Funding of projects by Corporation (100%) No BU funding for TR Strategic competencies were developed Sonera Service Software was established Software development was identified as a tool for an operator to climb up in the value chain SPICE maturity model was introduced for software processes DP model was introduced Technology Management was established to act as a CTO s Office R&D Forums were established for networking and information sharing purposes for R&D and development units and people TF = Telecom Finland, BU = Business Unit, DP = Decision Point, TR = Telecom Research 5

6 Corporate Venturing

7 New Communication Services what is NCS Telecom Finland had a good track record in incubating other s businesses, e.g. Nokia, Cisco, Tellabs (Martis), Tecnomen, and PacketVideo 1 st in the world in numerous businesses (mobile, FR, ATM, mobile portal) New Communications Services was established in 1998 on top of Telecom Research (or S3) and fuelled Sonera s future growth by investing into technology and services businesses within mobile, media and Internet industries to boost new product and long term business development (Corporate Venture Capital) developing a whole new mobile-based businesses, corporate funding globalize and scale up existing mobile-, software and operator-based businesses to correspond to the challenges of the future That work was supported by own platform and product development, which differentiated Sonera from other competitors by being a forerunner in technology. FR = Frame Relay, S3 = Sonera Service Software 7

8 G R O W T H NCS focus 2 nd and 3 rd horizon VENTURE CAPITAL NEW CONSEPTS - welfare - community systems - gaming - entertain. INCUBATOR - Mobile payment - Wireless entertain. START-UPS - ZedTravel - New learning BUSINESS UNITS - Inlog - Fleet Comm. - NEVA - Intellitel - Tedasys SONERA SERVICE SOFTWARE & TECHNOLOGY DEVELOPMENT TEAM Platform & Product development, Technical consulting, Architecture design, Due diligence Other ventures outside NCS included Zed, Smart Trust, Plaza and Juxto 8

9 New business development model NCS Spin-offs IDEAS (hundreds) EXPERIMENTS (tens) VENTURES (5-10) BUSINESSES (5) DP 1 DP 2 DP 3 DP 4 DP 5 DP 6 Screening the idea Experiment Venture launch Business launch Start check 9

10 New Communication Services downsizing in 2001 NCS was created at the time of hype Venture targets were set high NCS was downsized due to the cost cutting program of Sonera in 2001 Ventures not self supporting were in large extent downsized R&D and software development unit were left Two years was too short time to create new global businesses From the literature: risk / reward However, some major outcomes included e.g.: Mobile positioning platform Mobile payment platform Messaging gateways to Zed s global business Information Logistics: telemetrics for safety Fleet communications: mobile logistics tool Formation of TSD (Technology and Service Development) as a new R&D unit for Sonera in 2002 Scattered R&D units were put together 10

11 Evolution of Sonera CVC Phase 1: fund investment start in 1997 Phase 2: direct investments start in 1999 Phase 3: investment board take over 2000 Phase 4: CVC operations were spun off in 2001 Phase 5: VC co-operation for the purpose of insourcing partners, technology, products, solutions, and business ideas starts in 2002 Phase 6: consolidation of the VC related operations within TeliaSonera in 2003 CVC = Corporate Venture Capital 11

12 Phase 1: fund investments In the year 1997, 1st fund investments were made Fund investments were made from the Sonera balance sheet (HQ) This provided the deal flow for Sonera This provided a co-investment possibilities This provided an easy access to innovative companies widely An employee was sent to the country of origin and in the premises of the fund invested This provided an easy international presence and closeness to the deal flow companies for evaluation This provided a solid basis for establishing relationships to other VCs, too Local presence provided, in the course of time, direct deal flow to Sonera The fund investments enabled Sonera to gain VC related competencies and to develop the utilization of the VC tool 12

13 Phase 2: direct investments start Direct investments (from the Balance Sheet) started in 1999 Local presence had provided Sonera international deal flow For evaluation of the target companies resources from business units were utilized The deal flow also increased significantly The investment decisions needed business unit approvals BUs were more involved than in previous phase the investments occurred mostly in H1 supporting the business of a BU BUs did not support financially good investments, per se, but often appreciated business benefits, too Business benefits of BUs and financial targets of the CVC team caused sometimes challenges to fit these two targets together 13

14 Phase 3: investment board established The investment board was established in 2001 and the members represented mostly HQ like CTO, Corporate Strategy, CFO, etc. The focus shifted more to H2 and H3 i.e. to future technologies and future options Commitment to the investments was needed only from a few people, especially from CTO Decision process was simplified and speeded up investment focus was broadened in some extent this led to increased communication with the Investment Board but in some extent - in lesser communication with Sonera businesses, CVC was applied to gain more strategic benefits, less operational benefits Due to CVC, the thinking of e.g. CTO developed and CVC contributed in long term planning Due to the new focus, no conflicts of interest with BUs 14

15 Phase 4: spinning off the VC activities After February 2001 no new investment decisions were made due to the cost cutting program at Sonera Some of the 15 people transferred to venture spin-offs reasoning for outsourcing the portfolio management and VC fund operations became relevant CVC operations were spun off in September 2001 Independent fund could raise funds from other sources than Sonera, too This would enable a larger Sonera dedicated fund with larger and focused deal flow (c. five to ten folded) Autonomy was seen as a tool to increase efficiency and motivation (of the CVC team) Outsourced portfolio management was seen as a toll to cut cost, too => SNV first took over the portfolio management => cooperation agreement between SNRA and SNV SNV = SNV Partners, SNRA = Sonera 15

16 Old way: the push of VC deals and info Start-ups seeking for finance (in Europe, Israel, and U.S) Fund 1 Fund 2 Fund 3 Fund n Deal flow of companies annually Screening layer of of sonerians (Helsinki, London, Boston, Silicon Valley, Tel Tel Aviv, Tokyo) Request for evaluation and support for investments CTO s office Zed Zed Smart Trust Juxto Plaza NCS NCS MO MO Telecom 16

17 Phase 5: The opposite way: pull of new ideas (H2) VC Cooperation model Start-ups seeking for finance (in Europe, Israel, and U.S) portfolio portfolio portfolio portfolio Fund 1 Fund 2 Fund 3 Fund n CSD CSD Company Request for information on companies information Comments back to to a specific VC s valuable for them intermediary focus layer of of two two sonerians in in in terms CTO s of office evaluation (in (in Helsinki) area of or possible business Sonera co-operation with Request for information in their specific focus areas Sonera MIT MIT CRD CRD MAD SPS SPS OSYS Media Lab Lab CTO s office BUs BUs 17

18 Phase 6: consolidation of the VC related operations within TeliaSonera in 2003 Portfolio management at Sonera and Telia were taken over by centralised MAD (M&A and Divestments) Investments were judged important if ownership was essential for cooperation with the investee company Decision not to further invest in minority shares was confirmed VC cooperation model was supported VC cooperation model on TS CTO s responsibility Similar modes of cooperation was established both in TSF and TSS to handle on demand needs from BUs and ad hoc inquires as well as use it as a strategic tool M&A = Mergers & Acquisitions, TS = TeliaSonera, TSF = TeliaSonera Finland, TSS = TeliaSonera Sweden 18

19 Case Intellitel

20 Case Intellitel (former SSP) 1994 SSP was established to increase development power at TF Initiated by R&D director as a cooperative project between Nokia, HP, and TF Due to non recruitment and for innovative environment, SSP was established outside TF No minor ownerships were allowed at that time for TF => private owners Competence and strategic importance grew gradually Initially SSP developed light IN platform and service development tools Later inter alia development of mobicentrex and messaging gateways (intelligent MW) Intense cooperation first with TKK and SSP and knowledge transfer to SSP Competencies in SSP grew and it was finally seen as core for Sonera and acquired by Sonera (95%) in 1997 Becoming one of the main technology providers for Sonera new ventures Main technology provider for NCS, Messaging GWs to Zed, no external trade NCS downsizing caused financial problems Due to re-focusing of Sonera s strategy, Intellitel s business focus was not relevant any more but competencies were appreciated in 2001 Consolidation to Sonera S3 in 2002 due to network interoperability and inter-working capabilities SSP = System Software Partners. MW = middleware OpenCall 20