There are several ways of doing Open Innovation in a company, like partnerships and joint ventures; working with startups or investing in startups; spin-offs; licensing or buying intellectual property; co-creation with clients; or collaborating with universities.
Susana Jurado Apruzzese –
Head of Wayra Builder
At Telefónica we have a significant number of Open Innovation initiatives, but in 2020 we launched a couple of initiatives that represent our approach to early-stage Open Innovation: Wayra Builder, a venture builder that allows us to create startups and invest in them, and Open Innovation Campus, our instrument to explore and implement innovation collaboration models with the academic world. In this article I will explain how our early-stage Open Innovation model works. Some key learnings from our journey will be shared as well.
According to Henry Chesbrough, the father of Open Innovation:
Open innovation means that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company as well.
This implies there is not just one single way of doing Open Innovation but a big range of alternatives, like working with or investing in startups, partnerships and joint ventures, building a research consortium, spin-offs, licensing or buying intellectual property, participation in the definition of standards, co-creation with clients, crowdsourcing or collaborating with universities among others.
At Telefónica we have several Open Innovation initiatives that focus on detecting innovation that occurs outside the company in order to integrate it into Telefónica. Through these initiatives, we involve different agents of the entrepreneurial ecosystem such as startups, entrepreneurs, venture capital funds, and an extensive network of strategic partners. We work together with other agents in the entrepreneurial ecosystems in which we are present, developing alliances and joint verticalised programs in relevant technological industries to become the main partners of future game-changers.
This article looks deeply into the two initiatives that deal with the earliest phase of Open Innovation and, hence, represent what we call our early-stage open innovation approach: Wayra Builder and Open Innovation Campus.
In 2006, we launched our first investment vehicle: Telefónica Ventures. Since then, we have maintained our unwavering commitment to bring innovation to our company through collaboration with entrepreneurs around the world. In 2011 we launched Wayra and in 2020 Wayra Builder and Wayra X. Wayra Builder aims to increase the value of Telefónica’s portfolio of startups by complementing the existing investment vehicles, through the creation of new companies based on innovative ideas with a high potential market. Wayra X is an investment vehicle that invests in B2C startups in the early stage (hence it could be also considered part of our early-stage approach, but is not being covered in this article). This way we have been able to generate an ecosystem with different initiatives covering all stages of entrepreneurship both in terms of the maturity of the startups and the investment ticket.
Through Wayra Builder we create and invest up to 350k€ in startups that come from business ideas conceived in four markets where Telefónica is operating: Spain, UK, Germany and Brazil. As a result of this investment we obtain a maximum of 20% of the equity, to ensure the resulting startups captable does not compromise future investment rounds. The business ideas must be 100% digital, with no proprietary hardware, and within one of the following key areas: IoT, Video, Cloud, AI, Cybersecurity, Big Data, Gaming, or Metaverse. The ideas can be both B2B or B2C and, although they are born locally in any of the aforementioned countries, they aim to become global companies.
When Wayra Builder was created, it was mainly a vehicle for spinning-out internal ideas. It keeps on being a spin-out vehicle, but we also are leveraging the knowledge Telefónica’s business units have to identify areas of opportunity as well as other initiatives like our New Trends team (a team devoted to explore future trends in different industries and markets) and Open Future (a strategic regional entrepreneurship program developed in alliance with public and private partners). At the same time, we’re looking for external sources of ideas like other venture builders, other corporates, the academic world, our own website and, of course, word of mouth. So, we experiment with these sources to understand what works and what does not, and learn how to make them work.
In order to build startups and improve their success rate, it is essential to prototype and validate as many hypotheses as possible. To this end, the Wayra Builder team is multidisciplinary so that it supports founders not only during the validation phase before the startup is created, but also after the startup is created. We provide technological, UX, product, and business advice to our founders and startups. We call it 360 Advice, as we are covering all the areas where the founder and the startup might need support.
Our way of working might be tailored to the particular situation of the business idea, but follows the following principles:
Since Wayra Builder was launched, we have created four startups. All of them, but one, which was recently, are up and running. The ones currently active in our portfolio are:
Shaadow and Deeder were initially patented technologies we had developed at Telefónica and subsequently identified as an opportunity to spin-out. Wiper is the result of a collaboration with another venture builder.
Open Innovation Campus (OICampus) was born in March 2020 with the mission of being a bidirectional bridge that closes the gap between the academic world and Telefónica by designing, executing, and scaling collaboration models. Such models combine the assets of both worlds to create impactful innovation that addresses key needs, challenges and opportunities identified in the company.
A key aspect of our way of working is that everything starts with a need, a problem, challenge or opportunity identified in the company that can be addressed by collaborating with the academic world. Once the need is validated, we approach academic institutions and design and implement a collaboration model that combines our assets to get the expected results. As Open Innovation Campus is a bidirectional bridge, sometimes an academic institution approaches us with a proposal for addressing a need.
No doubt the academic world offers a range of possibilities to cover corporate needs. These possibilities can be linked to four types of needs that we have in companies:
Next, we will delve into each of these types of needs with concrete examples of initiatives that we have carried out from OICampus, which allow us to illustrate the relevance of these collaborations for both the company and the academic world.
Our current approach to early-stage Open Innovation is the result of the evolution of the different initiatives we have created during all these years and, more importantly, our lessons learnt.
There are some general lessons that could be applied to any type of innovation initiative. Specifically:
We have also some specific learnings with regards to our venture building experience:
And I would like to end with some particular learnings with regards academia and enterprise collaboration:
For Telefónica, the ability to anticipate the future is key, this allows us to understand society’s needs and to continue being pioneers in the digital world. To achieve this, we rely on the innovation created internally and on what our Open Innovation initiatives bring in all the stages, including of course our early-stage initiatives Wayra Builder and Open Innovation Campus.
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