Embracing Innovation
Portugal Telelcom has 11,000 employees, 100 million customers and had 6.6 billion Euros in revenues in 2012. PT provides telecommunications and multimedia services in Portugal and in developing markets such as Brazil, Angola, East Timor, Cape Verde, Mozambique and Namibia.
The worldwide economic crisis of recent years has led to tremendous volatility in many sectors and telecommunications is no exception. Portugal Telecom’s leadership team has actively embraced a strategy of innovation to thrive in today’s highly competitive business environment.
But what does it mean when an international telecom company with over 100 million customers and 6.6 billion Euros in annual revenues actively embraces innovation? For Portugal Telecom (PT), it means declaring every employee to be a part of their ‘innovation team’; it means embracing new lines of communication; it means defining a structured approach to innovation; it means leveraging academic and private partnerships. Perhaps most importantly, it means an active and engaged workforce that is constantly dreaming, defining and implementing innovative ideas.
While PT has always had a culture of innovation (e.g. offering the world’s first pre-paid mobile phone service in 1995), over the past few years the company’s executive leadership redefined its approach, integrating innovation into all of its processes and making it the responsibility of each and every one of its employees.
PT has demonstrated its commitment to innovation both through its corporate culture and its financials. In 2011, PT invested 3.6% of revenues in Research, Development and Innovation (2nd placed European operator in terms of R&D investment as a percentage of revenue according to “The 2012 EU Industrial R&D Investment Scoreboard”).
Structuring Innovation
In 2009, with fixed line revenues decreasing across the telecom sector and ever increasing competition in the mobile market, PT’s CEO Zeinal Bava recognized that innovation was the key catalyst of value creation in his sector. He identified the need to move innovation beyond one single division and to embed a culture of innovation into the company. The PT “OPEN Programme” was born, a new structured innovation initiative managed by a small team reporting directly to the CEO. PT’s leadership team believed in the wisdom of crowds, and set about harnessing the minds of its people. This initiative was designed to develop the structures and tools needed to align corporate wide innovation with the company’s business strategies and priorities.
PT’s approach defines three types of innovation: exploratory innovation (structural projects, long-term and high-risk by nature); planned innovation (medium-term business development); and incremental innovation (low-risk and short-term optimisations). This structured approach allows PT to assume a leadership role in its industry, remaining competitive today while focusing on opportunities to grow and thrive tomorrow and beyond.
As part the launch of the OPEN program, PT recognized the potential for all of its employees to be part of its new approach to innovation, especially incremental innovation. PT searched for an effective platform that would actively engage its employees in generating innovative ideas. Exago MarketTM was identified as the tool that would help realize this goal.
What is an Idea Market?
An idea market is an online platform that applies the principles of gamification (i.e. the process of taking the concepts used to design games to be engaging and applying them in non-game environments) to idea generation and innovation management. What better way to get all of your employees thinking about how to solve the challenges facing your company than by motivating them to do so through a process of fun and play?
In 2009, PT implemented Exago Market, an industry leading idea market platform that offers employees the chance to participate in a virtual stock market of ideas. PT’s idea market has four ‘permanent’ challenge areas: Operational Efficiency, Customer Experience, Products and Services, and Culture and Organizational Behavior. Additionally, every 2-3 months, PT’s CEO introduces an ‘innovation challenge’ into the idea market. Employees can offer insights in three ways:
- present their own ideas about how to address the challenge;
- offer comments to discuss and perhaps build upon ideas presented by others;
- indicate their support (or lack thereof) for a particular idea by choosing how to ‘invest’ their virtual currency in the market.
As more and more people engage in the ‘marketplace’ of ideas, the power of the ‘crowd’ becomes apparent. Good ideas evolve and grow, weak ideas quietly disappear from the debate, and great ideas rise to the top and assume a dominant role in the collective discussion.
Effective Employee Engagement
As an incentive to participation, employees see the virtual value of their portfolios grow as they participate and invest in the idea market. They can redeem the value of their virtual portfolio by bidding on rewards ranging from a restaurant voucher to a shared lunch with the CEO.
“PT employees know that they have the means to share ideas hat make a difference. Innovation is a company wide effort – anyone can play a part in changing the company and its performance for the better”. Joao Doloers, Portugal Telecom.
Ideas that ‘succeed’ in the market are examined by the PT Innovation Team, a committee of business experts. This team identifies ideas with the greatest potential impact and ease of implementation and assigns them an ‘Owner’ who will work with the original idea ‘Creator’ to implement the idea.
PT has learned (through both practical experience and scientific analysis of the idea market) that incentives and rewards are not enough to keep employees engaged and interested. Research found that users ranked the rewards and incentives offered within the market as among the least important factors contributing to their participation. Intrinsic motivations played a much more important role; values such as being able to contribute to innovation within the company and actively participating in a community about which they cared, presented themselves as strong determinants of participation. People want to feel valued, informed and involved; communication, feedback and recognition are vital. At PT, through internal communications channels, employees are kept informed about idea implementation and creators of implemented ideas are acknowledged.
Positive Results
Since the 2009 launch of the PT idea market, over 7000 ideas have been submitted leading to over 300 implementation actions in areas including improved customer experience, products and services, organizational culture and behaviour, and cost reductions.
The implemented ideas have resulted in savings including more than a 20% reduction in corporate paper usage, €125,000 annually through lighting and computer usage initiatives, €100,000 annually in efficient garden initiatives, and €25,000,000 annually from the refurbishment and reuse of telephones and set top boxes. Additionally, €150,000 has so far been raised and donated to charity from the internal sale of obsolete equipment to employees.
Over the past four years, PT’s culture of innovation has come to permeate every division and employee in the company. More than 2/3 of employees, including a significant number of employees working in remote locations, actively share their thoughts and ideas in the idea market. There have been both tangible and intangible benefits, including annual financial benefits of approximately €30 million, a reduced carbon footprint, and increased employee engagement. While 58% of employees reported feeling ‘aligned with PT’s strategy’ in 2008, prior to the implementation of the idea market, 84% reported feeling aligned in 2012.
Innovation and Sustainability
As a sustainability leader (Dow Jones Sustainability World Index, FTSE 4Good, ‘World’s Most Ethical’ companies), PT works to offer innovative products and services within a sustainable framework, focusing on efficiency and environmental footprint reduction. In the 3rd quarter of 2013 PT will open one of Europe’s largest data centres to position the company as an international player in cloud computing. This data centre is strategically located and carefully engineered to use renewable energies (on-site wind and solar), take advantage of local temperature to aid in cooling, use LED lighting and monitor ongoing consumption habits to maximize efficiencies.
PT is focused on anticipating future consumer and technology trends and has positioned itself to remain at the cutting-edge, leading its sector by building an agile next generation organization that is ready to seize opportunities in emerging markets, digitalization and virtualization of services and content, and mobility. PT demonstrates its commitment to innovation not only through its internal programs, but through external involvement such as the PT Technology & Innovation Conference which it hosted in October 2012, with over 5000 attendees.
A recent challenge presented in the idea market was, “How can PT support Portuguese society in the current downturn?” Portugal Telecom is a company that recognizes that its ongoing success is inextricably linked with its ability to evolve and innovate as a responsible corporate citizen. And, it is a company that recognizes that the best path to success is one where each and every employee actively participates in the journey. As PT Executive João Dolores explains, “PT employees know that they have the means to share ideas that make a difference. Innovation is not seen as something that only the technical departments or senior management can create or make happen. Anyone can play a part in changing the company and its performance for the better.”