Tell me a bit about your background?
I started out my career in New Zealand in insurance & banking but was headhunted to the telco industry after a few years. I was attracted by the more dynamic and fast-paced environment, which I still think it is. After that, I back-packed around the Middle East before landing in London in the midst of the dot-com bubble. In late 2001 I joined Telia International Carrier (now Arelion), where I worked in different roles, from product manager to CEO. In 2016 I moved to Telia Company where I was asked to establish what is now Division X.
What is Division X and why is it important for Telia?
Division X is Telia Company’s dedicated growth unit. We are tasked with exploring, building, commercializing and scaling new business areas – business areas that have the potential to augment our core and generate significant future revenue streams. Since 2016 it has evolved from a broader innovation and corporate venturing unit to a highly focused scaling unit. Today that focus is on IoT (for enterprise and public sector); Data Insights (enabling various sectors to take better data informed decisions based on anonymized real-world location data); and Digital Life (digital products and services aimed at solving the everyday life puzzle). Telia Smart Family is an example of the latter.
Telcos have missed countless waves of innovation driven by technology and consumer behavior changes related to the internet. This is not due to a lack of good ideas. I’d argue it’s due to the crisis of prioritization the vast majority of established businesses suffer from – when competing for the same resources the longer term will lose out to the here and now every time. Hence the decision to ring fence our future bets and give them the prerequisites to succeed.
What do you see as the most common barriers for corporates who want to scale a venture?
There’s a saying that first time founders focus on the product, and second time founders on go-to-market. The corporate innovation graveyard is no doubt full of examples of great products that failed due to the go-to-market or lack of it. And for sure we could offer up numerous past examples of our own. Existing channels are often either unfit for purpose, or unable/unwilling to make capacity available for future bets (coming back to the crisis of prioritization i mentioned earlier). Regardless of the reason, I think the solution is to ensure the necessary runway is in place before investing a cent in product development.
The typical corporate mindset and metrics are other barriers to scaling. One needs to understand and appreciate that overnight success is ten years in the making. So optimizing for short term EBITDA or cash flow simply won’t work. Don’t get me wrong, sustainable long-term profitability and growth is what any business should be aiming for. But you must use metrics that are suitable for the phase in which the venture is in.
Brendan Ives, VP & Head of Division X.
How is Division X addressing these challenges?
Division X was initiated with a lot of insight from other corporate innovation successes and failures. So from the outset, I think we’ve had a good foundation for success and we’ve tweaked/improved it over time. For example Division X is somewhat independent (end-to-end organizational capability, own funding, fit-for-purpose growth metrics used for performance management) but well connected unit (our core business is seen as the primary channel to market; key internal stakeholders are engaged in strategy formulation, business planning and follow-up etc). Without a doubt one of the key success factors has been board, CEO and executive support. Without this the prerequisites for success would have been watered down, and we likely wouldn’t have had the patience needed in some cases. Today I’m very happy to say that we have some great pull from our core business. But it takes push to get to pull and without the support from the top that’s going to be an impossible task in most established organizations.
In terms of how we operate I’d say the major difference compared to our core business is that we need to have more of a startup approach – thinking big, starting small, and scaling fast. There’s a lot of trial and error, iterating and pivoting in the development of our product offerings and how we go-to-market.
What’s your next step in further developing Division X?
As I mentioned earlier, Division X has evolved into a highly focused scaling unit. Right now we are in the middle of fine-tuning our operating model to better serve that mission. That includes gearing up to engage an emerging developer community and support/enable a shift towards online – trends that are driven by the maturing of the business areas we are addressing.