Oct 4, 2016
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Ken Olisa: Disruption, the Royal Family and other innovation stories

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Ken Olisa
Olisa: The Queen’s Lord Lieutenant of
London

According to Ken Olisa, the average telco is risk averse
– for a number of reasons. One of them is legacy
technology. He says: "I remember someone declaring many years
ago that you should never interfere with a telco’s
business support system (BSS) since if you broke it,
you’d never be able to fix it, as the person who
designed it probably died 20 years ago. If that’s
your experience of your own IT you are going to be
risk-averse." The other reasons stem from the failed working
methods telcos seem reluctant to drop.
When Olisa was chairman of cloud company Outsourcery, Vodafone
asked if they could provide a unified communications system.
They wanted to provide it to their customers.
Olisa says: "We were excited. In anticipation, we went to the
market, raised the money necessary – £20 million
– built a system, gave it to them and waited. Three
years later they still hadn’t launched the
product. I found out at that point that this was not unusual
for a telco. However we suffered because of this
indecision."
Olisa remembers it as a painful experience, but is very clear
not to put all the blame on Vodafone.
The process is what was flawed: "Very often a telco will come
up with the idea for a product, such as a unified
communications solution It will then funnel it through several
layers of product managers.Then a clutch of internal and
external partners are involved, who all add their unique
changes to the product which years later comes out as something
so malformed no one can use it."
Olisa says: "Innovation is mostly driven by the smaller
companies and start-ups such as Airbnb, which looked at the
entire old hotel model and said: 'You do it this way –
this is crazy. Why buy all that expensive real-estate and
employ staff? Why not do it this way?’ Uber
reinvented the taxi business without having to own any
taxis."
How, therefore, can telcos generate innovation? Why do
corporate venture capital set-ups not work?
Grow your own innovators
Olisa warms to his theme: "Now there are two ways you can do
this. Grow your own innovators or bring them in. What the
telcos usually do is – stupidly – set up
corporate venturing activities." This originates, Olisa
contends, because telcos are weak on offerings and people,
while being strong on what he calls base and brand.
Olisa is critical of the methods the big telcos have
traditionally used to drive innovation. "What they do is take a
few of their key internal innovators, maybe a few people who
are their most visibly irritating, rebellious and noisy, and
set them up as a corporate venture.
"They give them some money to invest – and a set of
corporate instructions in how to make money or instructions in
how to 'get something useful for us’ in corporate
venture land. So you send them off to find innovation."
The first thing they do is take off their ties because they
don’t have to wear them any more – they
are mixing with the cool entrepreneurs, he says. "Then they go
off for three years and carry on worrying about how they can
make a 2% fee on every deal and worry about how much interest
they can accrue because the telco has told them that is what it
wants in return.
"They then decide they don’t want to be part of
this contradictory business anymore –
it’s a hopeless in-between limbo – and
they go back and complain to the business about their lack of
progress which either re-absorbs them or
fires them.
"The funds that they have invested in get managed by the
telco’s finance department and the clients
demoralised."
So if you’re a telco venture capital investor,
according to Olisa’s guidelines, you put money in,
the scheme gets closed down and suddenly you’re
being managed by finance – you’re not
going to be very happy. But this happens time and
time again.
Dotcom bubble
Olisa is speaking from long experience. He started his career
at IBM in the 1970s and moved to Wang Laboratories in 1980. He
founded technology merchant bank Interregnum in 1992, which he
led through dotcom storms to a listing on the AIM market in
2000, just as the dotcom bubble burst.
Olisa is now a non-executive director of Thomson Reuters. Last
year he was named as the most powerful black person in Britain
in the annual Powerlist, which lists Britain’s
most influential people of African and African-Caribbean
heritage.
In 2015, he was made Lord Lieutenant of London, appointed by
Queen Elizabeth II on the advice of then Prime Minister David
Cameron.
The title gives him an office in Whitehall,
London’s government district, and control of a
staff base of 90 people. It puts him in charge of all visits
made by the royal family within Greater London – with
him even standing in for them on some occasions.
Back to innovation: the present model doesn’t
work, says Olisa. With the UK and European model, venture
capitalists are betting that the one company or entrepreneur
they pick will be the winner in their market sector.

Poking at a big hive with a long stick

But Olisa says: "They are blindly poking at a big hive with a
long stick. It’s not working." So what is the
future of innovation?
Olisa explains the difference between European innovation and
the US version with a true story: "I was in a bar in Silicon
Valley a while ago talking to an entrepreneur. I was expounding
at length about the internet of things and what a rich seam of
inspiration it will be for entrepreneurs."
The entrepreneur was not in the slightest interested, so Olisa
went to the bar to get another drink.
"When I got back, he said: 'Selling shoes over the internet is
the next big thing.’ Being a Brit I poured cold
water on the idea – and asked him how he would make
sure they fitted the customer? He said the customer downloads a
template, measures their feet and sends it back." Olisa was
sceptical and had another drink. Soon after he got back to
London he read about Amazon buying Zappo shoes for $1.2
billion.
"This shows that successful innovation is finding out what the
consumer wants and finding an efficient way of selling to them.
You have eliminated a lot of the competition, and as long as
you can deliver on the growth you do well. But you have to do
that as a carrier as well – or your future will mirror
the utilities – and we all know what happens to
utilities."
The Silicon Valley system

This means that the future for innovation in Europe will take a
different path. That’s because Silicon Valley is a
closed system – nowhere else has the same system, with
Amazon, Google, Apple, Facebook and other big companies. In
Europe, there are no equivalents, so Europe does not have those
companies to fund innovation.
"Uber, Amazon et al are huge consumers of innovation who can
bring new companies into their systems and spin them off. Uber
was no overnight success – it was ten years and
£2 billion in development. They bring companies into the
mothership and develop them or absorb them."
So what is the future, since there is no Google or Facebook in
Europe?
For Olisa, the problem is not a lack of individual innovation,
which he has always been good at identifying, supporting and
creating value from. He works with and champions a lot of
innovation.
"We’ve got Vodafone and we had ARM – but
there aren’t many companies who are consumers of
the type of innovation Facebook, Google and Apple snap up," he
says.
"And the model doesn’t feed into them. So
it’s broken. Ford recently bought its new car
operating system from Nissan because they couldn’t
solve the problem themselves. "However, vehicle operating
systems are already being provided by Apple and Google. Detroit
will not want to be slaves to the Valley so it tries to buy
outside – but Apple and Google just keep investing and
they will build better OSs and because they have the perfectly
vertically integrated supply chain in Silicon Valley, motor
city Detroit will end up buying from them anyway."
What is the reality of IT investment in the UK? "I was recently
with Princess Anne [daughter of the British queen], meeting a
child of nine who had made a robot that shakes hands. She was
slightly disconcerted she might be put out of the handshaking
business by a robot.
"But I don’t think the child was trying to make
her redundant. I asked him if he could modify the code. Of
course he could. I was impressed – he’s
only nine. So I think we have an improving education system,
expanding tech sector and have London which is still driving
innovation." Let’s just hope he finds a telco as a
client.

Read on: GlobalTelecomsBusiness

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