Portugal Telecom Case

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http://www.insead.edu/facultyresearch/centres/elab/research/documents/INSEADLogica_innovationreport.pdf Case study: Portugal Telecom
Portugal Telecom (PT) is a global telecommunications operator with a portfolio covering all segments of the market, personal, residential, SOHO / SME, corporate and wholesale and all technological solutions, fixed, mobile, multimedia, data and corporate. With 74 million customers, PT has a diversified portfolio of assets in 14 countries, including Portugal, Brazil and high growth international markets, including the subSaharan Africa. The company has 33,000 employees of which 11,000 are in Portugal. In March 2009, PT launched the ‘Open’ project with the aim of ‘industrialising’ the innovation process, to accelerate the roll out of novel services, and create the right conditions to leverage the power of creativity of its employees, according to Rogério Canhoto, Group Manager for Innovation. The process has three streams, the short, medium and long-term. The short-term is aimed at innovations that can have immediate impact. The medium-term looks three to five years out and is focused on the ‘next big thing’. The long-term is far ranging and involves external partners sharing their vision of the future. The long-term strategy is fed back into the medium-term to generate the candidates for the ‘next big thing’. In its short life span it has already generated significant traction across PT’s employees through a comprehensive communications plan that challenges employees to come up with new ideas every five to six weeks, such as reducing cost in a particular area, or how to capture the ‘millennial’ generation. “Employees are encouraged to participate in an ‘ideas market’” explained Rogério. “Everyone has credits that they can use to ‘invest’ in ideas and also comment on them. At the end of the period, the top 20 ideas go to the Board for debate and approval”. The Board and a group of internal experts examine each idea for ‘game-changing’ potential and ease of implementation. Those ideas that are selected get assigned to a team made up of the inventor, someone from the Open team, and someone from the Operations team. Follow-up happens every two weeks with the Board to ensure that obstacles are dealt with swiftly. Credits can be won or lost according to what happens to the ideas that employees back or comment on. These can be converted to small prizes, such as a box at a local football game, attending the TED conference, or – the most eagerly sought – shadowing the CEO for a day. His backing and commitment to the programme is well understood by the employees. Backing up the project is a training programme that has already been attended by 5,000 employees. Moreover, a scorecard keeps track of participation at the departmental level, and has a direct impact on managers’ bonuses. There are also additional coaching sessions available to managers who request them, as well as a roadshow to help departments who need to improve, or field-based employees that are unable to attend the training sessions. Implementation and measurement.

One of the most crucial findings in this category was a clash between ‘short-term management performance priorities and long-term innovation priorities’, with 41% of respondents noting that this was the top factor blocking successful innovation. This was followed by 27% saying that ‘middle management focused on the delivery of projects rather than innovation beyond project scope’. Perhaps all very understandable, particularly during uncertain times, but successful innovators need to be able to balance these competing aspects. The follow-up interviews confirmed this line of thinking: most interviewees indicated that getting the balance right between innovation and the day-to-day operations was extremely difficult. Some respondents do have mechanisms to allocate and prioritise resources and projects, but many have a more ‘silo-ed’ approach to innovation projects and how they are...
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