Winning practices of the most successful Technology, Media, and Telecom innovators

How leading TMT businesses overcome barriers to make innovation happen

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Dan DiFilippo
Global Technology, Communications, Entertainment and Media Leader
Tel: +1 (646) 471 8426
Raman Chitkara
Global Technology Industry Leader
Tel: +1 (408) 817 3746
Pierre-Alain Sur
Global Communications Industry leader
Tel: +1 (646) 471 6973
Marcel Fenez
Global leader, entertainment and media
Tel: +852 2289 2628
Roman Friedrich
Strategy& Global TMT leader
Tel: +49 170 2238 165

Clearing the innovation hurdles - How leading TMT businesses overcome barriers to make innovation happen

Only 10% of respondents in PwC's 17th Annual CEO Survey self identify as innovation leaders. That leaves 90% of companies that may not achieve sustainable, long-term revenue growth and competitive advantage. Which group does your company fall into? This paper focuses on how companies can ensure innovation efforts deliver tangible results to their business, focusing on key areas of differentiation, including: visionary leadership, open culture, genuine collaboration and partnerships, hiring the best talent, measuring innovation metrics, and a proactive approach to saving cash through innovation subsidies and tax incentives.

In Seizing the Innovation Edge, the first in our series exploring innovation within TMT, we identified the steps companies take to develop a coherent innovation strategy, and how this focus on innovation, coupled with intelligent innovation spending, generates faster revenue growth.

In Learning from innovation leaders, the second paper in our series focused on exploring innovation within TMT, we distil the lessons that can be learned from a cohort of leading TMT companies, and identify how to apply these lessons to enhance any TMT company’s innovation capability.

This third paper, Clearing the innovation hurdles - How leading TMT businesses overcome barriers to make innovation happen, looks at how business leaders can focus on the right metrics to achieve business-changing success.

The typical innovation portfolio of the most innovative TMT companies has a greater proportion of breakthrough and radical innovation.

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Case study: Verizon reaching out to innovative talent in new locations

Keys to success:

  • Searching out the best talent in key locations in the US
  • Investing in innovation centres to support talent pool

Many TMT companies are experimenting with setting up innovation labs in new locations across the globe as a way to compete for, and get close to, the best innovation talent. Though headquartered in New York, US telecom company Verizon has established innovation centres San Francisco and Boston for this purpose. These centres create an environment where small, innovative companies can test their solutions on Verizon’s development network, and collaborate with Verizon’s engineers and business development staff to bring their big ideas to market quickly.

For Tony Melone, Verizon CTO and Executive Vice President, searching out the best talent is critical to boosting the company’s innovation capabilities. “It should be no surprise why San Francisco is one of our two showcase centres: this is the innovation capital of the world for hardware and software,” he says. “And for our internal work, we have also created a software development centre in Palo Alto. That’s two areas of significant investments we have made in the Bay Area to tap into the smarts embedded here.”4
4 PCMag, ‘Verizon expands San Fran innovation center’, (October 2013)

Case study: freeing up time to innovate through a nitiative’

Keys to success:

  • Bold vision and leadership from company CEO
  • Freeing up time in individuals’ day to focus on innovation
  • Creating a more open culture

A European IT services company found that almost three-quarters of employees (73%) spent more than a quarter of their time at work managing email. The company estimated that only 10% of email received was useful. The result was a productivity deficit: employees were spending time on tasks that didn’t add value, at the expense of focusing on genuine added-value tasks such as innovation.

In 2011 the CEO launched a ‘zero email initiative’ whereby employees were discouraged from sending or receiving internal emails. The CEO believed email was an outmoded and cumbersome form of communication.

Now employees are encouraged to use social platforms or instant messaging for internal communications which are more targeted and realtime.

Collaborative working is encouraged through the use of cloud-based apps for sharing ideas and documents. Employees now have more control over their time, which boosts the scope for innovative thinking, creativity and collaborative working.

So where next for the initiative? The company is reportedly considering removing other innovation hurdles through initiatives such as ‘zero PowerPoint’ or ‘zero meetings’. Whatever happens next, the ‘zero email initiative’ seems to be gaining traction with other business leaders. For example, Volkswagen, the German carmaker, has stopped its email servers from sending messages to employees outside working hours.

Case study: innovating the customer service ecosystem at a Fortune 100 software company

Keys to success:

  • Using an “Enterprise Co-Creation” approach to foster internal and external collaboration
  • Put the customer at the centre of the strategy to ensure they remain a priority for innovation

A leading Fortune 100 software company realised that its customer service experience was falling short, and that this was a barrier to increasing market share and customer loyalty. Because the company’s products are services are delivered in collaboration with a range of partners, this sometimes left customers confused or exposed to inconsistent quality of service.

To drive genuine innovation the company decided to take an “Enterprise Co-creation” approach. This involved bringing together all stakeholders — internal staff, as well as external vendors and partners — to candidly share pain points, formulate hypotheses for improved interactions, and ultimately conceptualize new operating models to deliver exceptional customer service.

The company used the insight derived from a series of co-creation workshops to create a three-year strategy and roadmap for improving customer experience. The strategy encompassed the total customer lifecycle.

A core element of the strategy was to create a framework for ecosystem governance supported by a new online marketplace where customers can access multiple support channels and select support agents based on skill, other customers’ feedback and language preference.

Within 18 months the company had moved from concept to launch. By placing customer at the centre of the strategy, they have ensured customer experience remains a key priority for innovation. In fact, customer satisfaction scores immediately increased following the launch, and continue to rise. And although thousands of support staff had to be re-trained and redeployed, the company has saved several million dollars in overall support costs during the first six month since launch.

Case study: overcoming collaborative hurdles to deliver digital and 3-D film

Keys to success:

  • Taking a long-term view of collaborative partnerships
  • Focusing on the value for each member of the supply chain can define the business model

Sometimes innovations that provide obvious customer benefits are slow to be adopted in the marketplace. One such example is digital cinema.

Over a decade ago, one of the leading suppliers of film and projection equipment to cinemas had developed the technology required to create digital cinema, offering higher quality resolution, enabling new functionality, and delivering a better customer experience for moviegoers.

Despite this, it struggled to make much impact on the market, given the investment needed to make the switch. Theatre owners were used to buying projectors that cost less than $20,000 and were easy to operate.

To introduce digital projection, they were being asked to upgrade to projectors costing upwards of $100,000 that required highly-trained, technically-skilled resources to operate.

Despite the lower cost of digital distribution versus the traditional distribution of film canisters, no party in the value chain – film producer, on-screen talent, distributor, cinema operator – was willing to compromise on margin. Likewise, customers had little appetite to pay significantly more for their movie tickets.

Another wave of innovation — the advent of 3-D digital cinema — broke the stalemate. Without digital projection, the new wave of 3-D was not possible, and growing customer demand for 3-D films meant cinemas were under increasing pressure to invest in technology to meet customer need. To make this happen in a sustainable way, production companies had to change their business model, setting up financing vehicles to lend money to cinema operators for upgrades to 3-D projection. In the end, a new business model that encouraged collaboration along the supply chain ultimately benefited all parties.

Case study: Collaborative ideation — revenue-boosting innovation in China

Keys to success:

  • Collaborative approach to ideation
  • Openness to innovating product portfolios
  • Framework for prioritising successful concepts

The Chinese team of a large multinational electronics business had aggressive growth targets set by its headquarters: triple revenue over four years. Meeting this goal required the company to generate innovative ideas totalling more than $2 billion of revenue.

The EVP responsible for managing the innovation portfolio realised the only way to achieve targets was to aim for breakthrough innovation by reshaping the product portfolio. In practice this meant a radical departure from business as usual.

To kick-start the ideation process, the company developed a strategic ideation framework, at the heart of which was the concept of collaboration. This was achieved through workshops that brought together teams from different parts of the business, with external innovation experts and input from customer.

The collaborative approach generated more than 100 ideas. These were rated against metrics such as potential revenue opportunity and time to impact. Ten of the most commercially-viable ideas were presented to the executive team. As a result seven ideas were taken forward as workable options for achieving the $2 billion target.

Through this process they expanded beyond their global product portfolio to create a China specific product portfolio, catering to the specific needs and price point of the local market. Most importantly of all, the approach helped shift their product innovation culture from “perfect execution” to “innovation and execution.”

Case study: maximising innovation returns at a global telecoms operator

Keys to success:

  • Aligning innovation investment with corporate strategy
  • Eliminating resource bottlenecks to enhance impact of existing spending

A leading telecoms operator was investing $500m each year to support innovation initiatives and its global R&D function. Despite this significant level of funding, the desired level of returns was not being achieved.

The root cause of this underperformance was poor decision-making about how to allocate innovation funding. Innovation investments were not wellaligned with corporate strategy, and there was a lack of guidance about market priorities and appropriate levels of risk tolerance. As a result the company struggled to bring new services to market quickly enough.

In response, the company defined a comprehensive portfolio management process for innovation investment linked to its annual budgeting cycle.

Simultaneously, a stronger governance structure was put in place to provide a clearer framework for investment decisions. This process involved identifying historical resource bottleneck to understand where hurdles had arisen previously, and to eliminate the bottlenecks for future resource allocation. These changes mean future innovation investment – both financial resources and human capital – better support the company’s growth strategy, and deliver a greater return for the business.

Building the gateway to the future of air travel

Now in its 42nd year of operation, Dallas-based Southwest Airlines carries more domestically-originated passengers than any other airline in the US. From its first flights in June 1971, the company has made air travel more affordable than ever before, driving fares downwards and passenger traffic upwards on every route it serves. In late 2010, Southwest announced its commitment to “spreading low fares farther”, and said it would start building its gateway to the future by acquiring and integrating AirTran Airways.

This deal was a huge undertaking for Southwest. At a stroke it would increase its reach from 72 to 97 destinations and its fleet size by 25%, while also seeing it officially enter international markets – an absolute game changer for a carrier that historically provided domestic-only services. Executing the deal would be complex, time consuming, and require unwavering focus from all areas of Southwest’s business. The effort would also face headwinds ranging from widely differing business processes to ageing technologies.

“PwC adds real value. They genuinely care about the success of your business and will see you through to success.”

- Kathleen Wayton, Vice President Technology, Business Transformation Solutions — Commercial, Southwest Airlines

Overall, the proposed merger highlighted the need for the help and support of a strategic partner Southwest had come to trust: someone that understood Southwest’s culture, a proven champion of Southwest’s strategic initiatives, and a seasoned advisor with deep understanding of the airline’s business. Southwest turned to PwC US.

The US firm hit the ground running, pulling together several high-performing teams committed to helping Southwest achieve its goals. First, the team built an IT integration planning team to draw up a technology roadmap spanning corporate, commercial, operations, and infrastructure. Next, it formed an integration programme management team to support technical integration across applications including reservation systems, agent applications, loyalty and web, supported by dedicated project management and solution development teams for high-risk applications. Finally, it established a technology deployment management function to ensure all the necessary technical changes were executed as planned.

On 28 January 2013, through the combined efforts of the Southwest and PwC teams, the integration efforts were completed with the successful sale of flights spanning the combined Southwest and AirTran flight network.

Improving healthcare in the world’s poorest countries

Global fund

The Global Fund is a US$23 billion financing institution based in Geneva, which funds programmes to prevent, treat and care for people with HIV/AIDS, tuberculosis (TB) and malaria in the world’s poorest countries. PwC has been working with the Fund since its creation in 2002.

The Global Fund is the main multilateral funder in global health, with 750 programmes currently in 151 countries. The success of the Global Fund’s activity can be gauged not only by its funding levels but more importantly by the results it has achieved. Over the past 10 years, more than 300 million insecticide-treated bed nets were distributed to prevent malaria, 9.7 million cases of TB were detected and treated, and 4.2 million people received life-saving treatment for HIV/AIDS.

As a provider of finance, the Global Fund does not directly implement any programmes. Instead, it funds mostly national institutions, like ministries of health or NGOs to deliver programmes that will have the greatest impact on the three diseases. In order for the financing to be used as effectively as possible, the Global Fund uses a number of Local Fund Agents (LFA) on the ground. Their role is to help to assess the capacities of key implementers in-country and provide ongoing monitoring of the use of funds and the progress of programme implementation.

PwC firms currently act as LFAs in 72 countries, with more than 350 people working to assist the Global Fund in making effective programme funding decisions. According to Gill Sivyer, the PwC Switzerland partner who leads the work with the Global Fund, two of PwC’s major strengths in particular make us the ideal fit for this work: “The global strength and reach of our network means that we have the right people, with the right skills and capabilities on the ground. Thanks to this network, we’re truly local both to the programmes and to the Global Fund’s base in Geneva. In addition, one of PwC’s core strengths – our independence – enables us to offer the Global Fund completely impartial assessment and recommendations. This gives the Global Fund the transparency and confidence they need for effective decision-making.”

PwC’s work with the Global Fund has grown considerably over the past decade. Our team in Geneva works closely with the Global Fund to deliver high-quality LFA services that meet the Global Fund’s information and risk management requirements. We also host an annual training conference for PwC staff to make sure they’re up to speed on the latest developments.

Monitoring the quality of broadband services in Brazil


PwC Brazil has been awarded a five-year contract to establish and run a new organisation (the EAQ – Entidade Aferidora de Qualidade) that will monitor the quality of broadband services in Brazil. PwC Brazil was the only major consulting firm that was asked to compete for the contract by the Brazilian telecoms regulator Anatel.

Ensuring the quality of both fixed and mobile broadband across the whole of Brazil is a priority for Anatel. Accordingly, it has created a unique regulatory framework that includes the power to fine service providers who fail to meet required standards and quality benchmarks. The importance of high-quality monitoring, assessment and reporting of that performance is therefore critical.

PwC Brazil and PwC UK worked together with a UK-based broadband technology provider to win this five-year project, awarded in 2012. The combination of PwC’s telecommunications’ expertise and its partner´s credentials on similar projects in Europe, the US, the UK and Singapore, created a powerful proposition.

Additionally, PwC’s leading reputation in the telecoms industry in Brazil was a key success factor as the body awarding the contract included representatives from more than 20 Brazilian broadband service operators as well as Anatel’s management. “PwC’s track-record for independence and integrity helped us win the contract and run this very challenging and exciting project”, says Luiz Viotti, PwC Brazil TICE Advisory and Engagement Leader.

From winning the contract, PwC Brazil has built a new organisation from scratch, and now has 30 full-time people working in the EAQ office in Brasilia. Ensuring that testing is as rigorous and representative as possible has required recruiting more than 200,000 broadband customers as volunteers across Brazil to agree to have a monitoring device connected to their computer. In addition, 5,000 public schools across the country were selected to receive and install equipment that will measure the quality of the mobile broadband connections. At any one time, up to 10,000 of those households and schools, on a rolling basis every 24 months, are subject to constant field-testing and their data is already being used to create reports for both the regulator and the Brazilian public.

Building and running the new organisation required PwC Brazil to enter into contracts with a wide variety of suppliers, including logistics, manufacturing and network infrastructure so that the EAQ fulfils its brief to help all Brazil’s broadband customers to get the best possible service from their service providers.

José Alexandre Bicalho, Anatel´s Planning and Regulation Superintendent, describes the introduction of the new quality indicators for internet broadband as “a milestone in the evolution of telecommunications in Brazil.” He adds: “Continued growth in the availability and quality of broadband services is essential to meet the needs and expectations of Brazilian society. Creating the EAQ with PwC is a major innovation – one that both enhances transparency for users and also reinforces Anatel’s regulatory model."

Helping to rebuild post-quake Christchurch


Photo by Ross Becker, photographer

In February 2011, a devastating earthquake struck New Zealand’s second-largest city of Christchurch, located in the country’s Canterbury region. Tragically, the earthquake killed 181 people, while also causing severe damage to buildings and infrastructure already weakened by a previous quake in 2010. The cost of the damage from the earthquake and aftershocks has been estimated at around NZ$40 billion, making it New Zealand’s costliest natural disaster ever.

In the immediate aftermath, PwC New Zealand was engaged by the newly-formed Canterbury Earthquake Recovery Authority (CERA) to lead and coordinate the recovery efforts. This role has seen us undertake a wide variety of work for many organisations across Canterbury, with our Christchurch office receiving active and enthusiastic support from most of our other offices throughout New Zealand.

We began by seconding two directors to CERA itself to help set the organisation up – a move that helped us gain insights into the challenges ahead. This work included advising on a financial blueprint, investor engagement and the business cases for anchor projects, one of which is a new Convention Centre in Christchurch.

We also acted as financial advisors on land acquisitions, developed joint risk management frameworks, and helped with a proposal to the Commerce Commission for an increase in electricity line charges to cover repairs to the power network.

Restoring public transport was a key priority after the earthquake, and this was another area in which we were involved, providing a due diligence report on the landscape of Christchurch including public transport planning. We developed a dedicated Christchurch Rebuild page on the PwC website, focusing on the risks for companies associated with the reconstruction efforts. We also engaged with construction firms involved in the work, as well as providing ongoing support to businesses dealing with business interruption claims. Insurance assessments were a further focus, and we developed proposals to reduce the risks of fraud.

“The rebuild is clearly an emotional and sensitive time for the people of Christchurch – and we’ve done our best to make the project run as smoothly as possible, by providing resources from across our offices and sharing our expertise with a wide array of businesses”, says Wayne Munn, PwC New Zealand partner responsible for the Christchurch office.

“We’ve also helped with the governance of the anchor projects. Most of these are currently underway, but we’ve recently been awarded roles as advisors to the Transport Interchange design-build contract (DBC) and Stage 2 of the Convention Centre DBC.”

Helping JICA IMPACT the base of the income pyramid

The PwC Japan International Development Assistance team

The Japan International Cooperation Agency (JICA) is a government agency that executes Japan’s Official Development Assistance programmes in developing/emerging markets. With more than 90 overseas offices, JICA’s role includes helping Japanese companies establish businesses that serve the ‘base of the pyramid’ (BoP) – commonly defined as the four billion people in developing countries who live on less than US$2.50 a day – thus fostering local social and economic development.

To support these goals, PwC Japan has helped JICA to promote BoP businesses to Japanese companies, including operating the Feasibility Study (F/S) programme. This enables Japanese companies to apply for and gain financial support to conduct feasibility studies, structure financing mechanisms such as the IMPACT fund, establish monitoring and evaluation schemes, and raise awareness of BoP businesses.

The project, recently won by a PwC team from the Japanese and the UK firms with support from PwC firms in Norway and the US, involved a benchmarking study to prepare the way for JICA to form new financial mechanisms to improve access to finance of BoP businesses. The PwC team reviewed the success factors for BoP businesses in emerging markets and existing impact fund mechanisms, and prepare a road map that JICA could take to establish its financial support for them. The PwC team then created a framework for measuring and monitoring the social returns of BoP businesses together with Japan’s leading social investment company.

In parallel to the benchmarking study, PwC Japan then won a three-year contract to help administer the BoP F/S programme of JICA. With private BoP companies setting up in developing countries able to apply for the programme, PwC Japan won the mandate to advise JICA on the selection process, and to help monitor and evaluate the programme – including reviewing lessons learned and recommending improvements to the company’s business propositions.

As part of this engagement, PwC Japan is also providing a ground-breaking one-stop shop for the BoP businesses supported by the programme, including supplying them with technical assistance in-market.

In evaluating the bids for this work, JICA was very impressed with PwC's global credentials, especially the UK-led ‘Business Innovation Facility’, which is aimed at pioneering new ways of working that will improve the lives of the poor. And the Sweden-led ‘Innovations Against Poverty’, which works to stimulate and support sustainable business ventures that might not otherwise be pursued because of perceived commercial risks and market uncertainties.

Masataka Mitsuhashi, engagement partner and International Development Leader for PwC Japan, comments: “In our work for JICA we’ve been able to draw on PwC’s unique blend of capabilities across the world, including our deep knowledge of BoP business, our presence in emerging markets, and our expertise in both business consulting and international development.”

Helping Oerlikon to develop its long-term growth strategy for India:
Emerging Markets Centre of Excellence plays key role


Oerlikon is a highly innovative industrial group specialising in machine and plant engineering. With over 12,700 people in more than 34 countries, the Group is active in five businesses: textile machines for manufacturing manmade fibers, drive and transmission systems and components, vacuum systems, thin-film coatings and nanotechnology.

In its drive to double revenue growth in India in the next five years, Oerlikon Group needed to identify opportunities for leveraging its business in the country. Operating in a diverse set of industries and product categories, the Swiss group recognised that a holistic and cohesive approach would be essential. To drive a successful long-term outcome, and combat increased competition from mid-market players, it set out to promote India, at group-level, as a vital growth engine in a growing market.

To help achieve its ambitious targets, Oerlikon turned to PwC’s Emerging Markets Centre of Excellence, which partners with clients to help navigate challenges and deliver on their business ambitions in India, a key emerging market. The centre is a strategic investment made by PwC India and is closely connected with other PwC firms in emerging and developed economies.

Leveraging the Centre’s integrated and comprehensive suite of solutions, PwC India’s Mumbai-based team set about helping Oerlikon to extend its understanding of the Indian business environment, develop new value propositions and put in place a tailored operating model that would deliver on its objectives. The team helped Oerlikon define which products and services would be best suited to the Indian market as well as focus on deepening existing customer relationships. A business case was developed promoting India as a growth market which set an accelerated target for growth till 2020 and a national operating model was created that would facilitate common functions related to brand and national policies.

Oerlikon’s India Country head Khurshed Thanawalla said: “Our work with PwC resulted in a strategy that recognised the nuances and complexities of the Indian market for each of our four key segments. The process facilitated growth ideas from each team member. This has led to clarity for our long term goals and has created ownership for this profitable growth agenda.”

Along with enabling and accelerating strategy development, the team proposed on making the new strategy work ‘on the ground’. For Oerlikon, the results of this engagement enabled it to rapidly prioritise opportunities from a large and complex range of options. With an initial capability assessment backed by a financial plan, Oerlikon’s management was able to build internal consensus for the strategy and drive the transformation that is now underway in the India business.


Seizing the innovation edge

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Learning from innovation leaders

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Learning from innovation leaders

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Learning from innovation leaders

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