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Vodafone is in January expected to put in place the last piece of a pan-European jigsaw to set up a new business unit designed to increase product innovation.

The world’s biggest mobile operator by revenues is due to confirm its final choice for the last of six centres of excellence it has set up inside some of its national operating companies.

The new organisation, called the Future Products Unit, is designed to fill the gap between internal research and development and the team responsible for bringing new products to the market.

Aris Hadjiaslanis, who heads the new business unit, explains: “It is about adding medium-term innovation to Vodafone. In the past it has been about short-term innovation with a time-to-market of up to one-and-a-half years where the focus is about commercialising products so they won’t look at the innovation side.”

He adds: “Then we already have people who look at the three-to-five-year time frame in research and development who are purely technology focused and do not look at their work in terms of road map to market.”

Mr Hadjiaslanis says this set-up has left a clearly defined gap in innovation and product development. “There are lots of small companies globally churning out products but they don’t have a bell to ring at Vodafone so the opportunities get lost.”

The new unit is thought to be unique among telecommunications operators, which are not generally known for product innovation.

Michael Ransom at Current Analysis, a US-based technology consultancy, says: “I certainly haven’t seen any of the other major operators put such a major focus on the 18 months to three-year time frame.”

He identifies two key reasons for the initiative. The first is an extension of Vodafone’s drive to leverage its global scale by bringing all the national operating businesses together.

“Vodafone wants to develop once and deploy many times and get the costs savings that way,” Mr Ransom says.

Perhaps more crucially, he believes the move is a further clear sign that Vodafone’s core markets are maturing and it needs to find new ways to win customers. “Obviously [equipment] vendors will offer their products to all the operators. Vodafone wants to differentiate its brand from their competitors.”

Mr Hadjiaslanis, who joined Vodafone centrally in January, after working at its Greek business, took the idea, which had been debated internally for two years, and put it into practice after the board gave the nod a year ago.

After running an internal competition among all the operating companies, he decided to start with three centres of excellence in the UK, Germany and Spain. After an initial pilot period, all of them went live last month.

Portugal and Italy have since joined, with each unit employing 25 staff. By end of March, all six will be up and running with 150 staff spread across them.

Each unit will have a specialisation. For instance, the UK will have responsibility for business applications, while Spain will work on improving the online experience.

Each will have a team of scouts with the remit to look for new ideas, which will then be vetted by the unit’s market researchers, business and technology as well as some initial market testing.

Only products or concepts deemed commercially viable will proceed to the final incubation phase. Mr Hadjiaslanis believes only 5 per cent will make it this far.

He sees opportunities in such areas as machine-to-machine communication, for example, a car that automatically contacts the emergency services in an accident. Another area he believes will bear fruit is the use of voice commands to navigate through a mobile device.

He says the decision to base the units alongside the operating businesses was critical. “They are close to where the money is made and close to our customers, so will hear the real voice of the market.” The consumer will ultimately dictate who will survive in this rapidly changing industry and Vodafone is not going to give up its market leading position without a fight.

Copyright The Financial Times Limited 2017. All rights reserved.
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