Lean Startup at Telefónica
The rapid changes in the telecommunications industry and extremely demanding market has led Telefónica to transform itself into a digital telecommunications company. Being immerse in such a dynamic environment where customers expect innovative solutions with shorter development times, Telefónica started to apply the Lean Startup methodology for the development of new products and services where customer base and market have yet to be validated. However, for projects where markets are already well defined and solutions are only to be improved and/or updated, Telefónica applies Agile Development. This approach enables Telefónica to keep its competitive advantage as one of the leading telecommunications companies in the world.
Let’s have a closer look in what Lean Startup is and how Telefónica leverages this methodology in order to create new products and services that customer need and desire.
The Lean startup is the application of lean thinking to the creation of new businesses, products and services. One of the cornerstones of Lean Startup methodology is the “Build – Measure – Learn” cycle also known as the “feedback loop”. The first step is to understand the problem that needs to be solved. In the second step the team develops a Minimum Viable Product (MVP) to begin the rapid learning process. Once the MVP is established, teams measure success using actionable metrics, and learn from the feedback and insights observed from users in order to improve the MVP. The cycle is then repeated.
The methodology was initially proposed for fast-growing start-up companies but its benefits and the approach quickly attracted established companies from across different industries. Some of the first enterprises that deployed Lean Startup include GE, Intuit, and Telefónica.
The Lean Startup methodology encompasses a set of practices which enable intrapreneurs (in-company entrepreneurs) to design profitable and scalable business models that will help to increase the success rate of new products and businesses. In Telefónica the lean startup is employed in three key stages starting by outlining a new business model, before moving to the customer development stage, and ending in agile development to bring the solution, for the identified audience up to the market launch
As mentioned earlier, in 2011, Telefónica began to position itself as a digital telecommunications company applying actively the Lean Startup methodology in the same year, by piloting several innovation projects. The successful outcomes of those projects that followed the lean startup methodology encouraged the company to rollout the Lean Startup methodology across other innovation projects.
After the initial learning period, Telefónica decided to use the Lean Startup in projects where markets need to be validated. That is, when the aim is to create products that offer new solutions to customers or to adapt new solutions for niches with specific needs (non-existent until now). In both cases, the market is not yet validated. For the projects with pre-existing market knowledge and a validated business strategy company would continue to follow more traditional Product Life Cycle (PLC) management processes.
While this set-up is not entirely unique to Telefónica, the way they continuously ensure synergy and coexistence of a traditional and startup culture is unique. Find out more about successful example of Lean Startup methodology in an Enterprise setting in our book.
Telefónica is one of the world’s leading telecommunication service providers, operating in 21 countries, employing 120,000 people, and serving over 360 million customers around the globe. In 2011, the continuous and rapid changes in the telecommunications market led Telefónica to reinvent itself and transform into a digital telecommunications company. The combination of traditional telco assets combined with digital ones, enable its customers to access and enjoy the latest technology. To achieve this, Telefónica defined its path towards success by applying three values: Discover, Disrupt, and Deliver.
Telefonica’s Best Practices are presented and described in more than 36 pages in the Lean Product Development Best Practices book. Siemens Building Technologies chapter is only one out of the 10 chapters presenting the real-world application of lean product development in multinational companies.
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ABOUT THE AUTHOR(S)
Lean Analytics Association
Dr Flores has over 20 years of experience collaborating as an internal or external consultant in different manufacturing and services organizations, leading several initiatives related to Lean Thinking, Business Process Improvement, Six Sigma, Supply Chain, Change Management, Open Innovation, Digital Transformation and Human Centered Service Design; providing also training and coaching.
She is co-founder and president of the Lean Analytics Association (LAA) and visiting scholar at the College of Management of the Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.
She carried out her Post-doc at EPFL collaborating at the Lean Product and Process (LeanPPD) FP7 European project from 2009 to 2013. She completed her PhD in 2006 at the Politecnico di Milano studying Open Innovation Models to enable Industry-University collaboration for innovation. She obtained her Master’s Degree in Manufacturing Systems in 1999 and a Bachelor’s Degree in Mechanical Engineering from Monterrey Tec (ITESM) in 1996.
Susana is currently the Head of Innovation Portfolio at Product Innovation in Telefónica. After fourteen years working on different areas at Telefónica, in the last five years her career has focused on innovation and strategy. She has been also a member of the core team that defined the current innovation model at Telefónica I+D. In her current role, she drives the innovation process, the key tool for managing innovation projects funnel; and runs the innovation calls, where employees submit their ideas (these calls are thus the main source of projects for the innovation funnel). She has co-authored the Lean Elephants report, describing the experience and learnings of applying Lean Startup to innovation projects at Telefónica since 2012.
Susana holds a M. Eng. in Telecommunication Engineering and an Executive MBA from IE Business School. And is also currently Associate Professor of Lean Enterprise at the IE Business School.
Lean Analytics Association
Matic has over 5 years of experience in working with global organizations from various industrial sectors, either leading or supporting the development and introduction of bespoke lean innovation and new product development solutions. Over the past years, Matic led the development of a framework to enable better, faster and more integrated innovation across the entire value chain, empowering companies to maximize their innovation capability and deliver truly customer-centric solutions, while minimizing the risk of market failure.
Matic is a certified Service Design Thinking Facilitator, and the creator of the Set-Based Integrated Innovation Business Game co-developed with a multinational Swiss company. He previously worked as a Research Fellow and Project Manager at Cranfield University, where he acted as a task leader of Set-Based Design activities for the British aerospace project. He completed his Master’s degree in Global Product Development and Management at Cranfield University in 2012.
In 2017 Matic co-authored the Lean Product Development Best Practices book, and several journal and conference publications. He regularly appears as a speaker at various lean, product development and innovation conferences.
Lean Analytics Association
Seyi Omoloso has collaborated in strategic projects related to Lean Product Development and Industry 4.0. In Jaguar Land Rover, he worked with a team to introduce Set-Based Concurrent Engineering principles to accelerate the product development cycle time at the Chassis Engineering Department. He recently completed a research project for CEMEX to identify best practices and trends to develop a roadmap for Internet of Things implementation as part of their digital transformation strategy.
Seyi has an undergraduate degree in Agricultural Economics at the Federal University of Technology, Akure, Nigeria and a Master’s degree in Global Product Development and Management at Cranfield University, United Kingdom. His areas of primary interest are in Entrepreneurship, Lean Product Development and Industry 4.0.