Disrupt your business model, before someone else does

need to disrupt your own business model fast, before somebody else does it for you,"
according to Matthew Key, CEO of Telfonica Digital, in a recent article in The
Times (subscription needed). I posted here about the risk of brand leaders
like Kodak and Blockbuster Video failing to respond to disruptive market
changes. Matthew offers
some interesting insight into how Telefonica, owner of fixed and mobile phone
networks including O2, is trying to disrupt its own business model before
someone else does.

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1: Overcome inertia

agrees with my earlier post here that the issue most companies face is not “marketing myopia”, when they don’t see change coming, but rather inertia. He comments, “Every business has inherent inertia as the company and,
more significantly, the people within it are successful because of the past
model, not a future one.”

2: Source ideas from outside

are following the example of P&G in sourcing ideas from outside their own
business. P&G’s Connect+Develop program
means that half
of new product initiatives involve significant external collaboration. As
Matthew says, “A
company’s in-house R&D facility
remains important, but you also need to identify disruptive innovation from
outside your company and outside your industry.”

3: Invest time and talent

is investing big time to identify new technology. Matthew was previously CEO of
Telefonica Europe, so naming him as head of the new Digital Innovation unit
sends a powerful signal about how important this is. Telefonica’s technology accelerator programme, Wayra, is also getting
serious support. It is incubating 170 start-ups across 11 countries, with
Telefonica taking a 10% share in each one. The purpose is to create new
innovations for the company’s 300 million customers.

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of new ideas include

– Helping
people with serious health issues share results of heath monitoring done at
home in real time with their doctors, improving the quality and cost of

– Installing
SIM cards in cars so insurance companies can see when, where and how somebody
drives. Insurance policies can then be tailored to individual needs and

conclusion, Matthew shows how to react to the significant changes happening in
technology: “move fast, embrace the
opportunities, create new ecosystems and build stronger businesses and a better