Ericsson's innovation arm looks to bring ideas to life

Once the idea has been turned into a business, it is seen as a 100%-owned subsidiary of Ericsson.
Once the idea has been turned into a business, it is seen as a 100%-owned subsidiary of Ericsson.

Ericsson's incubator programme, Ericsson ONE, helps find innovative ideas and turn them into "the next big businesses that can go to market".

So said Salman Taj, VP of Ericsson ONE Innovation, explaining the decision to create the incubation programme, which seeks to drive co-creation between the company and entrepreneurial employees.

Taj, one of the keynote speakers addressing the media during a tour of the Ericsson Silicon Valley Experience Centre, in Santa Clara, last week, said the aim is to capture disruptive ideas within the company and convert them into viable businesses.

"If Ericsson doesn't provide an incubation platform for ideas then another company will," he noted.

This is done via "a democratic crowd-sourced approach", he noted.

"Ericsson ONE is more of a support group within Ericsson. We let the entrepreneurs within Ericsson, and there are quite a few of them, come up with the ideas, and then we provide various services that they will need to work. This can include connecting them to customers, capital investment or human resources... whatever they need."

Working formula

According to Taj, for corporate innovation incubation to work, corporates must develop formulas that will ensure the programmes work to the benefit of both the entrepreneur and the business.

The two main ingredients to achieve success are executive mandate and funding.

"We need support from the top, otherwise these programmes will fizzle out. There needs to be a champion, otherwise these aren't going to work. In our case, we get support all the way from the top, from the CEO himself.

"We need to have a clear innovation fund defined for these programmes so that we are not going around in circles looking for funds for every project that may come in."

While Taj wouldn't say how much Ericsson allocates to its incubation programme, he revealed the budget has gone up based on the results the company has been able to show.

"Our job is to incubate those ideas and businesses, which should be inexpensive to do. If you are spending too much money at this stage then we are not doing our jobs right. Our job is to validate businesses and not to run them."

Five-stage approach

Ericsson ONE follows a five-stage approach when it comes to taking an idea and turning it into a viable business.

1. Innovation

The first stage is initiation, an outreach programme within Ericsson, letting everybody know that the programme exists, how to engage and how to submit ideas.

2. Ideation

Next is the ideation phase, where we build the idea a little more. From here, we basically enable the idea originators to do a quick pitch of the idea. Once we find that this is a good enough idea, a good enough problem to be solved and relevant for Ericsson, and with a big enough addressable market, that's when it heads to the incubation stage.

3. Incubation

We develop the MVP [most valuable player] and we try and test it with some customers. This is when we do the validation and we will get the feedback from the market in terms of how viable the business is, and that's the input we take to build a business case at that point. After you validate, that is when you know the reality of the business and how big or small it could be. Within incubation is also the industrialisation phase, which is where we go out to get three or five customers.

4. Ignition

Once we hit that stage, that is when we go to the ignition stage, which is the growth stage. This is where business is scaling from the first three customers to 20 customers. This is a critical stage as a lot of companies never have this phase. We created this bridge phase to basically give the business some space to take off.

5. Incorporation

After it does that, we get it into incorporation phase. This is basically an exit to either spin it out or be incorporated into an existing business unit.

Once the idea has been turned into a business, the organisation will be seen as a 100%-owned subsidiary of Ericsson, added Taj.

"We give them all operational freedom, but financially, it will be combined with Ericsson eventually. Of course, they can come back to ask us for whatever they need in order to leverage their business. The business becomes a totally independently run business."

Right now Ericsson ONE has specific strategic areas it is focusing on incubating. These include smart manufacturing, Internet of logistics, autonomous vehicles, augmented and virtual reality, as well as the data economy.

"These are adjacent industries to what we currently do and we believe with 5G connectivity and all assets that we have, we can play a role in these industries.

"There are quite a few interesting projects that are on-going. At Mobile World Congress, we will probably be launching at least two of them, so you will probably hear more about them then," he concluded.

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