Olisa: The Queen’s Lord Lieutenant of London
Ken Olisa, the founder and chair of technology merchant bank Restoration Partners, is one of the key European entrepreneurs helping to drive innovation. Bill Boyle spoke to him about the choices telcos must make if they want to survive.
According to Ken Olisa, the average telco is culturally risk averse – for a number of reasons. One of them is legacy technology. He says: “I remember someone declaring many years ago that you should never interfere with a telco’s business support system (BSS) since if you broke it, you’d never be able to fix it, as the person who designed it probably died 20 years ago. If that’s your experience of your own
When Olisa was chairman of cloud company Outsourcery, Vodafone asked if they could provide a unified communications system. They wanted to supply it to their customers. Olisa says: “We were excited. In anticipation, we went to the market, raised the money necessary – £20 million – built a system, gave it to them and waited. Three years later they still hadn’t launched the product. I found out at that point that this was not unusual for a telco. However, we suffered because of this indecision.”
Olisa remembers it as a painful
The process is what was flawed: “Very often a telco will come up with the idea for a product, such as a unified communications solution It will then funnel it through several layers of product managers. Then a clutch of internal and external partners become involved, who all add their unique changes to the product then there is a companywide reorganisation and years later the offering appears so malformed no one can use it.”
Olisa says: “Innovation is mostly driven by legacy-free smaller companies and start-ups such as Airbnb, which looked at the entire old hotel model and said: ‘You do it this way – this is crazy. Why buy all that expensive real-estate and employ staff? Why not do it this way?’ Uber reinvented the taxi business without having to own any taxis.”
How, therefore, can telcos generate innovation? Why do corporate venture capital set-ups not work?
Grow your own innovators
Olisa warms to his theme: “Now there are two ways you can do this. Grow your own innovators or bring them in. What the telcos usually do is – stupidly – set up corporate venturing activities.” This originates, Olisa contends, because telcos are weak on offerings and
Olisa is critical of the methods the big telcos have traditionally used to drive innovation. “What they do is take a few of their key internal innovators, maybe a few people who are their most visibly irritating, rebellious and noisy, and set them up as a corporate venture capitalist.
“They give them some money to invest – and a set of corporate rules in how to calculate IRRs (internal rates of return) or instructions in how to ‘get something useful for us’ in corporate venture land. And off they go in search of innovation.”
The first thing they do is take off their ties because the dress code no longer applies and they are mixing with the cool entrepreneurs, he says. “In this brave new
“The final indignity sees the management of their portfolio – the companies that they have invested in – being passed to the telco’s finance department ending up with the entrepreneurial investees becoming thoroughly demoralised as their dreams of a partnership made in heaven disappear in a fog of monthly spreadsheet reports to their new masters.”
“That journey from the romance department to the finance department is a sad one for all concerned – and yet it continues to happen time after time.” Says Olisa.
Olisa is speaking from long experience. He started his career at IBM in the 1970s and moved to Wang Laboratories in 1980. He founded technology merchant bank Interregnum in 1992, which he led through
Olisa is now a non-executive director of Thomson Reuters. Last year he was named as the most powerful black person in Britain in the annual Powerlist, which lists Britain’s most influential people of African and
In 2015, he was made Lord Lieutenant of London, appointed by Queen Elizabeth II on the advice of then Prime Minister David Cameron.
The title gives him an office in Whitehall, London’s government district, and control of a team of 90 people. It puts him in charge of all visits made by the royal family within Greater London – with him even standing in for them on some occasions.
But away from tradition and back to innovation: the present model doesn’t work, says Olisa. With the UK and European model, venture capitalists are betting that the one company or entrepreneur they pick will be the winner in their market sector.
Poking at a big hive with a long stick
But Olisa says: “They are blindly poking at a big hive with a long stick. It’s not working.” So what is the future of innovation? Olisa explains the difference between European innovation and the US version
The VC was not in the slightest interested, so Olisa went to the bar to get another drink.
“When I got back, he said: ‘Selling shoes over the internet is the next big thing.’ Being a Brit I poured cold water on the idea – and asked him how he would make sure they fitted the customer? He said the customer downloads a template, measures their feet and sends it back.”
Olisa was sceptical and had another drink. Soon after he got back to London he read about Amazon buying
“This shows that successful innovation starts out what the consumer wants and then finding a fresh solution and an efficient way of selling to them. By adding externally sourced innovation to an established business with a large customer base, the behemoth can steal a march on its competitors, and as long as you can deliver
The Silicon Valley system
Olisa argues that the future for innovation in Europe must take a different path. That’s because Silicon Valley is a closed system and unique. Amazon, Google, Apple, Facebook and the other big pro-innovators know that winning means acting at speed. They use their scale to exploit new products and services the bulk of which will be from smaller, nimbler businesses obtained for them by an active venture capital community. Although Europe, has many large companies, they are handicapped by a culture of NIH (not invented here) which rejects externally sourced ideas and the absence of a US-style VC industry.
“Uber, Amazon, et al are huge consumers of innovation – they are totally comfortable with welcoming new companies into their ecosystems which
So what is the future for Europe, since we have no Googles or Facebooks of our own?
For Olisa, the problem is not a lack of supply of innovation, which he has always been good at identifying, supporting and creating value from. He works with and champions a lot of high-potential tech businesses. The problem lies with the inertia of the incumbents.
“Our big companies still hope that they will break the habit of a lifetime and invent the silver bullet themselves. A complacency which is underpinned by an emotional irritation with the upstart entrepreneurs who are driving innovation. Admittedly, this isn’t unique to Europe. Ford recently bought its new car operating system (OS) from Nissan because they couldn’t solve the problem themselves.
“Although vehicle operating systems are already being provided by Apple and Google, Detroit car-makers don’t want to be slaves to the Valley upstarts and prefers to buy something as fundamental as an OS from a competitor! But it’s doomed to fail. Apple and Google will just keep investing and acquiring innovative stars which
The solution in Europe is for the major incumbents to build mutually supportive ecosystems with themselves at the centre surrounded by a community of energetic, entrepreneurial innovators with whom they can work to solve identified customer needs. “We built and manage one of these for Lockheed Martin UK (the Lockheed Martin Virtual Technology Cluster)” says Olisa and the results are compelling – positive returns and customer wins in the first year. So it can be done.”
But is there really a culture of entrepreneurial innovation in Europe and the UK? “I was
“But I don’t think the child was trying to make her redundant he was just driven by a desire to discover and invent. Patronisingly I asked him if he could modify the code. Disdainfully he told me that