Enterprise must shake core to be innovative: Telstra

Innovation centres can be detrimental, says Telstra Digital executive director, Gerd Schenkel

Telstra Digital executive director, Gerd Schenkel, and Twiter Australia managing director Karen Stocks.

Telstra Digital executive director, Gerd Schenkel, and Twiter Australia managing director Karen Stocks.

To be innovative, a large corporation must do more than build an "innovation centre," according to panellists from Telstra and major Web companies.

"If that's all you do, then what's the point?" Telstra Digital executive director Gerd Schenkel said at the Telstra Australian Digital Summit in Sydney.

To truly be innovative, the enterprise must be "brave enough to touch the core," he said.

"If the [innovation] centre is an excuse not to touch the core, it's actually detrimental, because you're actually just wasting time."

"The trick is to find pockets of the core you can mess with that are progress but are not actually presenting any risk whatsoever..."

Related: Telstra embraces digital future at 'unique moment in time'

In a small market like Australia, it's okay to take risks, according to Twitter Australia managing director, Karen Stocks.

"I'm a big fan of ask forgiveness and not permission. If you've got a great idea, and as long as it's not going to get you in trouble with legal or anything like that, go for it. Try it. See what happens. What's the risk?"

If it works in Australia, the idea can easily scale to bigger English-speaking markets, she said.

Klout co-founder Joe Fernandez agreed that startups should not be dissatisfied with Australia's smaller population and instead take advantage of it as a test bed.

"People are too focussed on trying to recreate Silicon Valley," he said.

One way for a large corporation to spur innovation in a large company is to partner with startups.

However, while investment from a corporation can be critical for a small company, Fernandez cautioned startups to be careful not to give up their long-term vision, said Fernandez.

"As a smaller company in a relationship with a big company, it's hard sometimes not to be looked at as a dev shop, and it's easy to lose your own focus."

For its own part, Klout took investment from Microsoft and was recently acquired by Lithium. Fernandez said there are positives and negatives to involving corporations.

Big companies are focussed on the "short game," and it can be easy for the startup to "over-rotate toward them" and lose sight of its own goals, he said.

"You're making those pay cheques, but you've sold out your vision."

Telstra tries to stay out of the startup's way after making an investment, said Schenkel.

He said it is "universally accepted that we typically destroy what we buy -- so we try not to buy startups or small businesses."

Instead, Telstra seeks partnerships with startups -- as it did with PayPal -- or it makes minority investments in rising companies, he said. Telstra has also sought to help new businesses through its muru-D accelerator program.

PayPal Australia managing director Jeff Clementz said there is some financial security that comes with being part of a larger organisation. The company is undergoing a separation from longtime parent eBay.

Under the previous relationship, if PayPal was having a soft quarter but eBay was doing well, it balanced out, he said.

“When you’re focussed only on your own business, it raises the bar,” he said. “It is all about you. It’s all about your results.”

Schenkel said the biggest mistake startups make when making a deal with Telstra is assuming that they will automatically get more sales on the strength of the deal.

"Just because a company makes an investment doesn't mean people want to use it. You still need to market yourself inside the company."

Evernote is one company that has made this mistake of assuming instant benefits from signing deals with major telcos, said Troy Malone, Evernote general manager of APAC.

"That's absolutely just the beginning."

To maximise impact, Stocks advised startups to find a passionate advocate within large corporations.

"It's around how do you identify who that person is and then do everything you can to make them successful," she said.

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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