A new look Telstra?

Morris Kaplan

Morris Kaplan is a guest blogger.

Morris Kaplan, one-time stockbroker and venture capitalist, brings his finance skills and recent experience as a business journalist and writer to IT, with a special interest in telecoms and how communications is being transformed by technology.

If there was any doubt about Telstra’s desire to remain the dominant force in the telecoms market in Australia then an analysis of the moves made recently inside the organisational structure of the big Telco would put paid to any doubt.

Telstra chief executive David Thodey announced the creation of an in-house venture capital team to develop new applications and IT for Telstra’s customers. Perhaps it’s a desire to look like Apple with its very powerful culture of products development and leadership in innovative marketing. Perhaps he has read Clayton Christenson’s seminal book The Innovator’s Delight which spends much column space on the demise of certain industries which did not have an internal culture of innovation and where disruptive technologies (such as iPod and iPhone Apps cast aside industry incumbents .

The idea of in-house venture capital teams is by no means a novel idea and is one that many large organisations have adopted over the past 101-5 years. The idea is that a large organisation with its large systems and a prescribed way of doing business can find itself flat footed against more nimble new entrants. For sure new entrants will always come but in welcome there are dangers of being flat footed. The principle one being that the market splinters across all the media and that fixed line becomes redundant over the long term.

Today's large corporations are suffering from size. They are so large that the managers making decisions are often isolated from a personal knowledge of the problems to be solved. A system that gives the decision to those who get successful results is the back bone of internal venturing. The idea (and experience with such companies as Apple) is that such people will be willing to take moderate risks and will be more concerned with achieving results than with gaining influence. These are among the characteristics of the successful entrepreneur.

What is needed in the large corporation like Telstra free market entrepreneurship within the corporate organisation? Thodey’s reorganisation internally seems to be aligned with these principles. The NBN may have removed one competition bottleneck in the industry by structurally dividing Telstra, but its real coemptive advantage is its balance sheet and it seems that Thodey wan to use that to hammer home the Telco’s position. It will take a lot of entrepreneurship from this nascent venture capital team to ward off the barbarians at the gates.

Tags: Apple, innovation, internal venture capital, Telstra