Seeking Alpha: Telefonica’s Moonshot

Alpha employees speak to people in an Andean village about what types of energy services could make sense in the region.

Fearing that their core business will become a commodity, turning them into little more than “dumb pipes,” telecom operators have spent the last 30 years trying to reinvent themselves as everything from content providers to banks, with limited success.

So now Telefónica is sending people trekking all the way to the Amazon jungle and Peruvian Andes to try and find radically different paths forward.

One idea being explored by the global telecom operator is to become an energy service provider that will “redefine power generation for the 21st century.” To that end, it is exploring ways it could serve the three billion people globally who have no access to electricity or are stuck with unreliable service.

It is also looking at how to apply advances in artificial intelligence and behavioral science to monitor and improve peoples’ health.

These are just two of the “moon shots” being pursued by Telefónica’s Alpha, which is billed as Europe’s first moon shot factory.

Telefónica has three well-established startup investment arms — Wayra, Telefónica Ventures and Amérigo — and, like other big corporates, is constantly developing new ways of approaching innovation internally. These efforts are primarily aimed at keeping the current business running and taking incremental steps in new directions.

Alpha is a radically different program. It is completely separate from the core company, staffed primarily by outsiders and its goal is to help Telefónica branch into entirely new high-impact business lines in the future.

“By our definition of a moon shot, there are only two moon-shot factories in the world: X {launched by Alphabet, Google’s parent company} and Alpha,” says Maurice Conti, Alpha’s Chief Innovation Officer. Conti previously worked as Director of Applied Research & Innovation at the U.S. software giant Autodesk. He has expertise in applied machine learning, advanced robotics, augmented and virtual realities, and the future of work, cities and mobility and is a member of the faculty of future/io, a new European education and research institute focused on exponential technologies and desirable futures.

Conti and his team are responsible for coming up with ideas, prototypes and proofs of concepts that will go on to become full-blown moon shots, i.e. things that have not been tried before that will affect a 100 million people or more and grow into impactful businesses.

The team is comprised of people who are not your typical phone company employee.

“If you polled most of the people who work at Alpha I don’t think they would say they work for a big telephone company, but rather for a small, fast, scrappy startup that is exciting to be a part of,” says Conti. “This is partly due to the fact that Telefónica has come up with a very clever business model. Alpha is not an in-house center of innovation excellence — which we have all seen ad nauseam. They don’t work. We have the benefit of Telefónica’s support (without which we wouldn’t exist), but our identity is Alpha. It’s what we live and breathe every day. That’s part of what helps us attract a whole different kind of talent.”

As an example Conti recalls how Alpha recently contacted a “crazy musician/artist /hacker type and asked him to build a prototype — a VR thing. He was wary of working with Alpha. We were almost too corporate for him.”

But, says Conti, “we talked him into it by showing him we’re not just corporate types, we have plenty of eccentric brilliant weirdos doing really groundbreaking stuff. So he came in and after four, five days he built this truly awesome prototype that incorporated some off-the-wall ideas which might have never occurred to us.”

To Conti this is an example of how Alpha can attract brilliant people who are not interested in a big-name brand or big paycheck. “Most of the folks here are motivated by the opportunity to make a big difference in the world,” he says.

The Alpha ideation team’s mission is to deliver new moon-shot ideas for board approval. The board is comprised of Telefonica CEO Jose Maria Alvarez-Pallete Lopez (Alpha was his brainchild) and a group of Telefonica executives, scientists and Silicon Valley innovators.

“If a moon shot is approved, Telefonica knows they may take up to a decade to become viable businesses, which means we can pursue challenges that are out of the reach of startups fueled by venture capital,” says Conti.

“The ideation process is like a linear funnel,” he says. “In the beginning, there are a lot of concepts, very rough ideas and a lot of assumptions. We use different methodologies like science fiction futures and Worldbuilding to come up with several dozen candidates. At the end of this phase we reduce it down to between five and ten and double down on them with more resources and prototyping — not just developing gizmos but prototyping business plans, thinking about potential collaborations and partnerships, exploring the bleeding edge of the relevant technologies, and generally envisioning what the world with this thing in it would look like.”

During the process, the Alpha team start decreasing the amount of risk or number of leaps of faith. “We get down to three ideas and we go heavy and serious on all three, developing a robust business plan, market analysis and technology,” says Conti. “If the moon shot is intended for a certain part of the world, we go there and meet the people who intend to use this technology and do ethnographic research. We also seek to get external validation from the world’s top experts. We look for the top two or three people on the subject to get their feedback. Usually the projects are so interesting that even these folks — the best in the world at what they do — are willing to give their time and energy. Then, at the end of the process, we go from three to the one candidate that is going to be presented to the board and we do two things: we do everything we can to prove it is a solid moon shot and then we do everything we can to kill it.”

The team tries to come up with a dozen questions designed to question the moon shot. “We’re actually super motivated to kill the moonshot before presenting it to the board,” says Conti. “No one wants to be working on something for the next decade that isn’t the very best idea we can come up with.”

So far two moon shots have been approved. Offering access to electricity to people who have no access or are underserved “could be both a very interesting large business and at the same time a net force for a good,” says Conti. “We believe there is a significant healthy long-term market in this space but I can’t share too much publicly. All I can tell you is we are sending people into the Amazon jungle and Andean mountain villages to work with these folks around what energy could mean.” Alpha is releasing few details about the health initiative.

So what kind of other moon shots can we expect to see from Alpha? “We are not tasked with developing things like 6G {the next potential wireless broadband standard},” says Conti. “We’re here to solve some of the biggest problems facing society. We have no boundaries in the areas that we investigate so I’d say you should expect something big, audacious and, well, unexpected.”