Is Google-inspired “moonshot factory” a new model for tech R&D?
Business Management

Is Google-inspired “moonshot factory” a new model for tech R&D?

It’s Friday lunchtime. In a spacious meeting room inside Barcelona’s Diagonal Zero Zero tower, a disparate group of coders, engineers, data experts, designers and general thinkers have gathered over sandwiches to listen to a short presentation by a distinguished neuroscientist. His topic for the day is the cutting edge science that is mapping, with ever more accuracy, the brain activity that correlates with physical actions. Today, impulses from the brain are being used to enable patients to move and manipulate objects using robotic limbs. But with scientists beginning to understand the link between specific neurons lighting up and speech – even down to individual words and phrases – we are looking ahead to a world where humans may be communicating each other through a kind of machine-enabled telepathy or at the very least a thought driven man/machine interface. 

When the presentation comes to end, those in the room are divided up into groups and asked to come up with scenarios looking at how an ever more sophisticated interface between human beings and digital devices might affect how we live and work in 20 years’ time. After about half an hour, each of the teams gives its own presentation covering their thoughts and ideas.

As a TV game show host might say: “It’s all a bit of fun,” with most of the scenarios owing more than a little to Blade Runner and Black Mirror. But it is fun with a purpose. Launched two years ago but only now opening its doors to outsiders, Telefonica’s Alpha unit has been set up and positioned by the company as a European equivalent of the celebrated – but determinedly secretive – Google X skunk works facility in California. With its own governance structure, Alpha and its relatively small team of around 40 employees has a remit to stay abreast of the breakthroughs in science and technology that are continually emerging from university labs and science parks and consider how these developments could help to drive the disruptive business models of tomorrow. “We tell people to think high and dream bigger,” says Pablo Rodriguez, Alpha’s CEO.

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In that respect Alpha is an ideas factory. But as concepts are created and considered and honed into potential business plans, a select few – around one a year – will be given funding over a five to seven year drawing-board-to-market cycle. These will be Alpha’s moonshots and they are seen as crucial to Telefonica’s long-term plans to look beyond the present and tap into the profitable opportunities afforded by digital disruption.  As Rodriguez adds: “Disruption produces 70% of growth.”  


A new kind of R&D?

So what does that mean in practice? As the largest company listed on Spain’s Stock exchange, Telefonica is the biggest player in the domestic telecom space, and is also a serious multi-national telco. As a provider of broadband, mobile and landline services it is both an infrastructure provider and technology business. And like other big telecoms companies, it takes R&D seriously. Over the last ten years or so it has been working alone and with partners on technologies such as the Internet of Things, blockchain and data analytics.  And as Rodriguez notes: “We were hiring data scientists long before it became common for companies to do so.”

But Alpha is intended as a catalyst for a new kind of corporate R&D. Sitting outside the conventional parameters of the parent organisation, the hope is that Alpha can address data and tech driven projects that probably wouldn’t get approval from a main board focused on a current market opportunities. But equally Alpha is intended to bring projects to market, rather than simply being a place where nice ideas are tried and quietly forgotten.

Conceived by CEO Jose Maria Alvarez-Pallete Lopez following a trip to Google X, the unit operates semi-autonomously with Telefonica essentially acting as an investor rather than taking a hands-on role on day-to-day management and structure. Nevertheless, the relationship is close enough to enable Alpha to use Telefonica’s data, technology infrastructure and channels to market.   

That access is important not only in terms of Alpha’s relations with its parent/sponsor but also as an incentive. As Rodriguez explains, Alpha’s aim is to draw on the expertise of, potentially, thousands of collaborators ranging from tech startups and scientists, through to NGOs. “We only have a small team here - we won’t be hiring 4,000 people - so we know we can’t do this alone. What we want to do is out-collaborate our rivals,” says Rodriguez.

To attract collaborators, there has to be some kind of incentive, particularly for businesses. Access to Telefonica infrastructure is one of the honeypots on offer. 


The aim is to develop workable solutions 

The collaboration is intended to work on a number of levels, as Innovation Officer Maurice Conti – an import from the Bay Area – explains. Alpha has set about establishing strong links with academia and the startup community in Barcelona, Europe and beyond to acquire knowledge of new technologies. This intelligence is filtered through an ideation process in which concepts are kicked around formally and informally. “At any one time we are discussing around 100 ideas,” he says. “Around three of these will be considered every year for ‘moonshot’ funding and one will be chosen.”  

When a moonshot is approved, funding will be allocated and a team assembled. At that point there will be further collaboration between Alpha and other parties, who can bring something to the table. “If we need hospital facilities, then we’ll work a hospital,” says Oliver Harrison, Captain of the currently running Health Moonshot. “Or we might work with an NGO.” 

To date, Alpha has made an arguably modest start with its moonshots. ‘Health’ is looking at models to use big data as a means to improve the health outcomes of individuals across a range of illness, including heart disease, diabetes and cancer. Work has already begun on how data collected via Telefonica’s networks and other sources can be used to empower the health choices of individuals. Meanwhile, Alpha Energy – the first project to be approved – is exploring technologies to bring power to areas of the world that don’t as yet have it. 

In comparison to the  driverless cars, drone delivery vehicles and web enabled visors (glass) attributed to Google X, this may seem relatively mainstream,  but what is certainly true is that Alpha’s autonomous structure has enabled it to pursue projects that are ambitious and lie outside the normal comfort zone of a ‘big telco’ player. And Rodriguez says the aims is to use the collaborative model to work on moonshots that are ahead of the curve. He cites a decision not to run with a plan to deliver a balloon delivered internet network because Google had got there first with ‘Loon’. 

Rodriguez claims Alpha’s commitment to ideation and development through collaboration makes it unique in Europe, if not the world. “Nobody is doing what we do,” he says.  The bigger question is whether this represents a useful model for tech R&D, sponsored by, but existing apart from, the corporation. 

The answer probably lies in whether a corporate business is prepared to fund an autonomous skunk works, somewhere on its periphery. In the longer term, Alpha will be judged whether or not the five to seven year moonshots come to market and make a difference. Alpha is seeking the agility of a startup, but unlike the average early-stage tech company this is a hub for ideas rather than a business with tight focus on the application of a specific technology. Arguably it may therefore lack purpose and perhaps simply burn funds on projects that won’t achieve lift off.  

Rodriguez is aware of the risks, but says the funding will reflect a policy of ‘patient impatience’. We are patient in that we are going after hard problems that need patient funding to find a solution, but there is an impatience to hit milestones and sort things out.”  

Moonshot captains are responsible for hitting those milestones and they have been made aware that Alpha is also prepared to fail, “We have to be prepared for individual projects to fail, and perhaps Alpha itself might fail,” Rodriguez acknowledges.  

In the meantime, with its Barcelona tech district base, Alpha is seen by Telefonica as a means to become a technology innovator at a time when the services offered by telecoms companies is becoming increasingly commoditised. 



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Trevor Clawson

Trevor Clawson is business and technology writer, specialising in fast-growth technology companies and corporate innovation. In addition to writing for magazines, newspapers and online publications, he is the author of a number of business books.

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