Key  findings  and  implications  of  managing  innovation  in  Canal  Digital

of integration. This may be related the business area Canal Digital is in. Canal Digital

operates in broadcast, which is not the core activity of Telenor Group. Part of the reason of a lack of global integration may be the lack of relevant infrastructure, products and services from Telenor Group.

Currently, Canal Digital is developing a service that requires a cloud-service. In this

particular project Telenor Group is involved as it has competence and cloud-based platforms already established. Other than that, there is little co-operation, and adoption from Telenor Group (CD 2 2015). One of the respondents (CD2 2015) maintain that if Telenor Group developed a product or service relevant for broadcasting, Canal Digital would certainly consider adopting it. This has yet to happen. The same respondent point out that she misses a higher degree of involvement from Telenor Group, for instance in terms of competencies on customer involvement in innovation processes. This is a competency she believes exists in Telenor Group.

4.7.4 Key findings and implications of managing innovation in Canal Digital

There are several specific characteristics of Canal Digital, which differentiate it from the other two subsidiaries and have implications for the management of innovation in this subsidiary.

Innovation in Canal Digital is characterised by high expenditure in infrastructure, and above average expenditure in services. The services expenditure is mainly related to designing a on-demand streaming service in addressing the competitive pressures from streaming services.

As a result, Canal Digital’s main focus has been on keeping up with the technological changes, leaving the subsidiary with less time and resources to focus on innovations

extending beyond this. Canal Digital owns infrastructure based on traditional television. The respondents for this study do not consider streaming services to be a direct substitute to the offers of Canal Digital, rather a complementary service. On the other side, Canal Digital is experiencing a decrease in their current market share (from 55% in 2007 to 45 % in 2013, Medienorge 2015). This may imply that Canal Digital should focus on value-added services based on their existing technology (CD 1 2015).

Canal Digital is the oldest (established in 1997) and most mature subsidiary of this study.

Compared to the other two cases, Canal Digital also has the highest innovation intensity.

A great breadth of technology disciplines in innovation projects may imply a lower degree of economy of scale, in terms of using the same technology to create several innovations (The Economist 2008). On the other side breadth of technological discipline may enable

economies of scope. Economies of scope may become a result of centralizing the creation processes for the four Nordic regions, and adhere to one standardized processes. Economies of scope is enabled in Canal Digital because the average total cost of production decreases by way of increasing the number of different products or services produced (The Economist 2008).

In terms of innovation processes Canal Digital has implemented the Telenor project model as-is. The model is considered to be functioning well in the organisation. Aside from a tendency of skipping the first gate related to conceptualization of the idea, there is little deviation from the original model. There has been a tendency of focusing less on the actual customer needs and wants in the innovation processes of Canal Digital. Consequently, Canal Digital has a moderate degree of local responsiveness. The subsidiary is however working on processes to include the customers to a larger extent in the product development, which may lead to higher levels of local responsiveness.

Canal Digital is a special case as this subsidiary is not within Telenor Groups core activity.

As a result this subsidiary has a low degree of global integration. This may be explained by the fact that Telenor Group has little to offer Canal Digital, both in terms of competency, product, services and other support systems.

The innovation activity in Canal Digital is centralized for all four Nordic units. This implies that it may become more challenging to satisfy the local user needs in all four markets. One respondent pointed out that the four units of Canal Digital (Norway, Sweden, Denmark and Finland) usually have input to the innovation processes, resulting in compromises to reach consensus of an idea. The result might be an innovation that does not fully satisfy the need of four different user groups. The risk of not satisfying local customer needs may also be

intensified by the tendency of not thoroughly addressing the actual customer needs in the conceptualization phase of the Telenor project model. This is related to Canal Digital comparatively lower levels of local responsiveness. Canal Digital has been a technology-driven organization, in which customer needs have not been the main focus in innovation

projects (CD2 2015). If a technology-focus drive innovation, as opposed to satisfying actual customer needs, innovation may not bring the desired effects to Canal Digital (CD1 2015).

Canal Digital’s low level of global integration may be a result of being outside the core activity of Telenor Group. This may imply that Canal Digital is may miss out on

opportunities of economies of scale associated with global integration (Marin and Bell 2010).

However, the possibility of economies of scope is as noted, enabled in Canal Digital due to the centralization of innovation processes.

Canal Digital being outside of Telenor Group’s core activity may imply that this subsidiary to larger extent is dependent on creating innovation at the local level, as the possibilities of adoption are more limited compared to the other two subsidiaries. The low density of communication and cooperation with other subsidiaries further limits this opportunity.

However, the findings may indicate that Canal Digital is more isolated than is necessary. This became apparent to one of the respondents during an innovation summit. The summit

revealed that there are in fact relevant innovations, such as a co-creation²⁷ tool that to a larger extent include customers in the innovation processes. This processes may be relevant for Canal Digital to adopt.

The implications of these findings are that Canal Digital should try to increase internal communication and collaboration with other subsidiaries, as this may increase adoption and diffusion of innovations (Ghoshal and Bartlett 1988). As noted in the analysis of the other two subsidiaries, increasing adoption may be cost-efficient, both because the subsidiary do not have to bear the development cost, and because one reduce the risk and cost of ‘double work’. On the other side, Canal Digital does have cost-efficiency in centralizing functions across the Nordic region, such as innovation. This may however imply not exploiting the potential for innovation that may be present in the four Nordic Canal Digitals.

27  Co-­‐creation  is  a  management  initiative  that  centers  around  involving  the  community  outside  a   corporation  (customers,  suppliers,  vendors  ect)  in  the  ideation  phase  of  a  new  product  or  service   development.  The  participants  are  through  a  series  of  steps  invited  to  contribute,  evaluate  and  re-­‐define   ideas  and  concepts,  in  order  to  jointly  create  a  mutual  valued  outcome  (Prahalad  and  Ramaswamy  2004)  

Lastly, low rates of internal communication and collaboration may reduce the possibility of utilizing valuable competency and knowledge that some of the respondents thinks exists outside this subsidiary (CD1 2015; CD2 2015).