Key  findings  and  implications  for  managing  innovation  in  Telenor  Pakistan

two different levels. Firstly, in terms of specific standardized product and service offering from Telenor Group or other subsidiaries that they are trying to sell to Telenor Pakistan. One such example includes the, already discussed, global backend applications store developed by Telenor Digital. Second, the involvement of Telenor Group may be seen in terms of

corporate functions, such as procurement, finance, HRM and IT infrastructure and systems.

The extent Telenor Pakistan is inclined towards global integration, may become apparent on a more aggregated level. There is a higher degree of global integration in areas such as procurement, HR operations, IT infrastructure and corporate communications. Telenor Pakistan is also moving towards global integration in matters such as network, billing and CRM (TP3 2015; TP1 2015).

There is a strong focus on architecture standardization, harmonization and simplification across the Asian markets, following the industrialization across Telenor Group, discussed in chapter 4.4. Telenor Pakistan has done a billing and charging platform swap. During that process there was focus on the need to reduce customization of products, in which the Group communicated that Telenor Pakistan should implement a solution that is a “off the shelf”

product. In this example the customization was reduced for the overall business requirements, so that Telenor Pakistan’s current billing and charging platform is “over 90% off the shelf”

(TP1 2015). There is a similar situation in regards to CRM. Telenor Pakistan is planning a CRM platform swap, and the need for buying ‘off the shelf’ products is stressed by Telenor Group. According to the respondent ‘off the shelf’ products do not mean that Telenor Pakistan is becoming less locally responsive, rather it means that “you have to be more creative and innovative in trying to understand the need of the customer, and offer solutions that are according to those needs” (TP1 2015).

4.5.5 Key findings and implications for managing innovation in Telenor Pakistan The telecommunications market in Pakistan is characterised by intense competition for subscribers. The rivalry has intensified as the rate of subscriptions began to decrease in 2011/2012 (Evans 2013). Thus, the market has moved into a more mature phase, in which the focus has moved from offering basic telecommunications services towards offering value-added services to the customers (Evans 2013).

Parallel to this development Telenor Pakistan has gone from being a greenfield investment²⁰ when Telenor Group commenced its operations in 2005 to being a more mature subsidiary (TP1 2014). Among other things, this transition means that Telenor Pakistan has become a more inflexible organization, due to the introduction of control mechanisms (TP1 2014). The control mechanisms have resulted in the introduction of information security controls, risk management protocols, sourcing/procurement guidelines and audit processes to innovation projects, resulting in a more rigidified process than before (TP1 2014). Furthermore, the introduction of control mechanisms relate to a risk-aversion culture and a focus on short terms targets in Telenor Pakistan, stressed by several of the respondents (TP1 2014; TP3 2015).

Telenor Pakistan’s innovation expenditure is related to heavy investments in Pakistan’s underdeveloped infrastructure. Consequently, Telenor Pakistan’s breadth technological breadth in innovation projects is comparatively low to the two other subsidiaries. Telenor Pakistan is the subsidiary with the lowest innovation intensity in this study.

Innovation in Telenor Pakistan is further characterised by three innovation tasks: creation, adoption and diffusion (Ghoshal and Bartlett 1988). Regarding creation, this study has found three innovation processes in Telenor Pakistan - Telenor project model, revenue share projects and open innovation. Telenor Pakistan has exercised its local autonomy in adapting the Telenor project model to its own needs.

Some of the respondents (TP1 2015; TP3 2015) suggested that Telenor Pakistan has a low rate of adoption of innovation from other subsidiaries. Telenor Pakistan may exercise its local autonomy in deciding which innovation it has a need for adopting. In instances where

innovations are adopted, it is more likely that the innovations originates from Asian subsidiaries that Telenor Pakistan has more dense communication and collaboration with.

20 Greenfield investment is the creation of a subsidiary from scratch by non- resident investors (OECD 2004)

Diffusion of innovation was exemplified by the diffusion of Telenor Pakistan’s financial service ‘Easypaisa’. However, this innovation may not be diffused as-is, due to differences in the regulatory environments the different subsidiaries operate in.

Regarding Marin and Bell’s (2010) structural positions, there seems to be a strong drive for local responsiveness in Telenor Pakistan. This is apparent by the fact that most development projects are locally initiated and developed for the Pakistani marked. Further, services from the global backend platform is adapted to fit local market requirements (TP1 2015; TP3 2015). The pressure for global integration is increasing and occurring on two different levels.

Global integration in Telenor Pakistan is present in terms of the global backend platform and its related service offerings, as well as through higher-level functions. Both forms of

integration strive for standardization across to enable a decrease in expenditure and an increase in the speed of delivery of new processes and services.

Implications

The main findings in Telenor Pakistan have several implications for managing innovation in this subsidiary. The market situation in Pakistan implies a shift of focus from providing basic telecommunications services towards value-added services. This implies that Telenor

Pakistan should shift their focus of innovation towards services. It is likely that this is now possible as the basic telecommunication infrastructure in Pakistan is now in place.

The managerial implications of standardisation of innovation processes and the

implementation of control mechanisms in the innovation processes are aversion to risk and a focus on short-term targets in Telenor Pakistan. According to one respondent, this implies an aversion towards (radical) innovation projects, as there is less willingness to support projects in which the outcome is uncertain (TP1 2015). This is a paradox, as uncertainty is a key characteristic of innovation (Jalonen 2012). The implications of control mechanism relates to the innovation processes itself. A rigidified process “stifle experimentation and discourage risk taking” according to one respondent. The same respondent stresses that “breakthrough innovation cannot flourish in such environment” (TP1 2014).

This may imply a culture where innovations that are more radical are discouraged, and the focus is on incremental innovations yielding short-term benefits to the subsidiary. There is

not necessarily a need for radical innovation in Telenor Pakistan. However, the implications of discouraging risk-taking through control mechanisms and standardised processes, may dissuade employees of thinking outside the box. Consequently, there may be unexploited potential and ideas in the subsidiary that are not made use of.

The high density of internal communication with the Asian subsidiaries should be substantiated as it is associated with higher presentations in all three innovation tasks (Ghoshal and Bartlett 1988). However, if the main cooperation effort is limited to the Asian subsidiaries due to similar environments, it may limit Telenor Pakistan’s possibilities of adopting from, and diffusing innovation to other subsidiaries.

Respondents of this study suggest that Telenor Pakistan has a low rate of adoption of innovation from other subsidiaries. This may imply a risk of double efforts, meaning that more or less the same developmental effort may be occurring in another subsidiary. In these situations is likely that it is more cost-efficient for Telenor Pakistan to adopt an innovation as opposed to develop it in-house (TP1 2015; TP3 2015).

The managerial implications of a high level of local responsiveness may be a higher level of innovative activity in Telenor Pakistan, as it enables the subsidiary to deliver on local user needs (Marin and Bell 2005). This may be important given the competitive situation in the Pakistani market. Despite Telenor Pakistan having a high level local responsiveness, do the innovation expenditure from 2013 not reflect a higher level of local innovation activity, compared to the other subsidiaries. The innovation expenditure of Telenor Pakistan has been characterises by heavy investments in infrastructure. These investments have been a

prerequisite for product, services and process innovations (TP1 2014). There is increasing local innovative activity in Telenor Pakistan, apparent by the many local initiatives, and projects, including the two presented in chapter 4.5 (Simensen 2014; TP1 2014). It may be suggested that Telenor Pakistan is increasing starting to show signs of higher local innovation activity. This may imply that both Telenor Pakistan and Telenor Group should focus on maintaining the high level of local responsiveness, as it may over time increase the level of local innovation activity in Telenor Pakistan (Marin and Bell 2005).

On the other hand, global integration enables cost saving benefits (Birnik 2007; Marin and Bell 2005). It may further make it easier to adopt and diffuse innovations (Bartlett and

Ghoshal 1988) if innovations are built on the same platform, like the global backend services.