"Open Innovation" model

The changes taking place in the current economic globalisation and technological convergence have made innovation a key tool for Telefónica to achieve its revenue growth and operating cost control targets. The innovation management model is progressing through three lines of action: implementing a global innovation platform applied locally at the business units; developing capabilities in order to leverage long-term business opportunities; and offering a global response to competitors and global partners.

The aim of technological innovation at Telefónica is to bring about digital construction so as to harness the opportunities offered by new production tools and technologies in the development of software and creative talent. In 2011, we increased our investment in this area to €5,090 million (€4,814 million in 2010), of which €983 million will be earmarked for R&D, 23% more than the previous year. Telefónica R&D is responsible for the majority of applied research activities, aimed at obtaining first versions of products; the remainder, more than 80%, has been channeled through collaborating entities, to give form to one of the largest innovation networks in the worldwide ICT industry.

Telefónica has developed an open innovation model for managing technological innovation that helps to improve the application of technical research results to commercial services, focusing on certain applied research activities aligned with its corporate strategy. This model has been executed through the following lines of work whose purpose is to develop new solutions in collaboration with third parties, digging deeper into a line of work that began in previous years. The following initiatives are the most remarkable ones:

• opening company platforms to collaboration with third parties
• providing support to technology companies through Telefónica’s risk capital fund
• attracting customers to innovation processes
• collaborating with universities, either in projects, or through Telefónica’s Professorships
• taking part in technological programmes and platforms aimed at promoting entrepreneurial R&D at a domestic and international level
• innovating in collaboration with each industry’s leading companies