Vodafone struggles to solve the co-creation conundrum

As Jan Geldmacher, Chief Executive of Vodafone Global Enterprise, said earlier this week, one of the operator’s priorities is providing more than just connectivity services to its business customers.

A key area the UK-based operator is looking at in this space is what Geldmacher terms “co-creation”.

In short, this is working together with a customer to develop new products and services that could benefit them both. So how does this work in practice?

Last July, Vodafone won a deal to supply a range of connectivity solutions to insurance company Aviva.

But the two companies agreed to go further and develop a product based on both their portfolios.

To do this they pulled together a full-time team, set them up in an office in London’s start-up hub of Shoreditch and provided a budget of around £150,000, plus a steering committee made up of executives from both companies, including Geldmacher.

The 10-strong team, which included data analysts, mobile engineers and app developers, initially came up with 35 different ideas.

The steering committee selected one – a pay-as-you go car insurance app that uses data available to both Vodafone and Aviva.

Geldmacher says: “You put the license plate of the car you want to drive into the app, the insurance data pulls the make of car and correlates it with your mobile usage data. We found out that by diving deep into the data, there is a correlation between mobile usage and the risk of driving.”

The CEO says the team was looking to leverage the fact that in the UK, only the driver of the car is insured.

“This is not the case elsewhere in Europe, where if the car is insured then everyone who drives it is insured,” Geldmacher explains.

A user needs to sign up to the app first and agree that Vodafone and Aviva can use their data.

They then enter bank card details on which Aviva runs a credit check and a quote, based on their mobile data usage and the car they want to get insured on, is provided.

It’s a cost-per-mile figure and the route is tracked by GPS. When the journey ends, the user is shown a map of where they have travelled and the final price.

“The good thing is, it pulled a lot of value from telecoms data that was not looked at before,” Geldmacher says.

“The strategic relevance that we can offer our customer is improving.

“We have two patents relating to how we use the mobile data that are pending – we found stuff that is truly unique.”

Geldmacher doesn’t go into too much detail as a result.

He says it took the team 2-3 months to develop the app and that the whole process was “very agile, fast and cheap”.

The two companies agreed to a shared risk, shared revenue approach.

“We said that we’d go into it together and sort out [the details] later, as we don’t want to put the lawyers in front of the innovation,” Geldmacher says.

But for all this effort, Aviva is not pursuing the idea.

A spokesperson said: “It was tested on a small scale earlier this year and, while it's no longer available to download, we have been pleased with how well it's been received.

“The app is just one part of our wider 'test-and-learn' strategy whereby we plan to use feedback from our customers to develop further digital insurance innovations.”

Geldmacher outlines one of the challenges: “You couldn’t tell an Aviva customer that they can only use it if they are a Vodafone customer.”

The insurance company would not confirm whether it had explored the idea with other operators.

Nevertheless, Geldmacher does not look on the venture as a failure.

“In the worst case we have a joint piece of R&D – it’s never a waste of money,” he says.

While Vodafone does harbour ambitions that go beyond the provision of connectivity, it remains a difficult nut to crack and seems destined to be a peripheral part of the business, at least in the short term.

Concludes Geldmacher: “The thing for us is not to leave our core strategy – when you do app creation and stuff like this you can unlock some fantasy in people that we will move ahead in that area… but we are not going to become a systems integrator; we are not going to be app designers.

“Seventy percent of our revenue should come from infrastructure.”

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