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Innovation governance

Innovation cycles are getting shorter and shorter. As a result, we must be agile and flexible in how we manage and budget our innovation projects. We orient ourselves toward the best-practice approaches used by innovative start-ups and successful companies, and to the latest findings from research and academia.

Portfolio and Innovation Board

The Portfolio & Innovation Board (PIB) plays a central role in managing our innovations. This Group-wide body ensures that we set the right priorities by identifying and selecting the innovation projects for our Group and deciding on the method of implementation. Our efforts are guided primarily by the Group strategy and we create full transparency across the Group regarding our investments in innovation.

Corporate Innovation Fund

Our Corporate Innovation Fund (CIF) is managed centrally by the PIB. Similar to a venture capital approach, the CIF offers all business and product ideas generated within the Group a flexible and results-oriented form of funding for a specific project phase. The provision of an additional innovation budget allows us, for example, to fund new innovation projects at short notice and with little red tape. Such financing is granted independently of annual planning periods, and therefore intensifies our focus on market and customer requirements. Innovation can take place anywhere across Deutsche Telekom, as long as the proposed business and product ideas fit within our Group’s central innovation focuses.

T&I Investment Committee

We established the Investment Committee to speed up investment decisions on our multi-year innovation priorities. Its objective is to act like an (internal) venture capitalist. The Investment Committee allocates funding according to success, similar to the approach used for start-ups and among venture capital investors, whereby raising new funding from capital investors is dependent on the venture’s performance. This gives us the flexibility we need when developing innovation topics and focuses efforts on success. Funding is made available for the next project phase only when specific outcomes that are relevant to our customers are achieved.

DTCP

Deutsche Telekom’s investment management group DTCP, established in early 2015, manages around USD 1.0 billion for Deutsche Telekom and other institutional investors, and has a portfolio of more than 60 businesses. DTCP pursues two investment strategies: growth equity in Europe, the United States, and Asia, and investments in digital infrastructure in Europe. The prime motive for DTCP’s investments is financial. For example, it acquires shares in companies still in the growth phase and aids those companies’ further growth, with a view to selling its stake for a profit later on. DTCP also plays an active role in establishing business relations between the innovative portfolio companies and Deutsche Telekom and other partner corporations, in order to add value for both sides.

In the growth equity field, the focus on cloud-based software-as-a-service (SaaS) solutions for companies resulted in a positive development similar to the previous years, not least due to the rising number of people working from home and the growing acceptance of this mode of working, and to increasing digitalization. New additions to the growth equity portfolio are Axonius (cybersecurity asset management), Iterable (a cross-channel marketing platform), One Store (a South Korean app store), Neo4j (a graph database management system), and Figment (infrastructure for Web3 staking). In addition, DTCP increased its stakes in the successful portfolio companies AppsFlyer (marketing analysis), Aircall (call center software), and Arctic Wolf Networks (corporate network security). The former portfolio company Signavio, a provider of software for business processes, was taken over by SAP. In addition, the single sign-on systems company Auth0 was acquired by Okta. The portfolio company Epsagon (application monitoring) was acquired by Cisco, and the portfolio company Guardicore (network segmenting for cybersecurity) was taken over by Akamai. The merger with a private equity-financed competitor meant that DTCP could sell part of its stake in Dynamic Signal, a corporate communications platform provider.

The strategic investment fund Telekom Innovation Pool (TIP) is available for investments that are mainly strategically motivated. Advised by DTCP, Deutsche Telekom invests in and promotes business start-ups through TIP that have a strategic focus and that support the Group’s long-term targets through collaboration with the different business areas. TIP actively pursues long-term innovations for the Deutsche Telekom Group, particularly in the fields of software-defined networking (SDN), decentralized and cloud-based applications, and the digitalization of business operations. TIP made four new corporate investments in 2021: Celo (decentralized financial systems and tools for smartphones), Signalwire (communications platforms as a service, CPaaS), Teridion (software-defined wide area network, SD-WAN), and GoStudent (digital tutoring, online learning).

Cybersecurity
Protection against internet crime.
Glossary
SD-WAN – Software-Defined Wide Area Network
SD-WAN simplifies the management and operation of a WAN by decoupling the network hardware from its control mechanism. This concept is similar to the way in which software-defined networking implements virtualization technology in order to improve the management and operation of data centers. A key application of SD-WAN is to allow companies to build higher-performance WANs using lower-cost and commercially available internet access. This would enable companies to partially or wholly replace private WAN connection technologies.
Glossary