Beyond the Wireless Bubble

Kenny Hirschhorn, executive VP of strategy, imagineering, and futurology at Orange PLC, a leading European telecom company, is betting that he knows what's next for wireless access to the Internet.

If the size of his smile is any indication of his feelings, then Kenny Hirschhorn is very proud of his older sister, whom he considers something of an Internet pioneer. An antiques dealer, she and her husband created a Web site and staked a position on eBay in the early days of that service. For years, they had worked out of a garage in southern California — 5,400 miles away from Hirschhorn's own base of operations, off Baker Street in London's West End. But within a few months, SIS needed to find 30,000 square feet of warehouse space and a dozen staffers just to keep up with rising demand. "She's a great example of how the Internet creates jobs, companies, and marketplaces," grins Hirschhorn.

The polite, sepia-tinged world of antiques has little to do with the frenetic, white-hot world that Hirschhorn inhabits. But like his sister, he knows how it feels to be a winner in the first stage of the Internet revolution. As executive vice president of strategy, imagineering, and futurology at Orange PLC — a network operator that was formerly a part of Mannesman and, later, Vodafone Group PLC — he has helped fashion Europe's juiciest brand in one of the tech world's hottest sectors: wireless communication.

Acquired by France Telecom last June for a staggering $37.5 billion, Orange now has operations in 19 countries, including several in Europe, as well as Hong Kong and Israel. But Hirschhorn, 46, a cigar-puffing, ear-stud-wearing visionary who joined the company in 1998, is still greedy for growth. His goal is to take Orange from regional to global, from single-platform to multi-platform, from network operator to service provider. And why not? The convergence of two of the fastest-growing technologies of all time — the cell-phone and the Internet — is intoxicating. "The key is to build, borrow, or buy," declares Hirschhorn. "If it's not out there or it's not going fast enough, you have to drive it."

Trouble is, the second phase of the wireless revolution will be much more exacting (and possibly much more expensive) than the first. That's why Hirschhorn and his team of futurologists are on the hot seat. Sure, his job is to conjure bold visions for the next 10 or 20 years — and to generate unorthodox ideas about how his company can prosper. But those visions and those ideas must remain tethered to hard-core business realities. This is one blue-sky thinker who has to keep his feet on the ground.

Values First, Technology Second

For the first six years of its life, Orange was a one-trick pony. But what a trick! Like many of the companies that created huge amounts of value during the first phase of the Internet economy, Orange won the competitive game by playing according to a new set of rules. Its one killer insight: Base your brand on lifestyle, not technology.

At the time of Orange's launch, big telcos in Europe were clinging desperately to their monopoly privileges. Within the cell-phone industry, the concept of branding was virtually nonexistent. In the UK, BT Cellnet and Vodafone were the dominant players, having operated analog networks there since the early 1980s. Being the last to launch in a congested market made little sense, but Hutchison Whampoa, a Hong Kong - based industrial conglomerate, saw an opening. In 1994, cell-phones were almost exclusively business tools. Three-year contracts, high monthly rental fees, and steep call charges scared most consumers away.

So Hutchison positioned its upstart to sell service, not technology. The proposition: freedom and independence; being able to keep in touch, anytime, anyplace. Hutchison also infused its brand with a vision, a distinctive look — and a colorful name. Amber, B, Egg, Indy, Jimini, Pecan, Red Sky, and Yellow all made it on to the shortlist. But Orange was chosen for its warmth and friendliness.

The ad agency WCRS created a campaign that deliberately excluded images of cell-phones: Orange wasn't a cell-phone! It was a "wirefree service"! And the tagline was a killer: "The future's bright. The future's Orange." Within nine months (according to Orange's own research), consumer awareness of Orange had soared ahead of Cellnet and Vodafone. Seven months later, it had even outstripped the mighty British Telecom.

Of course, it's one thing to devise a clever ad campaign and quite another to introduce a compelling new service. Customers don't know the potential of technology, argues Hirschhorn, so they have trouble understanding what the future might bring. For that reason, Orange decided not to ask cell-phone users what they wanted. Instead, it quizzed them on what they didn't like and then built its initial business strategy on righting such wrongs.

Orange discovered that customers were confused by the large number of pricing plans available. So it created a single structure with a small number of easily understandable rates and allowed customers to switch between them at will. Customers also moaned about being ripped off by companies whose policy it was to round a 15-second call up to a minute. So Orange introduced itemized, per-second billing — a first for the wireless field. (Orange also claims to be the first to offer caller ID and the first to offer a free replacement service.) There were gripes about dealers and other middlemen who knew little about technology and even less about good service. So Orange created a single point of contact for its customers.

The unorthodox strategy worked. The company's London IPO, in 1996, gave it a market cap of $4 billion. Later that year, Orange was the youngest company ever to enter the FTSE 100 and the first to do so without having made a profit. More important, the company's churn rate — the number of customers who quit the service — was (and remains) half that of other UK networks.

The acquisition by France Telecom gives Orange the global clout that it needs to achieve its aim of becoming a significant presence in each of the world's top 50 markets for wireless by 2005. But that future presence, like the company's past success, will be driven as much by what makes Orange tick as by how well its phones work. "Your values need to be austere," says Hirschhorn. "At Orange, we picked just a few: dynamic, friendly, innovative, trustworthy. Those values create a framework that helps people understand us — and they cross all cultural lines."

Imagineering the Future

The past can be a powerful source of inspiration for any company. But the past must never become a formula for repetition. In order to keep Orange moving forward, Hirschhorn has hired a team of what he calls "imagineers." ("Imagineering is R&D for the sake of human beings, not for the sake of technology," he says.) Their titles range from "ambassador of strategy" ("the right-brained thinkers") to "knowledge consul" ("the left-brained, facilitating people"). Collectively, they go to work under the banner of MIB ("managing integrated businesses"), and they rely on three crucial methods for creating and blending various competing strategies.

The first is what Hirschhorn calls the "Playground to the Stars": participating in and steering the strategic direction of Orange's most senior decision-making units, as well as driving the special projects of senior managers. Next up is "Constituency Maintenance": carrying messages to and from Orange's business groups, and acting as a catalyst for strategy development and as a bidirectional conduit of information. (Hirschhorn prefers to call this method "virtual handshaking.")

But at the center, quite literally, sits a think tank. Early on, Hirschhorn told Hans Snook, CEO of Orange, that if he wanted an organization that knew how to think, then he needed to create a physical think tank. So Orange built a circular room, which Hirschhorn has dubbed the Imaginarium, where the company's imagineers, ambassadors, and knowledge consuls play "What Happens Next?" The room has no desks, all of the computers in it are portable, music oozes out of air-conditioning ducts, and walls are fabricated from whiteboards.

So what are Hirschhorn and his people thinking about? New business models, for one thing. "There will be no need to meter calls or monitor airtime usage," predicts Hirschhorn. "The 'death of distance' in telephony means that a call from Rome to New York will cost about the same as a call across town. In the new paradigm, the revenue model is not about phone calls. It's about providing life services to our customers: whatever they want, wherever and however they want it — everything from waking them up in the morning, monitoring their health, and controlling their diary, to providing them with entertainment, locating their children, and keeping watch over them while they sleep."

Hirschhorn also wants Orange to make lots of small bets, rather than one huge bet. There will be no killer app for wireless, he claims, because the number of possible uses for the technology is so vast. The challenge for companies like his is to explore many avenues to humanizing the Internet. One example: a 28-year-old, emerald-eyed, green-haired virtual newscaster who goes by the name of Ananova. ("Hello, world! Here is the news . . . and this time it's personal.") Confused? Orange has paid $137.5 million for the Press Association's digital news-feed technology, which includes the Ananova service and which gives wireless customers the chance to personalize their news bulletins. By entering a zip code, for example, users will be able to access items, such as weather and traffic updates, that are relevant to their particular region.

Orange has spent another $137.5 million on Wildfire, a firm based in Lexington, Massachusetts that specializes in speech recognition and virtual personal-assistant technology, and a further $6 million to secure a 25% stake in NewsTakes, a Silicon Valley - based firm that specializes in reformatting content for cell-phones and other handheld digital devices. Orange has also created a $434 million cyberfund to incubate, and to take further equity stakes in, small technology startups. And it plans to roll out a string of Imaginariums in Silicon Valley, in Cambridge, Massachusetts, and throughout Europe and Asia.

Hirschhorn can't guarantee that any particular bet will come up a winner. But he understands the stakes that he's playing for — and the resources that he needs to stay in the game. "This is the new frontier," he says. "We're doing what's never been done before. What I need is the best possible talent pool. Give me hot-shot wizards who understand the future, people who beat up their alarm clock in the morning because they can't wait to get started. Give me a few hundred of them, and I'll be happy."

Ian Wylie (ian@wylienet.demon.co.uk), a Fast Company contributing editor, is based in London. Contact Kenny Hirschhorn by email (kenny.hirschhorn@orange.co.uk).

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