Carphone Warehouse and the art of innovation

Sir Charles Dunstone Image copyright Getty Images
Image caption Charles Dunstone was early to spot the full commercial potential of mobile phones

Innovation is an exhilarating thing to do, and to report on.

And it is rewarding to bear in mind that even technological innovation is not just about inventing things.

Somebody has to make the link between the invention and the prospective user. Somebody has to turn the integrated computer on a chip into a usable computer.

Somebody has to make people actually want personal computers... even if (in retrospect) they turn out to be one of the most must-have empowering inventions ever conceived.

Those "somebodies" are often entrepreneurs: the opportunists who see the possibilities of a new machine or innovation just ahead of the rest of us.

People like Sir Charles Dunstone, for example, now in the process of merging his company Carphone Warehouse with Dixons Retail, owners of Curry's and PC World.

First mover advantage

Charles Dunstone has made a fortune out of mobile phones, but he was not a communications outsider. He was working in mobile phones when he spotted their true potential.

The company he originally worked for was doing the conventional thing people do with a new technology: apply it to the obvious existing marketplace.

In this case the big companies were the obvious market for business equipment: those phones as big as a brick that people used to lug around 25 years ago as symbols of their importance... to somebody.

Ideal equipment for corporate sales people out in their company cars seeking out somewhere with a signal.

Mobile phones were a business-to-business product, everyone agreed.

Image caption Early mobile phones were a little on the chunky side

Charles Dunstone - immersed in this strategy - saw things differently from the company he was working with.

He realised that if there were thousands of big company people, there were hundreds of thousands - maybe millions - of small business and sole proprietors whose lives would be transformed by being unshackled from the "he's not here now" or the answerphone.

The painter up a ladder could arrange his or her next job without coming down to earth. Over and over again. A real small business revolution.

In response to this insight, Carphone Warehouse was set up by Charles Dunstone and Julian Brownlie in 1989; Dunstone's old school friend David Ross joined a year later.

The phone retailer with a High Street presence was an almost immediate success.

It never needed to borrow money to create a hectic pace of expansion across the UK and then Europe. It was an idea whose time had come, but somebody had to realise it.

The name of the stores crystallises a now vanished era for mobile telephony: portable but not too portable. The move to retailing was a stroke of entrepreneurial genius, and brilliantly timed.

Carphone Warehouse had first mover advantage, and knew how to capitalise on it. That entrepreneurial drive imbued the company for a long time afterwards.

Quick decisions

The look and feel of a company headquarters are very revealing about the way the business runs, and I have been in few more impressive than Carphone Warehouse's base in a workaday part of West London close to the A40.

Two huge open plan floors were at the heart of the business, and a visitor walked up what I remember as a big curved staircase into the main floor which had a very familiar feel.

Image copyright Reuters
Image caption Carphone Warehouse's headquarters is located in North Action, just off the A40

It had the look, noise and intensity of a big media newsroom. Decisions could be taken on a minute-by-minute basis by people who walked across the room to consult on a new idea (such as a new pricing strategy).

Then the in-house broadcast studio could turn into the price announcement into a local radio advertisement within an hour or so.

Here was an organisation set up around flexibility and market responsiveness. Even a casual visitor like me caught the entrepreneurial buzz.

Mind you, businesses mature, and so do the people who run them. Charles Dunstone got his knighthood and he was in demand as a non-executive director.

One of the companies whose boards he graced was the now disgraced bank HBOS, where he chaired the retail risk committee from 2006 to 2008. HBOS later needed a government bailout because of the risks it took, and the losses it made.

"A colossal failure," said the parliamentary commission on banking standards.

Banks and entrepreneurs are not necessarily good bedfellows.

Now the mobile phone marketplace is maturing, and so are computers and home electronics. The wireless networks that created Carphone Warehouse are busy disrupting bricks and mortar selling with electronic retailing.

Sir Charles Dunstone is to be chairman of the newly merged Dixons Carphone.

In a disrupting world it will be interesting to see whether he has retained the entrepreneurial nous that 25 years ago spotted the original opportunity... when mobile phones seemed to most other people to be just a big business proposition.