insead case - bazile telecom

Maag ICE Centre

Bazile Telecom

05/2011-5755

This case was written by Anne-Marie Carrick-Cagna, Research Associate, and Manuel Sosa, Associate Professor of Technology and Operations, both at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The authors gratefully acknowledge the help of Frank Drummond in the development of the case study.

The development of the case was sponsored by the Heinrich and Esther Baumann-Steiner Fund for Creativity and Business and the Rudolf and Valeria Maag International Centre for Entrepreneurship (Maag ICE Centre).

It can be taught as a standalone case or twinned with ‘Mimijumi’, INSEAD case no 5778.

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Copyright © 2011 INSEAD 1 05/2011-5755

Email from: Laurence Grand-Clement To: Jean-Luc Grand-Clement Date: April 2006 Subject: One button phone for seniors Hi Jean-Luc, I’m just back from a field trip to South Africa with my business school and I got chatting to a fellow student on one of the long bus trips we took. It turns out he’s been working with a group of design students from Pasadena on the idea of a phone for seniors with an integrated panic button – could be along the lines of your project for a one button phone? I can put you in touch with him – his name is Frank Drummond and he’s a qualified psychiatrist from the US. Let me know Laurence Email from: Laurence Grand-Clement To: Frank Drummond Date: April 2006 Re: Phone for seniors Hi Frank Hope you’re settling back into student life again after the South Africa trip. I contacted my cousin about the phone project and he’s interested in meeting you with his colleagues to discuss possible collaboration on the project. If you need help with a presentation let me know. I’m happy to help you draw something up – I think you’d work well together, knowing my cousin. The team is made up of my cousin, Jean-Luc, who’s a retired telecoms expert, Jeff, an engineer; and Yves, a finance expert – all of them have worked in the US and know each other from other ventures. Best Laurence

Email from: Frank Drummond To: Laurence Grand-Clement Date: June 2006 Re: Phone project Hi Laurence, Thanks for helping me prepare the presentation and introducing me to the team in Aix en Provence. I really think we could work well together. Jeff’s a competent and experienced engineer who I’m sure is more than capable of developing the hardware and software required. Together with Jean-Luc’s experience in the telecom industry and Yves’ financial expertise it looks like it could be a dream team! It’s great they’ve already got the name Bazile from Jean-Luc’s grandson, started work on the design, and have already applied for the two patents that are needed. I’ve had quite a few job offers but have decided this is an opportunity I can’t miss. So I’ve decided to accept their offer and I’m moving down to the south of France after graduation to start work full time on Bazile. We have the same work ethic, have complementary skills and experience – it’s the right fit! Thanks again Frank


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Teaming Up – Let’s Get Started

Frank Drummond – From Psychiatrist to Entrepreneur

Frank Drummond was a qualified medical doctor with extensive experience in the healthcare sector. He had worked as a psychiatrist, and had managed various medical clinics and groups before becoming CEO of Georgia Regional Hospital in Savannah, in the US. It was while he was in this position that he I realised that “With more training I could round up my skills and do a better job. So I decided to do an MBA in France.”

It was during the Strategies for Product and Service Development (SPSD) class at INSEAD that Frank had the opportunity to team up with designers from the Art Center College of Design in Pasadena, California, who were at INSEAD as part of an exchange between the two schools. Frank’s team worked on a project to develop a mobile phone targeted at the senior end of the market, which included a large panic button.

Frank described what inspired his decision to focus on this product:

“I had to fight with the rest of the team for this feature as they didn’t think it was necessary, but I was adamant it was crucial for me to include it. At the time I kept hearing people around me saying ‘Why can’t a phone just be a phone?’ I tried three simple mobile phones on my godmother, who was 97 – none of which she could use. That was part of the motivation to develop a simple phone for seniors. This and the fact that research showed the over-60s segment was increasing due to a rise in life expectancy.”

Frank was finishing the last semester of his MBA when he met Laurence Grand-Clement on a field trip to South Africa as part of his course work. Her cousin was working with a team in the south of France on the concept of a one button phone. They already had the name, “Bazile”, and had applied for two patents, one for the one button phone and the second for the service. Frank met with them and was hooked on the idea. The French team consisted of Jean-François Peyre (Jeff) – technical manager and engineer, Yves Morel, finance specialist, and Jean-Luc Grand-Clément, a retired telecoms specialist (Exhibit 1).

“I realized by talking with the others that the project I’d done in school was all wrong. They were working on a one button phone with voice recognition.”

Towards the end of his studies, Frank began the customary job search that most students undergo to ensure employment on graduation. He was spoilt for choice with offers from pharmaceutical companies, consulting firms and hospitals. By this time, however, he knew he would be heading south to Aix en Provence, where Jeff lived, to begin the new one button phone venture – Bazile Telecom.

On 1st August 2006, the Bazile equity plan was drawn up. They divided it into four equal shares, reaching an agreement that Frank’s equity share would be in return for one year working full time without income. The next task was to decide on a preliminary budget for the €150,000 they had already raised through angel investments, loans and government grants. Frank began work on the business plan that defined the company’s goals and would be the road map for the venture.


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Let’s Do It – Brand and Product Development

“Brand values are key, so get it right.”

Frank Drummond

The next milestone for Bazile was to design a working prototype. This involved the service part of the phone for end users, the software and industrial design, together with the marketing. Until then, Jeff had been working on the design in his garage but in September 2006 they moved operations to a business incubator sponsored by the local government in Aix en Provence. Meanwhile Frank continued working on the brand values, product development, corporate identity, marketing, communication and branding.

By November 2006 they had a prototype – made of leather – that went on show at the Foire Internationale de Marseille trade fair (Exhibit 2).1 They had a stand in the new inventors’ tent that generated local media attention for the one button phone concept. While they found new partners, there were no customers as there was nothing yet to sell!

Developing the Design and Brand Values

“At this stage I contacted my profs at INSEAD for help in the development of the product. Finally we got a part-time designer to work with from the US. Our challenge was to make a really beautiful, ergonomic and functional phone with our unique technical features.”

In January 2007, seven months after they had started working together, an experienced industrial designer based in the US, Lukas Scherrer, was brought on board on a fee basis. Bazile had already worked with a graphic designer based in Marseille on the logo (two basil leaves), the font and the colour schemes.

“We didn’t take on an industrial designer at the start because of the cost and the fact the software wasn’t yet ready. Once the designer was on board we reworked the interface of the button with the vibration and the light by listening to what the end users needed. We were dealing with some major design issues such as whether the phone should have a screen or not.”

The process was divided into four phases. The designer began by an exploration phase to get a feel for the scale, details, manufacturing techniques and part splitting. He sent a series of initial sketches that would eventually be synthesized into three design directions. After four months and four design rounds the final prototype was ready. The design rounds included the manufacture of iterations of the physical model, along with ten or more variations of the user interface guided by the software. Each of these iterations was market tested by user groups and refined accordingly.

“Lukas sent me many sketches and then we would meet as a team to discuss them. We narrowed the design ideas down to just three that we wanted him to develop further. There was a strong mutual trust between the designer and the team. Some

1 The Foire Internationale de Marseille is an annual event that lasts 10 days.


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of the ideas were technically complicated – for instance having the mould line down the middle of the phone. This was not an easy solution but Lukas felt strongly about it and I respected that. In other instances we would ask him to change the design and he was very open to our suggestions. We had an excellent working relationship.”

One of Frank’s roles was to balance the ideas of the engineer with Lukas’ designs.

“Jeff, the engineer, would come up with new codes just about every weekend that basically fiddled with the user interface – this included the voice recognition at one stage, the light patterns, etc. Every time he changed a code it was added on to the old one. The result was messy code that was difficult to work with. So my job at times was to nourish and encourage Lukas’ creativity and limit Jeff’s!”

The final design had a soft top shell with a large circular button with the Bazile logo (Figure 1). The main body of the phone was smooth and white, with the upper part in Bazile green. The button also had a light mechanism that changed colour according to the status of the phone – for example if it needed charging it turned red so that the user could recharge. The all-important panic button was integrated into the phone, with the user simply pressing the button for five seconds to activate it.

Figure 1. Final Design on the Bazile One Button Phone

In addition a set of brand values was developed that would be reflected in Bazile’s communications, software and hardware experience. The values they decided on were: human, friendly, natural, technology, design and social. These served as guidelines for the designer used in choosing the form, material, texture and colour of the Bazile product (Exhibit 3).

“These are the driving values of Bazile Telecom. They talk about a company that puts the HUMAN in the centre of its DESIGN process. Interactions are simple and understandable because the TECHNOLOGY is approachable. Bazile’s FRIENDLY and NATURAL appearance reflects the idea of enabling SOCIAL interactions not only between tech-savvy youngsters but between everyone in society.”


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Bazile is Born

“We soon realized that there was only so much you could do with one button, even with voice recognition, and so a call centre quickly became a necessity. It is now a crucial part of the phone. The voice recognition didn’t always work and research showed that the users didn’t like using the system – they preferred to talk to a ‘real’ person.”

The first call centre was piloted in Provence in September 2007, with two people working the day shift. The night calls were picked up by Frank, Jeff or Nicholas, the intern, through their cell phones.2 Nicholas had joined the small team in January 2007 as an intern from the local business school (IAE).

“We received between two and ten calls during the night. Some of the users don’t realise what time it is and older people don’t sleep very well in general. During the day and at night often people phone for a chat as they’re lonely. We now have volunteers, many of whom are retired, to answer these calls, otherwise the lines would be blocked for other callers.”

The solution that Bazile Telecom offered was not only for seniors but also for people with impaired sight and other handicaps that prevented them from using traditional mobile phones. The principle was simple: the one button phone allowed the caller to feel less isolated and keep in touch with friends and relatives more easily. The package included a one button phone with unlimited access to the Bazile Telecom call centre. The caller pressed on the large button and was immediately put through to an operator who would transfer the call to the correspondent indicated. When the Bazile user received a call they simply pressed on the button to begin the conversation. There was also a voice-recognition option that allowed the person to simply say the name of the person they wished to contact to be instantly connected (Exhibit 4).

What made the Bazile product different was that all the information stored in a user’s account could be changed wirelessly. This meant that a relative could change their parent’s phone numbers via the internet, while Bazile staff updated all the phone numbers on their books at the same time. This facility was unique to Bazile but the flexibility was technically complicated to develop.

Bazile began to work with a number of local insurance call centres to handle calls more efficiently. Bazile picked up any overflow of calls from the centres during the day, and in turn the insurance centres handled any overflow through the night. Bazile had seven full-time staff during the day and two at night.

Marketing and Research

Before the product was launched, Frank had carried out some concept testing – such as how much people would be willing to pay if they liked the product. Although Bazile had developed the product for the 80+ end user age group and visually impaired people who had

2 This was Jeff’s daughter’s boyfriend who worked free of charge as an intern for the first year. He was later

taken on as a salaried full time employee.


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trouble with the small buttons of traditional mobile phones, the targeted customer base was the relatives of these users, often in the 60+ age bracket. Bazile tested the product on the street using local students to question passers-by. They also worked closely with the Association for the Blind to ensure the product was suitable for this segment of the population.

A few months after the Marseille trade show Bazile exhibited the prototype at a Paris trade show in March 2007 which was specifically targeted at businesses that offered services and products for the senior population. It was here that they found new partners, in particular insurance companies, and gained more media exposure. The fair, which lasted three days, represented an investment of €2,000 for the stand plus the cost of the decoration and staff, but, as Frank said:

“Never overestimate the power of the internet. Traditional people still rely on traditional media. Trade shows are greatly underestimated - they are places to meet new partners, clients and gain valuable visibility.”

The first distribution outlet for the phones was direct-to-customer through the internet. But in March 2008, Bazile got a huge boost when the bank Credit Agricole featured Frank and the Bazile phone in a national advertising campaign (Exhibit 5).

“We had secured a loan with the bank a few months earlier when the initial money began to run out. I was invited to the bank one day, where they took my photo – they were about to embark on a campaign featuring clients that ran small businesses. I became ‘Franck’, with posters of me and the phone appearing in bus-stops throughout France, running for weeks in the south of France and also nationally.”

The publicity generated for Bazile was unprecedented and led to a contract for the phones to be distributed through FNAC, the major French retailer. This was a huge milestone.

Mobile Virtual Network Operator

While work was being carried out in the US on the industrial design of the phone, Frank and Nicholas were concentrating their efforts on Bazile becoming a Mobile Virtual Network Operator (MVNO).3

“It was important for Bazile to become an MNVO because it meant that we could buy minutes from the operator and then sell them under the Bazile brand, thus avoiding the customer receiving two bills – one from the telecoms operator for the minutes used and the other from Bazile for the monthly fee of €15.”

However, becoming an MNVO was not a simple process. Certain standards and achievements had to be met. Frank and Nicholas began discussions with the three main operators in France: Orange, SFR and Bouygues Telecom. Numerous meetings were held before they finally 3 A Mobile virtual network operator (MVNO) is a company that provides mobile phone services but does not

have its own licensed frequency allocation of radio spectrum, nor does it necessarily have all the infrastructure required to provide mobile telephone service. The first successful MVNO in the UK was Virgin Mobile UK, that launched in 1999 – it resold capacity on T-mobile.


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signed an agreement with Orange, which insisted on Bazile having a customer base of 1,000 to show that the Bazile outfit meant business. A pilot began in December 2007 but the contract was not signed until July 2008 – one and half years after the initial talks. The same month there was another major breakthrough for Bazile: as part of the French government’s social assistance policy for seniors, half the telephone bill could now be paid by the state.

“It was really time consuming, even with access to the top management at Orange, SFR and Bouygues Telecom thanks to Jean-Luc’s contacts in the business.”

What Next – Itchy Feet

Towards the end of 2007 – before the Orange contract was signed – as the company was taking shape and enjoying some success, Frank began wondering what the next step should be for him personally. He could scale up the Bazile model but taking it to his native US was far too complicated. Expansion to other French-speaking countries wasn’t that appealing: Canada would mean a bilingual service, Belgium required that services be in three languages, and Tunisia wasn’t yet a large market for mobile phones. He was also getting weary of the complexities of the product and the constant discussions involved in becoming an MNVO. Perhaps it was time to move on and let the rest of the team take Bazile to the next step. Indeed Frank felt that the existing team was more than competent to grow on the success they had already experienced.

One of his psychiatrist friends had phoned some months previously with the idea of inventing products for babies – bottles, pacifiers and the like. Although designing a novel baby bottle was simpler than designing a mobile phone, the challenge was far from trivial. There were many aspects to take into account. For a new baby bottle there was the shape and size of the bottle together with the teat. The choice of materials and different textures also had to be considered, as well as the needs of both parents and babies. Moreover, certain regulations had to be met when designing a product as sensitive as a baby bottle. Despite these potential difficulties, however, Frank felt “The idea of developing a new product seemed a lot simpler than the complex telecom business.”

What should he do? Grow his mobile phone business or start over again in a new industry? Both opportunities offered interesting, yet distinct, challenges. Could he leverage his experience in the telecom industry to design new products for babies successfully?


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Exhibit 1 The Bazile Team

Exhibit 2 First Prototype at the Marseille Trade Show

The Bazile Stand

Source: Frank Drummond

Frank Drummond Business, Management IINSEAD MBA, MD Psychiatrist, 39

NSEAD MBA MD

Yves Morel Finance HEC (Finances), 39

Jean-François Peyre Technical Direction Engineer Supelec, 49

Jean-Luc Grand-Clément Strategy, Civil Engineer Telecoms Paris, 66


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Exhibit 3 Brand Values

Source: Frank Drummond


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Exhibit 4 Bazile – How it Works

Bazile Phones Simple and elegant phones that simplify your life.

The Prestige Bazile: the phone with a single button

The Prestige Bazile Phone is a mobile phone that accompanies you wherever you go. It is the ideal solution to stay independent and be in touch with your friends wherever you are.

Nothing could be simpler than calling with the Bazile phone:

By pressing the button you are put in touch with an operator who transfers you to all your contacts.

Example:

"Bazile Telecom, Hello"

"Hello, may I speak to my daughter"

"I’ll put you through”

To receive a call:

When the Bazile phone rings, simply press the button to converse with the caller.

Emergency:

The Prestige Bazile Phone secures your home as well.

Emergencies are defined during registration. The operator contacts a relative, a neighbour or a predefined emergency number. The operator stays connected with you until you're in good hands.

By pressing the button for 5 seconds you are put in contact with emergency services.

Emergency calls (112) are always free.

In case of an emergency, Bazile can call one of your loved ones instead of calling the emergency services, if you wish.

Source: www.baziletelecom.fr


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Exhibit 5 Credit Agricole Advertisement


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insead case - bazile telecom

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