SAN JOSE -- Digital Disruption -- Orange has realized in the past 5-7 years that innovation has to come from both inside and outside the company, but it's leaning more toward outside these days.

Speaking on a panel here Tuesday, Georges Nahon, CEO of Orange Silicon Valley, the US arm of France Télécom, explained how the process of innovation has evolved at the Paris operator. It has its Orange Vallée subsidiary working on innovative communications apps inside, but it recently expanded its focus to look outside its walls and even outside its home country. (See: Innovation Makes Life Better for Orange and Is Orange Really Innovating?)

The company has had a Silicon Valley presence for years to be closer to the developer community. This May, it welcomed its inaugural class of startups as part of its Fab accelerator program, in which developers spend three months at Orange labs building new services that leverage the Orange network. (See: 'Orange Fab' Has Its First Startups and Euronews: Orange Hatches Startups.)

Rod Randall, executive partner at the private equity firm Siris Capital, joined Nahon on stage and talked up the power of investing outside the company to acquire talent. But Nahon said Orange is most interested in partnering, signing distribution deals, and potentially building special features today.

"We are being approached all the time about investors that want to see Orange be an acquirer in an existing company," he said. "We are a network services provider. We operate network services. We aren't an Apple creating devices. The network business is very resilient."

Sure, you can disrupt the network, Nahon said; voice is still there, even if it isn't what it used to be. But Orange is more interested in complementing what assets it does have with people who develop services on the periphery of its core business. "I don’t see ourselves getting into product design and manufacturing," he said. "The reason we want to invest in services companies is this is the other side of the network business, the people from the cloud and apps business. These are nice combinations. We don't converge; we combine."

Most of the innovation Orange has seen coming out of Silicon Valley has centered on mobile services, rather than infrastructure, but Nahon said the evolution to software-defined networking has shifted the focus. Young entrepreneurs think they can do telecom without the telcos or just build over the top of their networks -- and a good number of them have -- but Orange's goal with the Fab program is to show them the benefit of a partnership. One example he cited was a cloud-based call center that uses big data analytics behind the scenes to understand callers. Orange decided to partner with this company to co-brand and co-market the service.

The overall roadmap in terms of what services it develops is decided by Orange's top management in Paris, Nahon said, but with many more inputs than would have happened in the past. Part of that process is this new practice of talking to people and companies it hasn't talked to in the past but that might bring value to the industry. "You just can't put everything on a roadmap. You need to be prepared to disrupt the roadmap at some point."

— Sarah Reedy, Senior Editor, Light Reading