Two Stanford grads starting a Fortune 500 computer company in 1939 in their garages is a more than a twice-told tale. Same with a group of Harvard students coming up with a foundation to build Microsoft or Facebook. Less sexy, but equally important, are the innovations that happen at those same giant powerhouse organizations.
During the recent SKS Invent virtual conference, a pair of leaders from two such giants, Electrolux and BSH, spoke about the challenges and rewards that come with sparking innovation at a large, global brand. This post is a look back at my conversation and key insights gleaned from Tove Chevalley, Head of Electrolux Innovation Hub, and Lars Roessler, Head of Corporate Venturing for BSH Startup Kitchen.
What’s it like when a large, established organization pursues innovation? How does it happen? How does it start? Does it just kind of come to somebody in the shower?
Lars: No matter what type of innovation you’re talking about, it’s got to be consumer-centric, has to be customer-driven, customer focused. Suppose you innovate in a space where the consumer is not at the center of your thinking. You can do many things. But it won’t be successful.
Again, it starts with the consumer; we think about how we can improve quality of life, which is our old mantra, but how can we improve the consumer journey across the customer lifecycle? Of course, we are a big corporation and have resources and smart people. But in the end, you need to have the garage mentality is somehow getting inspiration from the outside world.
Tove: I don’t think it’s that different than what it is in the startup community. You know you need a good idea; you need an entrepreneurial spirit; you need to be a bit gutsy and be able to drive that forward.
Ensure you have availability for funding if you have ideas. We know which areas that we are interested in, in driving innovation. So we get to focus on everything that we do, which I think is critical for us when we crack that, that made a huge difference in our innovation funnel
What role does market research play?
Lars: Having market data is super important, but I think we all know typically, market research is kind of like backward-looking. Right? So, we know what happened in the past and what sales have been and what users might be thinking about. But you got to be more forward-looking as well. You could call it foresight management. Also, you can be more experimental, thinking about new needs.
Tove: We also have a foresight team that helps us look at the biggest opportunity spaces in the future. Because I think that is key. What Lars is mentioning is, as a startup community, you need to look at the market right now as well. But it would help if you looked at other signals that are happening on and going on, you know, economically, politically, consumer, what’s happening around the world. And that gives us signals of where the future growth areas are.
Let’s talk about money. How are your projects and innovation financed? Or do you get kind of a budget? Is it a free flow of cash? Does it come with strings attached? And how do you set up goals and milestones?
Tove: We struggled with this setup because we started funding projects. That had a higher uncertainty. We realized quite quickly, of course, that that kills off ideas very quickly. What we did is we started looking at what the startup world looks like and venture capital. And how can we structure our funding, not only the funding we do with startups, but the funding that we do with their projects, in the same way, and looking at how you move through the funnel, you have different funding rounds. I think it takes a lot of training for leadership and how you look at projects, but also training for people internally and being comfortable in working that way. But that has given us risk mitigation and how we do risk in the company is a lot better.
Lars: When it comes to funding new innovation projects and startup collaborations, we run a very decentralized approach, meaning that money needs to come from business. So, we have had a learning curve on our end and many discussions. For projects, it depends, of course. How far out are you looking with the innovation you want to develop and a new business model you want to develop? But typically, if you don’t have a landing spot, how can you convince anyone within the company to fund, like the first couple of steps of an innovation project? How would you ever be able to convince them to do it by you when you got to be writing the really big checks?
What’s it like to pull the plug on a project?
Lars: No one likes to do it. When people work together, they form some bond. Right? But at some point in time, and that’s, I guess, also the role of units like ours, to be that mediator, buffer in between the startup, the external partner, and the internal innovation team. So I mean, in the end, it’s like a failed relationship, where hopefully, all come to the same conclusion. But in the end, it’s to the benefit of all parties to move
Tove: It’s about killing your darlings, and I think we all have the darlings we work with. I think for us, it’s a lot of building that culture internally and ensuring that we have, you know, mental security coming into these projects because you are working with a lot of uncertainty. And we want people to be comfortable being uncertain. And one of the most important things when you work with uncertainty, is to feel trust in each other and that you trust both the stakeholders that you work towards, but also the team that you work with, and trust that we all have the same goal in this and that we do this together. And I think for us, it’s a muscle that you need to train over and over again to ensure that you have this trust among yourselves, but also trust with your managers. So, we worked a lot on the kind of governance of projects and working with leadership to ensure that they provide that trust to the people who work with us. Also, looking into our, you know, Swedish heritage, we come from a culture where we do work as a team, and we don’t look and celebrate an individual accomplishment; we celebrate team efforts.
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