Innovation is everywhere, yet remains out of reach for many. Especially amid a #ClimateTransition that will require transformation across the industrial landscape, large companies can have a hard time knowing where to begin.
This is where working with startups can make a big difference. In our latest video, Markus Moor talks to Paolo Bavaj, head of technology ventures at German conglomerate Henkel. They discuss the key factors affecting the success of startup-corporate collaboration:
- Every instance of cooperation is different, so maintain enough flexibility to implement a tailored approach.
- Establish a “bridge” between the venture arm and the business units—someone with standing and clout.
- Understand what the business units need and want, so collaborations will fit their strategic plans.
Hello, and welcome to this conversation hosted by Emerald Technology Ventures.
In this episode, we look into open innovation and how collaborations with startup companies can make open innovation successful.
I’m Markus Moor partnered with Emerald technology ventures, and I’m joined today by Paulo Bavaj, from Henkel Tech Ventures.
Paulo has an impressive track record in the chemical industry spanning over 25 years.
You’ve been heading global warranty, you’ve been heading business development, you lead business segments.
For the last five years you’ve been heading the Henkel Tech Ventures, and I’m sure you have a lot of experience gain over these five years.
And so why don’t you tell us a bit about your core activities?
What do you do at Henkel Tech Ventures?
And then we dive into the topic and if you coul
d share, kind of some of the key learnings you took away from these five years when looking at collaborating with startups.
So for Henkel innovation certainly very, very important to grow further.
In particular Henkel, at least of technologies, you know, is the by far market leader in, in our industry.
So in order to grow, we need to grow outside of our current core business.
We of course need to make sure that the core business itself has always top-notch technologies,
but the real growth, the real expansion is outside of our core business.
So we don’t necessarily have the skill sets to do that on ourselves.
So we are reaching out to other companies and that could be larger companies and could be in our case of Henkel tech ventures, startup companies who have skills and capabilities, which we don’t have, and who did develop a technology, which we could not have developed ourselves.
And the idea is to build on that technology and new Henkel business.
So our mission in life, is building a new Henkel business based on the technology of a startup companies.
And you asked about the learnings?
So I think, it was a journey for us so we started with that adventure in Henkel eight years ago, and eight years ago it was not natural for Henkel to work with startup companies.
So, the colleagues didn’t take them really seriously.
And that changed over time.
So they got in contact with more and more startup companies.
And today everybody in Henkel understands that startup companies, are full of serious
and very good scientists that they have a real industrial problem to solve and thatthey can contribute a great technology to hand at Henkel technologies in that case.
So we, we, we took the company, our company on a cultural journey, towards collaborating with startups.
And the other learning is that every case is so individual and different, that there is not the one size fits all kind of approach.
So we have to tailor our approach and our collaborations to any particular startup we are meeting.
So you have a tailored approach.
Beside the tailored approach, have you been able to develop some sort of a playbook that helps the people in the business units or in the corporate units to gather, or to quickly get into kind of the process into gears, how to work with startups?
I, I think we, we didn’t do that.
We tried to do that and we have processes established to do that, but I wouldn’t say it’s really a playbook.
It’s not, I mean, playbook always makes the impression that we work in a very kind of standardized process and world.
And I think we, we do have a process, but the process is very flexible.
So I think for us, one of the major learnings is that it’s all about dedication.
Also in our team.
It starts actually with our team, in the in the past, we tried to do venturing and the collaborations at the same time with the same people, and that actually didn’t really work out.
So now we have a dedicated resource in my team, and he has a long standing Henkel business relationship.
He is a quite senior manager.
So he has the standing in the organization, which we need to in order to connect with our organization in order to be, have a serious
discussion with the organization.
And he is now taking care about these collaborations and hand holding both the startups and the colleagues from the operating business along that process.
And I think that is really, I would say the bridge in between.
Yeah, the key learning.
I’ll come back to this dedication element, which I believe is a very important element.
Before we go there, how do you decide where the anchor point is for the startup?
You mentioned that you want build new business, so it’s probably a bit less with really working super closely with the business units.
So where do you anchor the collaboration?
You have this champion who helps, but where in your organization are the anchor points.
So we have, we have, we are approaching that from two directions.
So one direction is, is basically top down.
So we do understand the strategies of our operating business units.
We understand what they need in terms of technologies and business models in order to grow, according to their strategic plans.
And then we are trying to find something which is supporting their growth ambitions.
On the other hand, they also can approach us with certain projects with certain initiatives saying, hey, we have this particular problem.
And, or we will would like to get experience for this particular business model.
Please look for a startup who can help us and who can do that.
And then we, we, we search for that startup.
We, we engage a startup with our operating business and, and try to build that collaboration, but it’s.
And the other point is that, so that’s the the anchor point from a content perspective,
from the organizational perspective, we always work with, we start to work with our top management.
So we, we approach the the head of our SPUs, the head of product development, and the head of marketing and sales in order to be successful.
And as you all know, to, to make things successful, people need to be incentivized, people need dedicated.
How do you, how do you make sure the incentives, the motivations are kind of set up the right way?
Not just for the startups, but also in your teams, the people on Henkel’s side?
Yeah, so we don’t have formal incentives in place.
So we all benefit from our corporate incentive system.
I think for the startups, it’s relatively easy.
The working hypothesis is that the startup can grow with us much faster than without us, because we can move the technology into an additional market verticals.
You can connect them with more customers than they can connect by themselves.
So I think that motivation is clear.
The internal motivation, I think, is a mix.
I mean, some, some colleagues are just curious and just have, little bit self propelled to, to drive certain innovation.
And they are intrigued by opportunities for Henkel and, and have a personal motivation on, on following up.
And others simply see that, certain sets of collaborations help them to fulfill their strategic goals and objectives.
So they, we know what their key strategic initiatives are.
And if you find a startup, which helps them to fulfill that initiative, I mean that, that’s
That’s the motivation for them.
If, if you try to, again, look back from the collaborations you’ve done, what do you think are, where do you have the biggest lever to make them successful, working with earlier stages or working with later stages startup, working with startups, which are closer to your home geographically, or further away,
working with more the headquarter or the, the country level units.
What do you think you have the biggest lever to create success?
I think it’s really, really depends on the technology and the application, the business model itself.
I think we, we almost don’t care where on this planet, the startup is, located.
We also, don’t in the collaborations, don’t care so much about the stage, if they are early or late.
When it comes to investment, we would like to see some revenue, some traction.
So then we are more investing into later stage startups.
But when it comes to collaboration, we also collaborate with, with very early stage startups.
So I think it’s really content to broader, broader spectrum.
If you would be sitting here in 10 years from today and looking back, what, what, what would be the topic we would discuss in 10 years from today?
The topic which we discuss was hopefully how we helped Henkel to build two new business units based on a startup technology, which are now each 500 billion euros in size, and
how Henkel is enjoying that 1 billion Euro top-line revenue.
I think that, that’s, that’s our dream, right?
That is, that is what we would like to achieve and think we are on a good track to achieve that.
We have so far collaborations with over 50 startups.
We have over 80 collaborations with them.
So I think we are on the right track to do so.
We just need to execute
That’s an impressive number.
And that’s a very nice closing statement as well I believe.
Paulo, thank you very much for joining us today and share some of your experiences and learnings, that’s very valuable.
And thank you for the audience too listening in.