How established brands collaborate effectively with startups
Digital transformation requires new partnerships and thinking outside of the box. This is easier said than done. The partnership between Vileda Professional, the home and cleaning brand from Freudenberg, and FacilityApps is a best-practice example of a win-win relationship between an established company and an independent startup.
When advising Vileda on a digital transformation project in December 2018 – and learning about the brand’s strategic partnership with FacilityApps – I soon realized that other corporates, including us here at Bosch, could use this as a best-practice example of co-innovation with startups.
Understand that you cannot do everything yourself – and then find the right partner
In contrast to the secrecy and silo mentality of traditional corporate innovation processes, the term “open innovation” describes the strategic use of information and innovation from both inside and outside the company, including creative customers, communities, suppliers, academia, and startups.
The story of Vileda’s open innovation initiative starts with a moment of reflection that many companies face at the start of their transformation journey. Back in 2014, Vileda realized that it would take more to increase the profitability of their most important customer group – professional contract cleaners – than merely better materials and more-efficient cleaning methods. Managing remote workforces remains the key pain point and offers the biggest lever to improve both efficiency and quality at the same time. Measures include the digitalization of all paper-based activities and the introduction of digital cleaning plans and quality management processes, to name but a few.
This problem was solved with a holistic approach that combined high-performance solutions leveraging software and the IoT. Manfred Zielbauer, Director of Business Development at Vileda, remembers the first touchpoints with the startup FacilityApps and what they were offering: “FacilityApps was a perfect fit for us: their idea was to offer contract cleaners a cloud-based software solution to help them better manage their operations in the digital era. This was exactly the product – as well as the technical competence and development resources – that Vileda Professional had been lacking.”
Exploit your full potential through outside-in innovation
In his role as Director of Business Development at Vileda, Manfred Zielbauer shaped the outside-in partnership with the startup FacilityApps.
Vileda quickly realized that this new “outside-in innovation” approach of introducing external expertise to a corporate’s innovation process had a strong impact on the organization’s culture: “In the beginning of our relationship, there was a clash of cultures: corporates vs. startups, old economy vs. new economy, tradition vs. agility. There was a lot of uncertainty on our side as to whether we could engage with an independent startup and what benefits they could offer. As a family-owned business and a traditional corporate, we were trapped in our very own ‘not-invented-here-syndrome.’”
To overcome these barriers, Vileda first had to admit that they lacked the internal expertise and development resources for their own full-blown IoT solution. Following this reset in the internal mindset, coupled with a strong sense of the urgent need for action, the company soon committed on all levels to viewing digitalization as a new business opportunity.
The results of Vileda’s outside-in approach to innovation are already very promising. “The strong partnership with FacilityApps will enable us to achieve our goal: the realization of a smart IoT solution that combines data from sensors, people, and machines so as to transform routine maintenance into a cleaning-on-demand service,” Mr. Zielbauer says. “For Vileda, this new business model of selling software has prompted a range of new insights. One is that new revenue streams require new thinking and new processes. Another is that it will be vital in the future to have data and insights on the usage of our products. Our partnership with FacilityApps is still very much a relationship with an independent, external partner. This can lead to uncertainty, but it also helps preserve speed and agility.”
Best practice for successful partnerships with startups
What can other corporates learn from Vileda, as they transition toward digitalization and the IoT? What is best practice for corporates looking to enter into a partnership with startups? Mr. Zielbauer summarizes the core lessons as follows:
- Startups deal in uncertainties. Large companies have built up extensive processes in order to remove uncertainties and reduce risks. In order to overcome barriers and “increase the comfort level of corporate stakeholders,” companies should:
- Design initially a small, well-defined, isolated pilot project, with low perceived risk but real potential results
- Reduce the number of decision-makers to a minimum
- Provide a separate, dedicated budget for pilot projects
- Define the success of the pilot project and agree on key metrics
- Install key contacts on both sides to act as a bridge, translator, or mediator between the startup team and the enterprise.
- Secure top-management commitment; set long-term objectives and performance indicators, and then measure these accordingly.
- Have the courage to explore new ways together; it’s worth it!
Veronika Brandt is Head of Co-Innovation and leads the Bosch Startup Harbour, an incubation program for early-stage startups. She co-developed the IoT Business Model Builder, a framework to develop IoT business models.
Open innovation at Bosch is now starting to happen
At Bosch, too, open innovation is becoming more and more important. Our Berlin-based Startup Harbour program is a great example of how we are finding new ways of co-creation between startups and Bosch business units as well as jointly fostering innovation. Our program is continuously improving so as to best meet the needs of our business units. In order to select relevant startups for our current batch, business units were asked to specify areas in which they would like to cooperate with startups. This helped both sides to better define a future relationship.
The Startup Harbour presents an exciting opportunity for colleagues to combine their experience and expertise with new ideas and technologies. Among those who have already had the chance to experience our program, we have received very positive feedback from both sides – from Bosch business units and from startups outside of Bosch. Open innovation at Bosch is now really starting to happen.
This text was co-authored by Anna Hünemohr.