This article series by Elena Bou, Innovation Director, EIT InnoEnergy, explores the philosophy of open-innovation that underpins good collaboration, as well as the why, how and where of how to make a success of energy company/start-up collaborations, drawing on best-practice from EIT InnoEnergy's experience along the way.
PART FOUR: The where – creating the right environment for start-up collaboration
April 14 (Renewables Now) - The model and motivations are in alignment and all bodes well for the energy company’s collaboration with a start-up. Excitement is high, as are expectations. There is one thing left to attend to though: the environment you create. Will it be a space where collaboration can thrive? Or where it will wither on the vine?
Compare the typical culture and processes of a large company to those of a start-up. On the one hand we have weighty institutions geared towards efficiency, volume and replication. As far as it can be, it is a predictable, stable system.
Ask a start-up founder to describe their working environment and you are unlikely to hear any of those words. Flexibility is king, time is always short and uncertainty is pervasive. Rather than replication, creation and innovation are key to success.
The first step is to be aware of these differences. Then, the energy company must ask itself:
1) What processes must I create or modify?
2) Which of our cultural values will affect the collaboration – either positively or negatively?
Let us suppose that an energy company has decided to partner with start-ups to speed up market launch of its solutions. Suitable start-ups will be sought out, pilot projects put in place and then business agreements for the right candidates.
Immediately we can identify two procedural areas that require attention – one where a new process is needed, and one where current processes must be adapted.
The new process is scouting. Like a football club, the company is in competition to unearth the next generation of high-potential talent. This is likely to be a new process for an energy company and is becoming more difficult all the time as the pool of start-ups grows and decentralises.
In terms of existing processes, take something extremely dull such as purchasing. To sign a business agreement with the start-up, the company cannot force a long, tedious process with excessive guarantees and onerous payment terms. Start-ups lack the financial clout or legal bandwidth to work according to such terms. Rather than stubbornly sticking to established procedure, the company must adapt.
All the process tweaks in the world will not be enough though if the cultural fit is not right. That does not mean energy companies need to put in table tennis tables and aping their start-up counterparts – the cultures do not need to be the same, but they do need to gel.
For the larger partner, that means ensuring there is absorptive capacity – is there enough diversity and openness within the team to be able to take on external influence?
That openness must also extend to weeding out any ‘not-invented-here’ syndromes. This is more common than many people assume, and sees companies overvalue what is created in-house and undervalue the contribution from outside. This can be a subtle, rather than overt, issue. Managers can help overcome it by encouraging their team to work on start-up collaborations or even undertake secondments with the possibility of returning to their job at a later date.
Of course, the closer the partnership, the more important cultural fit becomes. Arms-length relationships are one thing, but if the aim is to truly work hand-in-hand with the start-up, then teams will be in very close proximity. It takes time for mutual understanding and working relationships to flourish; the result may be more radically disruptive, but expect it to take more time and effort too.
David and Goliath
Ultimately, creating the right environment – the right where – boils down to creating a scenario where David and Goliath work with – and not against – one another. Overzealous legal teams an overbearing, interventionist programme managers will kill the collaboration before it has a chance to yield results. It is important to have someone on the team who understands the different world and risks of start-ups so that due diligence and purchasing processes can be modified accordingly.
Easier said than done, perhaps. But if an energy company can get the right motivation, model and environment – the right why, how and where – then the rewards are worth it. The energy sector is changing at breakneck speed – a pace that start-ups are more accustomed to than the established giants. It is only natural energy companies will look to their smaller peers as valuable allies in that transition.
Of course, one can never have too many allies. And if the challenges described in this article series seem too daunting, third party support can make the difference. At EIT InnoEnergy, we have backed more than 330 start-ups since 2010, 90% of which have partnered with corporations. We have learned through long experience how to ensure the experience is mutually beneficial for both sides – and by extension for the European energy sector as a whole.