The Elephant dancing with the Mouse
Recently StartupDelta spoke with the founders of The Venture Generator, a Rotterdam-based consultancy operating within large enterprises in the Rotterdam –Delft – Schiphol region. The three founders, Job Nijs, Jan van Kranendonk and Duke Urbanik each have wide experience across various sectors including high-tech climate research, mechanical engineering and business. Venture Generator is a startup in itself, complementing many existing incubators and accelerators. And they have carved out an interesting niche for their new venture.
“Yes, we are taking a different approach to an old challenge”, explains Duke Urbanik. “We are teaching the elephant to dance with the mouse: the corporate enterprise being the elephant, the mouse being, of course, the disruptive startup. Corporates everywhere are having a huge problem scaling innovation inside their companies. Too often than not innovation simply morphs into a business unit where it fights to be heard above the humdrum of routine. Disruptive thinking interrupts their normal day-to-day operations of executing an existing business model.” But the startup doesn’t have a business model – in fact the team is usually in search of their “business model canvas”. We believe that combining the strengths of both leads to real breakthrough innovation for both parties. It’s a hybrid approach. You generate some very creative friction when the experience of enterprise meets the passion and agility of startups.”
Energy alliances are working
This approach seems to be working well in this part of Western Europe. Take the energy supplier Eneco for instance. This integrated European energy group provides energy to over two million customers and employs over 7000 people in five countries. Jan van Kranendonk explains they were one of Venture Generator’s first partners.
“We set up three companies together with Eneco and energy startups” explains Jan. “Renewable energy like solar and wind energy can often cause surpluses or shortages because they’re unpredictable. As more of these sources come online, the problem of efficient use of this clean-tech needs to be tackled because the national electricity grid cannot store energy – only distribute it. One of the startups, PeeeksPower, has developed very smart switches at the user’s side. It monitors the real-time price for energy and then decides whether to switch a device on earlier or later in order to take advantage of those savings. As well as saving the user up to 40% in energy costs, the system is helping energy company Eneco to balance the energy load to its 2 million customers. Eneco invested in PeeekPower, but also gave access to their network and expertise. In the end, everyone benefits from this approach.”
This process of collaboration involved spotting the “intrapreneurs” within Eneco – those who are actively driving the transition towards new thinking about energy supply.
Job Nijs continues. “Having selected these change-makers, we put them together with startups for what turned into very intensive, yet creative sessions. Apart from the collaborative energy which this creates, we saw that by structuring this in the right way, it means both parties are able to accelerate their path towards doing something useful. It has to be more than just brainstorming. You need to take people out of their comfort zone and give them real-world direct exposure to the market so they can validate their ideas. In general, corporates have a habit of hiring researchers to go and discover new markets. We believe that you need to take the research and validate it with customers. This “lean-startup” methodology is well known to active startups, especially those who follow the work of Steve Blank. But it is still a different language and culture for many large enterprises. He’s famous for saying that “no business plan will ever survive the first encounter with a customer”. It’s true.”
“We’re also working hard to increase the ambition level of startups, so they “think global but test local” rather than the other way round. The successful entrepreneurs also think about how they are going to scale their business ideas. Some corporates tend to have more strategic and research goals – in other words they are willing to try something out with a startup on a small scale in the hope of learning something. Startups tend to be wary of those corporates who are just using them for R & D, knowing that if they fail they will be discarded and if they succeed they may be acquired for the talent rather than for the technology.”
Fast Pivoting is encouraged
Duke Urbanik is also a regular mentor at the Yes!Delft incubator, closely connected with Delft University of Technology.
“A good team can take a mediocre business idea and turn it into a world-class business proposition. More than half of the teams we’ve been helping at Yes!Delft have pivoted in some way – and we encourage them to do this as fast as possible.”
“And we’ve pivoted the way our own company works too, adapting to the rapid changes that are happening in this market. For instance, we initially took ideas from entrepreneurs and tried to find a market for those ideas within the corporates. The large companies quickly rejected this approach – they have plenty of ideas already. What they lack is both the time and skilled people to execute on those ideas.”
“So we set up think-and-do labs to try new approaches for those ideas. We also see that corporates are on a steep learning curve when it comes to understanding how to get the best out of a collaboration with a startup. And when startup/enterprise collaboration projects work outside the company, there needs to be a path so that the intellectual property can be incorporated into the large enterprise – otherwise it quickly gets diluted in the corporate culture. Also, if there is no visible support from top management, then everything below is doomed to fail.”
Job Nijs agrees that the climate for entrepreneurs have improved in the Netherlands. “We think that in order to succeed you need more than a nice building. You need to build an ecosystem. It sounds simple, but it is not something that you can inject into a place like water in a syringe. Still too few corporates have created an ecosystem for startups. But it is changing.”
“Remember that the Netherlands has quite a large number of international corporations, relative to the size of the country. There is generally less hierarchy than in neighbouring countries and leaders seem to be more approachable to discuss new approaches. Still, there is a lot of work to be done to educate middle-management that new approaches are needed in order for corporates to innovate. Innovation has become key to maintaining and growing the bottom line”.
“Most people we encounter seem to understand that the world has changed to an extent that there is no way back. As technologies have an increasingly shorter lifespan, it means that no company can build a business on the heritage from the last century. Retail, manufacturing, healthcare, and consultancy – there isn’t a sector which is unaffected.”
“We’re becoming a sort of collaboration accelerator. We speak both the languages of corporate and of startups and we act as a bridge between the two. And perhaps we need to stress that there are many successful startups who need a much longer development runway than the 3-6 months we’re used to in the app world. For those working in hardware, big data, security, or engineering the period of acceleration is the culmination of a long incubation period. During this period, the business model canvas is tested with realcustomers time and time again. So we need an ecosystem that has all kinds of help and support. And here the more engaged corporates are doing a lot to add their knowledge, their distribution expertise. Good examples are Amsterdam Schiphol airport and KLM, Royal Dutch airlines. Both organisations are engaging extensively with startups”.
Jan van Kranendonk points to what their team has learned from extensive travels in North America. “I think we’re learning from the West Coast of the US about the power of informal networks. We have very similar structures in place on the West Coast of Europe. But the US corporates are faster networkers – so when they spot a brilliant idea they can often act faster. It’s a can-do culture as opposed to can-not. There is now a whole generation of US serial entrepreneurs with hands-on experience of growing and selling the business. And in Europe people have tended to pick a chosen career, let’s say as a lawyer, and then stick with it. But the new generation of entrepreneurs are often willing to adapt to fast-changing business conditions, trying out fresh approaches with the benefits of what they learned from the last venture.”
Improved Climate for international startups in the Netherlands
“We welcome the recent changes in Dutch law which makes it much easier for international entrepreneurs to set up a business here. And the start-up visas for those outside the European Union is now a much better-streamlined procedure.”
“We’re fortunate in the Netherlands of having plenty of recent examples of startups that have made a major impact in the world. Take Amplemann for instance. This is a recent scale-up from the Yes!Delft incubator. They describe themselves as a high-tech offshore personnel transfer company. Their core technology is the Ampelmann system, a motion compensation platform that allows easy, fast and safe access from a moving vessel to offshore structures. They now have 40 of these systems in operation around the world which is a great achievement for a company that was founded less than 7 years ago.”