Breaking the corporate mould by partnering with start-ups

Thomas Birr and Jan Lozek shared their story of how the innogy Innovation Hub has evolved in less than 4 years to become a role model for corporates wanting to reinvent themselves by partnering with start-ups.

Originally an in-house innovation project within the traditional German utility company RWE, innogy was created with a vision of using innovation to create the future energy system. The starting point was when the German Government effectively gave notice to the nuclear industry and hydrocarbon-based energy companies. The future was in renewable energy sources, in particular the newly emerging population of ‘pro-sumers’ – people who produce as well as consume energy. The choice for RWE/innogy was either to disrupt their own industry, or watch others do it for them.

The innogy Innovation Hub began very inwardly, with a focus on achieving mind-set change within the existing organisation. But soon the focus switched to value creation and the challenge of building new entrepreneurial business models. The breakthrough moment was ‘realising that the best people who can drive innovation are not working for you.’ From here, the team went out into the innovation ecosystem – to Silicon Valley, Tel Aviv, Berlin and London – to find the best people to co-create the future of energy.

Early experiences were at times painful, with many failed experiments. It was about learning to be comfortable with discomfort (and the other way round!) But then things started to work out, the businesses innogy was investing in and nurturing began to scale. The innogy Innovation Hub now has around 75 ‘experiments’ running within the energy industry and adjacent industries (such as e-mobility, cyber-security, building automation), with ‘most of them doing really well’.

The long term strategy of the innogy Innovation Hub was to invest in ‘game-changing’ ideas that will shake the energy world in 3-5 years – what McKinsey call ‘Horizon 3’ businesses that are capable of creating a completely new business. As a result, they have been investing strongly in technologies such as Artificial Intelligence, Blockchain and data driven business models.

Along the way, the team has learned valuable lessons in partnering and mentoring start-ups, including the importance of humanity and resilience. According to Thomas, when assessing a start-up you need to ‘look at the team, look at the market, look at the product’ and develop a gut feel, before investing to take the company to the next stage of development.

Working with start-ups also requires corporates to function differently themselves, especially when mentoring a start-up business to scale their business. It is often about ‘doing the right thing at the right moment; deciding within a week – or sometimes within a day – rather than within a couple of months.’

Measuring success is also vital. Thomas is particularly interested in people innovation – not just skills, but having the right behaviours and mind-set. You also have to look at customers to see whether the start-up is creating traction and has a customer-centric approach. Finally, you need to do a health check on operations to check whether the company has a fast time to market.

For all that the innogy Innovation Hub has already achieved in building a valuable portfolio of businesses, Thomas and Jan still believe that their greatest success lies in front of them. Unicorns and ‘up-rounds’ are still to come!