How to transform a creative idea into a solid business?
Ulrike Steinhorst -Strategy, Planning and Finance Director at EADS Technical Corporate division-, and Patrice Commin -New Business‚ Innovation Nursery Director-, are working on it! And it’s up and running at EADS corporate nursery, an incubator for internal ideas. Below is my personal understanding of their tasks and missions.
EADS covers a variety of companies such as Airbus, Eurocopter, Cassidiuam, and Astrium, employing around 130k people, of which 700 are researchers, and delivering a turnover of €Md 39.
EADS nursery reports to the technical division and is a small part of this large group, numbers speak for themselves:
- Its budget arises to €m 5, over 33% of which is provided by the operational units;
- It’s a team of 3 people, one director and two business managers.
Compared to turnover, innovation resources appear quite limited. Though, nursery manages to handle a portfolio of 40 projects.
EADS nursery focuses on disruptive technology, and innovation management. Fostering innovation et entrepreneurship, it seeks for new ideas in the fields of products, processes, and services, and helps them to go through the “Death Valley for ideas”, moving from exploration to deployment, through validation phase.
EADS nursery manages an Innovation Portfolio which corresponds to an ascending pyramidal process: from Evolution, Product Replacement, to New Product, and New Business.
Innovation starting point is usually technological, to which nursery team adds key marketing dimensions – market, segment, business model – filling the gap between ‘exploration of a mature technology’ and ‘market launch with a clear view on market conditions’.
Nursery tutors innovative ideas, turning them into market offerings, helping the innovation leader to complete his case. Support is personalized according to the entrepreneur autonomy. Nursery works on an initiative for 2 years in average. By this time, the innovation has become a comprehensive file, including technological review and business model.
If the investment required is above a k€ 500 for the headquarters, the case is submitted to a Growth Committe composed of CEO, CMO, CFO, CTO, and nursery director. Under k€500, the CTO holds decision delegation. Global investment includes 2/3 from the headquarters and 1/3 from the operational units.
How is the front-end nurtured? I believe that’s where the nursery plays an informal but precious role for developing a culture of innovation:
- proactive scouting and sourcing of internal ideas, seeking for innovation talents;
- assessing projects submitted (one page summary is enough: value, potential, risk, roamap, success rate), and building acceptance (50% of the projects go to the next phase);
- respecting the freedom to fail;
- integrating cultural dimension as part of innovation;
- mixing internal and external skills in innovation teams;
- designing innovation “with” the operational units rather than “for”;
- promoting initiatives performed internally;
- engaging top management in ‘out of the box’ ideas;
- keeping process lean, avoiding bureaucraty.
Selection criteria unfolds three major types of innovation:
- market driven growth initiatives (e.g luggae inspection);
- disruptive technologies and ideas, where markets cannot be described yet (e.g nanotechnology applications); disruption is defined as a radical progression in technology combined with a change in business model, and usage transformation;
- initiatives adding corporate value through various options: castratrice importance, quality, cost structure, image and reputation – e.g biofuel).
What impressed me is the 15 business model items, that nursery team leverages on to enrich the innovation idea: it’s tutoring again, not applying a blind matrix. It stretchs a creative idea into a business idea, and make it sound the most convincing possible for the Growth Committe review.
Business modeling acts as follows:
- value proposition, nature, segment, competition, cooperation, channel, resources, activities, suppliers, cost structure, revenue model, profitability, internal fit, external fit, risk shape the business model #1;
- business model #1 + Swot analysis + refinment form the business model # n+1.
What innovations has the nurery processed so far? After 4 years of existence, it has raised a significant range of creative projects mixing technical capabilities with service extension aspects:
- Location based system;
- Precision approach and landing system;
- Luggage inspection;
- Added layer manufacturing;
- Anti corrosion inhibispheres;
- Portable anti sniper;
- Bio fuel.
What are the lessons learnt by the project leaders who have been through the nursery process? The overall feeling is very positive, there is a tangible proud to have been part of this pioneering achievement. Here are a few lessons I have noted:
- Risk is part of the game;
- Fully dedicated entrepreneurship is required, with the need of an appropriate friendly environment, and top level sponsorship;
- If innovative project is not easy to launch, it’s even more difficult to quit! Intermediate NoGo generate frustrations, clear rules upfront must be established and communicated;
- Time shedules are usally too optimistic;
- There is a valuable path between early prototype and production; demonstrating a concept is viable, even if regulation does not allow it yet;
- Technical maturity is a subjective topic, subject to review;
- Multi operational units and transversal projects are complex to handle;
- Structured business modeling is a good tool for early large spectrum investigation; but it would be a mistake to freeze the project, waiting for a detailed business plan: agility must prevail;
- Innovation shall not be measured only in financial benefits: the nursery set up a model for ideation which has been adopted widely in the company.
What are the improvements suggested?
- Focus on value analysis before decision : what is the value created by the innovation for the customer, compared to current system?
- Start nursery process at the right Technical Readiness Level (TRL);
- Be careful in relation with SMEs;
- Support project team with business modeling, market accessibility is key; involve internal customer to assess and support: set-up pilot customer and sales support early, Airbus as a customer is a great asset; we have to find an internal customer who’s not in a comfort zone, who is willing to move: best innovation’s advocates are the people having difficulties with their current business;
- Support partnership and spin out operation;
- Facilitate networking, sharing experiences across nursery men;
- Simplify nursery process to quicken decision and reactivity;
- Clarify nursery positioning on long term vs short terme return;
At the end of the day, there is this great idea about what puts innovators in motion: what counts for innovators is the ability to develop their concept. Providing entrepreneurs with the necessary means is what makes them happy. There is a desire to enter the nusery proceess, because it’s a space for freedom, passion and entrepreneurship.